Exhibit (d)(2)
▇▇▇ ▇▇▇ FUNDS, INC.
INVESTMENT SUB-ADVISORY AGREEMENT
THIS AGREEMENT ("Agreement") made as of the 15th day of October 2003 by
and among NEW YORK LIFE INVESTMENT MANAGEMENT LLC, a limited liability company
organized under the laws of the state of Delaware having its principal place of
business in New York, New York (the "Sub-Adviser") and ▇▇▇ ▇▇▇ ASSOCIATES
CORPORATION, a corporation organized under the laws of the State of Delaware and
having its principal place of business in New York, New York (the "Adviser") and
▇▇▇ ▇▇▇ FUNDS, INC., a corporation organized under the laws of the state of
Maryland having its principal place of business in New York, New York (the
"Company").
WHEREAS, the Company is engaged in business as an open-end investment
company and is so registered under the Investment Company Act of 1940 as amended
("1940 Act"); and
WHEREAS, the Sub-Adviser is engaged principally in the business of
rendering investment management services and is registered under the Investment
Advisers Act of 1940 ("Advisers Act"); and
WHEREAS, the Company is authorized to issue shares of common stock in
separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Company has retained the Adviser to render management and
advisory services to the series of the Company known as the ▇▇▇ ▇▇▇ Mid Cap
Value Fund (the "Fund"); and
WHEREAS, the Adviser has retained the Sub-Adviser to render investment
advisory to the Fund; and
WHEREAS, the Sub-Adviser is willing to furnish such services to the Fund
under this investment sub-advisory agreement.
NOW, THEREFORE, WITNESSETH:
That it is hereby agreed among the parties hereto as follows:
1. APPOINTMENT OF SUB-ADVISER
The Adviser hereby appoints the Sub-Adviser to act as investment adviser to the
Fund for the period and on the terms set forth herein. The Sub-Adviser accepts
such appointment and agrees to render the services herein set forth, for the
compensation herein provided. So long as the Sub-Adviser serves as investment
adviser to the Fund pursuant to this Agreement the obligation of the Adviser
under this Agreement with respect to the Fund shall be, subject in any event to
the control of the Board of Directors of the Company (the "Board"), to determine
and review with Sub-Adviser the investment policies of the Fund and the
Sub-Adviser shall have the obligation of furnishing continuously an investment
program and making investment decisions for the Fund, adhering to applicable
investment objectives, policies and restrictions and placing all orders for the
purchase and sale of portfolio securities for the Fund and such other services
set forth in Section 2 hereof. The Adviser will compensate the Sub-Adviser of
the Fund for its services to the Fund. The Adviser or the Fund, subject to the
terms of this Agreement, may terminate the services of the Sub-Adviser at any
time in their sole discretion, and the Adviser shall at such time assume the
responsibilities of the Sub-Adviser unless and until a successor investment
adviser is selected.
2. DUTIES OF SUB-ADVISER
The Sub-Adviser, at its own expense, shall furnish the following services and
facilities to the Company:
(a) INVESTMENT PROGRAM. The Sub-Adviser will (i) furnish continuously an
investment program for the Fund, (ii) determine (subject to the overall
supervision and review of the Board and the Adviser) what investments
shall be purchased, held, sold or exchanged and what portion, if any, of
the Fund shall be held uninvested, and (iii) make changes on behalf of the
Fund in the investments. The Sub-Adviser will provide the services
hereunder in accordance with the Fund's investment objectives, policies
and restrictions as stated in the then current prospectus and statement of
additional information which is part of the Trust's Registration Statement
filed with the Securities and Exchange Commission, as amended from time to
time, together with supplements or amendments (together, the "Registration
Statement"), along with copies of the Articles of Incorporation and
By-laws as they may be amended from time to time, copies of which shall be
sent to the Sub-Adviser by the Adviser. The Sub-Adviser also will manage,
supervise and conduct such other affairs and business of the Fund and
matters incidental thereto, as the Sub-Adviser and the Fund agree, subject
always to the control of the Board and to the provisions of the Articles
of Incorporation of the Fund, the Fund's By-laws and the 1940 Act. The
Sub-Adviser will provide the services under this Agreement so that the
Fund will qualify as a regulated investment company under sub-chapter M of
the Internal Revenue Code of 1986, as it may be amended from time to time.
With respect to the services provided by the Sub-Adviser under this
Agreement, it shall be responsible for compliance with all applicable
laws, rules and regulations. Sub-Adviser will adopt, or has adopted, and
will maintain procedures reasonably designed to ensure compliance.
(b) OFFICE SPACE AND FACILITIES. The Sub-Adviser will arrange to furnish
office space, all necessary office facilities, simple business equipment,
supplies, utilities, and telephone services required for managing the
investments of the Fund.
(c) PERSONNEL. The Sub-Adviser shall provide executive and clerical personnel
for managing the investments of the Fund, and shall compensate officers
and Directors of the Fund for services provided to the Fund (but not any
other series of the Company) if such persons are also employees of the
Sub-Adviser or its affiliates, except as otherwise provided herein.
(d) PORTFOLIO TRANSACTIONS. The Sub-Adviser shall place all orders for the
purchase and sale of portfolio securities for the account of the Fund with
brokers or dealers selected by the Sub-Adviser, although the Fund will pay
the actual transaction costs, including without limitation brokerage
commissions on portfolio transactions in accordance with this Paragraph
2(d). In executing portfolio transactions and selecting brokers or
dealers, the Sub-Adviser will use its best efforts to seek on behalf of
the Fund the best overall terms available. In assessing the best overall
terms available for any transaction, the Sub-Adviser shall consider all
factors it deems relevant, including, without limitation, the breadth of
the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any (for the specific transaction and
on a continuing basis). In evaluating the best overall terms available,
and in selecting the broker or dealer to execute a particular transaction,
the Sub-Adviser may also consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of
1934) provided to the Sub-Adviser or an affiliate of the Sub-Adviser in
respect of accounts over which it exercises investment discretion. The
Sub-Adviser is authorized to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction which is 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
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of
that particular transaction or in terms of all of the accounts over which
investment discretion is so exercised by the Sub-Adviser or its
affiliates. Nothing in this agreement shall preclude the combining of
orders for the sale or purchase of securities or other investments with
other accounts managed by the Sub-Adviser or its affiliates provided that
the Sub-Adviser does not favor any account over any other account and
provided that any purchase or sale orders executed contemporaneously shall
be allocated in an equitable manner among the accounts involved in
accordance with procedures adopted by the Sub-Adviser. The Sub-Adviser is
authorized to allocate the orders placed by it on behalf of the Fund to
the Adviser, Sub-Adviser, or affiliate thereof that is registered as a
broker-dealer with the SEC, in compliance with Rule 17e-1 procedures that
the Fund's Board shall adopt from time to time.
(e) In connection with the purchase and sale of securities for the Fund, the
Sub-Adviser will arrange for the transmission to the custodian and record
keeping agent for the Company on a daily basis, such confirmation, trade
tickets, and other documents and information, including, but not limited
to, Cusip, Sedol, or other numbers that identify securities to be
purchased or sold on behalf of the Fund, as may be reasonably necessary to
enable the custodian and record keeping agent to perform its
administrative and record keeping responsibilities with respect to the
Fund. With respect to portfolio securities to be purchased or sold through
the Depository Trust Company, the Sub-Adviser will arrange for the
automatic transmission of the confirmation of such trades to the Fund's
custodian and record keeping agent.
(f) The Sub-Adviser will monitor on a daily basis the determination by the
custodian and record-keeping agent for the Fund of the valuation of
portfolio securities and other investments of the Fund. The Sub-Adviser
will assist the custodian and record keeping agent for the Fund in
determining or confirming, consistent with the procedures and policies
stated in the Registration Statement for the Company, the value of any
portfolio securities or other assets of the Fund for which the custodian
and record keeping agent seeks assistance from, or identifies for review
by, the Sub-Adviser. The Sub-Adviser shall assist the Board of Directors
in determining fair value of such securities or assets for which market
quotations are not readily available.
(g) The Sub-Adviser will provide the Company or the Adviser with copies of all
of the Fund's investment records and ledgers maintained by the Sub-Adviser
(which shall not include the records and ledgers maintained by the
custodian and record keeping agent for the Company) as are necessary to
assist the Company and the Adviser to comply with requirements of the 1940
Act and the Advisers Act as well as other applicable laws. The Sub-Adviser
will furnish to regulatory authorities having the requisite authority any
information, reports or investment records and ledgers maintained by the
Sub-Adviser in connection with such services which may be requested in
order to ascertain whether the operations of the Company are being
conducted in a manner consistent with applicable laws and regulations.
(h) The Sub-Adviser will provide reports to the Board of Directors for
consideration at meetings of the Board on the investment program for the
Fund and the issues and securities represented in the Fund's portfolio,
and will furnish the Board of Directors with respect to the Fund such
periodic and special reports as the Board of Directors or the Adviser may
reasonably request.
3. EXPENSES OF THE COMPANY
Except as provided in Paragraph 2(d) above, the Sub-Adviser shall assume and pay
all of its own costs and expenses related to providing an investment program for
the Fund.
4. COMPENSATION
For the services and facilities to be provided to the Fund by the Sub-Advisor as
provided in Paragraph 2 hereof, the Advisor shall pay the Sub-Advisor a fee,
payable monthly, at the annual rate of .50% (one half of one per cent) on any
balance of the Fund's average daily net assets from the Advisory fee it receives
from the Fund, as determined by the Trust or its third party administrator in
accordance with procedures established, from time to time, by or under the
direction of the Board. Such fee shall be reduced by 0.01% (one hundredth of one
per cent) on an annual basis for each month for each $1 million (one million
dollars) by which average daily net assets of the Fund for the month are below
$50 million (fifty million dollars). The Trust shall not be liable for the
obligation of the Advisor to make payment to the Sub-Advisor.
5. REPRESENTATIONS AND COVENANTS
(a) The Adviser hereby represents and warrants as follows:
1. That it is registered in good standing with the Securities and
Exchange Commission as an investment adviser under the
Advisers Act;
2. That it has all the requisite authority to enter into,
execute, deliver and perform its obligations under this
Agreement; and
3. Its performance of its obligations under this Agreement does
not conflict with any law, regulation or order to which it is
subject.
(b) The Adviser hereby covenants and agrees that, so long as this
Agreement shall remain in effect:
1. It shall maintain its registration in good standing as an
investment adviser under the Advisers Act;
2. Its performance of its obligations under this Agreement does
not conflict with any law, regulation or order to which it is
subject; and
3. It shall promptly notify the Sub-Adviser upon occurrence of
any event that might disqualify or prevent it from performing
its duties under this Agreement.
(c) The Sub-Adviser hereby represents and warrants as follows:
1. That it is registered in good standing with the Securities and
Exchange Commission as an investment adviser under the
Advisers Act;
2. That is has all the requisite authority to enter into,
execute, deliver and perform its obligations under this
Agreement; and
3. Its performance of its obligations under this Agreement does
not conflict with any law, regulation or order to which it is
subject.
(d) The Sub-Adviser hereby covenants and agrees that, so long as this
Agreement shall remain in effect:
1. It shall maintain its registration in good standing as an investment
adviser under the Advisers Act;
2. Its performance of its obligations under this Agreement does not
conflict with any law, regulation or order to which it is subject;
3. It shall at all times fully comply with the Advisers Act, the 1940
Act, all applicable rules and regulations under such Acts and all
other applicable law; and
4. It shall promptly notify the Adviser and the Fund upon occurrence of
any event that might disqualify or prevent it from performing its
duties under this Agreement. It further agrees to notify the Adviser
and the Fund promptly with respect to written material that has been
provided to the Fund or the Adviser by the Sub-Adviser for inclusion
in the Registration Statement, or any supplement or amendment
thereto, or, if written material has not been provided, with respect
to the information pertaining to the Sub-Adviser or Sub-Adviser's
services under this Agreement contained in the Registration
Statement, or any supplement or amendment thereto, reviewed by the
Sub-Adviser, in either case, of any untrue statement of a material
fact or of any omission of any statement of a material fact which is
required to be stated therein or is necessary to make the statements
contained therein not misleading.
6. COMPANY TRANSACTIONS
The Adviser and Sub-Adviser each agrees that neither it nor any of their
respective officers, directors, employees or agents will take any long or
short-term position in the shares of the Company; provided, however, that such
prohibition shall not prevent the purchase of shares of the Company by any of
the persons above described for their account and for investment at the price
(net asset value) at which such shares are available at the time of purchase or
as part of the initial capital of the Company.
7. RELATIONS WITH COMPANY
Subject to and in accordance with the Articles of Incorporation and By-Laws of
the Company and the Articles of Incorporation and By-Laws of the Adviser and
Sub-Adviser it is understood (i) that directors, officers, agents and
shareholders of the Company are or may be interested in the Sub-Adviser (or any
successor thereof) as directors, officers, or otherwise; (ii) that directors,
officers, agents and shareholders of the Sub-Adviser are or may be interested in
the Company as directors, officers, shareholders or otherwise; and (iii) that
the Sub-Adviser (or any such successor) is or may be interested in the Company
as a shareholder or otherwise and that the effect of any such adverse interests
shall be governed by said Articles of Incorporation and By-laws.
8. LIABILITY OF ADVISER, SUB-ADVISER AND OFFICERS AND DIRECTORS OF THE
COMPANY
Neither the Adviser, Sub-Adviser nor any of their respective officers,
directors, employees, agents or controlling persons or assigns, or Board of
Directors or officers of the Company shall be liable for any error of judgment
or law, or for any loss suffered by the Company or its shareholders in
connection with the matters to which this Agreement relates, except that no
provision of this Agreement shall be deemed to protect the Adviser, Sub-Adviser
or such persons against any liability to the Company or its shareholders to
which the Adviser or Sub-Adviser might otherwise be subject by reason of any
willful misconduct, negligence or actions taken in bad faith in the discharge of
its respective obligations and performance of its respective duties under this
Agreement.
9. INDEMNIFICATION
(a) Notwithstanding Section 8 of the Agreement, the Adviser agrees to
indemnify and hold harmless the Sub-Adviser, any affiliated person
of the Sub-Adviser (except the Company), and each person, if any,
who, within the meaning of Section 15 of the Securities Act of 1933
as amended (the "1933 Act") controls ("controlling person") the
Sub-Adviser (all of such persons being referred to as "Sub-Adviser
Indemnified Persons") against any and all losses, claims, damages,
liabilities (excluding salary charges of employees, officers or
partners of the Sub-Adviser), or litigation (including legal and
other) expenses to which a Sub-Adviser Indemnified Person may become
subject under the 1933 Act, the 1940 Act, the Advisers Act, any
other statute, common law or otherwise, arising out of the Adviser's
responsibilities to the Company which (1) may be based upon any
untrue statement or alleged untrue statement of a material fact
supplied by, or which is the responsibility of, the Adviser and
contained in the Registration Statement, or the omission or alleged
omission or failure to state therein a material fact known or which
should have been known to the Adviser and was required to be stated
therein or necessary to make the statements therein not misleading,
unless such statement or omission was made in reliance upon
information furnished to the Adviser or the Company or to any
affiliated person of the Adviser by a Sub-Adviser Indemnified Person
in writing for inclusion in the Registration Statement; or (2) may
be based upon a failure by the Adviser to comply with, or a breach
of, any provision of this Agreement or any other agreement with the
Fund; or (3) may be based upon misfeasance or negligence by the
Adviser in the discharge of its duties and performance of its
obligations under this Agreement or any other agreement with the
Fund, provided however, that in no case shall the indemnity in favor
of the Sub-Adviser Indemnified Person be deemed to protect such
person against any liability to which any such person would
otherwise be subject by reason of any misfeasance or negligence in
the discharge of its obligations and the performance of its duties
under this Agreement.
(b) Notwithstanding Section 8 of this Agreement, the Sub-Adviser agrees
to indemnify and hold harmless the Adviser, any affiliated person of
the Adviser, and each person, if any, who, within the meaning of
Section 15 of the 1933 Act, controls ("controlling person") the
Adviser (all of such persons being referred to as "Adviser
Indemnified Persons") against any and all losses, claims, damages,
liabilities (excluding salary charges of employees, officers or
partners of the Adviser), or litigation (including legal and other)
expenses to which an Adviser Indemnified Person may become subject
under the 1933 Act, the 1940 Act, the Advisers Act, any other
statute, common law or otherwise, arising out of the Sub-Adviser's
responsibilities as investment sub-adviser to the Fund which (1) may
be based upon any untrue statement or alleged untrue statement of a
material fact supplied by the Sub-Adviser for inclusion in the
Registration Statement, or, with respect to a material fact supplied
by the Sub-Adviser for inclusion in the Registration Statement, the
omission or alleged omission or failure to state therein a material
fact known or which should have been known to the Sub-Adviser and
was required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission
was made in reliance upon information furnished to the Sub-Adviser,
the Company, or any affiliated person of the Sub-Adviser or Company
by an Adviser Indemnified Person; or (2) may be based upon a failure
by the Sub-Adviser to comply with, or a breach of, any provision of
this Agreement or any other agreement with the Fund; or (3) may be
based upon misfeasance or negligence by the Sub-Adviser in the
discharge of its duties and performance of its obligations under
this Agreement or any other agreement with the Fund provided
however, that in no case shall the indemnity in favor of an Adviser
Indemnified Person be deemed to protect such person against any
liability to which any such person would otherwise be subject by
reason of misfeasance or negligence in the discharge of its
obligations and the performance of its duties under this Agreement.
(c) Neither the Adviser nor the Sub-Adviser shall be liable under this
Section with respect to any claim made against an Indemnified Person
unless such Indemnified Person shall have notified the indemnifying
party in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claim
shall have been served upon such Indemnified Person (or such
Indemnified Person shall have received notice of such service on any
designated agent), but failure to notify the indemnifying party of
any such claim shall not relieve the indemnifying party from any
liability which it may have to the Indemnified Person against whom
such action is brought otherwise than on account of this Section. In
case any such action is brought against the Indemnified Person, the
indemnifying party will be entitled to participate, at its own
expense, in the defense thereof or, after notice to the Indemnified
Person, to assume the defense thereof, with counsel satisfactory to
the Indemnified Person. If the indemnifying party assumes the
defense and the selection of counsel by the indemnifying party to
represent both the Indemnified Person and the indemnifying party
would result in a conflict of interests and would not, in the
reasonable judgment of the Indemnified Person, adequately represent
the interests of the Indemnified Person, the indemnifying party will
at its own expense, assume the defense with counsel to the
indemnifying party and, also at its own expense, with separate
counsel to the Indemnified Person which counsel shall be
satisfactory to the indemnifying party and the Indemnified Person.
The Indemnified Person will bear the fees and expenses of any
additional counsel retained by it, and the indemnifying party shall
not be liable to the Indemnified Person under this Agreement for any
legal or other expenses subsequently incurred by the Indemnified
Person independently in connection with the defense thereof other
than reasonable costs of investigation. The indemnifying party shall
not have the right to compromise or settle the litigation without
the prior written consent of the Indemnified Person if the
compromise or settlement results, or may result, in a finding of
wrongdoing on the part of the Indemnified Person.
10. DURATION AND TERMINATION OF THE AGREEMENT
(a) This Agreement shall commence on the date hereof and unless
terminated as herein provided, this Agreement will remain in full
force and effect until October 1, 2005 and shall continue in full
force and effect for periods of one year thereafter so long as such
continuance is approved at least annually (i) by either the Board of
Directors or by a vote of a majority of the outstanding shares (as
defined in the ▇▇▇▇ ▇▇▇) of the Company, and (ii) in either event by
the vote of a majority of the Directors who are not parties to this
Agreement or "interested persons" (as defined in the ▇▇▇▇ ▇▇▇) of
any such party, cast in person at a meeting called for the purpose
of voting on such approval.
(b) This Agreement may be terminated at any time without payment of any
penalty by the Company upon the vote of a majority of the Board or
by vote of the majority of the Fund's outstanding voting securities,
upon ten (10) days written notice to the Sub-Adviser or (b) by the
Adviser or the Sub-Adviser at any time upon sixty (60) days written
notice to the other parties.
(c) This Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act).
11. MISCELLANEOUS
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
(b) 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.
12. USE OF NAME
(a) It is understood that the name "▇▇▇ ▇▇▇" or any derivative thereof
or logo associated with that name is the valuable property of the
Adviser and its affiliates, and that the Company and Sub-Adviser
have the right to use such name (or derivative or logo) only with
the approval of the Adviser and only so long as the Adviser is
Adviser to the Fund. Upon termination of the Investment Advisory and
Management Agreement between the Company and the Adviser, the
Company and the Sub-Adviser shall forthwith cease to use such name
(or derivative or logo).
(b) It is understood that the name New York Life or any derivative
thereof or logo associated with that name is the valuable property
of the Sub-Adviser and its affiliates and that the Company and/or
the Fund have the right to use such name (or derivative or logo) in
offering materials of the Company only with the approval of the
Sub-Adviser and only for so long as the Sub-Adviser is investment
sub-adviser to the Fund. Upon termination of this Agreement, the
Company and Adviser shall forthwith cease to use such name (or
derivative or logo).
13. SERVICES NOT EXCLUSIVE
It is understood that the services of the Sub-Adviser are not exclusive, and
nothing in this Agreement shall prevent the Sub-Adviser (or its affiliates) from
providing similar services to other clients, including investment companies
(whether or not their investment objectives and policies are similar to those of
the Fund) or from engaging in other activities.
14. BINDING AGREEMENT
This Agreement will become binding on the parties hereto upon their execution of
the attached Schedule to this Agreement.
Witness the due execution hereof effective this 15th day of October 2003.
ATTEST: ▇▇▇ ▇▇▇ ASSOCIATES CORPORATION
_______________________ By:__________________________________
ATTEST: ▇▇▇ ▇▇▇ FUNDS, INC.
MID CAP VALUE FUND
_______________________ By:__________________________________
ATTEST: NEW YORK LIFE INVESTMENT
MANAGEMENT LLC
_______________________ By:__________________________________