INTERIM SUB-INVESTMENT ADVISORY AGREEMENT
XXXXX XXXXXX INCOME FUNDS
(Xxxxx Xxxxxx Premium Total Return Fund)
April 23, 1999
Salomon Brothers Asset Management, Inc.
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Xxxxx Xxxxxx Income Funds, a trust organized under
the laws of the of the Commonwealth of Massachusetts (the
"Trust"), and SSBC Fund Management Inc. (the "Adviser")
each confirms its agreement with Salomon Brothers Asset
Management, Inc. (the "Interim Sub-Adviser ") as follows:
1. Investment Description; Appointment
The Trust desires to employ its capital relating to
Xxxxx Xxxxxx Premium Total Return Fund ("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 (the "Prospectus") and the Statement of
Additional Information (the "Statement") filed with the
Securities and Exchange Commission as part of the Trust'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
Trust (the "Board"). Copies of the Prospectus, the
Statement and the Master Trust Agreement have been or will
be submitted to the Interim Sub-Adviser. The Trust agrees
to provide copies of all amendments to the Prospectus, the
Statement and the Master Trust Agreement to the Interim
Sub-Adviser on an on-going basis. The Trust employs the
Adviser as the investment adviser to the Fund, and the
Trust and the Adviser desire to employ and hereby appoint
the Interim Sub-Adviser to act as the sub-investment
adviser to the Fund for a period of 120 days to commence on
April 26, 1999. The Interim Advisor accepts the appointment
and agrees to furnish the services for the compensation set
forth below.
2. Services as Interim Sub-Investment Adviser
Subject to the supervision, direction and approval
of the Board of the Trust and the Adviser, the Interim
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 Interim 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 Interim Sub-Adviser
will seek the best overall terms available. In assessing
the best overall terms available for any transaction, the
Interim 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 Interim 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 Interim Sub-Adviser or its
affiliates exercise investment discretion.
4. Information Provided to the Trust
The Interim Sub-Adviser will keep the Adviser and the
Trust informed of developments materially affecting the
Fund and will, on its own initiative, furnish the Adviser
and the Trust from time to time with whatever information
Interim Sub-Adviser believes is appropriate for this
purpose.
5. Standard of Care
The Interim Sub-Adviser shall exercise its best
judgment in rendering the services listed in paragraphs 2
and 3 above. The Interim 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 Interim Sub-Adviser against any
liability to the Adviser, the Trust or the shareholders of
the Fund to which the Interim 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 Interim Sub-Adviser's reckless
disregard of its obligations and duties under this
Agreement.
6. Compensation
In consideration of the services rendered pursuant to
this Agreement, the Adviser will pay the Interim Sub-
Adviser on the first business day of each month a fee for
the previous month at an annual rate of 0.15% of 1.00% of
the Fund's average daily net assets such payments to
commence on June 14, 1999. The fee for the period from
June 14, 1999, to the end of that month 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 Interim 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 Interim 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 paid to the Advisor,
administration fees; fees for necessary professional
services and brokerage services; fees for any pricing
service; the costs of regulatory compliance; and costs
associated with maintaining the Trust's legal existence and
shareholder relations.
8. Services to Other Companies or Accounts
The Trust understands that the Interim Sub-Adviser
now acts, will continue to act and may act in the future as
investment adviser to fiduciary and other managed accounts,
and as investment adviser to other investment companies,
and the Trust has no objection to the Interim Sub-Adviser's
so acting, provided that whenever the Fund and one or more
other investment companies advised by the Interim 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
trust. The Trust recognizes that in some cases this
procedure may adversely affect the size of the position
obtainable for the Fund. In addition, the Trust
understands that the persons employed by the Interim Sub-
Adviser to assist in the performance of the Interim 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 Interim Sub-Adviser or any affiliate of the Interim
Sub-Adviser to engage in and devote time and attention to
other businesses or to render services of whatever kind or
nature.
9. Term of Agreement
This Interim Agreement shall become effective as of
April 26, 1999 (the " Effective Date") and continue for a
period of 120 days or upon the approval of the interim sub-
advisor as the sub-advisor by a vote of a "majority" (as
that term is defined in the Investment Trust Act of 1940,
as amended (the "1940 Act") of the Fund's outstanding
voting securities. This Agreement is terminable, without
penalty, on 60 days' written notice, by the Board of the
Trust or by vote of holders of a majority of the Fund's
shares, or upon 90 days' written notice, by the Interim
Sub-Adviser. This Agreement will also terminate
automatically in the event of its assignment (as defined in
the 1940 Act and the rules thereunder).
10. Representation by the Trust
The Trust 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.
11. Limitation of Liability
The Trust the Adviser and the Interim Sub-Adviser
agree that the obligations of the Trust 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 Trust,
individually, but are binding only upon the assets and
property of the Fund and not upon the assets and property
of any other portfolio of theTrust. The execution and
delivery of this Agreement have been authorized by the
Board and signed by an authorized officer of the Trust,
acting as such, and neither such authorization by the such
members of the Board 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
Xxxxx Xxxxxx Premium
Total Return Fund
By:
_______________________________
Name: Xxxxx X.
XxXxxxxx
Title: Chairman of
the Board
SSBC Fund Management
Inc.
By:
_______________________________
Name: Xxxxx X.
XxXxxxxx
Title: Chairman of
the Board
Accepted:
Salomon Brothers Asset Management, Inc.
By: ___________________________________
Name:
Title:
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