Exhibit 4(I)
SUB-ADVISORY AGREEMENT
XXXXXXX CAPITAL MANAGEMENT, INC.
World Trade Center-Baltimore
28th Floor
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
This will confirm the agreement between XXXXXXX CAPITAL
MANAGEMENT, INC. (the "Investment Advisor") and you as follows:
1. GENERAL. The Xxxxxxx Funds, Inc., a Maryland corporation
(the "Corporation") is an open-end management investment company which has
multiple investment portfolios including, the DEM Multi-Manager Bond Fund (the
"Fund"). The Corporation proposes to engage in the business of investing and
reinvesting the assets of the Fund in the manner and in accordance with the
investment objectives, policies and limitations specified in the Corporation's
Prospectus and Statement of Additional Information (the "Prospectus") included
in the Corporation's Registration Statement pertaining to the Fund, as amended
and/or supplemented from time to time (the "Registration Statement"), filed
under the Investment Company Act of 1940, as amended (the "1940 Act"), and the
Securities Act of 1933, as amended. Copies of the Prospectus have been furnished
to you. Any amendments to the Prospectus shall be furnished to you promptly.
2. SUB-ADVISORY SERVICES. Subject to the supervision and
approval of the Corporation's Board of Directors and the Investment Advisor you
will provide investment management of that portion of the Fund's portfolio
allocated to you by the Investment Advisor in accordance with the Fund's
investment objectives, policies and limitations as stated in the Prospectus as
from time to time in effect. In connection therewith, you will obtain and
provide investment research and will supervise the Fund's investments and
conduct a continuous program of investment, evaluation and, if appropriate, sale
and reinvestment of the Fund's assets. You will place orders for the purchase
and sale of portfolio securities and will solicit brokers to execute
transactions, including The Xxxxxxx Co. or a broker that may be affiliated with
you or another sub- advisor of the Fund, in accordance with the policies and
restrictions regarding brokerage allocations of the Fund and the Corporation.
You will furnish to the Corporation and/or the Investment Advisor such
statistical information with respect to the investments which the Fund may hold
or contemplate purchasing as the Corporation or the Investment Advisor may
reasonably request. You acknowledge that this agreement does not require the
Corporation or the Investment Advisor to allocate any specific percentage of the
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Fund's assets to you at any time or for any specific period. You further
acknowledge that the Corporation or the Investment Advisor may at any time or
from time to time allocate you no assets at all.
3. ASSISTANCE. You may employ or contract with other persons
to assist you in the performance of this Agreement. The fees or other
compensation of such persons shall be paid by you and no obligation may be
incurred on behalf of the Corporation or the Investment Advisor to any such
person.
4. RECORD KEEPING AND OTHER INFORMATION. You will create and
maintain all records required of you pursuant to your duties hereunder in
accordance with all applicable laws, rules and regulations, including records
required by Section 31(a) of the 1940 Act. All such records will be the property
of the Corporation and will be available upon request of the Corporation for
inspection, copying and use by the Corporation and will be surrendered to the
Corporation upon demand of the Corporation. Where applicable, such records will
be maintained by you for the periods and in the places required by Rule 31a-2
under the 1940 Act. Upon termination of this Agreement, you will promptly
surrender all such records to the Corporation or such person as the Corporation
may designate.
5. FEES. In consideration of the sub-advisory services
rendered pursuant to this Agreement, the Investment Advisor will pay you on the
first business day of each month a fee at the annual rate of [ ]* of the
value of that portion of the Fund's average weekly net assets that is allocated
to you by the Investment Advisor during the preceding month. Net asset value
shall be computed in the manner, on such days and at such time or times as
described in the Prospectus from time to time. The fee for the period from the
date of the allocation of a portion of the Fund's portfolio to you to the end of
the first month thereafter shall be pro-rated according to the proportion which
such period bears to the full monthly period, and upon any termination of this
Agreement or if your allocation of the Fund's portfolio is reduced to nothing
before the end of any month, the fee for such part of a month shall be pro-rated
according to the proportion which such period bears to the full monthly period.
6. EXPENSES:
You will bear all expenses in connection with the performance
of your services under this Agreement.
7. LIABILITY. You shall exercise your best judgment in
rendering the services to be provided to the Fund. The Investment Advisor agrees
as an inducement to you and to others who may assist you in providing services
to the Fund that you and such other persons shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Investment Advisor,
the Fund or the Corporation, and the Investment Advisor agrees to indemnify and
hold harmless you and such other persons against and
* Fee information redacted pursuant to Order under Section 6(c) of the
Investment Company Act, Rule 18f-2 under the Act, and certain disclosure
requirements, Investment Company Act Release No. 42002, September 8, 1999
Page 3
from any claims, liabilities, actions, suits, proceedings, judgments or damages
(and expenses incurred in connection therewith, including the reasonable cost of
investigating or defending same, including, but not limited to attorneys' fees)
arising out of any such error of judgment or mistake of law or loss; provided,
however, that the Investment Advisor's obligation with respect to such claims,
liabilities, actions, suits, proceedings, judgments or damages (and expenses
incurred in connection therewith, including the reasonable cost of investigating
or defending same, including, but not limited to attorneys' fees) arising out of
any such error of judgment or mistake of law or loss shall be limited to the
amount of "assets belonging to" (as such expression is defined in the
Corporation's charter) the Fund and further provided that nothing herein shall
be deemed to protect or purport to protect you or any other such person against
any liability to the Corporation, its security holders or the Investment Advisor
to which you or they would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder, or by reason of reckless disregard of the obligations and duties
hereunder.
8. OTHER ACCOUNTS. The Corporation and the Investment Advisor
understand that you and other persons with whom you contract to provide the
services hereunder may from time to time act as investment advisor to one or
more other investment companies and fiduciary or other managed accounts, and the
Corporation and the Investment Advisor have no objection to your or their so
acting. When purchase or sale of securities of the same issuer is suitable for
the investment objectives of two or more companies or accounts managed by you or
such other persons which have available funds for investment, the available
securities will be allocated in a manner believed by you and such other persons
to be equitable to the Fund and any other account. It is recognized that in some
cases this procedure may adversely affect the price paid or received by the Fund
or the size of the position obtainable for or disposed of by the Fund.
In addition, it is understood that you and the persons with
whom you contract to assist in the performance of your duties hereunder will not
devote their full time to such service and nothing contained herein shall be
deemed to limit or restrict your or their right to engage in and devote time and
attention to similar or other businesses.
9. TERM. This Agreement shall continue until December 29, 1999
and thereafter shall continue automatically for successive annual periods ending
on the anniversary of such date, provided such continuance is specifically
approved at least annually by the Corporation's Board of Directors or a vote of
the lesser of (a) 67% of the shares of the Fund represented at a meeting if
holders of more than 50% of the outstanding shares of the Fund are present in
person or by proxy or (b) more than 50% of the outstanding shares of the Fund,
provided that in either event its continuance also is approved by a majority of
the Corporation's Directors 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' notice, by the Investment Advisor, by you, by the
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Corporation's Board of Directors or by vote of the lesser of (a) 67% of the
shares of the Fund represented at a meeting if holders of more than 50% of the
outstanding shares of the Fund are present in person or by proxy or (b) more
than 50% of the outstanding shares of the Fund. This Agreement will terminate
automatically in the event of its assignment (as defined in the 1940 Act). This
Agreement will terminate immediately and automatically in the event of the
termination of the Investment Advisory and Administrative Services Agreement
between the Investment Advisor and the Corporation, on behalf of the Fund.
If the foregoing is in accordance with your understanding,
will you kindly so indicate by signing and returning to us the enclosed copy
hereof.
Very truly yours,
XXXXXXX CAPITAL MANAGEMENT, INC.
By:
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Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President
Accepted:
By:
------------------------------
Name:
Title:
APPENDIX 1
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Name and Address of Sub-Advisor Date of Agreement
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Xxxxxx Capital Management, Inc. December 14, 1998
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
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MDL Capital Management, Inc. December 14, 1998
000 Xxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
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NCM Capital Management Group, Inc. December 14, 1998
000 Xxxx Xxxx Xxxxxx
Xxxxxx, XX 00000-0000
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Seix Investment Advisors Inc. December 14, 1998
000 Xxxx Xxxxxxxxx
Xxxxxxxxx Xxxx, XX 00000
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