GE FUNDS
GE MID-CAP VALUE EQUITY FUND
SUB-ADVISORY AGREEMENT
This agreement ("Agreement") is made as of December 30, 1998, between
GE INVESTMENT MANAGEMENT INCORPORATED ("GEIM"), a Delaware corporation, GE
FUNDS, a Massachusetts business trust ("Company"), on behalf of the GE MID-CAP
VALUE EQUITY FUND ("Fund"), a series of the Company, solely with respect to
Section 5(b) of this Agreement, and NWQ INVESTMENT MANAGEMENT COMPANY, a
Massachusetts corporation ("Sub-Adviser").
RECITALS
GEIM has entered into an Investment Advisory and Administration
Agreement dated December 9, 1998 ("Advisory Agreement") with the Company, an
open-end management investment company registered under the Investment Company
Act of 1940, as amended ("1940 Act"), with respect to the Fund, a series of the
Company;
Pursuant to Section 1 of the Advisory Agreement, GEIM is authorized to
delegate its investment advisory responsibilities to other investment advisers,
subject to the requirements of the 1940 Act;
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; and
GEIM intends that this Agreement will become effective when approved
in accordance with Section 15 of the 1940 Act;
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 Board of
Trustees of the Company ("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 consult with GEIM from time to time regarding matters
pertaining to the Fund,
including market strategy and portfolio characteristics. 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
("Registration Statement") and the Company's Declaration of Trust and By-Laws,
if any, ("Constituent Documents"). In this connection and in connection with
the further duties set forth in paragraphs 2(b) - (k) below, the Sub-Adviser
shall provide GEIM and the Board with such periodic reports and documentation
as GEIM or the Board shall reasonably request regarding the Sub-Adviser's
management of the Fund's assets, compliance with applicable laws and rules and
the Registration Statement 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) the Constituent
Documents, (3) all investment guidelines, policies, procedures or directives of
the Company or GEIM provided to the Sub-Adviser, (4) the 1940 Act and the rules
promulgated thereunder, and (5) other applicable federal and state laws and
related regulations. In particular, in carrying out its duties as Sub-Adviser,
Sub-Adviser shall, to the extent within its control, make every effort to
ensure that the Fund continuously qualifies as a regulated investment company
under sub-chapter M of the Internal Revenue Code of 1986, as amended ("Code")
and the regulations promulgated thereunder. GEIM shall promptly notify the
Sub-Adviser of changes to (1), (2) or (3) above and shall consult with
Sub-Adviser before making any changes relating solely to the Fund's investment
objective, policies and restrictions as set forth in the Registration
Statement.
(c) The Sub-Adviser shall take all actions which it considers
necessary to implement the investment objectives and 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(s) 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.
In addition to seeking the best price and execution, to the extent
covered by Section 28(e) of the Securities Exchange Act of 1934, as amended
("1934 Act"), the Sub-Adviser is also authorized to 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 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
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or investment operations, including using such information in managing its own
accounts. The Sub-Adviser is also authorized to use soft-dollar services as
requested by the Board from time to time. 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 ("Advisers Act"),
(3) the provisions of the 1934 Act, 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. The Sub-Adviser shall
permit the books and records maintained with respect to the Fund to be
inspected and audited by the Company, GEIM or their respective agents at all
reasonable times during normal business hours upon reasonable notice. In
compliance with the requirements of Rule 3la-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, the Sub-Adviser
will provide to the Board and GEIM economic and investment analyses and
reports, information required in the Registration Statement and information
necessary for GEIM and the Board to review the Fund or discuss the management
of it. The Sub-Adviser will provide quarterly reports setting forth the Fund's
performance and the Sub-Adviser's private account composite performance and
will complete on a quarterly basis the checklist provided to it by GEIM
regarding the Fund's investments and transactions. The Sub-Adviser shall make
available to the Board and GEIM any economic, statistical and investment
services normally available to institutional or other customers of the
Sub-Adviser. The Sub-Adviser will make available its officers and employees to
meet with the Board on reasonable notice to review the Fund's investments.
(g) In accordance with procedures adopted by the Board, as amended
from time to time, the Sub-Adviser is responsible for assisting the Board in
determining the fair valuation of
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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.
(h) At such times as shall be reasonably requested by GEIM, the
Sub-Adviser shall review and certify in writing that the information stated in
the Company's Registration Statement relating to the Sub-Adviser, its
management of the Fund, including investment objectives, strategies and related
risks, and its performance history is true, correct and complete.
(i) The Sub-Adviser will promptly notify GEIM of any change of control
of the Sub-Adviser, including any change of its general partners or 25%
shareholders or members, as applicable, and any changes in the key personnel of
the Sub-Adviser, including without limitation portfolio management personnel
responsible for the Fund's assets, in each case prior to or promptly after such
change. Notwithstanding the foregoing, the Sub-Adviser will promptly notify
GEIM of any existing agreement, or upon entering into any agreement, that may
result in a change of control of the Sub-Adviser, including without limitation
the retention of an agent to assist in the sale of all, or a significant
portion, of the business of the Sub-Adviser.
(j) The Sub-Adviser will calculate its private account composite
performance in compliance with the Performance Presentation Standards of the
Association for Investment Management Research.
(k) 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.
3. 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.
4. Compensation.
For the services rendered, the facilities furnished and the expenses
assumed by the Sub-Adviser, the Adviser shall pay the Sub-Adviser no later than
the twentieth (20th) business day following the end of each calendar month a
fee based on the average daily net assets of the Fund at the following annual
rates: .450% of the first $50,000,000; and .375% of amounts in excess of
$50,000,000.
The Sub-Adviser's fee shall be paid by GEIM out of GEIM's advisory fee
to the extent such fee is received by GEIM pursuant to the Advisory Agreement.
To the extent that GEIM determines to waive, or to reimburse the Fund for, all
or a portion of its advisory fee, the Sub-Adviser agrees to a reduction of its
fee pro-rata.
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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 (30)
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.
5. Indemnification.
(a) GEIM agrees to indemnify and hold 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, as amended ("1933 Act") harmless
from any and all direct or indirect liabilities, losses or damages (including
reasonable attorneys' fees) suffered by Sub-Adviser resulting from (i) GEIM's
breach of its duties under the Advisory Agreement or (ii) bad faith, willful
misfeasance, reckless disregard or gross negligence on the part of GEIM or any
of its directors, officers or employees in the performance of GEIM's duties and
obligations under this Agreement, except to the extent such loss results from
the Sub-Adviser's own willful misfeasance, bad faith, reckless disregard or
gross negligence in the performance of Sub-Adviser's duties and obligations
under this Agreement.
(b) The Fund agrees to indemnify and hold the Sub-Adviser, its
officers and directors, and any person who controls the Sub-Adviser within the
meaning the 1933 Act harmless from any and all direct or indirect liabilities,
losses or damages (including reasonable attorneys' fees) suffered by
Sub-Adviser resulting from any misrepresentation of a material fact in the
Registration Statement or the omission of a fact necessary to make information
contained in the Registration Statement not misleading, except to the extent
that such loss results from information in the Registration Statement that was
provided by Sub-Adviser.
(c) The Sub-Adviser agrees to indemnify and hold GEIM, its officers
and directors, and any person who controls GEIM within the meaning of Section
15 of the 1933 Act, and the Company harmless from any and all direct or
indirect liabilities, losses or damages (including reasonable attorneys' fees)
suffered by GEIM, its officers and directors, and any person who controls GEIM
within the meaning of Section 15 of the 1933 Act, and the Company resulting
from (i) Sub-Adviser's breach of its duties hereunder or (ii) bad faith,
willful misfeasance, reckless disregard or gross negligence on the part of the
Sub-Adviser or any of its directors, officers or employees in the performance
of the Sub-Adviser's duties and obligations under this Agreement, except to the
extent such loss results from the Company's or GEIM's own willful misfeasance,
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bad faith, reckless disregard or gross negligence in the performance of their
respective duties and obligations under the Advisory Agreement or this
Agreement.
6. Representations and Warranties 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 the
Advisory Agreement; (iv) has the authority to enter into and perform the
services contemplated by this Agreement and the execution, delivery and
performance by the Sub-Adviser of this Agreement does not contravene or
constitute a default under any agreement binding upon the Sub-Adviser; (v) will
promptly notify GEIM of the occurrence of any event that would disqualify it
from serving as an investment adviser of an investment company pursuant to
Section 9(a) of the 1940 Act or otherwise; (vi) has filed a notice of exemption
pursuant to Rule 4.14 under the Commodity Exchange Act with the Commodity
Futures Trading Commission and the National Futures Association, or is not
required to file such exemption; and (vii) is duly organized and validly
existing under the laws of the state in which it was organized with the power
to own and possess its assets and carry on its business as it is now being
conducted.
(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.
(c) The Sub-Adviser certifies that the information stated in
Post-Effective Amendment No. 26 to the Company's Registration Statement
relating to the Sub-Adviser, its management of the Fund and its performance
history is true, correct and complete to the best of its knowledge.
(d) The Sub-Adviser's performance under this Agreement will not be
materially affected by any problems related to Year 2000 compliance. For this
purpose, Year 2000 compliance shall mean that computer systems (1) shall be
capable of accurately processing date-related data for dates earlier and later
than January 1, 2000 (including calculating, comparing, sorting and
sequencing), (2) shall have the ability to provide proper date recognition for
any data element, including date-related data represented without a century
designation, date-related data whose year is represented by only two digits,
and date fields assigned special values or as default fields, and (3) shall
have the ability to recognize all leap years, and all valid dates therein.
7. 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 or the
Advisers Act from performing the services contemplated by the Advisory
Agreement; (iii) has met, and will seek to continue to meet for so long as this
Agreement remains in effect, any
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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 the Advisory Agreement; (iv) has
the authority to enter into and perform the services contemplated by the
Advisory Agreement and the execution, delivery and performance by GEIM of the
Advisory Agreement does not contravene or constitute a default under any
agreement binding upon GEIM; (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; (vi) has filed a notice of exemption pursuant to Rule
4.14 under the Commodity Exchange Act with the Commodity Futures Trading
Commission and the National Futures Association, or is not required to file
such exemption; (vii) is duly organized and validly existing under the Laws of
the State of Delaware with the power to own and possess its assets and carry on
its business as it is now being conducted; and (viii) it has furnished the
Sub-Adviser with true and complete copies of the Constituent Documents and the
Registration Statement and will provide to the Sub-Adviser copies of any
amendments or supplements to any of these materials as soon as practicable
after such materials become available.
8. Survival of Representations and Warranties; Duty to Update
Information. All representations and warranties made by the Sub-Adviser and
GEIM pursuant to Sections 6 and 7, respectively, shall survive for the duration
of this Agreement and the parties hereto shall promptly notify each other in
writing upon becoming aware that any of the foregoing representations and
warranties are no longer true.
9. 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 parties to this Agreement or "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, including without limitation, a change of control
of the Sub-Adviser, or upon termination of the Advisory Agreement.
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10. Change of Control and Change of Portfolio Management. The
Sub-Adviser will be liable to the Company and GEIM for all direct and indirect
costs resulting from (i) a change of control of the Sub-Adviser, or (ii) Xxx
Xxxxx'x resignation or the termination of Xxx Xxxxx'x employment by the
Sub-Adviser, provided, however, that such resignation or termination occurs
within five years from the date of this Agreement. For purposes of this Section
10, direct and indirect costs shall include without limitation all costs
associated with proxy solicitations, Board meetings, revisions to prospectuses,
statements of additional information and marketing materials, and the hiring of
another sub-adviser to the Fund in an amount not to exceed fees paid by GEIM to
the Sub-Advisor pursuant to Section 4 of this Agreement for three months
preceding the date of such change of control, resignation or termination of
employment. The understandings and obligations set forth in this Section 10
shall survive the termination of this Agreement and shall be binding upon the
Sub-Adviser's successor(s) and/or assign(s).
11. Exclusivity. During the term of the Agreement and so long as the
Fund is being offered to the public, the Sub-Adviser shall not, without the
written consent of GEIM and the Board, serve as investment adviser or
investment sub-adviser to any management investment company registered under
the 1940 Act (or series thereof) with substantially similar investment
objectives, policies and restrictions as those of the Fund (a "Mutual Fund")
other than a Mutual Fund that is advised by GEIM. At such time as the Fund is
no longer available to the public, the Sub-Adviser shall not serve as
investment adviser or investment sub-adviser to any other Mutual Fund without
having first offered in writing to serve as investment sub-adviser to a Mutual
Fund advised by GEIM for an investment sub-advisory fee not to exceed the
amount set forth in Section 4 of this Agreement (the "Offer"). The Offer shall
be valid for sixty (60) days from the date of its receipt by GEIM. If GEIM
accepts the Offer, the Sub-Adviser shall not serve as investment adviser or
investment sub-adviser to any Mutual Fund, unless the Board does not approve
the sub-advisory agreement with GEIM or the amount of the sub-advisory fee
contemplated.
12. 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, or the issue is the subject of a position of the SEC or
its staff, permitting it to modify the Agreement without such vote).
13. 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.
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14. 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.
GE INVESTMENT MANAGEMENT INCORPORATED
BY: /s/XXXXXXX X. XXXXXXXX
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President
GE FUNDS, ON BEHALF OF GE MID-CAP VALUE
EQUITY FUND, A SERIES OF GE FUNDS, SOLELY
WITH RESPECT TO SECTION 5(b) OF THIS
AGREEMENT
BY: /s/XXXXXXX X. XXXXXXXX
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
NWQ INVESTMENT MANAGEMENT COMPANY
BY: /s/XXXX-XXXX XXXXXX
--------------------------------
Name: Xxxx-Xxxx Xxxxxx
Title: Managing Director
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