SM&R INVESTMENTS, INC.
SUB-ADVISORY AGREEMENT
(SM&R Xxxxx Funds)
AGREEMENT, made as of September 1, 2000, by and between Securities
Management and Research, Inc. (herein called the "Investment Adviser"), a
Florida corporation and Xxxx Xxxxx Management, Inc. (herein called the
"Investment Subadviser"), a New York corporation.
WHEREAS, pursuant to an Investment Advisory Agreement (the "SM&R
Advisory Agreement") between the Investment Adviser and SM&R Investments, Inc.
(the "Fund"), an open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act") Investment Adviser
is the investment manager for the Fund; and
WHEREAS, the Investment Adviser desires to retain the Investment
Subadviser to perform certain of the Investment Adviser's duties under the SM&R
Advisory Agreement with respect to certain of its series of shares as may
currently exist or be created in the future (each, a "Series") as listed on
Exhibit A hereto, and the Investment Subadviser is willing to so render such
services on the terms hereinafter set forth;
NOW THEREFORE,
In consideration of the promises and mutual covenants herein contained,
it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Investment Adviser hereby appoints the Investment
Subadviser to act as investment subadviser to each Series for the
period and on the terms set forth in this Agreement. The Investment
Subadviser accepts such appointment and agrees to render the services
herein set forth for the compensation herein provided.
2. MANAGEMENT. Subject to the supervision of the Investment Adviser,
the Investment Subadviser will provide a continuous investment
program for each Series, including investment research and
management with respect to all securities, investments, cash and
cash equivalents in each Series. The Investment Subadviser will
determine from time to time what securities and other investments
will be purchased, retained or sold by each Series. The Investment
Subadviser will provide the services rendered by it hereunder in
accordance with the investment objective(s) and policies of each
Series as stated in each Series' then-current prospectus and
statement of additional information (or the Series' then current
registration statement on Form N-1A as filed with the Securities and
Exchange Commission (the "SEC") and the then-current offering
memorandum if the Series is not registered under the Securities Act
of 1933, as amended (the "1933 Act")). The Investment Subadviser
further agrees that it will comply with all applicable rules and
regulations of the SEC (herein called the "Rules") and with all
applicable provisions of the 1933 Act, the Securities Exchange Act
of 1934, as amended (the "1934 Act"), the 1940 Act; and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"),
and will, in addition, conduct its activities under this Agreement
in accordance with applicable regulations of the Board of Governors
of the Federal Reserve System pertaining to the investment advisory
activities of bank holding companies and their subsidiaries; it will
place orders pursuant to its investment determinations for each Fund
either directly with the issuer or with any broker or dealer
selected by it. In placing orders with brokers and dealers, the
Investment Subadviser will use its reasonable best efforts to obtain
the best net price and the most favorable execution of its orders,
after taking into account all factors it deems relevant, including
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,
both for the specific transaction and on a continuing basis. The
Investment Adviser acknowledges that Investment Subadviser may place
orders through Xxxx Xxxxx & Company, Incorporated ("Xxxxx Inc."),
member of the New York Stock Exchange, Inc. Xxxxx Inc. is an
affiliate of the Investment Subadviser and the Investment Adviser
agrees that Xxxxx Inc. may be paid commissions for such trades,
subject to the best execution requirements. The Investment Adviser
agrees that for each security transaction effected by Xxxxx Inc. for
a Series, Xxxxx Inc. may retain compensation in connection with
effecting the transaction. The Investment Subadviser will maintain
books and records with respect to the securities transactions of
each Series and will render to the Investment Adviser such periodic
and special reports as the Fund's Board or the Investment Adviser
may reasonably request.
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3. Subject to the provisions of this Agreement, the duties of the
Investment Subadviser, the portion of portfolio assets that the
Subadviser shall manage, and the fees to be paid to the Investment
Subadviser by the Investment Adviser under and pursuant to this
Agreement may be adjusted from time to time by mutual agreement of the
Investment Subadviser and the Investment Adviser with and upon the
approval of the Fund's Board of Directors including approval by a
majority of those Directors who are not "interested persons," as
defined in the Act.
4. SERVICES NOT EXCLUSIVE. The investment advisory services rendered by
the Investment Subadviser hereunder are not to be deemed exclusive, and
the Investment Subadviser shall be free to render similar services to
others so long as its services under this Agreement are not impaired
thereby.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3 of
the Rules under the 1940 Act, the Investment Subadviser hereby agrees
that all records which it maintains for the Fund are the property of
the Fund and further agrees to surrender promptly to the Investment
Adviser any of such records upon reasonable request of the Investment
Adviser. The Investment Subadviser further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained by Rule 31a-1 under the 1940 Act to comply in
full with the requirements of Rule 204-2 under the Advisers Act
pertaining to the maintenance of books and records.
6. EXPENSES. During the term of this Agreement, the Investment Subadviser
will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of purchasing securities
(including brokerage commissions, if any) for a Series.
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Investment Adviser will pay the
Investment Subadviser, and the Investment Subadviser will accept as
full compensation therefor, fees, computed daily and payable monthly,
on an annual basis equal to the percentage set forth on Exhibit A
hereto of that Series' average daily net assets.
8. LIMITATION OF LIABILITY OF THE INVESTMENT SUBADVISER. The Investment
Subadviser, its officers, directors, employees and agents shall not be
liable for any error of judgment or mistake of law or for any loss
suffered by the Investment Adviser or the Fund in connection with the
matters to which the Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the
Investment Subadviser in the performance of its duties or from reckless
disregard by the Investment Subadviser of its obligations and duties
under this Agreement.
9. PROXIES. It is agreed that the Investment Subadviser shall in its
discretion vote all proxies and other corporate actions it receives
on behalf of the Fund.
10. DURATION AND TERMINATION. This Agreement shall be effective as to a
Series as of the date first stated above, and shall continue in
effect unless terminated as described below. Such continuance must
be specifically approved at least annually (a) by the vote of a
majority of those members of the Board of Directors of the Fund who
are not parties to this Agreement or Interested Persons of any such
party, cast in person at a meeting called for the purpose of voting
on such approval, or (b) with respect to each Series, by Vote of a
Majority of the Outstanding Voting Securities of each Series;
provided, however, that this Agreement may be terminated by the Fund
at any time, without the payment of any penalty, by the Board of
Directors of the Fund or by vote of a Majority of the Outstanding
Voting Securities of a Series on 60 days' written notice to the
Investment Subadviser, or by the Investment Subadviser at any time,
without payment of any penalty, on 60 days' written notice to the
Investment Adviser. This Agreement will immediately terminate (i) in
the event of its assignment or (ii) upon termination of the SM&R
Advisory Agreement. As used in this Agreement, the terms "Vote of a
Majority of the Outstanding Voting Securities," "Interested Person"
and "Assignment" shall have the same meaning as such terms have in
the 1940 Act and the Rules and regulatory constructions thereunder.
11. AMENDMENT OF THIS AGREEMENT. No material term 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
amendment of a material term of this Agreement shall be effective with
respect to a Series, until approved by Vote of a Majority of the
Outstanding Voting Securities of that Series.
12. REPRESENTATIONS AND WARRANTIES. The parties hereto hereby represent and
warrant as follows:
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They are registered investment advisers under the 1940 Act;
They have all requisite authority to enter into, execute, deliver
and perform its obligations under this Agreement;
This Agreement is legal, valid and binding, and enforceable in
accordance with its terms; and
The performance by the parties of their obligations under this
Agreement does not conflict with any law to which they are subject.
13. COVENANTS. The parties hereto hereby covenant and agree that, so long
as this Agreement shall remain in effect:
They shall remain either exempt from, or registered under, the
registration provisions of the Advisors Act; and
The performance by the parties of their obligations under this
Agreement shall not conflict with any law to which it is then
subject.
14. NOTICES. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid,
(a) to the Investment Adviser:
Securities Management and Research, Inc.
Attn: Xx. Xxxxxxx X. XxXxxxxxx
0000 Xxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxx Xxxx, Xxxxx 00000
(b) to the Investment Subadviser:
Xxxx Xxxxx Management, Inc.
Attn: Xx. Xxxxxxx X. Xxxx
Executive Vice President
0 Xxxxx Xxxxx Xxxxxx-Xxxxx 0000
Xxx Xxxx, XX 00000
15. WAIVER. With full knowledge of the circumstances and the effect of its
action, the Investment Subadviser hereby waives any and all rights
which it may acquire in the future against the property of any
investor in a Series, other than shares in that Series, which arise
out of any action or inaction of the Investment Adviser under this
Agreement.
16. TITLES. The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
17. CONTROLLING LAW. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors
and shall be governed by the laws of the State of New York, without
reference to principles of conflicts of law. The Fund is organized
under the laws of the State of Maryland.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
XXXX XXXXX MANAGEMENT, INC.
By:
--------------------------------
Name: Xxxxxxx X. Xxxx
Title: Executive Vice President
SECURITIES MANAGEMENT AND RESEARCH, INC.
By:
--------------------------------
Name: Xxxxxxx X. XxXxxxxxx
Title: President
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EXHIBIT A
SERIES:
SM&R Xxxxx Growth Fund
SM&R Xxxxx Aggressive Growth Fund
SM&R Xxxxx Small Cap Fund
SM&R Xxxxx Technology Fund
INVESTMENT SUBADVISORY FEE:
SM&R Xxxxx Growth Fund .50%
SM&R Xxxxx Aggressive Growth Fund .60%
SM&R Xxxxx Small Cap Fund .60%
SM&R Xxxxx Technology Fund .60%
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