BRAZOS REAL ESTATE SECURITIES PORTFOLIO
INTERIM INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the 22nd day of January, 2004 (the "Effective Date"),
between Xxxx XxXxxx Investment Counsel, L.P., a limited partnership formed under
the laws of the State of Delaware and having its principal place of business in
Dallas, Texas ("JMIC"), and AIG Global Investment Corp., a corporation
incorporated under the laws of the State of New Jersey and having its principal
place of business in New York, New York (the "Subadviser").
WHEREAS, JMIC serves as the investment adviser to the Brazos Real Estate
Securities Portfolio (the "Portfolio"), a series of Brazos Mutual Funds (the
"Trust"), a Delaware statutory trust registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, under its Advisory Agreement with the Trust on behalf of the
Portfolio ("Advisory Agreement"), JMIC is authorized to appoint subadvisers for
the Portfolio; and
WHEREAS, JMIC wishes to retain the Subadviser to render investment
advisory services to the Portfolio; and
WHEREAS, the Subadviser is willing to provide such services to the
Portfolio and JMIC upon the terms and conditions and for the compensation set
forth below;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. APPOINTMENT OF SUBADVISER. JMIC hereby appoints the Subadviser to act as an
investment adviser for the Portfolio in accordance with the terms and conditions
of this Agreement. The Subadviser will be an independent contractor and will
have no authority to act for or represent the Portfolio, the Trust or JMIC in
any way or otherwise be deemed an agent of the Portfolio, the Trust or JMIC
except as expressly authorized in this Agreement or another writing by the
Portfolio, the Trust, JMIC and the Subadviser. The Subadviser accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.
2. DUTIES OF SUBADVISER.
(a) INVESTMENT PROGRAM. Subject to the control and supervision of JMIC
and the Board of Trustees of the Trust (the "Board"), the Subadviser, at its own
expense, shall provide to the Portfolio a continuous investment program for such
portion of the Portfolio's assets that is allocated to it by JMIC from time to
time. With respect to such assets, the Subadviser shall determine what
investments shall be purchased, held, sold or exchanged by the Portfolio and
what portion, if any, of the assets of the Portfolio shall be held in cash or
cash equivalents, and purchase and sell portfolio securities for the Portfolio.
In accordance with Subsection (b) of this Section 2, the Subadviser shall
arrange for the execution of all orders for the purchase and sale of securities
and other investments for the Portfolio's account and will exercise full
discretion and act for the Portfolio in the same manner and with the same force
and effect as the Portfolio might or could do with respect to such purchases,
sales, or other transactions, as well as with respect to all other things
necessary or incidental to the furtherance or conduct of such purchases, sales,
or other transactions.
In the performance of its duties, the Subadviser will act in the best
interests of the Portfolio and will comply with (i) applicable laws and
regulations, including, but not limited to, the 1940 Act and the Investment
Advisers Act of 1940, as amended ("Advisers Act"), and the rules under each,
(ii) the terms of this Agreement, (iii) the stated investment objective,
policies and restrictions of the Portfolio, as stated in the then-current Form
N-1A Registration Statement of the Portfolio ("Registration Statement"), (iv)
the Trust's compliance procedures and other policies, procedures or guidelines
as the Board or JMIC reasonably may establish from time to time, (v) the
provisions of the Internal Revenue Code of 1986, as amended ("Code"), applicable
to "regulated investment companies" (as defined in Section 851 of the Code), as
from time to time in effect, and (vi) the reasonable written instructions of
JMIC. JMIC shall be responsible for providing the Subadviser with current copies
of the materials specified in Subsections (a)(iii) and (iv) of this Section
2(a). JMIC shall provide the Subadviser with prior written notice of any
material change to the Registration Statement that would affect the Subadviser's
management of the Portfolio.
(b) PORTFOLIO TRANSACTIONS. In connection with the management of the
investment and reinvestment of the Portfolio's assets, the Subadviser will
select the brokers or dealers that will execute purchase and sale transactions
for the Portfolio, subject to the conditions herein. In the selection of
broker-dealers and the placement of orders for the purchase and sale of
portfolio investments for the Portfolio, the Subadviser shall use its best
efforts to obtain for the Portfolio the most favorable price and execution
available, except to the extent it may be permitted to pay higher brokerage
commissions for brokerage and research services as described below. In using its
best efforts to obtain the most favorable price and execution available, the
Subadviser, bearing in mind the Portfolio's best interests at all times, shall
consider all factors it deems relevant, including by way of illustration, price,
the size of the transaction, the nature of the market for the security, the
amount of the commission and dealer's spread or xxxx-up, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker-dealer involved, the general
execution and operational facilities of the broker-dealer and the quality of
service rendered by the broker-dealer in other transactions.
Subject to such policies as the Board may determine and to the extent
authorized by Section 28(e) of the Securities Exchange Act of 1934 ("Exchange
Act"), the Subadviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused the Portfolio to pay a broker-dealer that provides brokerage and
research services to the Subadviser an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker-dealer offering equally good execution capability in the portfolio
investment would have charged for effecting that transaction if the Subadviser
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular transaction or the
Subadviser's overall responsibilities with respect to the Portfolio and to other
clients of the Subadviser as to which the Subadviser exercises investment
discretion. In addition, subject to seeking best execution, JMIC or the
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Subadviser also may (but is not required to) consider sales of shares of the
Portfolio as a factor in the selection of brokers and dealers.
On occasions when the Subadviser deems the purchase or sale of a security
to be in the best interest of the Portfolio as well as other clients of the
Subadviser, the Subadviser, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made by the Subadviser
in the manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Portfolio and to its other clients over time.
The Subadviser may buy securities for the Portfolio at the same time it is
selling such securities for another client account and may sell securities for
the Portfolio at the time it is buying such securities for another client
account. In such cases, subject to applicable legal and regulatory requirements,
and in compliance with such procedures of the Trust as may be in effect from
time to time, the Subadviser may effectuate cross transactions between the
Portfolio and such other account if it deems this to be advantageous.
The Subadviser will advise the Portfolio's custodian or such depository or
agents as may be designated by the custodian and JMIC promptly of each purchase
and sale of a portfolio security, specifying the name of the issuer, the
description and amount or number of shares of the security purchased, the market
price, the commission and gross or net price, the trade date and settlement
date, the identity of the effecting broker or dealer and any other pertinent
data that the Portfolio's custodian may need to settle a security's purchase or
sale. The Subadviser shall not have possession or custody of the Portfolio's
investments. The Portfolio shall be responsible for all custodial agreements and
the payment of all custodial charges and fees and, upon the Subadviser giving
proper instructions to the custodian, the Subadviser shall have no
responsibility or liability for the acts, omissions or other conduct of the
custodian.
The Subadviser agrees that it shall not direct portfolio transactions for
the Portfolio through any broker or dealer that is an "affiliated person" of the
Subadviser (as that term is defined in the 1940 Act or interpreted under
applicable rules and regulations of the Commission), except as permitted under
the 1940 Act. JMIC agrees that it will provide the Subadviser with a list of
brokers and dealers that are affiliated persons of the Portfolio, or affiliated
persons of such persons, and shall timely update that list as the need arises.
JMIC agrees that any entity or person associated with JMIC or the Subadviser
that is a member of a national securities exchange is authorized to effect any
transaction on such exchange for the account of the Trust that is permitted by
Section 11(a) of the Exchange Act, and JMIC consents to the retention of
compensation for such transactions.
(c) EXPENSES. The Subadviser, at its expense, will furnish all necessary
facilities and personnel, including salaries, expenses and fees of any personnel
required for them to faithfully perform their duties under this Agreement and
administrative facilities, including bookkeeping, and all equipment necessary
for the efficient conduct of the Subadviser's duties under this Agreement.
However, the Subadviser shall not be obligated to pay any expenses of JMIC, the
Portfolio, or the Trust, including without limitation, interest and taxes,
brokerage commissions and other costs in connection with the purchase or sale of
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securities or other investment instruments for the Portfolio and custodian fees
and expenses.
(d) VALUATION. Securities traded on a national securities exchange or The
Nasdaq Stock Market for which market quotes are readily available are valued on
each day the New York Stock Exchange is open for business. For those securities
for which market quotes are not readily available, the Subadviser, at its
expense and in accordance with procedures and methods established by the Board,
which may be amended from time to time, will provide assistance to JMIC, or
other applicable service providers for the Trust and the Portfolio, in
determining the fair value of such securities, including providing market price
information relating to these assets of the Portfolio. The Subadviser also shall
monitor for "significant events" that occur after the closing of a market but
before the time as of which the Portfolio calculates its net asset value and
that may affect the valuation of the Portfolio's portfolio securities and shall
notify JMIC promptly of the occurrence of any such events.
(e) REPORTS AND AVAILABILITY OF PERSONNEL. The Subadviser, at its
expense, shall render to the Board and JMIC such periodic and special reports as
the Board and JMIC reasonably may request with respect to matters relating to
the duties of the Subadviser set forth herein. The Subadviser, at its expense,
will make available to the Board and JMIC at reasonable times its portfolio
managers and other appropriate personnel in order to review investment policies
of the Portfolio and to consult with the Board and JMIC regarding the investment
affairs of the Portfolio, including economic, statistical and investment matters
relevant to the Subadviser's duties hereunder.
(f) COMPLIANCE MATTERS. The Subadviser, at its expense, will provide JMIC
with such compliance reports relating to its duties under this Agreement as may
be agreed upon by such parties from time to time. The Subadviser also shall
cooperate with and provide reasonable assistance to JMIC, the Portfolio's
administrator, the Portfolio's custodian, the Portfolio's transfer agent and
pricing agents and all other agents and representatives of the Portfolio, the
Trust and JMIC, keep all such persons fully informed as to such matters as they
may reasonably deem necessary to the performance of their obligations to the
Portfolio, the Trust and JMIC, provide prompt responses to reasonable requests
made by such persons and maintain any appropriate interfaces with each so as to
promote the efficient exchange of information.
(g) BOOKS AND RECORDS. The Subadviser will maintain for the Portfolio all
books and records required to be maintained by the Portfolio pursuant to the
1940 Act and the rules and regulations promulgated thereunder insofar as such
records relate to the investment affairs of the Portfolio. Pursuant to Rule
31a-3 under the 1940 Act, the Subadviser agrees that: (i) all records it
maintains for the Portfolio are the property of the Portfolio; (ii) it will
surrender promptly to the Portfolio or JMIC any such records upon the
Portfolio's or JMIC's request; and (iii) it will preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records it maintains for the
Portfolio. Notwithstanding subsection (ii) above, the Subadviser may maintain
copies of such records, without limitation, to comply with its record keeping
obligations.
(h) PROXIES. The Subadviser will, unless and until otherwise directed by
JMIC or the Board, vote proxies with respect to the Portfolio's securities and
exercise rights in corporate actions or otherwise in accordance with the Trust's
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proxy voting guidelines, as amended from time to time, which shall be provided
to the Subadviser by JMIC.
3. ADVISORY FEE. JMIC shall pay to the Subadviser as compensation for the
Subadviser's services rendered pursuant to this Agreement a fee based on the
average daily net assets of the Portfolio at the annual rate 0.15%. Such fees
shall be calculated daily and payable monthly in arrears within 15 business days
after the end of such month. JMIC (and not the Portfolio) shall pay such fees.
If the Subadviser shall serve for less than the whole of a month, the
compensation as specified shall be prorated based upon the number of calendar
days during which this Agreement is in effect during such month, and the fee
shall be computed based upon the average daily net assets of the Portfolio for
such days.
4. REPRESENTATIONS AND WARRANTIES.
(a) SUBADVISER. The Subadviser represents and warrants to JMIC that: (i)
the retention of the Subadviser by JMIC as contemplated by this Agreement is
authorized by the Subadviser's governing documents; (ii) the execution, delivery
and performance of this Agreement does not violate any obligation by which the
Subadviser or its property is bound, whether arising by contract, operation of
law or otherwise; (iii) this Agreement has been duly authorized by appropriate
action of the Subadviser and when executed and delivered by the Subadviser will
be a legal, valid and binding obligation of the Subadviser, enforceable against
the Subadviser in accordance with its terms, subject, as to enforcement, to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and to general equitable principles (regardless of whether enforcement
is sought in a proceeding in equity or law); (iv) the Subadviser is registered
as an investment adviser under the Advisers Act; (v) the Subadviser has adopted
a written code of ethics complying with the requirements of Rule 17j-1 under the
1940 Act and that the Subadviser and certain of its employees, officers and
directors are subject to reporting requirements thereunder and, accordingly,
agrees that it shall, on a timely basis, furnish a copy of such code of ethics
to JMIC, and shall cause its employees, officers and directors to furnish to
JMIC all reports and information required to be provided under such code of
ethics with respect to such persons; (vi) the Subadviser is not prohibited by
the 1940 Act, the Advisers Act or other law, regulation or order from performing
the services contemplated by this Agreement; (vii) the Subadviser will promptly
notify JMIC of the occurrence of any event that would disqualify the Subadviser
from serving as investment subadviser of an investment company pursuant to
Section 9(a) of the 1940 Act or otherwise; (viii) the Subadviser has provided
JMIC with a copy of its Form ADV as most recently filed with the SEC and will
furnish a copy of all amendments to JMIC at least annually; and (ix) the
Subadviser will notify JMIC of any "assignment" (as defined in the 0000 Xxx) of
this Agreement or change of control of the Subadviser, as applicable, and any
changes in the key personnel who are the portfolio managers of the Portfolio, in
each case prior to or promptly after, such change.
(b) JMIC. JMIC represents and warrants to the Subadviser that: (i) the
retention of the Subadviser by JMIC as contemplated by this Agreement is
authorized by the respective governing documents of the Trust and JMIC; (ii) the
execution, delivery and performance of each of this Agreement and the Advisory
Agreement does not violate any obligation by which the Trust or JMIC or their
respective property is bound, whether arising by contract, operation of law or
otherwise; (iii) each of this Agreement and the Advisory Agreement has been duly
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authorized by appropriate action of the Trust and JMIC and when executed and
delivered by JMIC will be a legal, valid and binding obligation of the
Portfolio, the Trust and JMIC, enforceable against the Trust and JMIC in
accordance with its terms, subject, as to enforcement, to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
equitable principles (regardless of whether enforcement is sought in a
proceeding in equity or law); (iv) JMIC is registered as an investment adviser
under the Advisers Act; (v) JMIC has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the 1940 Act and that JMIC and certain
of its employees, officers and directors are subject to reporting requirements
thereunder; (vi) JMIC is not prohibited by the 1940 Act, the Advisers Act or
other law, regulation or order from performing the services contemplated by this
Agreement; and (vii) JMIC will promptly notify the Subadviser of the occurrence
of any event that would disqualify JMIC from serving as investment manager of an
investment company pursuant to Section 9(a) of the 1940 Act or otherwise.
5. LIABILITY OF THE SUBADVISER. In the absence of (i) willful misfeasance,
bad faith or gross negligence on the part of the Subadviser in performance of
its obligations and duties hereunder, (ii) reckless disregard by the Subadviser
of its obligations and duties hereunder, or (iii) a loss resulting from a breach
of the Subadviser's fiduciary duty with respect to the receipt of compensation
for services (in which case any award of damages shall be limited to the period
and the amount set forth in Section 36(b)(3) of the 1940 Act), the Subadviser
shall not be subject to any liability whatsoever to JMIC or the Trust, or to any
shareholder of the Portfolio, for any error or judgment, mistake of law or any
other act or omission in the course of, or connected with, rendering services
hereunder including, without limitation, for any losses that may be sustained in
connection with the purchase, holding, redemption or sale of any security on
behalf of the Portfolio. No provision of this Section 5 is intended to create
any rights whatsoever to any third parties, including without limitation the
shareholders of the Portfolio.
6. DURATION AND TERMINATION. Unless sooner terminated as provided herein,
this Agreement shall continue in effect until the sooner of (a) 150 days from
the date this Agreement is entered into or (b) the date upon which Portfolio
shareholders and the Board, including a majority of the Board members who are
not "interested persons" of the Trust, JMIC or the Subadviser ("Independent
Board Members"), approve the retention of the Subadviser in accordance with
Section 15(a) of the 1940 Act and JMIC executes an Investment Subadvisory
Agreement with the Subadviser; provided, however, that this Agreement may
continue for a period in excess of 150 days upon the written agreement of the
parties and consistent with SEC or SEC staff action or interpretation of
applicable law. This Agreement may be terminated at any time, without payment of
any penalty, by vote of the Board or by vote of a majority of the outstanding
shares (as defined in the 1940 Act), or by JMIC or the Subadviser on 60 days'
written notice to the other party. Any notice of termination served on the
Subadviser by the Trust or JMIC shall be without prejudice to the obligation of
the Subadviser to complete transactions already initiated or acted upon with
respect to the Portfolio. This Agreement shall terminate automatically in the
event of its assignment (as defined in the 1940 Act).
7. AMENDMENT OF AGREEMENT. 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 whom enforcement of the change, waiver, discharge or
termination is sought. No material amendment of this Agreement shall be
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effective until approved in the manner required by the 1940 Act, any rules
thereunder or any exemptive or other relief granted by the SEC or its staff.
8. SERVICES NOT EXCLUSIVE. The services of the Subadviser to JMIC are not to
be deemed exclusive, and the Subadviser shall be free to render investment
advisory services to others so long as its services hereunder are not impaired
thereby. It is understood that the persons employed by the Subadviser to assist
in the performance of its duties hereunder will not devote their full time to
such services and nothing contained herein shall be deemed to limit or restrict
in any manner whatsoever the right of the Subadviser to engage in or devote time
and attention to other businesses or to render services of whatever kind or
nature.
9. ADDITIONAL AGREEMENTS.
(a) ACCESS TO INFORMATION. The Subadviser shall, upon reasonable notice,
afford JMIC at all reasonable times access to Subadviser's officers, employees,
agents and offices and to all its relevant books and records and shall furnish
JMIC with all relevant financial and other data and information as requested;
provided, however, that nothing contained herein shall obligate the Subadviser
to provide JMIC with access to the books and records of the Subadviser relating
to any other accounts other than the Portfolio.
(b) CONFIDENTIALITY. The Subadviser shall treat confidentially and as
proprietary information of the Trust and the Portfolio all records and
information (including investment holdings and activities of the Portfolio)
relative to the Trust and the Portfolio and prior, present or potential
shareholders, and will not use such 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 the Trust, which approval
shall not be unreasonably withheld and may not be withheld where the Subadviser
may be exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by the Trust. Notwithstanding the above, the Subadviser may
disclose: (i) the identity of the Trust and the Portfolio as part of any
representative list of clients of the Subadviser; (ii) the investment results
and other data of the Portfolio (without identifying the Portfolio or the Trust)
in connection with providing composite investment results of clients of the
Subadviser; and (iii) investments and transactions with respect to the Portfolio
(without identifying the Trust or the Portfolio) in connection with providing
composite information of clients of the Subadviser, provided that such
disclosure will not be made in such a manner that may reasonably have an adverse
effect on the trading activities of the Portfolio.
(c) PUBLIC ANNOUNCEMENTS. No party shall issue any press release or
otherwise make any public statements with respect to the matters covered by this
Agreement without the prior written consent of the other parties hereto, which
consent shall not be unreasonably withheld; provided, however, that consent
shall not be required if, in the opinion of counsel, such disclosure is required
by law; provided further, however, that the party making such disclosure shall
provide the other parties hereto with as much prior written notice of such
disclosure as is practical under the circumstances.
(d) NOTIFICATIONS. The Subadviser agrees that it will promptly notify
JMIC in the event that the Subadviser or any of its affiliates is or expects to
become the subject of an administrative proceeding or enforcement action by the
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Commission or other regulatory body with applicable jurisdiction.
(e) INSURANCE. The Subadviser agrees to maintain errors and omissions or
professional liability insurance coverage in an amount that is reasonable in
light of the nature and scope of the Subadviser's business activities.
(f) SHAREHOLDER MEETING EXPENSES. In the event that the Trust shall be
required to call a meeting of shareholders solely due to actions involving the
Subadviser, including, without limitation, a change of control of the
Subadviser, the Subadviser shall bear all reasonable expenses associated with
such shareholder meeting.
10. MISCELLANEOUS.
(a) NOTICES. All notices or other communications given under this
Agreement shall be made by guaranteed overnight delivery, telecopy or certified
mail; notice is effective when received. Notice shall be given to the parties at
the following addresses:
JMIC: Xxxx XxXxxx Investment Counsel, L.P.
0000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Compliance Department
Subadviser: AIG Global Investment Corp.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: ___________________
Attention: Xxxxxxx Xxxxxx
With a copy to:
AIG Global Investment Corp.
General Counsel
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(b) SEVERABILITY. 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. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors.
(c) GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Texas, without giving effect to the conflicts of laws
principles thereof, and in accordance with the 1940 Act. To the extent that the
applicable laws of the State of Texas conflict with the applicable provisions of
the 1940 Act, the latter shall control.
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(d) COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(e) HEADINGS. The captions in 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.
(f) ENTIRE AGREEMENT. This Agreement states the entire agreement of the
parties hereto, and is intended to be the complete and exclusive statement of
the terms hereof.
(g) LIABILITY OF TRUSTEES AND SHAREHOLDERS. Any obligations of the
Portfolio under this Agreement are not binding upon the Trustees or the
shareholders individually but are binding only upon the assets and property of
the Portfolio.
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IN WITNESS WHEREOF, JMIC and the Subadviser have caused this Agreement to
be executed as of the date first set forth above.
Xxxx XxXxxx Investment Counsel, L.P.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Partner
AIG Global Investment Corp.
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Attorney-in-Fact
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