GE INVESTMENTS FUNDS, INC.
REAL ESTATE SECURITIES FUND
SUB-ADVISORY AGREEMENT
Agreement made as of May 1, 1997, between GE INVESTMENT MANAGEMENT
INCORPORATED ("GEIM"), a Delaware corporation, and GMG/Seneca Capital Management
("Sub-Adviser"), a California corporation (the "Agreement").
RECITALS
GEIM has entered into an Investment Advisory and Administration Agreement
dated April __, 1997, ("Advisory Agreement") with GE Investments Funds, Inc.
("Company"), an open-end management investment company registered under the
Investment Company Act of 1940, as amended ("1940 Act") with respect to the Real
Estate Securities Fund ("Fund") series of the Company; and
GEIM wishes to retain the Sub-Adviser to furnish certain investment
advisory services to GEIM and the Fund, and the Sub-Adviser is willing to
furnish those services;
GEIM intends that this Agreement will be submitted to the Board of
Directors (the "Board") and shareholders for approval hereafter;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Appointment. GEIM hereby appoints the Sub-Adviser as an investment
sub-adviser with respect to the Fund's assets for the period and on the terms
set forth in this Agreement. The Sub-Adviser accepts that appointment and agrees
to render the services herein set forth, for the compensation herein provided.
2. Duties as Sub-Adviser.
(a) Subject to the oversight and supervision of GEIM and the officers
and the Board, the Sub-Adviser will provide a continuous investment program
for the Fund's assets, including investment research and management. The
Sub-Adviser will determine from time to time what investments will be
purchased, retained or sold by the Fund. The Sub-Adviser will be
responsible for placing purchase and sell orders for Fund investments. The
Sub-Adviser will provide services under this Agreement in accordance with
the Fund's investment objective, policies and restrictions as stated in the
Company's current Registration Statement on Form N- 1A and any amendments
or supplements thereto (the "Registration Statement"). In this connection
and in connection with the further duties set forth in paragraphs 2(b) -
(g) below, the Sub-Adviser shall provide GEIM and the officers and
directors of the Company with such
periodic reports and documentation as GEIM or the officers and directors of
the Company shall request regarding the Sub-Adviser's management of the
Fund's assets and compliance with the Prospectus and all requirements
hereunder.
(b) The Sub-Adviser shall carry out its responsibilities under this
Agreement in compliance with: (1) the Fund's investment objective, policies
and restrictions as set forth in the Registration Statement, (2) such
policies or directives as the Board may from time to time establish or
issue, and (3) applicable law and related regulations. In particular, the
Sub-Adviser shall make every effort to ensure that the Fund complies with
Section 817(h) of the Internal Revenue Code of 1986 (the "Code") and
regulations issued thereunder relating to the diversification requirements
for variable annuity, endowment, and life insurance contracts and to ensure
that the Fund continuously qualifies as a regulated investment company
under sub-chapter M of the Code. GEIM shall promptly notify the Sub-Adviser
of changes to (1) or (2) above and shall notify the Sub-Adviser of changes
to (3) above promptly after it becomes aware of such changes.
(c) The Sub-Adviser shall take all actions which it considers
necessary to implement the investment policies of the Fund, and in
particular, to place all orders for the purchase or sale of securities or
other investments for the Fund with brokers or dealers selected by it, and
to that end, the Sub-Adviser is authorized as the agent of the Company to
give instructions to the Company's custodian as to deliveries of securities
or other investments and payments of cash for the account of the Fund. In
connection with the selection of brokers or dealers and the placing of
purchase and sale orders with respect to investments of the Fund, the
Sub-Adviser is directed at all times to seek to obtain best execution and
price within the policy guidelines determined by the Board and set forth in
the Registration Statement.
In addition to seeking the best price and execution, the Sub-Adviser
may also take into consideration research and statistical information and
wire and other quotation services provided by brokers and dealers to the
Sub-Adviser. The Sub-Adviser is also authorized to effect individual
securities transactions at commission rates in excess of the minimum
commission rates available, if it determines in good faith that such amount
of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Sub-Adviser's overall
responsibilities with respect to the Fund. The policies with respect to
brokerage allocation, determined from time to time by the Board are those
disclosed in the Registration Statement. The Sub-Adviser will periodically
evaluate the statistical data, research and other investment services
provided to it by brokers and dealers. Such services may be used by the
Sub-Adviser in connection with the performance of its obligations under
this Agreement or in connection with other advisory or investment
operations including using such information in managing its own accounts.
Whenever the Sub-Adviser simultaneously places orders to purchase or sell
the same security on behalf of the Fund and one or more other accounts
advised by the Sub-Adviser, the orders will be allocated as to price and
amount among all such accounts in a manner believed to be equitable by the
Sub-Adviser to each account.
(d) Subject to: (1) the requirement that the Sub-Adviser seek to
obtain best execution and price within the policy guidelines determined by
the Board and set forth in the Registration Statement, (2) the provisions
of the 1940 Act and the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), (3) the provisions of the Securities Exchange Act of 1934,
and (4) other applicable provisions of law; the Sub-Adviser or an
affiliated person of the Sub-Adviser or of GEIM may act as broker for the
Fund in connection with the purchase or sale of securities or other
investments for the Fund. Such brokerage services are not within the scope
of the duties of the Sub-Adviser under this Agreement. Subject to the
requirements of applicable law and any procedures adopted by the Board, the
Sub-Adviser or its affiliated persons may receive brokerage commissions,
fees or other remuneration from the Fund or the Company for such services
in addition to the Sub-Adviser's fees for services under this Agreement.
(e) The Sub-Adviser will maintain all books and records required to be
maintained by the Company pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on behalf
of the Fund, and will furnish the Board and GEIM with such periodic and
special reports as the Board or GEIM reasonably may request. In compliance
with the requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser
hereby agrees that all records which it maintains for the Fund are the
property of the Company, agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any records which it maintains for the
Company and which are required to be maintained by Rule 31a-1 under the
1940 Act, and further agrees to surrender promptly to the Company any
records which it maintains for the Company upon request by the Company.
(f) At such times as shall reasonably be requested by the Board or
GEIM, the Sub-Adviser will provide the Board and GEIM with economic and
investment analyses and reports as well as quarterly reports setting forth
the Fund's performance and make available to the Board and GEIM any
economic, statistical and investment services normally available to
institutional or other customers of the Sub-Adviser.
(g) In accordance with procedures adopted by the Board, as amended
from time to time, the Sub-Adviser is responsible for determining the fair
valuation of any illiquid portfolio securities and will assist the
Company's accounting services agent or GEIM to obtain independent sources
of market value for all other portfolio securities.
3. Further Duties. In all matters relating to the performance of this
Agreement, the Sub-Adviser will act in conformity with the Company's Articles of
Incorporation, By-Laws and Registration Statement and with the written
instructions and directions of the Board and GEIM and will comply with the
requirements of the 1940 Act, the Advisers Act, the rules under each, and
Subchapter M of the Code as applicable to regulated investment companies. In
addition, the Sub-Adviser will act in conformity with all other applicable
federal and state laws and regulations. GEIM agrees to provide to the
Sub-Adviser copies of the Company's Articles of Incorporation, By-Laws,
Registration Statement and any amendments or supplements to any of these
materials as soon as practicable after such materials become available.
4. Expenses. During the term of this Agreement, the Sub-Adviser will bear
all expenses incurred by it in connection with its investment sub-advisory
services under this Agreement.
5. Compensation.
For the services rendered, the facilities furnished and the expenses
assumed by the Sub-Adviser, the Adviser shall pay the Sub-Adviser at the end of
each calendar month a fee based on the average daily net assets of the Fund at
the following annual rates:
.425% of the first $100,000,000; .40% of the next $100,000,000; and
.375% of amounts in excess of $200,000,000.
The Sub-Adviser's fee shall be accrued daily at 1/365th of the applicable
annual rate set forth above. For the purpose of accruing compensation, the net
assets of the Fund shall be determined in the manner and on the dates set forth
in the current prospectus of the Company, and, on dates on which the net assets
are not so determined, the net asset value computation to be used shall be as
determined on the next day on which the net assets shall have been determined.
In the event of termination of this Agreement, all compensation due through the
date of termination will be calculated on a pro-rated basis through the date of
termination and paid within thirty business days of the date of termination.
During any period when the determination of net asset value is suspended,
the net asset value of the Fund as of the last business day prior to such
suspension shall for this purpose be deemed to be the net asset value at the
close of each succeeding business day until it is again determined.
6. Limitation Of Liability. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund, the
Company or its shareholders or by GEIM in connection with the matters to which
this Agreement relates, except a loss 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.
7. Indemnification.
(a) GEIM agrees to indemnify the Sub-Adviser, its officers and
directors, and any person who controls the Sub-Adviser within the meaning
of Section 15 of the Securities Act of 1933 ("1933 Act") for any loss or
expense (including attorneys' fees) arising out of any claim, demand,
action or suit in the event that the Sub-Adviser has been found to be
without fault and GEIM has been found at fault (i) by the final judgment of
a court of competent jurisdiction or (ii) in any order of settlement of any
claim, demand, action or suit that has been approved by the Board of
Directors of GEIM.
(b) The Sub-Adviser agrees to indemnify GEIM, its officers and
directors, and any person who controls GEIM within the meaning of Section
15 of the 1933 Act for any loss or
expense (including attorneys' fees) arising out of any claim, demand,
action or suit in the event that GEIM has been found to be without fault
and the Sub-Adviser has been found at fault (i) by the final judgment of a
court of competent jurisdiction or (ii) in any order of settlement of any
claim, demand, action or suit that has been approved by the Board of
Directors of the Sub- Adviser.
8. Representations of Sub-Adviser. 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; and (v) will
promptly notify GEIM 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.
(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
GEIM and the Board with a copy of that code of ethics, together with
evidence of its adoption. Within fifteen 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 GEIM 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 written request of
GEIM, the Sub-Adviser shall permit GEIM, 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 GEIM with a copy of its Form ADV as
most recently filed with the Securities and Exchange Commission ("SEC") and
promptly will furnish a copy of all amendments to GEIM at least annually.
(d) The Sub-Adviser will notify GEIM 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 of the
Sub-Adviser, in each case prior to or promptly after such change.
9. Representations and Warranties of GEIM. GEIM represents, warrants
and agrees that GEIM (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 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; and (v) will promptly notify the
Sub-Adviser of the occurrence of any event that would disqualify GEIM from
serving as an investment adviser of an investment company pursuant to
Section 9(a) of the 1940 Act or otherwise.
10. Duration and Termination.
(a) This Agreement shall become effective upon the date first above
written and will continue for an initial two-year term and will continue
thereafter so long as the continuance is specifically approved at least
annually (a) by the Board or (b) by a vote of a majority of the Fund's
outstanding voting securities, as defined in the 1940 Act, provided that in
either event the continuance is also approved by a majority of the Board
who are not "interested persons" (as defined in the 0000 Xxx) of any party
to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on the approval.
(b) This Agreement may be terminated at any time without the payment
of any penalty, by the Board, or by vote of a majority of the Fund's
outstanding voting securities, on 60 days' written notice to the
Sub-Adviser. This Agreement may also be terminated, without the payment of
any penalty, by GEIM: (i) upon 60 days' written notice to the Sub-Adviser;
(ii) upon material breach by the Sub-Adviser of any of the representations
and warranties set forth in Paragraph 8 of this Agreement; or (iii) if 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 Fund.
The Sub-Adviser may terminate this Agreement at any time, without the
payment of a penalty, on 60 days' written notice to GEIM. This Agreement
will terminate automatically in the event of its assignment or upon
termination of the Advisory Agreement.
11. 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, and no material amendment to the terms of
this Agreement shall be effective until approved by a vote of a majority of the
Fund's outstanding voting securities (unless the Company receives an SEC order
or opinion of counsel permitting it to modify the Agreement without such vote).
12. Governing Law. This Agreement shall be construed in accordance with the
1940 Act and the laws of the State of New York, without giving effect to the
conflicts of laws principles thereof. 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. 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. 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. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"affiliated person," "interested person," "assignment," "broker," "investment
adviser," "net assets," "sale," "sell" and "security" shall have the same
meaning as such terms have in the 1940 Act, subject to such exemption as may be
granted by the SEC by any rule, regulation or order. Where the effect of a
requirement of the federal securities laws reflected in any provision of this
Agreement is made less restrictive by rule, regulation or order of the SEC,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order. This Agreement may be
signed in counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.
Attest: GE INVESTMENT MANAGEMENT INCORPORATED
BY:______________________________________
Name:
Title:
Attest: GMG/SENECA CAPITAL MANAGEMENT
BY:______________________________________
Name:
Title:
