1
Exhibit 99.(d)(2)
FORM OF
INVESTMENT ADVISORY AGREEMENT
BETWEEN
SSGA FUNDS MANAGEMENT, INC.
AND
NAVIGATOR SECURITIES LENDING TRUST
This Agreement is made as of this 1st day of May, 2001, between
Navigator Securities Lending Trust, a Massachusetts business trust (the
"Investment Company"), and SSgA Funds Management, Inc., a Massachusetts
corporation (the "Adviser").
WHEREAS, the Investment Company is an open-end, diversified management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), currently consisting of three portfolio series, the
Navigator Government Portfolio, the Navigator Prime Portfolio and the Navigator
Short-Term Bond Portfolio (the "Initial Funds"), having their own investment
policies; and
WHEREAS, the Adviser is in the business of providing investment
advisory services; and
WHEREAS, the Investment Company desires to retain the Adviser to render
investment advisory services to the Investment Company with respect to the
Initial Funds and possibly such other funds (the "Additional Funds") as the
Investment Company and the Adviser may agree upon (each Initial Fund and
Additional Fund being referred to herein as a "Fund" and collectively as the
"Funds"), and the Adviser is willing to render such services;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the Investment Company and Adviser agree as follows:
1. APPOINTMENT OF ADVISER.
(a) INITIAL FUNDS: The Investment Company hereby appoints the
Adviser to act as investment adviser to the Initial Funds for the period and on
the terms set forth in this Agreement. The Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided. The Investment Company warrants that the Adviser has been duly
appointed to act hereunder.
(b) ADDITIONAL FUNDS: In the event that the Investment Company
establishes one or more Additional Funds with respect to which it desires to
retain the Adviser to render investment advisory services hereunder, it shall so
notify the Adviser in writing, indicating the advisory fee to be payable with
respect to the Additional Fund. If the Adviser is willing to render such
services, it shall so notify the Investment Company in writing, whereupon such
Additional Fund shall become a Fund hereunder. In such event, a writing signed
by both the Investment Company and the Adviser shall be annexed hereto as a part
hereof indicating that such Additional Fund has become a Fund hereunder and
reflecting the agreed-upon fee schedule for such Fund.
2
2. ADVISORY DUTIES. Subject to the supervision of the Board of Trustees
of the Investment Company, the Adviser shall manage the investment operations
and the composition of the Funds, including the purchase, retention and
disposition thereof, in accordance with each Fund's investment objective and
policies as stated in the Investment Company's Registration Statement. The
Adviser is authorized to engage one or more sub-advisers in connection with the
Adviser's duties under this Agreement, which sub-advisers may be affiliates of
the Manager. The Adviser's duties hereunder are subject to the following
understandings:
(a) The Adviser shall provide supervision of investments,
furnish a continuous investment program for each Fund, determine from time to
time what investments or Securities will be purchased, retained or sold by each
Fund, and what portion of the assets will be invested or held uninvested as
cash;
(b) The Adviser, in the performance of its duties and
obligations under this Agreement, shall act in conformity with the Master Trust
Agreement, By-Laws and Registration Statement of the Investment Company and with
the instructions and directions of the Board of Trustees of the Investment
Company, provided, however, the Adviser shall not be responsible for acting
contrary to any of the foregoing that are changed without notice of such change
to the Adviser; and the Adviser shall conform to and comply with the applicable
requirements of the 1940 Act and all other applicable federal or state laws and
regulations.
(c) The Adviser shall promptly communicate to the officers and
Trustees of the Investment Company such information relating to Fund
transactions as they may reasonably request. On occasions when the Adviser deems
the purchase or sale of a security to be in the best interest of a Fund as well
as other clients, the Adviser, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be sold or purchased, provided
that, in the opinion of the Adviser, all accounts are treated equitably and
fairly. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, shall be made by the Adviser
in the manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Investment Company and to such other clients.
(d) The Adviser shall maintain books and records with respect
to the Investment Company's securities transactions and shall render to the
Investment Company's Board of Trustees such periodic and special reports as the
Board may reasonably request.
(e) The Adviser shall provide the Investment Company with a
list of all securities transactions as reasonably requested by the Investment
Company.
(f) The investment advisory services of the Adviser to the
Investment Company under this Agreement are not to be deemed exclusive, and the
Adviser shall be free to render similar services to others.
3. EXECUTION AND ALLOCATION OF PORTFOLIO BROKERAGE COMMISSION. The
Adviser, subject to and in accordance with any directions which the Investment
Company's Board of Trustees may issue from time to time, shall place, in the
name of the Investment Company, orders for the execution of the securities
transactions in which any Fund is authorized to invest. When placing such
orders, the primary objective of the Adviser shall be to obtain the best net
price and execution for the Investment Company, but this requirement shall not
be deemed to obligate the Adviser to place any order solely on the basis of
obtaining the lowest commission rate if the other standards set forth in this
section have been
3
satisfied. The Investment Company recognizes that there are likely to be many
cases in which different brokers are equally able to provide such best price and
execution and that, in selecting among such brokers with respect to particular
trades, it is desirable to choose those brokers who furnish brokerage and
research services (as defined in Section 28(e)(3) of the Securities and Exchange
Act of 1934) or statistical quotations and other information to the Investment
Company and/or the Adviser in accordance with the standards set forth below.
Moreover, to the extent that it continues to be lawful to do so and so long as
the Board determines as a matter of general policy that the Investment Company
will benefit, directly or indirectly, by doing so, the Adviser may place orders
with a broker who charges a commission for that transaction which is in excess
of the amount of commission that another broker would have charged for effecting
that transaction, provided that the excess commission is reasonable in relation
to the value of brokerage and research services provided by that broker.
Accordingly, the Investment Company and the Adviser agree that the Adviser shall
select brokers for the execution of any Fund's securities transactions from
among:
(a) Those brokers and dealers who provide brokerage and
research services, or statistical quotations and other information to the
Investment Company, specifically including the quotations necessary to determine
the Investment Company's net assets, in such amount of total brokerage as may
reasonably be required in light of such services.
(b) Those brokers and dealers who supply brokerage and
research services to the Adviser and/or its affiliated corporations which relate
directly to portfolio securities, actual or potential, of the Investment
Company, or which place the Adviser in a better position to make decisions in
connection with the management of the Investment Company's assets, whether or
not such data may also be useful to the Adviser and its affiliates in managing
other portfolios or advising other clients, in such amount of total brokerage as
may reasonably be required.
The Adviser agrees that no investment decision will be made or
influenced by a desire to provide brokerage for allocation in accordance with
the foregoing, and that the right to make such allocation of brokerage shall not
interfere with the Adviser's primary duty to obtain the best net price and
execution for the Investment Company.
4. BOOKS AND RECORDS. The Adviser shall keep the Investment Company's
books and records required to be maintained by it pursuant to paragraph 2(d)
hereof. The Adviser agrees that all records which it maintains for the
Investment Company are the property of the Investment Company and it shall
surrender promptly to the Investment Company any of such records upon the
Investment Company's request. The Adviser further agrees to preserve for the
periods prescribed by Rule 31a-2 of the Commission under the 1940 Act any such
records as are required to be maintained by Rule 31a-1(f) of the Commission
under the 1940 Act. Nothing herein shall prevent the Adviser from maintaining
its own records as required by law, which may be a duplication of the Investment
Company's records.
5. REPORTS TO ADVISER. The Investment Company agrees to furnish the
Adviser at its principal office all prospectuses, proxy statements, reports to
stockholders, sales literature or other material prepared for distribution to
shareholders of the Investment Company or the public, which refer in any way to
the Adviser, ten (10) days prior to use thereof and not to use such material if
the Adviser should object thereto in writing within seven (7) days after receipt
of such material; provided, however, that the Adviser hereby approves all uses
of its name which merely refer in accurate terms to its appointment as
investment adviser hereunder, which merely identifies the Investment Company, or
which are required by the Securities and Exchange Commission or a state
securities commission. In the event of termination of this Agreement, the
4
Investment Company shall, on written request of the Adviser, forthwith delete
any reference to the Adviser from any materials described in the preceding
sentence. The Investment Company shall furnish or otherwise make available to
the Adviser such other information relating to the business affairs of the
Investment Company as the Adviser at any time, or from time to time, reasonably
requests in order to discharge its obligations hereunder.
6. PROXIES. Unless the Investment Company gives written instructions to
the contrary, the Adviser shall vote or not vote all proxies solicited by or
with respect to the issuers of securities in which assets of any Fund may be
invested. The Adviser shall use its best good faith judgment to vote or not vote
such proxies in a manner which best serves the interests of the Investment
Company's shareholders.
7. EXPENSES. During the term of this Agreement, the Adviser shall pay
all of its own expenses incurred by it in connection with its activities under
this Agreement and each Fund of the Investment Company shall bear all expenses
that are incurred in its operations not specifically assumed by the Adviser.
Expenses borne by a Fund will include but not be limited to the
following (or the Fund's proportionate share of the following): (a) brokerage
commissions relating to securities purchased or sold by the Fund or any losses
incurred in connection therewith; (b) fees payable to and expenses incurred on
behalf of the Fund by the Investment Company's administrator; (c) expenses of
organizing the Investment Company and the Fund; (d) filing fees and expenses
relating to the registration and qualification of the Fund's shares and the
Investment Company under federal or state securities laws and maintaining such
registrations and qualifications; (e) fees and salaries payable to the
Investment Company's Trustees and officers who are not officers or employees of
the Investment Company's administrator, any investment adviser or underwriter of
the Investment Company; (f) taxes (including any income or franchise taxes) and
governmental fees; (g) costs of any liability, uncollectible items of deposit
and other insurance or fidelity bonds; (h) any costs, expenses or losses arising
out of any liability of or claim for damage or other relief asserted against the
Investment Company or the Fund for violation of any law; (i) legal, accounting
and auditing expenses, including legal fees of special counsel for the
independent Trustees; (j) charges of custodians, transfer agents and other
agents; (k) costs of preparing share certificates (if any); (1) expenses of
setting in type and printing Prospectuses and Statements of Additional
Information and supplements thereto for existing shareholders, reports and
statements to shareholders and proxy material; (m) any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Investment Company
or the Fund; and (n) fees and other expenses incurred in connection with
membership in investment company organizations.
8. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in this Agreement, the Investment Company shall pay to the
Adviser such compensation as is designated in Exhibit A to this Agreement, so
long as the Adviser has not waived all or a portion of such compensation.
9. LIMITATION OF ADVISER'S LIABILITY. In the absence of (a) willful
misfeasance, bad faith or gross negligence on the part of the Adviser in
performance of its obligations and duties hereunder, (b) reckless disregard by
the Adviser of its obligations and duties hereunder, or (c) a loss resulting
from a breach of fiduciary duty with respect to the receipt of compensation for
services (in which case, any award of damages shall be limited to the period and
the amount set forth in Section 36(b)(3) of the 1940 Act), the Adviser shall not
be subject to any liability whatsoever to the Investment Company, or to any
shareholder of the Investment Company, for any error of judgment, mistake of law
or any other act or omission in the course
5
of, or connected with, rendering services hereunder including, without
limitation, for any losses that may be sustained in connection with the
purchase, holding, redemption or sale of any security on behalf of the
Investment Company.
10. DURATION AND TERMINATION.
(a) This Agreement shall become effective with respect to the
Initial Funds on the date hereof and, with respect to each Additional Fund, on
the date agreed to by the Adviser and the Investment Company so long as, with
respect to any Additional Fund, the provisions of Section 1(b) have been
complied with. This Agreement, unless sooner terminated as provided herein,
shall continue for each Fund for two years following the effective date of this
Agreement with respect to the Fund, or the date of the first annual or special
meeting of the shareholders of the Fund following such effective date, if
approved by a majority of the outstanding voting securities of the Fund (as
defined in the 1940 Act), and thereafter shall continue automatically for
periods of one year so long as such continuance is specifically approved at
least annually (a) by the vote of a majority of those members of the Board of
Trustees of the Investment Company who are not parties to this Agreement or
"interested persons" (as defined in the 0000 Xxx) of any such party, cast in
person at a meeting called for the purpose of voting such approval, and (b) by
the Board of Trustees of the Investment Company or by vote of a majority of the
outstanding voting securities of the Fund.
(b) This Agreement may be terminated by the Investment Company
at any time, without the payment of any penalty, by vote of a majority of those
members of the Board of Trustees who are not "interested persons" (as defined in
the 0000 Xxx) of the Adviser or the Investment Company or by the majority vote
of either the entire Board of Trustees of the Investment Company or by vote of a
majority of the outstanding voting securities of the Fund on 60 days' written
notice to the Adviser. This Agreement may also be terminated by the Adviser on
90 days' written notice to the Investment Company. This Agreement will
automatically and immediately terminate in the event of its assignment (as
defined in the 1940 Act).
11. CHOICE OF LAW. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Massachusetts and any applicable federal law.
12. LIMITATION OF LIABILITY. The Master Trust Agreement dated June 15,
1995, as amended from time to time, establishing the Investment Company, which
is hereby referred to and a copy of which is on file with the Secretary of The
Commonwealth of Massachusetts, provides that the name Navigator Securities
Lending Trust means the Trustees from time to time serving (as Trustees but not
personally) under said Master Trust Agreement. It is expressly acknowledged and
agreed that the obligations of the Investment Company hereunder shall not be
binding upon any of the Shareholders, Trustees, officers, employees or agents of
the Investment Company, personally, but shall bind only the trust property of
the Investment Company, as provided in its Master Trust Agreement. The execution
and delivery of this Agreement have been authorized by the Trustees of the
Investment Company and signed by an officer of the Investment Company, acting as
such, and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Investment Company as provided in its Master
Trust Agreement.
6
IN WITNESS WHEREOF, the due execution hereof as of the date first above written.
Attest: NAVIGATOR SECURITIES LENDING TRUST
By: ___________________________ By: __________________________
Name:
Title:
Attest: SSGA FUNDS MANAGEMENT, INC.
By: ___________________________ By: ___________________________
Name:
Title:
7
EXHIBIT "A"
As consideration for the Adviser's services to the following Fund(s),
the Adviser shall receive from the Fund(s) an annual advisory fee, accrued daily
at the rate of 1/365th of the applicable advisory fee rate and payable monthly
on the first business day of each month, of the following annual percentages of
the Fund's average daily net assets during the month:
Fund Rate
Navigator Government Portfolio 0.0175%
Navigator Prime Portfolio 0.0175%
Navigator Short-Term Bond Portfolio 0.05%
