SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT ("Agreement") is made this 1st day of
December, 2005, by and between Xxxxx Xxxxxx Fund Management LLC,
a Delaware limited liability company (the "Manager") and Citigroup
Asset Management Limited, a corporation organized under the laws
of England and Wales (the "Subadviser").
WHEREAS, the Manager has been retained by Xxxxx Xxxxxx Investment
Funds Inc. (the "Corporation"), a registered management investment
company under the Investment Company Act of 1940, as amended (the
"1940 Act") to provide investment advisory, management, and
administrative services to the Corporation with respect to a
series of the Corporation;
WHEREAS, the Manager wishes to engage the Subadviser to provide
certain investment advisory services to the Corporation with
respect to the series of the Corporation designated in Schedule
A annexed hereto (the "Fund") and Subadviser is willing to furnish
such services on the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed as follows:
1. In accordance with and subject to the Management Agreement
between the Corporation and the Manager with respect to the Fund
(the "Management Agreement"), the Manager hereby appoints the
Subadviser to act as Subadviser with respect to the Fund for the
period and on the terms set forth in this Agreement. The Subadviser
accepts such appointment and agrees to render the services herein
set forth, for the compensation herein provided.
2. The Manager shall cause the Subadviser to be kept fully informed
at all times with regard to the securities owned by the Fund, its
funds available, or to become available, for investment, and
generally as to the condition of the Fund's affairs. Manager shall
furnish the Subadviser with such other documents and information
with regard to the Fund's affairs as the Subadviser may from time
to time reasonably request.
3. (a) Subject to the supervision of the Corporation's Board of
Directors (the "Board") and the Manager, Subadviser shall
regularly provide the Fund with respect to such portion of the
Fund's assets as shall be allocated to the Subadviser by the
Manager from time to time (the "Allocated Assets") with investment
research, advice, management and supervision and shall furnish a
continuous investment program for the Allocated Assets consistent
with the Fund's investment objectives, policies and restrictions,
as stated in the Fund's current Prospectus and Statement of
Additional Information. The Subadviser shall, with respect to the
Allocated Assets, determine from time to time what securities and
other investments will be purchased, retained, sold or exchanged
by the Fund and what portion of the Allocated Assets will be held
in the various securities and other investments in which the Fund
invests, and shall implement those decisions, all subject to the
provisions of the Corporation's Corporation's Articles of
Incorporation and By-Laws (collectively, the "Governing Documents"),
the 1940 Act, and the applicable rules and regulations promulgated
thereunder by the Securities and Exchange Commission (the "SEC")
and interpretive guidance issued thereunder by the SEC staff and
any other applicable federal and state law, as well as the
investment objectives, policies and restrictions of the Fund
referred to above, and any other specific policies adopted by the
Board and disclosed to the Subadviser. The Subadviser is
authorized as the agent of the Corporation to give instructions
with respect to the Allocated Assets to the custodian of the Fund
as to deliveries of securities and other investments and payments
of cash for the account of the Fund. Subject to applicable
provisions of the 1940 Act, the investment program to be provided
hereunder may entail the investment of all or substantially all
of the assets of a Fund in one or more investment companies. The
Subadviser will place orders pursuant to its investment
determinations for the Fund either directly with the issuer or
with any broker or dealer, foreign currency dealer, futures
commission merchant or others selected by it. In connection with
the selection of such brokers or dealers and the placing of such
orders, subject to applicable law, brokers or dealers may be
selected who also provide brokerage and research services (as
those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to the Funds and/or the other accounts over
which the Subadviser or its affiliates exercise investment
discretion. The Subadviser is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for a Fund which is in excess of
the amount of commission another broker or dealer would have
charged for effecting that transaction if the Subadviser determines
in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services
provided by such broker or dealer. This determination may be viewed
in terms of either that particular transaction or the overall
responsibilities which the Subadviser and its affiliates have with
respect to accounts over which they exercise investment discretion.
The Board may adopt policies and procedures that modify and restrict
the Subadviser's authority regarding the execution of the Fund's
portfolio transactions provided herein. The Subadviser shall
exercise voting rights, rights to consent to corporate action and
any other rights pertaining to the Allocated Assets subject to such
direction as the Board may provide, and shall perform such other
functions of investment management and supervision as may be
directed by the Board.
(b) The Fund hereby authorizes any entity or person associated
with the Subadviser which is a member of a national securities
exchange to effect any transaction on the exchange for the account
of the Fund which is permitted by Section 11(a) of the Securities
Exchange Act of 1934, as amended, and Rule 11a2-2(T) thereunder,
and the Fund hereby consents to the retention of compensation for
such transactions in accordance with Rule 11a2-2(T)(a)(2)(iv).
Notwithstanding the foregoing, the Subadviser agrees that it will
not deal with itself, or with members of the Board or any principal
underwriter of the Fund, as principals or agents in making purchases
or sales of securities or other property for the account of a Fund,
nor will it purchase any securities from an underwriting or selling
group in which the Subadviser or its affiliates is participating, or
arrange for purchases and sales of securities between a Fund and
another account advised by the Subadviser or its affiliates, except
in each case as permitted by the 1940 Act and in accordance with
such policies and procedures as may be adopted by a Fund from time
to time, and will comply with all other provisions of the Governing
Documents and the Fund's then-current Prospectus and Statement of
Additional Information relative to the Subadviser and its directors
and officers.
4. The Subadviser may delegate to any other one or more companies
that the Subadviser controls, is controlled by, or is under common
control with, or to specified employees of any such companies,
certain of the Subadviser's duties under this Agreement, provided
in each case the Subadviser will supervise the activities of each
such entity or employees thereof, that such delegation will not
relieve the Subadviser of any of its duties or obligations under
this Agreement and provided further that any such arrangements are
entered into in accordance with all applicable requirements of the
1940 Act.
5. The Subadviser agrees that it will keep records relating to its
services hereunder in accordance with all applicable laws, and in
compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Subadviser hereby agrees that any records that it maintains for
the Fund are the property of the Fund, and further agrees to
surrender promptly to the Fund any of such records upon the Fund's
request. The Subadviser further agrees to arrange for the
preservation of the records required to be maintained by Rule 31a-1
under the 1940 Act for the periods prescribed by Rule 31a-2 under
the 1940 Act.
6. (a) The Subadviser, at its expense, shall supply the Board, the
officers of the Corporation, and the Manager with all information
and reports reasonably required by them and reasonably available to
the Subadviser relating to the services provided by the Subadviser
hereunder.
(b) The Subadviser shall bear all expenses, and shall furnish
all necessary services, facilities and personnel, in connection
with its responsibilities under this Agreement. Other than as herein
specifically indicated, the Subadviser shall not be responsible for
the Fund's expenses, including, without limitation, advisory fees;
distribution fees; interest; taxes; governmental fees; voluntary
assessments and other expenses incurred in connection with
membership in investment company organizations; organization costs
of the Fund; the cost (including brokerage commissions, transaction
fees or charges, if any) in connection with the purchase or sale
of the Fund's securities and other investments and any losses in
connection therewith; fees and expenses of custodians, transfer
agents, registrars, independent pricing vendors or other agents;
legal expenses; loan commitment fees; expenses relating to share
certificates; expenses relating to the issuing and redemption or
repurchase of the Fund's shares and servicing shareholder accounts;
expenses of registering and qualifying the Fund's shares for sale
under applicable federal and state law; expenses of preparing,
setting in print, printing and distributing prospectuses and
statements of additional information and any supplements thereto,
reports, proxy statements, notices and dividends to the Fund's
shareholders; costs of stationery; website costs; costs of meetings
of the Board or any committee thereof, meetings of shareholders and
other meetings of the Fund; Board fees; audit fees; travel expenses
of officers, members of the Board and employees of the Fund, if any;
and the Fund's pro rata portion of premiums on any fidelity bond and
other insurance covering the Fund and its officers, Board members
and employees; litigation expenses and any non-recurring or
extraordinary expenses as may arise, including, without limitation,
those relating to actions, suits or proceedings to which the Fund is
a party and the legal obligation which the Fund may have to indemnify
the Fund's Board members and officers with respect thereto.
7. No member of the Board, officer or employee of the Corporation or
Fund shall receive from the Corporation or Fund any salary or other
compensation as such member of the Board, officer or employee while
he is at the same time a director, officer, or employee of the
ubadviser or any affiliated company of the Subadviser, except as the
Board may decide. This paragraph shall not apply to Board members,
executive committee members, consultants and other persons who are
not regular members of the Subadviser's or any affiliated company's
staff.
8. As compensation for the services performed by the Subadviser,
including the services of any consultants retained by the Subadviser,
the Manager shall pay the Subadviser out of the management fee it
receives with respect to the Fund, and only to the extent thereof,
as promptly as possible after the last day of each month, a fee,
computed daily at an annual rate set forth on Schedule A annexed
hereto. The first payment of the fee shall be made as promptly as
possible at the end of the month succeeding the effective date of
this Agreement, and shall constitute a full payment of the fee due
the Subadviser for all services prior to that date. If this Agreement
is terminated as of any date not the last day of a month, such fee
shall be paid as promptly as possible after such date of termination,
shall be based on the average daily net assets of the Fund or, if
less, the portion thereof comprising the Allocated Assets in that
period from the beginning of such month to such date of termination,
and shall be that proportion of such average daily net assets as the
number of business days in such period bears to the number of
business days in such month. The average daily net assets of the Fund
or the portion thereof comprising the Allocated Assets shall in all
cases be based only on business days and be computed as of the time
of the regular close of business of the New York Stock Exchange, or
such other time as may be determined by the Board.
9. The Subadviser assumes no responsibility under this Agreement other
than to render the services called for hereunder, in good faith, and
shall not be liable for any error of judgment or mistake of law, or
for any loss arising out of any investment or for any act or omission
in the execution of securities transactions for a Fund, provided that
nothing in this Agreement shall protect the Subadviser against any
liability to the Manager or the Fund to which the Subadviser would
otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties hereunder. As used
in this Section 9, the term "Subadviser" shall include any affiliates
of the Subadviser performing services for the Corporation or the Fund
contemplated hereby and the partners, shareholders, directors, officers
and employees of the Subadviser and such affiliates.
10. Nothing in this Agreement shall limit or restrict the right of any
director, officer, or employee of the Subadviser who may also be a
Board member, officer, or employee of the Corporation or the Fund, to
engage in any other business or to devote his time and attention in
part to the management or other aspects of any other business, whether
of a similar nature or a dissimilar nature, nor to limit or restrict
the right of the Subadviser to engage in any other business or to
render services of any kind, including investment advisory and
management services, to any other fund, firm, individual or
association. If the purchase or sale of securities consistent with
the investment policies of a Fund or one or more other accounts of
the Subadviser is considered at or about the same time, transactions
in such securities will be allocated among the accounts in a manner
deemed equitable by the Subadviser. Such transactions may be combined,
in accordance with applicable laws and regulations, and consistent
with the Subadviser's policies and procedures as presented to the
Board from time to time.
11. For the purposes of this Agreement, the Fund's "net assets"
shall be determined as provided in the Fund's then-current Prospectus
and Statement of Additional Information and the terms "assignment,
" "interested person," and "majority of the outstanding voting
securities" shall have the meanings given to them by Section 2(a)
of the 1940 Act, subject to such exemptions as may be granted by
the SEC by any rule, regulation or order.
12. This Agreement will become effective with respect to the Fund
on the date set forth opposite the Fund's name on Schedule A annexed
hereto, provided that it shall have been approved by the Corporation's
Board and, if so required by the 1940 Act, by the shareholders of
the Fund in accordance with the requirements of the 1940 Act and,
unless sooner terminated as provided herein, will continue in effect
for two years from the above written date. Thereafter, if not
terminated, this Agreement shall continue in effect with respect to
the Fund, so long as such continuance is specifically approved at
least annually (i) by the Board or (ii) by a vote of a majority of
the outstanding voting securities of the Fund, provided that in
either event the continuance is also approved by a majority of the
Board members who are not interested persons of any party to this
Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval.
13. This Agreement is terminable with respect to the Fund without
penalty by the Board or by vote of a majority of the outstanding
voting securities of the Fund, in each case on not more than 60
days' nor less than 30 days' written notice to the Subadviser, or
by the Subadviser upon not less than 90 days' written notice to the
Fund and the Manager, and will be terminated upon the mutual written
consent of the Manager and the Subadviser. This Agreement shall
terminate automatically in the event of its assignment by the
Subadviser and shall not be assignable by the Manager without
the consent of the Subadviser.
14. The Subadviser agrees that for any claim by it against the
Fund in connection with this Agreement or the services rendered
under this Agreement, it shall look only to assets of the Fund for
satisfaction and that it shall have no claim against the assets of
any other portfolios of the Xxxxx Xxxxxx Investment Funds Inc.
Corporation.
15. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no material
amendment of the Agreement shall be effective until approved, if
so required by the 1940 Act, by vote of the holders of a majority
of the Fund's outstanding voting securities.
16. This Agreement, and any supplemental terms contained on Annex
I hereto, if applicable, embodies the entire agreement and
understanding between the parties hereto, and supersedes all
prior agreements and understandings relating to the subject matter
hereof. Should any part of this Agreement be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall
be binding on and shall inure to the benefit of the parties hereto
and their respective successors.
17. This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of
New York.
[signature page to follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their officers thereunto duly authorized.
XXXXX XXXXXX FUND MANAGEMENT LLC
By:_______________________________
Name: Xxxxxx Xxxxxxx
Title: Director
CITIGROUP ASSET MANAGEMENT LIMITED
By:_______________________________
Name:
Title:
The foregoing is acknowledged:
The undersigned officer of the Corporation has executed this Agreement
not individually but in his/her capacity as an officer of the
Corporation. The Corporation does not hereby undertake, on behalf
of the Fund or otherwise, any obligation to the Subadviser.
XXXXX XXXXXX INVESTMENT FUNDS INC.
By:_______________________________
Name: R. Xxx Xxxxxx
Title: Chairman
ANNEX I
This Annex I forms a part of the Subadvisory Agreement dated as
of December 1, 2005 by and between Xxxxx Xxxxxx Fund Management
LLC, a Delaware limited liability company, and Citigroup Asset
Management Limited (the "Subadviser"), an entity authorized and
regulated in the United Kingdom by the Financial Services Authority
(the "FSA").
1. The Subadviser represents, warrants and covenants that it is
authorized and regulated by the FSA.
2. The Subadviser has classified the Corporation as an Intermediate
Customer as defined by the FSA Rules.
SCHEDULE A
Xxxxx Xxxxxx Real Return Strategy Fund
Fee:
The following percentage of the Fund's average daily net assets:
0.45
