GE FUNDS
GE S&P 500 INDEX FUND
SUB-ADVISORY AGREEMENT
----------------------
Agreement made as of April , 2000, between GE ASSET
MANAGEMENT INCORPORATED ("GEAM"), a Delaware corporation, and STATE STREET BANK
AND TRUST COMPANY, a Massachusetts bank and trust company, through its division
STATE STREET GLOBAL ADVISORS (the "Sub-Adviser") (the "Agreement").
RECITALS
GEAM has entered into an Investment Advisory and
Administration Agreement dated March 16, 2000 ("Advisory Agreement") with GE
Funds ("Trust"), an open-end management investment company registered under the
Investment Company Act of 1940, as amended ("1940 Act"), with respect to the GE
S&P 500 Index Fund ("Fund"), a series of the Trust;
Pursuant to Section 1 of the Advisory Agreement, GEAM is
authorized to delegate its investment advisory responsibilities to other
investment advisers, subject to the requirements of the 1940 Act;
GEAM wishes to retain the Sub-Adviser to furnish certain
investment advisory services to GEAM and the Fund, and the Sub-Adviser is
willing to furnish those services; and
GEAM intends that this Agreement will become effective when
approved in accordance with Section 15 of the 1940 Act and shareholder(s) for
approval hereafter;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, the parties agree as follows:
1. Appointment. GEAM 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 GEAM and the
Board of the Trust (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 consult with GEAM 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
Trust's current Registration Statement on Form N-1A and any amendments or
supplements thereto (the "Registration Statement") and the Trust'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) - (g) below,
the Sub-
Adviser shall provide GEAM and the Board with such periodic reports and
documentation as GEAM or the Board shall request regarding the Sub-Adviser's
management of the Fund's assets and compliance with 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) such policies, procedures or directives as the Board may from
time to time establish or issue, (4) the License Agreement by and between
Standard & Poor's and GEAM dated April 30, 1997 (the "License Agreement"), (5)
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 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 (the "Code").
GEAM shall provide the Sub-Adviser with copies of the documents referred to in
(1), (2), (3) and (4) above and shall promptly notify the Sub-Adviser of changes
to (1), (2), (3) or (4) above and shall notify the Sub-Adviser of changes to (5)
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 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 Trust to give
instructions to the Trust'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, to the
extent covered by Section 28(e) of the Securities Exchange Act of 1934, as
amended (the "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 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. 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
-2-
Statement, (2) the applicable provisions of the 1940 Act and the Investment
Advisers Act of 1940, as amended (the "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 GEAM 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 Trust 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 Trust 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 GEAM with such periodic and special
reports as the Board or GEAM reasonably may request. 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 Trust,
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any records which it maintains for the Trust and which are required to be
maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender
promptly to the Trust any records which it maintains for the Trust upon request
by the Trust.
(f) At such times as shall reasonably be requested by the
Board or GEAM, the Sub-Adviser will provide the Board and GEAM 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 GEAM any economic,
statistical and investment services normally available to institutional or other
customers of the Sub-Adviser invested in a similar strategy. The Sub-Adviser
will complete on a quarterly basis the checklist provided to it by GEAM
regarding the Fund's investments and transactions. 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 any illiquid portfolio securities and
will assist the Trust'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 GEAM,
the Sub-Adviser shall review and certify in writing that the information stated
in the Trust's Registration Statement relating to the Sub-Adviser, its
management of the Fund, including investment objectives, strategies and related
risks is true, correct and complete.
(i) The Sub-Adviser will promptly notify GEAM of any change of
control of the Sub-Adviser, including any change of its partners or 25%
shareholders or members, as applicable, and any changes in the key personnel of
the Sub-Adviser's investment management division, including without limitation,
portfolio management personnel responsible for the Fund's assets, in each case
prior to or promptly after such change.
(j) 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 or a principal of the Sub-Adviser shall certify to GEAM that the
Sub-Adviser has complied with the requirements of Rule 17j-1 during the previous
-3-
year and that there has been no violation of the Sub-Adviser's code of ethics
or, if such a violation has occurred, that appropriate action was taken in
response to such violation. Upon the reasonable written request of GEAM, the
Sub-Adviser shall permit GEAM, 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. Further Duties. In all matters relating to the performance
of this Agreement, the Sub-Adviser will act in conformity with the Constituent
Documents and Registration Statement and with the written instructions and
directions of the Board and GEAM and will comply with the applicable
requirements of the 1940 Act, the Advisers Act, the rules under each, Subchapter
M of the Code as applicable to regulated investment companies, and the License
Agreement. In addition, the Sub-Adviser will act in conformity with all other
applicable federal and state laws and regulations. GEAM agrees to provide to the
Sub-Adviser copies of the License Agreement, the Constituent Documents,
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 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:
0.05% of the first $100,000,000
0.04% of the next $200,000,000
0.03% of amounts in excess of $300,000,000.
The Sub-Adviser's fee shall be paid by GEAM out of GEAM's
advisory fee to the extent such fee is received by GEAM pursuant to the Advisory
Agreement.
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 Trust, 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.
-4-
6. Indemnification.
(a) GEAM 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) GEAM's breach of its duties under the Advisory Agreement or this Agreement
or (ii) bad faith, willful misfeasance, reckless disregard or gross negligence
on the part of GEAM or any of its directors, officers or employees in the
performance of GEAM'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 or obligations under this Agreement.
(b) The Sub-Adviser agrees to indemnify and hold GEAM, its
officers and directors, and any person who controls GEAM within the meaning of
Section 15 of the 1933 Act harmless from any and all direct or indirect
liabilities, losses or damages (including reasonable attorneys' fees) suffered
by GEAM, its officers and directors, and any person who controls GEAM within the
meaning of Section 15 of the 1933 Act, 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 Trust's or GEAM's own willful misfeasance, bad faith, reckless
disregard or gross negligence in the performance of their respective duties and
obligations under the Advisory Agreement or this Agreement. In addition to the
foregoing, Sub-Adviser agrees to indemnify and hold harmless GEAM, its officers
and directors, and any person who controls GEAM within the meaning of Section 15
of the 1933 Act for any loss or expense (including reasonable attorneys' fees)
arising out of any claim, demand, action or suit as a result of any negligent
act or omission by Sub-Adviser relating to or arising out of the License
Agreement.
7. Representations and Warranties of Sub-Adviser. The
Sub-Adviser represents, warrants and agrees as follows:
(a) The Sub-Adviser (i) is a "bank" as defined in the Advisers
Act and therefore is exempt from registration pursuant to the Advisers Act and
will (y) continue to be a "bank" as defined by the Advisers Act and so exempt or
(z) become a registered adviser under the Advisers Act 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 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 GEAM 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; (vi) is registered as a Commodity Trading Adviser and Commodity Pool
Operator under the Commodity Exchange Act with the Commodity Futures Trading
Commission and the National Futures Association; and (vii) is duly
-5-
organized and validly existing under the Laws of the Commonwealth of
Massachusetts 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 GEAM 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. to the Trust's Registration Statement relating to
the Sub-Adviser and its management of the Fund is true, correct and complete to
the best of its knowledge.
8. Representations and Warranties of GEAM. GEAM represents,
warrants and agrees that GEAM (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 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 GEAM of the Advisory Agreement does not contravene or constitute
a default under any agreement binding upon GEAM; (v) will promptly notify the
Sub-Adviser of the occurrence of any event that would disqualify GEAM 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 of Delaware with the power to own and possess its assets and carry on
its business as it is now being conducted.
9. Survival of Representatives and Warranties; Duty to Update
Information. All representations and warranties made by (i) the Sub-Adviser
pursuant to Sections 7 and 14 and (ii) by GEAM pursuant to Section 8, 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.
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 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
-6-
penalty, by GEAM: (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 7 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 GEAM. This Agreement will terminate automatically in the
event of its assignment or upon termination of the Advisory Agreement.
11. Change of Control of the Sub-Adviser. The Sub-Adviser
(within the meaning of the 0000 Xxx) will be liable to the Trust and GEAM for
all direct and indirect costs resulting from a change in control of the
Sub-Adviser, including 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 resulting from such change of control. The
understandings and obligations set forth in this Section 11 shall survive the
termination of this Agreement and shall be binding upon the Sub-Adviser's
successor(s) and/or assign(s).
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 Trust receives
an SEC order or opinion of counsel 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.
14. Year 2000 Compliance. The Sub-Adviser will take reasonable
steps to ensure that its products (and those of its third-party suppliers)
reflect the available state of the art technology to offer products that are
Year 2000 compliant, including, but not limited to, century recognition of
dates, calculations that correctly compute same century and multi century
formulas and date values, and interface values that reflect the date issues
arising between now and the next one-hundred years, and if any changes are
required, the Sub-Adviser will make the changes to its products at no cost to
the Adviser or the Trust and in a commercially reasonable time frame and will
require third-party suppliers to do likewise.
15. Miscellaneous.
(a) 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
-7-
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.
(b) The Trust and GEAM agree that the obligations of the Trust
under this Agreement will not be binding upon any of the Trustees, shareholders,
nominees, officers, employees or agents, whether past, present or future, of the
Trust, individually, but are binding only upon the assets and property of the
Fund, as provided in the Declaration of Trust. The execution and delivery of
this Agreement have been authorized by the Trustees of the Trust, and signed by
an authorized officer of the Trust, acting as such, and neither the
authorization by the Trustees nor the execution and delivery by the officer will
be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but will bind only the trust property of
the Trust as provided in the Declaration of Trust. No series of the Trust,
including the Fund, will be liable for any claims against any other series.
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 ASSET MANAGEMENT INCORPORATED
By:
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President
STATE STREET BANK AND TRUST COMPANY
Through it division, STATE STREET GLOBAL ADVISORS
By:
-------------------------------------
Name:
Title:
-8-
