EXHIBIT 77 to Xxxxxxxxx Xxxxxx High Yield Strategies Fund N-SAR
File Number: 811-21342
CIK Number: 0001228361
Item 77Q1(e) Sub-Advisory Agreement
SUB-ADVISORY AGREEMENT BETWEEN
XXXXXXXXX XXXXXX MANAGEMENT LLC
AND
XXXXXXXXX XXXXXX FIXED INCOME LLC
AGREEMENT, made as of the 13th day of May, 2009, by and between XXXXXXXXX
XXXXXX MANAGEMENT LLC (Xxxxxxxxx Xxxxxx) and XXXXXXXXX XXXXXX FIXED
INCOME LLC, a Delaware limited liability company (Xxxxxxxxx Xxxxxx
Fixed Income).
W I T N E S S E T H
WHEREAS, Xxxxxxxxx Xxxxxx High Yield Strategies Fund, a Delaware statutory
trust (the Fund), intends to engage in business as a diversified,
closed-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the Investment Company Act);
WHEREAS, Xxxxxxxxx Xxxxxx has entered into an Investment Advisory Agreement
with the Fund dated as of May 4, 2009 (the Investment Advisory Agreement),
pursuant to which the Fund has retained Xxxxxxxxx Xxxxxx to serve as the
investment adviser of the Fund;
WHEREAS, pursuant to the Investment Advisory Agreement, Xxxxxxxxx Xxxxxx is
authorized to enter into a sub-advisory agreement with an investment adviser
registered under the Investment Advisers Act of 1940, as amended (the
Investment Advisers Act), subject to such approvals of the Board of Trustees
of the Fund (the Board) and the shareholders of the Fund (Shareholders) as
may be required to comply with applicable provisions of the Investment
Company Act, to obtain any or all of the investment advisory services
required to be provided by Xxxxxxxxx Xxxxxx under the Investment Advisory
Agreement;
WHEREAS, Xxxxxxxxx Xxxxxx Fixed Income is registered as an investment
adviser under the Investment Advisers Act and engages in the business of
acting as an investment adviser;
WHEREAS, Xxxxxxxxx Xxxxxx, with the approval of the Board, desires to
delegate to Xxxxxxxxx Xxxxxx Fixed Income the duty to manage the portfolio
investments of the Fund in the manner and on the terms and conditions
hereinafter set forth; and
WHEREAS, Xxxxxxxxx Xxxxxx Fixed Income desires to be retained to perform
such services on said terms and conditions.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. GENERAL PROVISIONS.
Xxxxxxxxx Xxxxxx hereby retains Xxxxxxxxx Xxxxxx Fixed Income to act as the
sub-adviser of the Fund and to perform, subject to the general supervision
of Xxxxxxxxx Xxxxxx and the Board, such duties and functions as are set
forth in paragraph 2. Xxxxxxxxx Xxxxxx Fixed Income shall, for purposes of
this Agreement, be deemed an independent contractor and shall not have,
except as expressly provided or authorized herein, any authority to act for
or represent Xxxxxxxxx Xxxxxx or the Fund in any way or otherwise to serve
as or to be deemed an agent of the Fund. Xxxxxxxxx Xxxxxx Fixed Income shall
provide services hereunder in a manner consistent with: (a) the provisions
of the Investment Company Act and any applicable rules and regulations
thereunder; (b) any other applicable provisions of Federal or state law;
(c) the provisions of the Declaration of Trust, as may be amended from time
to time of the Fund (Declaration of Trust), as amended from time to time;
(d) the policies and determinations of the Board, (e) the investment
policies and investment restrictions of the Fund as reflected in the
registration statement of the Fund and as such policies may, from time to
time, be amended; and (f) the Prospectus and Statement of Additional
Information of the Fund, as may be amended from time to time. The
appropriate officers and employees of Xxxxxxxxx Xxxxxx Fixed Income shall be
available upon reasonable notice for consultation with any members of the
Board or officers of the Fund or Xxxxxxxxx Xxxxxx with respect to any
matters dealing with the business and affairs of the Fund.
2. DUTIES OF XXXXXXXXX XXXXXX FIXED INCOME.
2.1 Xxxxxxxxx Xxxxxx Fixed Income shall, subject to the general supervision
of Xxxxxxxxx Xxxxxx and the Board: (i) manage the Funds investment portfolio
and make and implement all decisions regarding the investment and
reinvestment of the assets of the Fund; (ii) provide statistical, research
and other factual data for use in connection with the Funds investment
program; (iii) place all orders for the purchase and sale of investments by
the Fund and monitor the execution of transactions for the Fund and the
settlement and clearance of such transactions; (iv) maintain such internal
systems and controls as may be necessary to provide reasonable assurance
that the investment advisory services of Xxxxxxxxx Xxxxxx Fixed Income
provided to the Fund are provided in a manner consistent with the
investment objectives, policies and restrictions of the Fund and with the
requirements of applicable laws and regulations; (v) provide or maintain
such facilities as may be necessary in rendering the services set forth in
clauses (i) through (iv) of this paragraph 2(a); (vi) report to Xxxxxxxxx
Xxxxxx and the Board on the Funds investments and performance; and (viii)
provide all other services that Xxxxxxxxx Xxxxxx may reasonably deem
necessary or convenient to the foregoing.
2.2 Nothing in this Agreement shall prevent Xxxxxxxxx Xxxxxx Fixed Income
or any affiliate thereof from acting as investment adviser for any other
person, firm, fund, corporation or other entity and shall not in any way
limit or restrict Xxxxxxxxx Xxxxxx Fixed Income, or any of its affiliates,
or their respective directors, officers, stockholders or employees from
buying, selling or trading any securities or other investments for its or
their own account or for the account of others for whom it or they may be
acting, provided that such activities do not adversely affect or otherwise
impair the performance by Xxxxxxxxx Xxxxxx Fixed Income of its duties and
obligations under this Agreement and under the Investment Advisers Act and
further provided that such activities do not violate any provisions of the
code of ethics of Xxxxxxxxx Xxxxxx Fixed Income governing personal
securities trading by persons who are access persons, as defined by Rule
17j-1 under the Investment Company Act.
3. ALLOCATION OF EXPENSES.
Xxxxxxxxx Xxxxxx Fixed Income shall pay all expenses incurred by it in
providing services under this Agreement, including, but not limited to, the
salaries, employment benefits and other related costs of those of its
personnel engaged in providing investment advice to the Fund hereunder, and
the costs of office space, office equipment, telephone and postage.
4. COMPENSATION OF XXXXXXXXX XXXXXX FIXED INCOME.
In consideration of the services provided by Xxxxxxxxx Xxxxxx Fixed Income
under this Agreement, Xxxxxxxxx Xxxxxx will pay Xxxxxxxxx Xxxxxx Fixed
Income a monthly fee computed at the annual rate identified on Schedule A of
the Funds average daily managed assets (the Sub-Advisory Fee). Managed
assets means net assets, including assets attributable to outstanding
preferred shares, plus the aggregate amount of any borrowings. The
Sub-Advisory Fee shall accrue daily, and shall be payable monthly, in
arrears, on the first business day of the next succeeding calendar month.
The daily fee accrual shall be computed by multiplying the fraction of one
divided by the number of days in the calendar year by the Sub-Advisory Fee,
and multiplying this product by the managed assets of the Fund, as of the
close of business on the last preceding business day on which the Funds
managed assets were determined.
5. PORTFOLIO TRANSACTIONS AND BROKERAGE.
5.1 Xxxxxxxxx Xxxxxx Fixed Income shall be responsible for the selection
of brokers or dealers to execute the Funds portfolio transactions. In
selecting brokers or dealers to execute transactions on behalf of the Fund,
Xxxxxxxxx Xxxxxx Fixed Income generally shall seek to obtain the best price
and execution for the transactions, taking into account factors such as
price, the size and type of the transaction; the nature and character of
the markets for the security to be purchased or sold; the execution
efficiency, settlement capability and financial condition of the dealer; the
dealers execution services rendered on a continuing basis; and the
reasonableness of any dealer spreads.
5.2 Consistent with the principle of seeking best execution in connection
with the Funds portfolio transactions, Xxxxxxxxx Xxxxxx Fixed Income shall
have discretion, in the interests of the Fund, to place orders for the Fund
with brokers or dealers that provide Xxxxxxxxx Xxxxxx Fixed Income with
research services (as such services are defined in Section 28(e)(3) of the
Securities Exchange Act of 1934, as amended (the 1934 Act)), including,
without limitation, supplemental research, market and statistical
information, including advice as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities, and
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and the performance of
accounts, which may assist Xxxxxxxxx Xxxxxx Fixed Income in managing the
assets of the Fund or other accounts for which Xxxxxxxxx Xxxxxx Fixed Income
or any affiliate of Xxxxxxxxx Xxxxxx Fixed Income exercises investment
discretion (as that term is defined in Section 3(a)(35) of the 1934 Act).
Xxxxxxxxx Xxxxxx Fixed Income shall have discretion to cause the Fund to pay
such brokers or dealers a commission for effecting a portfolio transaction
for the Fund that is in excess of the amount of commission another broker or
dealer adequately qualified to effect such transaction would have charged
for effecting that transaction, if Xxxxxxxxx Xxxxxx Fixed Income determines,
in good faith, that such commission is reasonable in relation to the value
of the brokerage and/or research services provided by such broker or dealer
viewed in terms of either that particular transaction or the overall
responsibilities of Xxxxxxxxx Xxxxxx Fixed Income or its affiliates with
respect to accounts as to which they exercise investment discretion. In
reaching such determination, Xxxxxxxxx Xxxxxx Fixed Income will not be
required to place or attempt to place a specific dollar value on the
brokerage or research services provided or being provided by such broker
or dealer. In demonstrating that such determinations were made in good
faith, Xxxxxxxxx Xxxxxx Fixed Income shall be prepared to show that all
commissions were allocated for purposes contemplated by this Agreement and
that the total commissions paid by the Fund over a representative period
selected by the Board were reasonable in relation to the benefits to the
Fund.
5.3 Xxxxxxxxx Xxxxxx Fixed Income shall have no duty or obligation to seek
advance competitive bidding for the most favorable commission rate
applicable to any particular portfolio transactions or to select any broker
or dealer on the basis of its purported or posted commission rate but will
endeavor to be aware of the current level of the charges of eligible
brokers or dealers and to minimize the expense incurred by the Fund for
effecting its portfolio transactions to the extent consistent with the
interests and policies of the Fund.
5.4 The Fund recognizes that a broker or dealer affiliated with Xxxxxxxxx
Xxxxxx or Xxxxxxxxx Xxxxxx Fixed Income (i) may act as one of the regular
brokers for the Fund so long as it is lawful for it so to act; (ii) may be
a major recipient of brokerage commissions paid by the Fund; and (iii) may
effect portfolio transactions for the Fund only if the commissions, fees or
other remuneration received or to be received by it are determined in
accordance with procedures contemplated by any rule, regulation or order
adopted under the Investment Company Act to be within the permissible level
of such commissions.
5.5 Subject to the foregoing provisions of this paragraph 5, Xxxxxxxxx
Xxxxxx Fixed Income may also consider sales of Interests as a factor in the
selection of brokers or dealers for its portfolio transactions.
6. BOOKS AND RECORDS.
Xxxxxxxxx Xxxxxx Fixed Xxxxxx agrees that all records that it maintains for
the Fund, on behalf of Xxxxxxxxx Xxxxxx, are the property of the Fund and
further agrees to surrender promptly to the Fund or to Xxxxxxxxx Xxxxxx any
of such records upon request. Xxxxxxxxx Xxxxxx Fixed Income further agrees
to preserve for the periods prescribed by applicable laws, rules and
regulations all records required to be maintained by Xxxxxxxxx Xxxxxx Fixed
Income on behalf of Xxxxxxxxx Xxxxxx under such applicable laws, rules and
regulations, or such longer period as Xxxxxxxxx Xxxxxx may reasonably
request from time to time.
7. DURATION.
This Agreement will take effect on the date first set forth above. Unless
earlier terminated pursuant to paragraph 12 hereof, this Agreement shall
remain in effect through October 31, 2010 and thereafter shall continue in
effect from year to year, so long as such continuance shall be approved at
least annually by the Board or by the holders of a majority of the
outstanding voting securities of the Fund (as defined in the Investment
Company Act), subject in such case to the approval by a vote of the majority
of the Managers who are not parties to this Agreement or interested persons
(as defined in the Investment Company Act and the rules thereunder) of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
8. DISCLAIMER OF SHAREHOLDER OR TRUSTEE LIABILITY.
8.1 Xxxxxxxxx Xxxxxx Fixed Income understands and agrees that the
obligations of the Fund under this Agreement are not binding upon any
Shareholder or Trustee of the Fund personally, but bind only the Fund and
the Funds property.
8.2 Xxxxxxxxx Xxxxxx Fixed Income acknowledges that it has notice of the
provisions of the Declaration of Trust, disclaiming Shareholder and Trustee
liability for acts and obligations of the Fund.
9. EXCULPATION; INDEMNIFICATION.
9.1 Xxxxxxxxx Xxxxxx Fixed Income shall not be liable to the Fund or
Xxxxxxxxx Xxxxxx for any error of judgment or mistake of law or for any loss
suffered by the Fund or Xxxxxxxxx Xxxxxx in connection with the performance
by Xxxxxxxxx Xxxxxx Fixed Income of its duties under this Agreement, except
a loss resulting from a breach of fiduciary duty with respect to the receipt
of compensation for services, or a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of Xxxxxxxxx Xxxxxx Fixed Income
or any of its officers, directors, employees or agents (collectively, the
Affiliates) in the performance of their duties under this Agreement, or from
reckless disregard by Xxxxxxxxx Xxxxxx Fixed Income or its Affiliates of
their obligations or duties under this Agreement.
9.2 The Fund shall indemnify and hold harmless Xxxxxxxxx Xxxxxx Fixed
Income and its Affiliates (each, an Indemnified Person) against any and all
losses, claims, damages or liabilities, joint or several, including, without
limitation, reasonable attorneys fees and disbursements, reasonably incurred
by them in connection with, or resulting from, their actions or inactions in
connection with the performance of their duties under this Agreement, except
those losses, claims, damages or liabilities resulting from willful
misfeasance, bad faith or gross negligence in the performance by the
Indemnified Persons of their duties under this Agreement, or the reckless
disregard of their obligations or duties under this Agreement.
9.3 Notwithstanding any of the foregoing to the contrary, the provisions of
this paragraph 9 shall not be construed so as to relieve the Indemnified
Person of, or provide indemnification with respect to, any liability
(including liability under Federal securities laws, which under certain
circumstances, impose liability even on persons who act in good faith) to
the extent (but only to the extent) that such liability may not be waived,
limited or modified under applicable law or that such indemnification would
be in violation of applicable law, but shall be construed so as to
effectuate the provisions of this paragraph 9 to the fullest extent
permitted by law.
10. REPRESENTATIONS, WARRANTIES AND COVENANTS.
10.1 Representations, Warranties and Covenants of Xxxxxxxxx Xxxxxx Fixed
Income.
10.1.1 Xxxxxxxxx Xxxxxx Fixed Income is now, and will continue to be, a
limited liability company duly formed and validly existing under the laws of
the State of Delaware and is fully authorized to enter into this Agreement
and carry out its duties and obligations hereunder.
10.1.2 Xxxxxxxxx Xxxxxx Fixed Income is registered as an investment adviser
with the Securities and Exchange Commission (SEC) under the Investment
Advisers Act and maintains all other required registrations and/or licenses.
Xxxxxxxxx Xxxxxx Fixed Income shall maintain any and all required
registrations and licenses in effect at all times during the term of this
Agreement.
10.2 Other Covenants. Xxxxxxxxx Xxxxxx Fixed Income further agrees that:
10.2.1 as required by applicable laws and regulations, it will maintain
books and records with respect to the Funds securities transactions and it
will furnish to Xxxxxxxxx Xxxxxx and to the Board such periodic and special
reports as Xxxxxxxxx Xxxxxx or the Board may reasonably request; and
10.2.2 it will treat confidentially and as proprietary information of the
Fund all records and other information relative to the Fund, and will not
use records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to
and approval in writing by Xxxxxxxxx Xxxxxx or the Fund or when so
requested by Xxxxxxxxx Xxxxxx or the Fund, or required by law or
regulation.
10.3 Representations, Warranties and Covenants of Xxxxxxxxx Xxxxxx.
10.3.1 Xxxxxxxxx Xxxxxx is now, and will continue to be, a corporation duly
organized and validly existing under the laws of the State of Delaware and
is fully authorized to enter into this Agreement and to carry out its duties
and obligations hereunder.
10.3.2 Xxxxxxxxx Xxxxxx is registered as an investment adviser with the SEC
under the Investment Advisers Act. Xxxxxxxxx Xxxxxx shall maintain such
registration in effect at all times during the term of this Agreement.
11. ASSIGNMENT OR AMENDMENT.
Any amendment to this Agreement shall be in writing and shall be subject
to: (a) the approval of the Board, including the vote of a majority of the
Trustees who are not interested persons, as defined by the Investment
Company Act, of the Fund or any party to this Agreement; and (b) the
affirmative vote or written consent of the holders of a majority of the
outstanding voting securities of the Fund, as defined by the Investment
Company Act, to the extent such a vote of security holders is required by
the Investment Company Act. This Agreement shall automatically and
immediately terminate in the event of its assignment, as defined in the
Investment Company Act.
12. TERMINATION.
This Agreement may be terminated (a) by Xxxxxxxxx Xxxxxx Fixed Income at
any time without penalty upon sixty (60) days written notice to Xxxxxxxxx
Xxxxxx and the Fund (which notice may be waived by the Fund); (b) by
Xxxxxxxxx Xxxxxx at any time without penalty upon sixty (60) days written
notice to Xxxxxxxxx Xxxxxx Fixed Income and the Fund (which notice may be
waived by the Fund) or (c) by the Fund at any time without penalty upon
sixty (60) days written notice to Xxxxxxxxx Xxxxxx Fixed Income or Xxxxxxxxx
Xxxxxx, provided that such termination by the Fund shall be directed or
approved by the Board or by the vote of the holders of a majority of the
outstanding voting securities of the Fund, as defined by the Investment
Company Act.
13. NOTICES.
Any notice or other communication required to be or that may be given
hereunder shall be in writing and shall be delivered personally, telecopied,
sent by certified, registered or express mail, postage prepaid or sent by
national next-day delivery service and shall be deemed given when so
delivered personally or telecopied, or if mailed, two days after the date of
mailing, or if by next-day delivery service, on the business day following
delivery thereto:
If to Xxxxxxxxx Xxxxxx, to:
Xxxxxxxxx Xxxxxx Management LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention:
Telecopier:
If to Xxxxxxxxx Xxxxxx Fixed Income, to:
Xxxxxxxxx Xxxxxx Fixed Income LLC
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention:
Telecopier:
14. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of New York
applicable to agreements made and to be performed entirely within the State
of New York (without regard to any conflicts of law principles thereof).
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
Investment Company Act shall be resolved by reference to such term or
provision of the Investment Company Act and to interpretations 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 SEC
issued pursuant to the Investment Company Act. In addition, where the effect
of a requirement of the Investment Company Act reflected in any provision of
this Agreement is revised by rule, regulation or order of the Commission,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
15. DEFINITIONS.
The terms and provisions of the Agreement shall be interpreted and defined
in a manner consistent with the terms and provisions of the Investment
Company Act and the rules thereunder.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
XXXXXXXXX XXXXXX MANAGEMENT LLC
By: /s/ Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: President
XXXXXXXXX XXXXXX FIXED INCOME LLC
By: /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: Senior Vice President
The provisions of Section 9 are hereby agreed to and accepted.
XXXXXXXXX XXXXXX HIGH YIELD STRATEGIES FUND
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President and Secretary
