EXHIBIT (D) (4) UNDER FORM N-1A
EXHIBIT 10 UNDER ITEM 601/REG. S-K
SUB-ADVISORY AGREEMENT
AGREEMENT, effective on and as of completion of the Change of Control
Transaction (as hereinafter defined), which is presently anticipated to occur on
October 2, 2006, between XXXXX BROTHERS XXXXXXXX & CO., a New York limited
partnership (the "Adviser") and Xxxxxx Xxxxx & 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 investment management 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 interests 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;
WHEREAS, the Adviser retained the Sub-Adviser to perform investment
advisory services for the Fund pursuant to a Sub-Advisory Agreement dated as of
January 12, 2004 (the "Existing Sub-Advisory Agreement");
WHEREAS, on or about May 17, 2006 the Sub-Adviser agreed to be acquired in
its entirety by Mellon International Limited on or about September, 2006 (the
"Change of Control Transaction");
WHEREAS, the Change of Control Transaction will effect an assignment and
therefore an automatic and immediate termination of the Existing Sub-Advisory
Agreement; and
WHEREAS, the Adviser wishes to retain the services of Sub-Adviser, after
giving effect to the Change of Control Transaction, and 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 Adviser and custodian or such depositories or
agent designated by the Fund or the Adviser. The Sub-Adviser shall not deviate
from such investment program and any guidelines provided by the Adviser without
the prior written consent of the Adviser 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
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 written 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;
(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 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 Adviser advised the Sub-Adviser in writing that the
right to vote proxies has been expressly reserved to the Adviser or the Fund or
otherwise delegated to another party, the Sub-Adviser shall exercise voting
rights incident to any securities held without consultation with the Adviser or
the Fund. The Sub-Adviser shall also 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
Adviser 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(f) 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. 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 Adviser with respect to the Funds by Rule 31a-1
of the Commission under the 1940 Act. The Sub-Adviser will provide the auditors
and inspectors of any Fund and the Adviser with reasonable access to any such
books and records of the Funds during the Sub-Adviser'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
(including taxes and 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 therefor 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 Adviser in connection
with the matters to which this Agreement relates, except a loss, damage, cost or
expense resulting from a breach of 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 0000 Xxx) or a
loss, damage, cost or expense resulting from 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.
Accordingly, the Sub-Adviser hereby indemnifies and holds the Fund and the
Adviser harmless from any and all such losses, damages, costs or expenses
incurred by the Fund and/or the Adviser arising out of or in connection with the
performance of the Sub-Adviser hereunder. The provisions of the foregoing
sentence shall survive the termination of this Agreement.
8. The Sub-Adviser acknowledges that all information and documents
disclosed by the Adviser to the Sub-Adviser, or which come to the Sub-Adviser's
attention during the course of its performance under this Agreement, constitute
valuable assets of and are proprietary to the Adviser, and the Sub-Adviser also
acknowledges that the Adviser has a responsibility to its customers and
employees to keep the Adviser's records and information confidential and
proprietary. Therefore, the Sub-Adviser 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 Adviser unless the information is already in the public domain. 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-Adviser'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, the Investment Company or the
Adviser in any way or otherwise be deemed an agent of the Funds, the Investment
Company or the Adviser.
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 Xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx XX0 0XX,
Xxxxxxxx Attention: Xxxxxxxx Xxxx-Xxxx, Company Secretary, 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) 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.
(e) 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.
(f) The Adviser acknowledges that the Sub-Adviser is regulated in
the conduct of its investment business in the United Kingdom by the Financial
Services Authority (FSA) and that under the regulations of the FSA the Sub-
Adviser shall classify the Adviser as an "Intermediate Customer".
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.
XXXXXX XXXXX & PARTNERS LIMITED XXXXX BROTHERS XXXXXXXX & CO.
By: /s/ Xxxxx By: /s/ Xxxx X. Xxxxxxx
Name: Xxxxx Name: Xxxx X. Xxxxxxx
Title: Director Title: Partner
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EXHIBIT A
to the
Sub-Advisory Contract
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
Fees shall be 0.55% per annum on "Combined Assets" up to $250,000,000 and 0.35%
per annum on "Combined Assets" over $250,000,000.
The fee will be calculated on daily net assets (after fund expenses) and paid
quarterly. "Combined Assets" equals the net assets of the Fund plus the net
assets of other client accounts of the Adviser that are managed by the Sub-
Adviser.
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