EXHIBIT 99.B5(k)
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT
GE INSTITUTIONAL FUNDS
SMALL-CAP GROWTH EQUITY FUND
GE INVESTMENT MANAGEMENT INCORPORATED
Agreement made as of June 2, 1998 between GE INVESTMENT MANAGEMENT
INCORPORATED ("GEIM") and GE INSTITUTIONAL FUNDS (the "Trust") on behalf of its
Small-Cap Growth Equity Fund (the "Fund").
RECITALS
The Trust is a business trust organized under the laws of the State of
Delaware on May 23, 1997 and registered under the Investment Company Act of
1940, as amended (the "1940 Act"). The Trust is authorized to divide shares of
beneficial interests in the Trust into two or more separate series and to divide
each such series into two or more classes of Shares. The Fund is a series of the
Trust.
GEIM is a Delaware corporation registered as an investment adviser under
the Investment Advisers Act of 1940 (the "Advisers Act").
The Trust wishes to retain GEIM to serve as investment adviser and
administrator to the Fund and GEIM wishes to serve in this capacity.
SECTION 1. APPOINTMENT
The Trust hereby appoints GEIM as investment adviser and administrator with
respect to the Fund's assets for the period and on the terms set forth in this
Agreement. GEIM accepts this appointment and hereby agrees to render the
services herein set forth for the compensation herein provided.
Subject to the approval of the Board and to other applicable legal
requirements, GEIM may enter into any advisory or sub-advisory agreement or
contract with another affiliated or unaffiliated entity pursuant to which such
entity will carry out some or all of GEIM's responsibilities listed herein.
SECTION 2. SERVICES AS INVESTMENT ADVISER AND ADMINISTRATOR
(a) Subject to the oversight and supervision of the Trust's board of
trustees (the "Board"), GEIM agrees to provide a continuous investment program
for the Fund's assets, including investment research and management. GEIM will
determine from time to time what investments will be purchased, retained or sold
by the Fund. GEIM will place purchase and sale orders for the Fund's
investments. GEIM will provide services under this Agreement in
accordance with the Fund's investment objectives, policies and restrictions as
stated in the Trust's current Registration Statement on Form N-1A, as amended
from time to time (the "Registration Statement").
(b) The Trust has furnished or will furnish GEIM with copies of the
Registration Statement, its articles of incorporation and by-laws, if any, as
currently in effect and agrees during the continuance of this agreement to
furnish GEIM with copies of any amendment or supplements thereto before or at
the time such amendments or supplements become effective. GEIM may rely on all
documents furnished to it by the Trust.
(c) Subject to the oversight and supervision of the Board, GEIM agrees to
serve as administrator to the Trust and the Fund and, in this capacity, will:
(i) insure the maintenance of the books and records of the Fund (including those
required to be maintained or preserved by Rules 31a-1 and 31a-2 under the 1940
Act); (ii) prepare reports to shareholders of the Fund, (iii) prepare and file
tax returns for the Fund, (iv) assist with the preparation and filing of reports
and the Registration Statement with the Securities and Exchange Commission (the
"Commission"), (v) provide appropriate officers for the Trust, including a
Secretary or Assistant Secretary, (vi) provide administrative support necessary
for the Board to conduct meetings, and (vii) supervise and coordinate the
activities of other service providers, including independent auditors, legal
counsel, custodians, accounting service agents, and transfer agents.
(d) GEIM will, at its own expense, maintain sufficient staff, and employ or
retain sufficient personnel and consult with any other persons that it
determines may be necessary or useful to the performance of its obligations
under this agreement.
(e) GEIM will keep the Trust informed of developments materially affecting
the Fund, and will, on its own initiative, furnish the Trust from time to time
with whatever information and reports that the Board reasonably requests as
appropriate for this purpose.
SECTION 3. SELECTION OF INVESTMENTS ON BEHALF OF THE FUND.
Unless otherwise set forth in the Registration Statement or directed by the
Trust, GEIM will, in selecting brokers or dealers to effect transactions on
behalf of the Fund select the best overall terms available. In so doing, GEIM
may consider the breadth of the market on the investment, the price of the
security, the size and difficulty of the order , the willingness of the broker
or dealer to position, the reliability, financial condition and execution and
operational capabilities of the broker or dealer, and the reasonableness of the
commission or size of the dealer's "spread", if any, for the specific
transaction and on a continuing basis. GEIM may also consider brokerage and
research services provided to the Fund and /or other accounts over which GEIM or
its affiliates exercise investment discretion. The Trust recognizes the
desirability of GEIM's having access to supplemental investment and market
research and security and economic analyses provided by brokers and that those
brokers may execute brokerage transactions at a higher cost to the Trust than
would be the case if the transactions were executed on the basis of the most
favorable price and efficient execution. The Trust, thus, authorizes GEIM, to
the extent permitted by applicable law and regulations, to pay higher brokerage
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commissions or dealer spreads for the purchase and sale of securities for the
Fund to brokers who provide supplemental investment and market research and
security and economic analyses, subject to GEIM's determining in good faith that
such commissions are reasonable in terms either of the particular transaction or
of the overall responsibility of GEIM to the Fund and its other clients and that
the total commissions paid by the Fund will be reasonable in relation to the
benefits to the Fund over the long term. In no instance will portfolio
securities be purchased from or sold to GEIM, or any affiliated person thereof
or any investment advisory client thereof, except in accordance with the federal
securities laws and the rules and regulations thereunder.
SECTION 4. COSTS AND EXPENSES.
GEIM will bear the cost of rendering the services it is obligated to
provide under this Agreement and will provide the Trust with all executive,
administrative, clerical and other personnel necessary for the investment and
administrative operations of the Fund and will pay salaries and other
employment-related costs of employing these persons. GEIM will furnish the Trust
and the Fund with office space, facilities, and equipment and will pay the
day-to-day expenses related to the operation of such space, facilities and
equipment.
Except for those expenses assumed by the Fund as provided below, GEIM shall
bear all of the Fund's expenses, including, but not limited to: charges and
expenses of any registrar, the costs of custody, transfer agency and
recordkeeping services in connection with the Fund; registration costs of the
Fund and its shares under Federal and state securities laws; the cost and
expense of printing, including typesetting, and distributing of prospectuses
describing the Fund and supplements to those prospectuses to regulatory
authorities and the Fund's shareholders; all expenses incurred in conducting
meetings of the Fund's shareholders and meetings of the Board relating to the
Fund, excluding fees paid to members of the Board who are not affiliated with
GEIM or any of its affiliates; all expenses incurred in preparing, printing and
mailing proxy statements and reports to shareholders of the Fund; all expenses
incident to any dividend, withdrawal or redemption options provided to Fund
shareholders (except for purchase premiums and redemption fees, if any, charged
directly to shareholders); charges and expenses of any outside service used for
pricing the Fund's portfolio securities and calculating the net asset value of
the Fund's shares; fees and expenses of legal counsel, including counsel to the
members of the Board who are not interested persons of the Fund, or GEIM, and
independent auditors; membership dues of industry associations; postage;
insurance premiums on property or personnel (including officers and Trustees) of
the Trust that inure to their benefit; and all other costs of the Fund's
operations.
The Fund will bear the following expenses: advisory and administration fees
as described in Section 5 of this Agreement; shareholder servicing and
distribution fees under the terms of the shareholder servicing and distribution
plan adopted by the Trust with respect to the Fund pursuant to Rule 12b-1 (the
"Plan") under the 1940 Act; brokerage fees and commissions and other expenses
incurred in the acquisition or disposition of any securities or other
invest-ments; fees and travel expenses of members of the Board or members of any
advisory board or committee who are not affiliated with GEIM, or any of its
affiliates; and expenses that are not normal operating expenses of the Fund
(such as extraordinary expenses, interest and taxes).
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SECTION 5. COMPENSATION.
In consideration of services rendered and the expenses paid by GEIM
pursuant to this Agreement, the Trust will pay GEIM on the first business day of
each month a fee calculated as a percentage of the average daily net assets of
the Fund during the previous month at the following annual rates:
AVERAGE DAILY NET ASSETS ANNUAL RATE PERCENTAGE OF FUND (%)
------------------------ ----------------------------------
First $25 million .70
Next $25 million .65
Over $50 million .60
For the purpose of determining fees payable to GEIM under this Agreement,
the value of the Fund's net assets will be computed in the manner described in
the Registration Statement.
SECTION 6. SERVICES TO OTHER COMPANIES OR ACCOUNTS.
(a) The Trust understands and acknowledges that GEIM now acts and will
continue to act as investment manager or adviser to various fiduciary or other
managed accounts ("Other Accounts") and the Trust has no objection to GEIM's so
acting, so long as that when the Fund and any Other Account served by GEIM are
prepared to invest in, or desire to dispose of the same security, available
investments or opportunities for sales will be allocated in a manner believed by
GEIM to be equitable to the Fund and the Other Account. In addition, the Trust
understands and acknowledges that GEIM may, to the extent permitted by
applicable laws and regulations, aggregate securities to be sold or purchased
for the Trust with those to be sold or purchased for Other Accounts so long as
the securities purchased or sold, as well as the expenses incurred in the
transaction, are allocated in a manner believed by GEIM to be equitable to the
Trust and the Other Accounts. The Trust recognizes that, in some cases, the
above procedures may adversely affect the price paid or received by the Fund or
the size of the position obtained or disposed of by the Fund.
(b) It is agreed that GEIM may use any supplemental investment research and
other services provided by brokers or dealer obtained for the benefit of the
Fund or the Trust in providing investment advice to Other Accounts.
(c) The Trust understands and acknowledges that the persons employed by
GEIM to assist in the performance of its duties under this Agreement will not
devote their full time to that service and agrees that nothing contained in this
Agreement will be deemed to limit or restrict the right of GEIM or any affiliate
of GEIM to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
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SECTION 7. CONTINUANCE AND TERMINATION OF THE AGREEMENT.
(a) This Agreement will become effective as of the date hereof 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 Trustees 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 is terminable without penalty, by the Trust on not more
than 60 nor less than 30 days' written notice to GEIM, by vote of holders of a
majority of the Fund's outstanding voting securities, as defined in the 1940
Act, or by GEIM on not more than 60 nor less than 30 days' notice to the Trust.
(c) This Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act or in rules adopted under the 1940 Act).
SECTION 8. LIMITATION OF LIABILITY.
(a) GEIM will exercise its best judgment in rendering the services
described in this Agreement, except that GEIM will not be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, other than a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of GEIM in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement or to the extent specified in
Section 36(b) of the 1940 Act concerning loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services. Any
person, even though also an officer, director, employee or agent of GEIM, who
may be or become an officer, Trustee, employee or agent of the Trust, will be
deemed, when rendering services to the Trust or acting on any business of the
Trust, to be rendering services to, or acting solely for, the Trust and not as
an officer, director, employee or agent, or one under the control or direction
of, GEIM even though paid by GEIM.
(b) The Trust and GEIM 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.
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SECTION 9. MISCELLANEOUS.
The Trust recognizes that trustees, officers and employees of GEIM and its
affiliates may from time to time serve as trustees, trustees, officers and
employees of corporations, partnerships, group trusts and business trusts
(including other investment companies) and that such other entities may include
the initials "GE" or the words "General Electric" as part of their name, and
that XXXX or its affiliates may enter into distribution, investment advisory or
other agreements with such other corporations and trusts. If GEIM ceases to act
as the investment adviser to the Trust, the Trust agrees that, at GEIM's
request, any license granted to the Trust for the use of the initials "GE" will
terminate and that the Trust will cease and discontinue completely further use
of such initials and will take all necessary action to change the name of the
Trust and the Fund to a name not including the initials of "GE."
* * * * *
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 INSTITUTIONAL FUNDS
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman of the Board and President
GE INVESTMENT MANAGEMENT INCORPORATED
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: Executive Vice President
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