INSURED MUNICIPAL INCOME FUND, INC. INTERIM SUBADVISORY AGREEMENT
INSURED
MUNICIPAL INCOME FUND, INC.
This Interim Subadvisory Agreement is
made as of October 29, 2009 (the “Effective Date”), between Brooklyn Capital
Management, LLC, a Delaware limited liability company (the “Adviser”), and
Income Research & Management, a Massachusetts business trust (the
“Subadviser”).
WHEREAS, the Adviser serves as the
interim investment adviser to the Insured Municipal Income Fund, Inc. (the
“Fund”), a Maryland corporation registered as a closed-end management investment
company under the Investment Company Act of 1940, as amended (“1940
Act”);
WHEREAS, the Adviser’s Interim
Investment Management Agreement with the Fund allows it to delegate certain
investment advisory services to other parties; and
WHEREAS, the Adviser desires to retain
the Subadviser to perform certain investment subadvisory services for the Fund,
and the Subadviser is willing to perform such services;
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. Services to be Rendered by
the Subadviser to the Fund.
(a) Investment
Program. Subject to the control and supervision of the Board
of Directors of the Fund and the Adviser, the Subadviser shall, at its expense
and on the terms set forth herein, direct and oversee the orderly liquidation of
all long-term municipal securities held by the Fund, seeking best execution
under the then prevailing circumstances, and shall either re-invest the proceeds
of such liquidation into the short-term investment fund specified by the Fund,
or re-invest the proceeds upon approval of such re-investment by the Adviser, in
short-term, tax-free instruments that qualify as tax exempt obligations under
IRS guidelines and comply with the diversification requirements of the 1940
Act. The Adviser shall retain responsibility for maintaining the
Fund’s diversification requirements and other regulatory investment limits that
apply to the Fund.
In the performance of its duties, the
Subadviser will act in the best interests of the Fund 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 Fund’s compliance
procedures and other policies, procedures or guidelines as the Board or the
Adviser reasonably may establish from time to time, (iv) 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 (v) the reasonable written instructions of the
Adviser.
(b) 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 the Adviser or the
Fund, including without limitation, interest and taxes, brokerage commissions
and other costs in connection with the purchase or sale of securities or other
investment instruments for the Fund and custodian fees and
expenses.
(c) Reports and Availability of
Personnel. The Subadviser, at its expense, shall render to the
Board and the Adviser such periodic and special reports as the Board and the
Adviser reasonably may request with respect to matters relating to the duties of
the Subadviser set forth herein.
(d) Compliance
Matters. The Subadviser, at its expense, will provide the
Adviser with such compliance reports and certifications relating to its duties
under this Agreement and the federal securities laws as may be agreed upon by
such parties from time to time. The Subadviser also shall: (i)
cooperate with and provide reasonable assistance to the Adviser, the Fund’s
administrator, the Fund’s custodian, the Fund’s transfer agent and all other
agents and representatives of the Fund and the Adviser; (ii) keep all such
persons fully informed as to such matters as they may reasonably deem necessary
to the performance of their obligations to the Fund and the Adviser; (iii)
provide prompt responses to reasonable requests made by such persons; and (iv)
maintain any appropriate interfaces with each so as to promote the efficient
exchange of information.
(e) Books and
Records. The Subadviser will maintain for the Fund all books
and records required to be maintained by the Fund pursuant to the 1940 Act and
the rules and regulations promulgated thereunder insofar as such records relate
to the duties of the Subadviser set forth in this Agreement. Pursuant
to Rule 31a-3 under the 1940 Act, the Subadviser agrees that: (i) all
records it maintains for the Fund are the property of the Fund; (ii) it will
surrender promptly to the Fund or the Adviser any such records upon the Fund’s
or the Adviser’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
Fund. Notwithstanding subsection (ii) above, the Subadviser may
maintain copies of such records, without limitation, to comply with its record
keeping obligations.
2. Compensation. The Adviser shall
pay to the Subadviser as compensation for the Subadviser’s services rendered
pursuant to this Agreement a total fee of $75,000, payable in five (5) equal
installments on a monthly basis. Such fees shall be paid by the
Adviser (and not by the Fund), and shall be payable commencing on November 15,
2009 and on the fifteenth day of each subsequent month.
3. Representations
And Warranties. The Subadviser
represents and warrants to the Adviser that: (i) the retention of the
Subadviser by the Adviser 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 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 the
Adviser, and shall cause its employees, officers and directors to furnish to the
Adviser all reports and information required to be provided under such code of
ethics with respect to such persons; (vi) the Subadviser has adopted written
compliance policies and procedures reasonably designed to prevent violations of
the Advisers Act and the rules promulgated thereunder and the Subadviser agrees
to provide: (a) upon request from the Adviser, a copy and/or summary of such
compliance policies and procedures and an accompanying certification certifying
that the Subadviser’s compliance policies and procedures complies with the
Advisers Act; (b) a report of the annual review determining the adequacy and
effectiveness of the Subadviser’s compliance policies and procedures; (c) the
name of the Subadviser’s Chief Compliance Officer to act as a liaison for
compliance issues that may arise between the Fund and the Subadviser; (vii) 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;
(viii) the Subadviser will promptly notify the Adviser 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;
(ix) the Subadviser has provided the Adviser with a copy of its Form ADV as most
recently filed with the SEC and will furnish a copy of all amendments to the
Adviser upon request; and (x) the Subadviser will notify the Adviser 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
responsible for the liquidation of the long-term municipal securities portfolio
of the Fund, in each case prior to or promptly after, such change.
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4. Liability
of the Subadviser. In the absence of
(a) bad faith, gross negligence or willful misfeasance on the part of the
Subadviser in performance of its obligations and duties hereunder, or (b)
reckless disregard by the Subadviser of its obligations and duties hereunder,
the Subadviser shall not be subject to any liability whatsoever to the Adviser,
the Fund, or to any shareholder of the Fund, 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 Subadviser’s liquidation and
re-investment activities on behalf of the Fund. No provision of this
Section 4 is intended to create any rights whatsoever to any third parties,
including without limitation the shareholders of the Fund. However,
the Subadviser shall indemnify and hold harmless, as applicable, the Adviser,
the Fund, its Directors or any shareholder of the Fund from any and all claims,
losses, expenses, obligations and liabilities (including reasonable attorneys
fees) that arise or result from conduct specified in Subsections (a) and (b)
above.
5. Liability
of the Adviser. In the absence of
(a) bad faith, gross negligence or willful misfeasance on the part of the
Adviser in performance of its obligations and duties hereunder, or (b) reckless
disregard by the Adviser of its obligations and duties hereunder, the Adviser
shall not be subject to any liability whatsoever to the Subadviser for any error
or judgment, mistake of law or any other act or omission in the course of, or
connected with, rendering services hereunder. No provision of this
Section 5 is intended to create any rights whatsoever to any third parties,
including without limitation the shareholders of the Fund. However,
the Adviser shall indemnify and hold harmless the Subadviser from any and all
claims, losses, expenses, obligations and liabilities (including reasonable
attorneys fees) that arise or result from conduct specified in Subsections (a)
and (b) above.
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6. Liability
of Directors and Shareholders. Any obligations
of the Fund under this Agreement are not binding upon the Directors or the
shareholders individually, but are binding only upon the assets and property of
the Fund.
7. Duration
and Termination of the Agreement. This Agreement
shall become effective upon its execution, and shall remain in full force and
effect continuously thereafter for a term of 150 days from October 18, 2009,
except as follows:
(a)
By
vote of a majority of the (i) Independent Directors, or (ii) outstanding voting
shares of the Fund, the Fund may at any time terminate this Agreement, without
the payment of any penalty, by providing not more than 10 days’ written notice
delivered or mailed by registered mail, postage prepaid, to the Adviser and the
Subadviser.
(b)The
Adviser may at any time terminate this Agreement, without the payment of any
penalty, by not less than 60 days’ written notice delivered or mailed by
registered mail, postage prepaid, to the Subadviser, and the Subadviser may at
any time, without the payment of any penalty, terminate this Agreement by not
less than 60 days’ written notice delivered or mailed by registered mail,
postage prepaid, to the Adviser.
(c)This
Agreement automatically and immediately shall terminate, without the payment of
any penalty, in the event of its assignment or upon the date that the Interim
Investment Management Agreement between the Adviser and the Fund shall terminate
for any reason.
(d)Any
notice of termination served on the Subadviser by the Adviser shall be without
prejudice to the obligation of the Subadviser to complete transactions already
initiated or acted upon with respect to the Fund.
8. 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 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.
9. Additional
Agreements.
(a) Other Advisory
Agreements. The Subadviser and persons controlled by or under
common control with the Subadviser have and may have advisory, management
service or other agreements with other organizations and persons, and may have
other interests and businesses. Nothing in this Agreement is intended
to preclude such other business relationships.
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(b) Access to
Information. The Subadviser shall, upon reasonable notice,
afford the Adviser at all reasonable times access to Subadviser's officers,
employees, agents and offices and to all its relevant books and records and
shall furnish the Adviser with all relevant financial and other data and
information as requested; provided, however, that nothing contained herein shall
obligate the Subadviser to provide the Adviser with access to the books and
records of the Subadviser relating to any other accounts other than the
Fund.
(c) Confidentiality. The
Subadviser shall treat confidentially and as proprietary information of the Fund
all records and information (including investment holdings and activities of the
Fund) relative to the Fund 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 Fund, 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
Fund. Notwithstanding the above, the Subadviser may
disclose: (i) the identity of the Fund as part of any representative
list of clients of the Subadviser and the amount of fees paid under this
Agreement in response to inquiries relating to potential conflicts of interest
and/or in connection with marketing; (ii) the investment results and other data
of the Fund (without identifying the Fund) in connection with providing
composite investment results of clients of the Subadviser; and (iii) investments
and transactions with respect to the Fund (without identifying the Fund) 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
Fund.
(d) Public
Announcements. The Subadviser shall not 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 Adviser,
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 Subadviser shall provide
the Adviser with as much prior written notice of such disclosure as is practical
under the circumstances.
(e) Notifications. The
Subadviser agrees that it will promptly notify the Adviser 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 SEC or other regulatory
body with applicable jurisdiction.
(f) 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.
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10. 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:
Adviser: Brooklyn
Capital Management LLC
00 Xxxxxxxx Xxxxx
Xxxxxxxx,
XX 00000
Facsimile
No.: (000) 000-0000
Attention: Xxxxxxx
Xxxxxxxxx
Subadviser: Income
Research & Management
000 Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxxxxx, XX 00000
Facsimile No.: (000)
000-0000
Attention: Xxxx Xxxxxxxx
11. Definitions. For the purposes
of this Agreement, the terms “vote of a majority of the outstanding shares,”
“affiliated person,” “control,” “interested person” and “assignment” shall have
their respective meanings as defined in the 1940 Act and the rules thereunder
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission (“SEC”) under said Act; and references to annual approvals
by the Board of Directors shall be construed in a manner consistent with the
1940 Act and the rules thereunder.
12. Governing
Law. This Agreement
shall be construed in accordance with the laws of the state of New York, 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 New York conflict with the applicable provisions of the 1940 Act, the
latter shall control.
13. 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.
14. 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.
15. 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.
16. 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. Where the effect of a requirement of the 1940
Act reflected in any provision of this Agreement is made less restrictive by a
rule, or order of the SEC, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, or
order.
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IN WITNESS WHEREOF, Brooklyn Capital
Management, LLC and Income Research & Management have each caused this
instrument to be signed in duplicate on its behalf by its duly authorized
representative, all as of the day and year first above written.
| Attest: | BROOKLYN CAPITAL MANAGEMENT, LLC |
| By: | By: |
| Name: Xxxxxxx Xxxxxxxxx | |
| Title: Member | |
|
Attest:
|
Income
Research & Management
|
| By: | By: |
| Name: Xxxxxxx X. Xxxxx | |
| Title: Principal, Chief Compliance Officer |
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