Exhibit (d)(viii)
INVESTMENT SUB-ADVISORY CONTRACT
BETWEEN OLD WESTBURY FUNDS, INC.,
BESSEMER INVESTMENT MANAGEMENT LLC AND
XXXXX CAPITAL MANAGEMENT LLC
This CONTRACT is made as of this 25th day of July, 2003, among Old
Westbury Funds, Inc. (the "Company"), a Maryland corporation, with its principal
place of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, Bessemer
Investment Management LLC (the "Adviser"), a limited liability company organized
under the laws of the State of Delaware, with its principal place of business at
000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, and Xxxxx Capital Management LLC, (the
"Sub-Adviser"), a limited liability company organized under the laws of the
State of Delaware with its principal place of business at 0000 Xxxx Xxxx Xxxx,
Xxxxxxxx 0, Xxxxx 000, Xxxxx Xxxx, XX 00000.
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended, (the "1940 Act") as an open-end management investment company;
and
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940 as an investment adviser, and
WHEREAS, the Sub-Adviser is registered under the Investment Advisers
Act of 1940 as an investment adviser; and
WHEREAS, the Company and the Adviser desire that the Sub-Adviser
perform investment advisory services for such assets of the Old Westbury Capital
Opportunity Fund, a series of the Company (the "Fund"), as allocated by the
Adviser to the Sub-Adviser for management from time-to-time, and the Sub-Adviser
is willing to perform those services on the terms and conditions set forth in
this Contract;
NOW THEREFORE, the Company, the Adviser and Sub-Adviser agree as
follows:
Section 1. The Company. The Company is engaged in the business of
investing and reinvesting its assets in securities of the type and in accordance
with the limitations specified in its Articles of Incorporation, as amended and
supplemented, By-Laws and Registration Statement filed with the Securities and
Exchange Commission (the "Commission") under the 1940 Act, including any
representations made in the Prospectus and Statement of Additional Information
relating to the Fund contained therein and as may be supplemented from
time-to-time, all in such manner and to such extent as may from time-to-time be
authorized by the Company's Board of Directors (the "Board"). The Board is
authorized to issue any unissued shares in any number of additional classes or
series. The Company has delivered copies of the documents listed in this Section
to the Sub-Adviser and will from time-to-time furnish the Sub-Adviser with any
amendments thereof.
Section 2. Appointment. Subject to the direction and control of the Board,
the Adviser manages the investment and reinvestment of the assets of the Fund
and other funds of the Company and provides for certain management and services
as specified in the Investment Advisory Contract between the Company and the
Adviser with respect to the Fund.
Subject to the direction and control of the Board and the Adviser, the
Sub-Adviser shall manage the investment and reinvestment of such assets of the
Fund as the Adviser may allocate for management by the Sub-Adviser from
time-to-time (the "Allocated Assets"), and without limiting the generality of
the foregoing, shall provide the management and other services specified below,
all in such manner and to such extent as may be directed from time-to-time by
the Adviser.
Section 3. Duties of the Sub-Adviser.
(a) The Sub-Adviser shall be responsible for all day-to-day investment
decisions regarding the Allocated Assets. To carry out such decisions, the
Sub-Adviser is hereby authorized, as agent and attorney-in-fact for the Company,
at the risk of and in the name of the Company, to place orders and issue
instructions with respect to transactions relating to the Allocated Assets. In
all purchases, sales and other transactions relating to the Allocated Assets,
the Sub-Adviser is authorized to exercise full discretion and act for the
Company in the same manner and with the same force and effect as the Company
might or could do with respect to such purchases, sales or other transactions,
as well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
(b) The Sub-Adviser will report to the Adviser and the Board at each
regular quarterly meeting thereof all material changes relating to the Allocated
Assets since the prior report, and will also keep the Board informed of
important developments affecting the Company, the Allocated Assets and the
Sub-Adviser, and on its own initiative will furnish the Adviser and the Board
from time-to-time with such information as the Sub-Adviser may believe
appropriate, whether concerning the individual companies whose securities are
held as part of the Allocated Assets, the industries in which they engage, or
the economic, social or political conditions prevailing in each country in which
the Allocated Assets are invested. In making purchases and sales of securities
concerning the Allocated Assets, the Sub-Adviser will comply with the policies
set from time-to-time by the Board as well as the limitations imposed by the
Company's Articles of Incorporation, as amended and supplemented, By-Laws,
Registration Statement under the 1940 Act, the limitations in the 1940 Act and
in the Internal Revenue Code of 1986, as amended applicable to the Company and
the investment objectives, policies and restrictions of the Fund as set forth in
its registration statement, including its prospectus.
(c) The Sub-Adviser may from time-to-time employ or associate with such
persons as the Sub-Adviser believes to be appropriate or necessary to assist in
the execution of the Sub-Adviser's duties hereunder, the cost of performance of
such duties to be borne and paid by the Sub-Adviser. No obligation may be
imposed on the Company in any such respect.
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(d) The Sub-Adviser shall maintain records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Company under the 1940 Act as they relate to the
Allocated Assets. The Sub-Adviser shall prepare and maintain, or cause to be
prepared and maintained, in such form, for such periods and in such locations as
may be required by applicable law, all documents and records relating to the
services provided by the Sub-Adviser pursuant to this Contract required to be
prepared and maintained by the Company pursuant to the rules and regulations of
the Commission. The Sub-Adviser shall prepare and maintain records relating to
the diversification rules under the Internal Revenue Code for regulated
investment companies. The books and records pertaining to the Company which are
in possession of the Sub-Adviser shall be the property of the Company. The
Company, or the Company's authorized representatives (including the Adviser),
shall have access to such books and records at all times during the
Sub-Adviser's normal business hours. Upon the reasonable request of the Company,
copies of any such books and records shall be provided promptly by the
Sub-Adviser to the Company, the Adviser or the Company's authorized
representatives.
Section 4. Control by Board and Adviser. As is the case with respect to the
Adviser under the Investment Advisory Contract, any investment activities
undertaken by the Sub-Adviser pursuant to this Contract, as well as any other
activities undertaken by the Sub-Adviser relating to the Allocated Assets, shall
at all times be subject to the direction and control of the Company's Board, as
well as the Adviser. In addition, any investment activities undertaken by the
Sub-Adviser pursuant to this Contract, shall at all times be subject to the
direction and control of the Adviser.
Section 5. Compliance with Applicable Requirements. In carrying out its
obligations under this Contract, the Sub-Adviser shall at all times comply with:
(a) all applicable provisions of the 1940 Act, and any rules and
regulations adopted thereunder;
(b) the provisions of the registration statement of the Company, as it may
be amended from time-to-time, under the 1940 Act;
(c) the provisions of the Articles of Incorporation of the Company, as may
be amended from time-to-time;
(d) the provisions of the By-laws of the Company, as may be amended from
time-to-time, or resolutions of the Board as may be adopted from time-to-time;
(e) the provisions of the Internal Revenue Code of 1986, as amended,
applicable to the Company or the Fund; and
(f) any other applicable provisions of state or federal law.
In addition, any code of ethics adopted by the Sub-Adviser in compliance
with Rule 17j-1 under the 1940 Act shall include policies, prohibitions and
procedures which substantially conform to the recommendations regarding personal
investing approved by
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the Board of Governors of the Investment Company Institute, as such
recommendations may be amended from time-to-time, and that comply with any
amendments to Rule 17j-1 under the 1940 Act.
Section 6. Broker-Dealer Relationships. The Sub-Adviser is responsible for
the purchase and sale of securities comprising the Allocated Assets,
broker-dealer selection, and negotiation of brokerage commission rates. The
Sub-Adviser's primary consideration in effecting a security transaction will be
to obtain the best price and execution. In selecting a broker-dealer to execute
each particular transaction for the Allocated Assets, the Sub-Adviser will take
the following into consideration: the best net price available, the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the Allocated Assets on a continuing basis. Accordingly,
the price in any transaction may be less favorable than that available from
another broker-dealer if the difference is reasonably justified by other aspects
of the portfolio execution services offered. Subject to such policies as the
Board may from time-to-time determine, the Sub-Adviser shall not be deemed to
have acted unlawfully or to have breached any duty created by this Contract or
otherwise solely by reason of having caused the Fund to pay a broker or dealer
that provides brokerage and research services to the Sub-Adviser an amount of
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, if the Sub-Adviser determines in good faith that such amount
of commission was 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 overall responsibilities of the Sub-Adviser
with respect to the Fund and to other clients of the Sub-Adviser. The
Sub-Adviser is further authorized to allocate the orders placed by it relating
to the Allocated Assets to brokers and dealers who also provide research or
statistical material, or other services to the Fund or to the Sub-Adviser. Such
allocation shall be in such amounts and proportions as the Sub-Adviser shall
determine and the Sub-Adviser will report on said allocations regularly to the
Board of the Company indicating the brokers to whom such allocations have been
made and the basis therefor.
Provided the investment objectives of the Fund are adhered to with respect
to the Allocated Assets, the Sub-Adviser may aggregate sales and purchase orders
of securities held as part of the Allocated Assets with similar orders being
made simultaneously for other accounts managed by Sub-Adviser, if, in
Sub-Adviser's reasonable judgement, such aggregation will result in an overall
economic benefit to the Fund, taking into consideration the advantageous selling
or purchase price and brokerage commission. In accounting for such aggregated
order, price and commission shall be averaged on a per bond or share basis
daily. The Company and Adviser acknowledge that Sub-Adviser's determination of
such economic benefit to the Fund is based on an evaluation that the Fund is
benefited by relatively better purchase or sales price, lower commission
expenses and beneficial timing of transactions, or a combination of these and
other factors. The Sub-Adviser represents and acknowledges that it is solely
responsible for complying with any and all pronouncements of the Commission or
its staff with respect to the requirements for aggregating trades as may be set
out in any interpretive release and/or no-action letters issued by the
Commission staff ("SEC Requirements"). The Sub-
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Adviser further agrees to hold the Company and the Adviser harmless from any and
all loss, damage or liability resulting from the Sub-Adviser's failure to comply
with any SEC Requirements.
Section 7. Expenses of the Fund. All of the ordinary business expenses
incurred in the operations of the Fund with respect to the Allocated Assets and
the offering of Fund shares shall be borne by the Fund and the Company unless
specifically provided otherwise in this Contract. These expenses include, but
are not limited to, brokerage commissions, taxes, legal, auditing or
governmental fees, expenses of registering and qualifying shares for sale,
expenses relating to trustees and shareholder meetings, the cost of preparing
and distributing reports and notices to shareholders, the fees and other
expenses incurred by the Fund in connection with membership in investment
company organizations and the cost of printing copies of prospectuses and
statements of additional information distributed to the Fund's shareholders.
Section 8. Compensation. As compensation for the services provided under
this Contract, the Adviser shall pay the Sub-Adviser fees, payable monthly in
arrears, at the annual rates indicated on Schedule A hereto, as such Schedule
may be amended or supplemented from time-to-time, provided that the Sub-Adviser
is acting as a sub-adviser to the Fund with respect to the Allocated Assets. The
net assets under management against which the foregoing fees are to be applied
are the net assets as of the last day of the month. If this fee agreement
becomes effective subsequent to the first day of a month compensation for that
part of the month shall be subject to a pro rata adjustment based on the number
of days elapsed in the current month as a percentage of the total number of days
in such month. If this Contract shall terminate before the last day of a month,
the date of termination will be treated as the last day of the month. During any
period when the determination of net asset value is suspended, the net asset
value for the last day prior to such suspension shall for this purpose be deemed
to be the net asset value at the close of the month. It is understood that the
Adviser shall be solely responsible for the Sub-Adviser's fees for its services
hereunder, and the Sub-Adviser agrees that it shall have no claim against the
Company or the Fund with respect to compensation under this Contract.
Section 9. Standard of Care. The Company and Adviser shall expect of the
Sub-Adviser, and the Sub-Adviser will give the Company and the Adviser the
benefit of, the Sub-Adviser's best judgment and efforts in rendering its
services to the Company. As an inducement to the Sub-Adviser's undertaking these
services at the compensation level specified, the Sub-Adviser shall not be
liable hereunder for any error of judgment or mistake of law or for any loss
suffered by the Company in connection with the performance of this Contract,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Sub-Adviser or any
of its officers, directors, employees or agents, in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Contract.
Section 10. Non-Exclusivity. The services of the Sub-Adviser hereunder are
not to be deemed to be exclusive, and the Sub-Adviser shall be free to render
investment advisory and administrative or other services to others (including
other investment
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companies) and to engage in other activities. It is understood and agreed that
officers or directors of the Sub-Adviser are not prohibited from engaging in any
other business activity or from rendering services to any other person, or from
serving as partners, officers, directors or trustees of any other firm or trust,
including other investment advisory companies.
Section 11. Books and Records. The Sub-Adviser shall, with respect to
orders the Sub-Adviser places for the purchase and sale of portfolio securities
concerning the Allocated Assets, maintain or arrange for the maintenance of the
documents and records required pursuant to Rule 31a-1 under the 1940 Act as well
as trade tickets and confirmations of portfolio trades and such other records as
the Adviser reasonably requests to be maintained. All such records shall be
maintained in a form acceptable to the Fund and the Company and in compliance
with the provisions of Rule 31a-1 or any successor rule. All such records will
be the property of the Fund and the Company, and will be available for
inspection and use by the Fund and the Company and their authorized
representatives (including the Adviser). The Sub-Adviser shall promptly, upon
the Company's request, surrender to the Fund those records which are the
property of the Company or the Fund. The Sub-Adviser will promptly notify the
Adviser if it experiences any difficulty in maintaining the records in an
accurate and complete manner.
Section 12. Term of the Contract. This Contract shall become effective with
respect to the Allocated Assets after it is approved in accordance with the
express requirements of the 1940 Act, and executed by the Company, Adviser and
Sub-Adviser and shall continue initially for two years and thereafter continue
from year to year, provided that the continuation of the Contract is approved in
accordance with the requirements of the 1940 Act, which currently requires that
the continuation be approved at least annually:
(a) (i) by the Company's Board or (ii) by the vote of "a majority of the
outstanding voting securities" of the Fund (as defined in Section 2(a)(42) of
the 1940 Act), and
(b) by the affirmative vote of a majority of the Company's Directors who
are not parties to this Contract or "interested persons" (as defined in the 0000
Xxx) of a party to this Contract (other than as Directors of the Company), by
votes cast in person at a meeting specifically called for such purpose.
Section 13. Termination. As required under the 1940 Act, this Contract may
be terminated with respect to the Fund at any time, without the payment of any
penalty, by vote of the Company's Board or by vote of a majority of the Fund's
outstanding voting securities, or by the Adviser on the one hand, or the
Sub-Adviser on the other hand, in each case on sixty (60) days' written notice
to the other parties to this Contract. The notice provided for herein may be
waived by the party entitled to receipt thereof. This Contract shall
automatically terminate in the event of its assignment, the term "assignment"
for purposes of this paragraph having the meaning defined in Section
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2(a)(4) of the 1940 Act, as modified or interpreted by the Commission or its
staff in rules, regulations, interpretations or no-action letters.
Section 14. Indemnification by the Sub-Adviser. The Company shall not be
responsible for, and the Sub-Adviser shall indemnify and hold the Company or the
Fund harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable to
the willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties of the Sub-Adviser hereunder or any of its officers,
directors, employees or agents.
Section 15. Indemnification by the Company. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of duties
hereunder on the part of the Sub-Adviser or any of its officers, directors,
employees or agents, the Company hereby agrees to indemnify and hold harmless
the Sub-Adviser against all claims, actions, suits or proceedings at law or in
equity whether brought by a private party or a governmental department,
commission, board, bureau, agency or instrumentality of any kind, arising from
the advertising, solicitation, sale, purchase or pledge of securities, whether
of the Fund or other securities, undertaken by the Fund, its officers,
directors, employees or affiliates, resulting from any violations of the
securities laws, rules, regulations, statutes and codes, whether federal or of
any state, by the Fund, its officers, directors, employees or affiliates.
Federal and state securities laws impose liabilities under certain circumstances
on persons who act in good faith, and nothing herein shall constitute a waiver
or limitation of any rights which the Fund may have and which may not be waived
under any applicable federal and state securities laws.
Section 16. Notices. Any notices under this Contract shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Company
shall be 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, Attention: Secretary, and that
of the Adviser shall be 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: General
Counsel, and that of the Sub-Adviser shall be Xxxxx Capital Management LLC, 0000
Xxxx Xxxx Xxxx, Xxxxxxxx 0, Xxxxx 000, Xxxxx Xxxx, XX 00000, Attention: Xxxx X.
Xxxxx, Xx.
Section 17. Questions of Interpretation. Any question of interpretation of
any term or provision of this Contract having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such terms or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or in the absence of any controlling decision
of any such court, by rules, regulations or orders of the Commission, or
interpretations of the Commission or its staff, or Commission staff no-action
letters, issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act or the Advisers Act reflected in any provision of
this Contract is revised by rule, regulation or order of the Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order. The duties and obligations of the parties under this Contract shall be
governed by and construed in accordance with the laws of the State of Delaware.
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Section 18. Amendment. No provision of this Contract 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. If shareholder approval of an amendment is required
under the 1940 Act, no such amendment shall become effective until approved by a
vote of the majority of the outstanding shares of the Fund. Otherwise, a written
amendment of this Contract is effective upon the approval of the Board, the
Adviser and the Sub-Adviser.
Section 19. Old Westbury Name. The Sub-Adviser agrees that the name "Old
Westbury" or any variant thereof which comprises a component of the Company's
name, is a property right of the parent of the Adviser. The Sub-Adviser agrees
that it will not use the name "Old Westbury" or any variant thereof except as
expressly agreed between the Adviser and the Sub-Adviser.
Section 20 Release. The names "Old Westbury Funds, Inc." and "Directors of
Old Westbury Funds, Inc." refer respectively to the Company created by the
Articles of Incorporation and the Directors, as directors but not individually
or personally. The obligations of "Old Westbury Funds, Inc." entered into in the
name or on behalf thereof by any of the Directors, representatives or agents are
made not individually, but in such capacities, and are not binding upon any of
the Directors, shareholders, or representatives of the Company personally, but
bind only assets of the Fund, and all persons dealing with the Fund of the
Company must look solely to the assets of such Fund for the enforcement of any
claims.
Section 21. Miscellaneous. The captions in this Contract 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 Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby.
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IN WITNESS WHEREOF, the parties hereto have cause this Contract to be
executed in duplicate by their respective officers on the day and year first
written above.
OLD WESTBURY FUNDS, INC.
By:
---------------------------------
Xxxxxx X. Xxxxx
President
BESSEMER INVESTMENT MANAGEMENT LLC
By:
---------------------------------
Xxxxxxx X. Xxxxxx
Senior Managing Director
XXXXX CAPITAL MANAGEMENT LLC
By:
---------------------------------
Xxxx X. Xxxxx, Xx.
President
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SCHEDULE A
The Adviser shall pay the Sub-Adviser, as full compensation for
services provided hereunder, a sub-advisory fee, computed on the last day of the
month and payable monthly at the annual rates listed below as a percentage of
the net asset value of the Allocated Assets being managed by the Sub-Adviser
from time-to-time.
Rate of Net
Portfolio Compensation Assets
--------- ------------ ------
Old Westbury Capital Opportunity 0.45% on the first $200 million
Fund 0.40% on all sums in excess of $200
million
Approved: July 24, 2003
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