Exhibit (d)(3) under Form N-1A
Exhibit (10) under Item 601/Reg. S-K
SUB-ADVISORY AGREEMENT
AGREEMENT, is made as of October 16, 2004, between XXXXX BROTHERS XXXXXXXX
& CO., a New York limited partnership (the "Adviser") and Mondrian Investment
Partners Limited ("Sub-Adviser"). This Agreement was initially effective with
respect to each Fund on the date set forth on Exhibit A (the "Fund" or Funds").
WHEREAS, the Adviser has entered into an Investment Advisory Agreement,
amended and restated as of August 4, 2003 ("Advisory Agreement"), with BBH Fund,
Inc. (the "Investment Company") an open-end management investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act") and
of which each Fund is a series thereof;
WHEREAS, the Investment Company offers for public sale distinct series of
shares of beneficial interest of the Funds; and
WHEREAS, under the Advisory Agreement, the Adviser has agreed to provide
certain investment advisory services to the Funds; and
WHEREAS, the Advisory Agreement permits the Adviser to delegate certain of
its duties as investment adviser thereunder to a sub-adviser; and
WHEREAS, the Sub-Adviser is willing to furnish such services.
NOW, THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. The Adviser hereby appoints the Sub-Adviser to act as investment
sub-adviser to the Funds for the period and on the terms set forth in this
Agreement. The Sub-Adviser accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. Subject to the general supervision of (1) the Trustees/Directors of the
Investment Company (the "Board"), and (2) the Adviser, the Sub-Adviser shall
manage the investment operations and the composition of the portfolios of
securities and investments with respect to that portion of the Funds' assets
allocated to the Sub-Adviser from time to time by the Adviser in its sole
discretion, including cash ("Assets"), the purchase, retention and disposition
thereof and agreements relating thereto, in accordance with the Funds'
investment objective and policies as stated in the Prospectuses (as defined in
paragraph 3 of this Agreement) and subject to the following understandings:
(a) the Sub-Adviser shall furnish a continuous investment program
for the Assets of each Fund's portfolio and determine from time to time
which investments or securities will be purchased, retained, sold or lent
by the Funds, and which portion of the assets will be invested or held
uninvested as cash and shall communicate in a timely manner all such
transactions to the Funds' portfolio accountant, the Advisor and custodian
or such depositories or agent designated by the Fund or the Advisor. The
Sub-Advisor shall not deviate from such investment program and any
guidelines provided by the Advisor without the prior written consent of
the Advisor and the Board of the Investment Company;
(b) the Sub-Adviser shall use the same skill and care in the
management of each Fund's portfolio as it uses in the investment
management of other accounts for which it has investment responsibility as
agent;
(c) the Sub-Adviser, in the performance of its duties and
obligations under this Agreement, shall act in conformity with the
Investment Company's Declaration of Trust/Articles of Incorporation and
By-Laws and the Prospectuses of the Funds and with the instructions and
directions of the Board and will conform to and comply with the
requirements of the 1940 Act and all other applicable federal and state
laws and regulations, provided such documents and amendments thereto have
been delivered to the Sub-Adviser in accordance with Section 3 below;
(d) the Sub-Adviser shall determine the Assets to be purchased, sold
or lent by the Funds and as agent for the Funds will effect portfolio
transactions pursuant to its determinations either directly
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with the issuer or with any broker and/or dealer in such securities; in
placing orders with brokers and or dealers the Sub-Adviser intends to seek
best price and execution for purchases and sales; the Sub-Adviser shall
also make recommendations regarding whether or not the Funds shall enter
into repurchase or reverse repurchase agreements and interest rate futures
contracts.
(e) unless the Advisor advised the Sub-Advisor in writing that the
right to vote proxies has been expressly reserved to the Advisor or the
Fund or otherwise delegated to another party, the Sub-Advisor shall be
authorized to exercise voting rights incident to any securities held
without consultation with the Advisor or the Fund. The Sub-Advisor shall
also be authorized to respond to all corporate action matters incident to
the securities held for any Fund.
On occasions when the Sub-Adviser deems the purchase or sale of a security
to be in the best interest of the Funds as well as other customers, the
Sub-Adviser, may, to the extent permitted by applicable laws and regulations,
but shall not be obligated to, aggregate the securities to be so sold or
purchased in order to obtain the best execution and lower brokerage commissions,
if any. 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
Sub-Adviser in the manner it considers to be the most equitable and consistent
with its fiduciary obligations to the Funds and to such other customers;
(f) the Sub-Adviser shall maintain books and records with respect to
the Funds' securities transactions and shall render to the Board and the
Advisor such periodic and special reports as the Board may reasonably
request;
(g) the Sub-Adviser shall assist the Adviser and the Funds'
Administrator with the fair valuation of portfolio securities as necessary
and shall be responsible for identifying the need to fairly value
securities that are traded in markets that close prior to the time the
Fund calculates its net asset value; and
(h) the investment management services of the Sub-Adviser to the
Funds under this Agreement are not to be deemed exclusive, and the
Sub-Adviser shall be free to render similar services to others.
3. The Adviser has delivered copies of each of the following documents to
the Sub-Adviser and will promptly notify and deliver to it all future amendments
and supplements, if any:
(a) Declaration of Trust/Articles of Incorporation of the Investment
Company and amendments thereto (such Declaration of Trust/Articles of
Incorporation and amendments, as presently in effect and further amended
from time to time, are herein called the "Organizational Document");
(b) By-Laws of the Investment Company (such By-Laws, as presently in
effect and as amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Board authorizing the appointment
of the Sub-Adviser and approving the form of this Agreement;
(d) Registration Statement under the 1940 Act and the Securities Act
of 1933, as amended, on Form N-1A (the "Registration Statement") as filed
with the Securities and Exchange Commission (the "Commission") relating to
the Investment Company and the Funds' shares, and all amendments thereto;
(e) Notification of Registration of the Investment Company under the
1940 Act on Form N-8A as filed with the Commission; and
(f) Prospectuses of the Funds (such prospectuses, as presently in
effect and as amended or supplemented with respect to the Funds from time
to time, is herein called the "Prospectuses").
4. The Sub-Adviser shall keep the Funds' books and records required to be
maintained by it pursuant to paragraph 2(e) hereof. The Sub-Adviser agrees that
all records which it maintains for each Fund is the property of the Fund and it
will promptly surrender any of such records to the Fund upon the Fund's request,
provided that the Sub-Adviser is permitted to retain copies of any records
required for regulatory purposes. The Sub-Adviser further agrees to preserve for
the periods prescribed by Rule 31a-2 of the Commission under the 1940 Act any
such records as are required to be maintained by the
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Adviser with respect to the Funds by Rule 31a-1 of the Commission under the 1940
Act. The Sub-Advisor will provide the auditors and inspectors of any Fund and
the Advisor with reasonable access to any such books and records of the Funds
during the Sub-Advisor's normal business hours.
5. During the term of this Agreement the Sub-Adviser will pay all expenses
incurred by it in connection with its activities under this Agreement other than
the cost of securities and investments purchased for the Funds. The Sub-Adviser
will not pay taxes, custody fees and/or brokerage commissions, if any.
6. For the services provided and the expenses borne pursuant to this
Agreement, the Adviser, not the Funds, will pay the Sub-Adviser as full
compensation therefore a fee as set forth on Exhibit A attached hereto. This fee
will be computed based on the net asset value of the Assets allocated to the
Sub-Adviser as of 4:00 P.M. New York time on each business day within each month
and will be paid to the Sub-Adviser monthly during the succeeding calendar
month.
7. The Sub-Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by any Fund or the Advisor in connection
with the matters to which this Agreement relates, except a loss, damage, cost or
expense directly arising from a breach of fiduciary duty owed to Fund
shareholders as a result of this Agreement or a loss, damage, cost or expense
resulting from willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. The provisions of the foregoing
sentence shall survive the termination of this Agreement.
8. The Sub-Advisor acknowledges that all information and documents
disclosed by the Advisor to the Sub-Advisor, or which come to the Sub-Advisor's
attention during the course of its performance under this Agreement, constitute
valuable assets of and are proprietary to the Advisor, and the Sub-Advisor also
acknowledges that the Advisor has a responsibility to its customers and
employees to keep the Advisor's records and information confidential and
proprietary. Therefore, the Sub-Advisor agrees not to disclose, either directly
or indirectly, to any person, firm or corporation information of any kind,
nature or description concerning matters affecting or relating to the business
of the Advisor unless the information is already in the public domain.
Notwithstanding the foregoing, provided, however, the Sub-Adviser may use the
Fund's performance in calculating composites, may give the Fund's and the
Investment Company's names to brokers and other third parties providing services
to the Fund, and may identify the Fund and/or Investment Company on the
Sub-Adviser's client list. This provision shall survive termination of this
Agreement.
9. The Sub-Adviser 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 Sub-Advisor's business activities.
10. This Agreement shall continue in effect for two years from the date of
its execution with respect to any Fund, and thereafter only so long as its
continuance is specifically approved at least annually in conformity with the
requirements of the 1940 Act; provided, however, that this Agreement may be
terminated with respect to any Fund (i) at any time, without the payment of any
penalty, by vote of a majority of all the Board of the Investment Company or by
"vote of a majority of the outstanding voting securities" of the Fund on 60 days
written notice to the Sub-Adviser, or (ii) by the Sub-Adviser at any time,
without the payment of any penalty, on 90 days written notice to the Adviser or
(iii) immediately, if, in the reasonable judgment of the Adviser, the
Sub-Adviser becomes unable to discharge its duties and obligations under this
Agreement, including circumstances such as financial insolvency of the
Sub-Adviser or other circumstances that could adversely affect the Funds. This
Agreement will automatically and immediately terminate in the event of its
"assignment" or delegation by the Sub-Adviser of any of its responsibilities
hereunder.
11. The Sub-Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided herein or
authorized by the Board of the Investment Company from time to time, have no
authority to act for or represent the Funds or the Investment Company or the
Advisor in any way or otherwise be deemed an agent of the Funds or the
Investment Company or the Advisor.
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12. This Agreement may be amended by mutual consent, provided that any
material amendment hereto shall be approved (a) by vote of a majority of those
members of the Board of the Investment Company 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 amendment, and (b) by "vote of a
majority of the outstanding voting securities" of the Funds.
13. As used in this Agreement, the terms "assignment", "interested
persons" and "vote of a majority of the outstanding voting securities" shall
have the meanings assigned to them respectively in the 1940 Act.
14. Notices of any kind to be given to the Adviser by the Sub-Adviser
shall be in writing and shall be duly given if mailed or delivered to the
Adviser at 000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Treasurer, or at
such other address or to such other individual as shall be specified by the
Adviser to the Sub-Adviser. Notices of any kind to be given to the Sub-Adviser
by the Adviser shall be in writing and shall be duly given if mailed or
delivered to the Sub-Adviser at Mondrian Investment Partners Limited, 00
Xxxxxxxxx, 0xx Xxxxx, Xxxxxx, XX0X 0XX, Xxxxxxx Attention: Xxxxx X. Xxxxxx, with
a copy to Xxxx Xxxxxxx at the same address, or at such other address or to such
other individual as shall be specified by the Sub-Adviser to the Adviser.
15. The Adviser represents, warrants and agrees as follows:
(a) The Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 ("Advisers Act"); and
(b) The Advisory Agreement permits the Adviser to delegate certain
of its duties as investment adviser thereunder to a sub-adviser.
16. The Sub-Adviser represents, warrants and agrees as follows:
(a) (a) The Sub-Adviser (i) is registered as an investment adviser
under the Advisers Act and will continue to be so registered for so long
as this Agreement remains in effect; (ii) is not prohibited by the 1940
Act or the Advisers Act from performing the services contemplated by this
Agreement; (iii) has met and will seek to continue to meet for so long as
this Agreement remains in effect, any other applicable federal or state
requirements, or the applicable requirements of any regulatory or industry
self-regulatory agency necessary to be met in order to perform the
services contemplated by this Agreement; (iv) has the authority to enter
into and perform the services contemplated by this Agreement; (v) will
promptly notify the Adviser of the occurrence of any event that would
disqualify the Sub-Adviser from serving as an investment adviser of an
investment company pursuant to Section 9(a) of the 1940 Act or otherwise;
and (vi) is not presently under investigation by any regulatory agency and
does not know of any pending or anticipated investigation or litigation by
any such regulatory agency.
(b) The Sub-Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the 1940 Act and will provide
the Adviser and the Board with a copy of such code of ethics, together
with evidence of its adoption. Within forty-five days of the end of the
last calendar quarter of each year that this Agreement is in effect, the
president or a vice-president of the Sub-Adviser shall certify to the
Adviser that the Sub-Adviser has complied with the requirements of Rule
17j-1 during the previous year and that there has been no violation of the
Sub-Adviser's code of ethics or, if such a violation has occurred, that
appropriate action was taken in response to such violation. Upon the
reasonable written request of the Adviser, the Sub-Adviser shall permit
the Adviser, its employees or its agents to examine the reports required
to be made to the Sub-Adviser by Rule 17j-1(c)(1) and all other records
relevant to the Sub-Adviser's code of ethics.
(c) The Sub-Adviser has provided the Adviser with a copy of its Form
ADV, which as of the date of this Contract is its Form ADV most recently
filed with the Commission and will furnish a copy of all amendments to the
Adviser at least annually.
(d) The Sub-Adviser will notify the Adviser of any change of control
of the Sub-Adviser, including any change of its general partners or 25%
shareholders, as applicable, and any changes in the key personnel who are
either the portfolio manager(s) of the Funds or senior management of the
Sub-Adviser, in each case prior to, or promptly after, such change.
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(e) Except as stated in Section 8 of this Agreement, the Sub-Adviser
agrees that neither it, nor any of its affiliates, will in any way refer
directly or indirectly to its relationship with the Investment Company,
the Funds, the Adviser or any of their respective affiliates in offering,
marketing or other promotional materials without the express written
consent of the Adviser.
17. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
or provisions of this Agreement in any other jurisdiction.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York and together with the other agreements and
documents referenced herein, shall constitute the entire agreement of the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers or Partners designated below on the day and year
first above written.
MONDRIAN INVESTMENT XXXXX BROTHERS XXXXXXXX & CO.
PARTNERS LIMITED
By: By:
_____________________________ ______________________________________
Name: Xxxxx X. Xxxxxx Name: Xxxx X. Xxxxxxx
Title: Managing Director Title: Partner
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EXHIBIT A
to the
SUB-ADVISORY AGREEMENT dated as of October 16, 2004, between
XXXXX BROTHERS XXXXXXXX & CO. and Mondrian Investment Partners Limited
The Adviser shall pay to Sub-Adviser, for all services rendered by
Sub-Adviser hereunder, the fees set forth below.
BBH Fund, Inc.
BBH International Equity Fund
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