INVESTMENT SUBADVISORY AGREEMENT
Agreement made effective as of the ___ day of June, 2000 between
Capital Mortgage Management, Inc., a Delaware corporation ("Manager"), and
Principal Capital Management, LLC, a Delaware limited liability company
("Subadviser").
WHEREAS, the Manager has entered into a Management Agreement dated
October 23, 1997, as subsequently amended, with the Builders Fixed Income Fund,
Inc. (the "Fund"), an open-end investment company registered under the
Investment Company Act of 1940, as amended ("1940 Act");
WHEREAS, the Manager wishes to retain the Subadviser as subadviser to
furnish certain investment advisory services to the Manager for the benefit of
the existing and future portfolios of the Fund as the Manager and the Subadviser
shall agree upon (collectively, the "Portfolios") in connection with the
Manager's management of the Portfolios, and the Subadviser is willing to furnish
such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. Manager hereby retains the Subadviser as its subadviser
for the Fund and any future Portfolio(s) of the Fund as the Manager and the
Subadviser shall agree upon for the period and on the terms set forth in this
Agreement. Subadviser accepts such appointment and agrees to render the services
to the Manager for the benefit of the Portfolios herein set forth, for the
compensation provided herein. In the performance of its duties, the Subadviser
will act in the best interests of the Portfolios, and will comply with (a)
applicable laws and regulations including, but not limited to, the 1940 Act, (b)
the terms of this Agreement, (c) the Fund's Articles of Incorporation, By-Laws
and currently effective registration statement under the 1940 Act and the
Securities Act of 1933, as amended, (d) the stated investment objective,
policies and restrictions of each applicable Portfolio, and (e) such other
guidelines as the Board of Directors of the Fund (the "Board") reasonably may
establish in writing.
The Manager agrees to provide to the Subadviser current and effective copies of
the Fund's prospectus and statement of additional information as filed on Form
N-1A with the Securities and Exchange Commission. The Manager further agrees to
provide the Subadviser with notice prior to a proposed change in any of the
Fund's investment objectives, policies or restrictions.
2. DUTIES AS INVESTMENT SUBADVISER.
(a) Subject to the supervision of the Board and the Manager, the
Subadviser will provide a continuous investment program for each
Portfolio, including investment research and management with
respect to all securities, investments and cash equivalents in
each Portfolio. The Subadviser will determine from time to time
what securities and other investments will be purchased, retained
or sold by each Portfolio for which Subadviser has discretion.
The Subadviser will exercise full discretion and act for each
Portfolio in the same manner and with the same force and effect
as such Portfolio itself might or could do with respect to
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.
(b) The Subadviser will place orders pursuant to its investment
determinations for each Portfolio either directly with the issuer
or through brokers. In the selection of brokers and the placement
of orders for the purchase and sale of investments for the
Portfolios, the Subadviser shall use its best efforts to obtain
for the Portfolios 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 Portfolios' 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, the
timing of the transaction taking into account market prices and
trends, the reputation, experience and financial stability of the
broker involved and the quality of service rendered by the broker
in other transactions. 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 a
Portfolio to pay a broker 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 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,
viewed in terms of either that particular transaction or the
Subadviser's overall responsibilities with respect to the
Portfolios and to other clients of the Subadviser as to which it
exercises investment discretion. In addition, the Subadviser is
authorized to take into account the sale of shares of the Fund in
allocating purchase and sale orders for portfolio securities to
brokers or dealers (including brokers and dealers that are
affiliated with the Manager, Subadviser or the Fund's
distributor), provided that the Subadviser believes that the
quality of the transaction and the commission are comparable to
what they would be with other qualified firms. In no instance
will portfolio securities of the Fund be purchased from or sold
to the Subadviser, Manager, the Fund's distributor or any
affiliated person of the foregoing persons. The Fund agrees that
any entity or person associated with the Subadviser which is a
member of a national securities exchange is authorized to effect
any transaction on such exchange for the account of the Fund
which is permitted by Section 11(a) of the Securities Exchange
Act of 1934, as amended, and that the Fund consents to the
retention of compensation for such transactions by such entity or
person.
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(c) The Subadviser will be responsible for periodically determining
the interest rates and discount points for ProLoans originated by
mortgage lenders who participate in the ProLoan Program (as
described in the Fund's current registration statement) pursuant
to the terms of the ProLoan Master Agreement between the Fund and
the mortgage lenders originating such ProLoans, and for
determining, in its sole discretion, whether to grant extensions
of interest rate protection to borrowers with respect to the
borrowers' ProLoans.
(d) The Subadviser will meet with the Manager and the Board at least
quarterly and will provide the Manager and the Board on a regular
basis with economic and investment analyses and reports and make
available to the Manager upon request any economic, statistical
and investment services normally available to institutional or
other customers of the Subadviser.
3. SERVICES NOT EXCLUSIVE. The services furnished by the Subadviser
hereunder are not to be deemed exclusive and the Subadviser shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby.
4. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement with respect to each Portfolio, the Subadviser shall
receive an annual subadvisory fee equal to 0.165% of the Fund's average daily
net assets. The subadvisory fee shall be accrued daily and paid monthly by the
Fund. If this Agreement becomes effective or terminates with respect to any
Portfolio before the end of any month, the fee for the period from the effective
date to the end of the month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated according to the proportion
that such period bears to the full month in which such effectiveness or
termination occurs.
5. LIMITATION OF LIABILITY OF THE SUBADVISER. The Subadviser shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by any Portfolio in connection with the matters to which this Agreement relate
except a loss resulting from the willful misfeasance, bad faith or negligence on
its part in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement. Notwithstanding the foregoing,
the Fund does not hereby waive any right or claim of action against the
Subadviser that may be available under federal or state securities laws.
6. DURATION AND TERMINATION.
(a) As used in this Agreement, the terms "assignment" and "vote of a
majority of the outstanding voting securities" shall have the
meanings given to them by Section 2(a)(4) and 2(a)(42),
respectively, of the 1940 Act. This Agreement shall terminate
automatically in the event of its assignment, or upon termination
of the Management Agreement between the Fund and the Manager.
This agreement may be terminated at any time, without the payment
of any penalty, (i) with respect to the Fund, by the Board of
Directors of the Fund, or by vote of a majority of the
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outstanding voting securities of the Fund, or by the Manager on
not less than thirty (30) or more than sixty (60) days' written
notice addressed to the Subadviser at its principal place of
business; and (ii) by the Subadviser, without the payment of any
penalty, on not less than one hundred twenty (120) days' written
notice addressed to the Manager at the Manager's principal place
of business.
(b) Unless sooner terminated as provided herein, this Agreement shall
remain in full force and effect until June 1, 2002, and from year
to year thereafter only so long as its continuance is approved in
the manner required by the 1940 Act, as from time to time
amended.
7. ADVERTISING. Neither party will use any advertising that refers to
the other party or its affiliates without the prior consent of such party.
8. AMENDMENT OF THIS 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 which enforcement of the change, waiver,
discharge or termination is sought.
9. GOVERNING LAW. This Agreement shall be construed in accordance with
the 1940 Act and the laws of the State of Missouri, without giving effect to the
conflicts of laws principles thereof.
10. NOTICE. Any notice, advice or report to be given pursuant to this
Agreement shall be delivered or mailed:
To the Manager: Capital Mortgage Management, Inc.
0000 X. Xxxxx Xxxx, Xxxxx 000
Xx. Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
(000) 000-0000
with a copy to: Xxxxxxxx Xxxxxx LLP
Xxx Xxxxxxx Xxxxx
Xx. Xxxxx, XX 00000
Attention: Dee Xxxx Xxxxxxx, Esq.
(000) 000-0000
To the Subadviser: Principal Capital Management, LLC
000 Xxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attn: Xxxxx Xxxxxxxxx
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11. 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.
12. MISCELLANEOUS. 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.
13. COUNTERPARTS. This Agreement may be executed in counterparts by the
parties hereto, each of which shall constitute an original counterpart, and all
of which, together, shall constitute one Agreement
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.
CAPITAL MORTGAGE MANAGEMENT, INC.
By:
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Xxxx X. Xxxxxxx, President
PRINCIPAL CAPITAL MANAGEMENT, LLC
By:
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Name:
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Title:
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