QUANTITATIVE ADVISORS. INC.
ADVISORY CONTRACT
Advisory Contract ("Contract") dated as of May 1, 2001,
between QUANTITATIVE INVESTMENT ADVISORS d/b/a
QUANTITATIVE ADVISORS, INC., a Delaware corporation (the
"Manager") and SSGA FUNDS MANAGEMENT, INC., a
Massachusetts corporation (the " Advisor").
WITNESSETH:
That in consideration of the mutual covenants herein
contained, it is agreed as
follows:
1. SERVICES TO BE RENDERED BY ADVISOR TO
TRUST.
(a) Subject always to the control of the trustees (the
"Trustees") of Quantitative Group of Funds d/b/a Quant Funds, a
Massachusetts business trust (the "Trust"), and the Manager, the
Advisor, at its expense, will furnish continuously an investment
program for the Quant International Equity Fund (the "Fund") of
the- Trust. The Advisor will determine what securities shall be
purchased, held, sold or exchanged by the Fund and what portion,
if any, of the assets of the Fund shall be held uninvested and shall,
on behalf of the Fund, make changes in the Fund's investments. In
the performance of its duties, the Advisor will comply with the
provisions of the Agreement and Declaration of Trust and By-Laws
of the Trust, as amended, and the stated investment objectives,
policies and restrictions of the Fund as set forth in the then current
Prospectus and/or Statement of Additional Information of the Trust
and with other written policies which the Trustees or the Manager
may from time-to-time determine and of which the Advisor has
received notice. In furnishing an investment program to the Fund
and in determining what securities shall be purchased, held, sold or
exchanged by the Fund, the Advisor shall (1) comply in all material
respects with all provisions of applicable law governing its duties
and responsibilities hereunder, including, without limitation, the
Investment Company Act of 1940 (the "1940 Act"), and the Rules
and Regulations thereunder; the Internal Revenue Code of 1986, as
amended (the "Code"), relating to regulated investment companies
and all Rules and Regulations thereunder; the Xxxxxxx Xxxxxxx and
Securities Fraud Enforcement Act of 1988; and such other laws as
may be applicable to its activities as Advisor to the Fund and (2)
use its best efforts to manage the Fund so that the Fund will
qualify, and continue to qualify, as a regulated investment company
under Subchapter M of the Code and regulations issued thereunder.
The Advisor shall make its officers and employees available to the
Manager or Trustees from time-to-time at reasonable times to
review investment policies of the Fund and to consult with the
Manager or Trustees regarding the investment affairs of the Fund.
(b) The Advisor, at its expense, will (1) furnish all
necessary investment and management facilities, including salaries
of personnel, required for it to execute its duties hereunder, (2)
keep records relating to the purchase, sale or current status of
portfolio securities, (3) provide clerical personnel and equipment
necessary for the efficient rendering of investment advice to the
Fund, (4) furnish to the Manager such reports and records regarding
the Fund and the Advisor as the Manager or Trustees shall from
time- to-time request, and, (5) upon reasonable notice, review
written references to the Advisor, or its methodology, whether in a
Prospectus, Statement of Additional Information, sales material or
otherwise. The Advisor shall have no obligation with respect to the
determination of the Fund's net asset value, except to provide the
Trust's custodian with information as to the securities held in the
Fund's portfolio. The Advisor shall not be obligated to provide
shareholder accounting services.
(c) The Advisor shall place all orders for the purchase
and sale of portfolio investments for the Fund's account with
brokers or dealers selected by the Advisor. In the selection of such
brokers or dealers and the placing of such orders, the Advisor shall
use its best efforts to obtain for the Fund the most favorable price
and execution available, except to the extent that it may be
permitted to pay higher brokerage commissions for brokerage and
research services as described below. In using its best efforts to
obtain for the Fund the most favorable price and execution
available, the Advisor, bearing in mind the Fund's best interests at
all times, shall consider all factors it deems relevant, including by
way of illustration, price, the size of the transaction, the nature of
the market for the security, the amount of the commission, if any,
the timing of the transaction taking into account market prices and
trends, the reputation, experience and financial stability of the
broker or dealer involved and the quality of service rendered by the
broker or dealer in other transactions. Subject to such written
policies as the Trustees or the Manager may determine, and of
which the Advisor has received notice and which the Advisor has
accepted in writing, the Advisor shall not be deemed to have acted
unlawfully or to have breached any duty created by this Contract or
otherwise solely by reason of its having caused the Fund to pay a
broker or dealer that provides brokerage and research services to
the Advisor and/or the Manager 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 Advisor 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 Advisor's and/or Manager's overall
responsibilities with respect to the Trust and to other clients as to
which the Advisor and/or Manager or persons controlled by or
under common control with the Advisor and/or Manager exercise
investment discretion. The Advisor agrees that in connection with
purchase or sales of portfolio instruments for the Fund's account,
neither the Advisor nor any officer, director, employee or agent of
the Advisor shall act as principal or receive any commission other
than as provided in Section 3.
(d) The assets of the Fund shall be held by the Trust's
custodian in an account that the Trust has directed the Custodian to
open. The Advisor shall at no time have custody or physical control
of any of the assets of the Fund. The Manager shall cause such
custodian to provide the Advisor with such information and reports
concerning the Fund or its assets as the Advisor may from time to
time reasonably request and to accept instructions from the Advisor
with respect to such assets and transactions by the Fund in the
performance of the Advisor's duties hereunder. The Advisor shall
have no liability or obligation to pay the cost of such custodian or
any of its services.
(e) Advice rendered to the Fund shall be confidential and
may not be used by any shareholder, Trustee, officer, director,
employee or agent of the Trust or of the Manager or by the advisor
of any other fund of the Trust. Non-public information provided to
the Manager on a confidential basis regarding the methodology of
the Advisor shall not be made publicly available by the Manager,
except that such information may be disclosed to the Trustees and
may be disclosed to the extent necessary to comply with the federal
and state securities laws and, after notice to the Advisor, upon order
of any court or administrative agency or self regulatory organization
of which the Manager or its affiliates are members.
(f) The Advisor shall not be obligated to pay any
expenses of or for the Fund not expressly assumed by the Advisor
pursuant to this Section 1.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees,
officers and employees of the Trust may be a shareholder, partner,
director, officer or employee of, or be otherwise interested in, the
Advisor, and in any person controlled by or under common control
with the Advisor, and that the Advisor and any person controlled by
or under common control with the Advisor may have an interest in
the Trust. It is also understood that the Advisor and persons
controlled by or under common control with the Advisor have and
may have advisory, management, service or other contracts with
other organizations (including other investment companies and other
managed accounts) and persons, and may have other interests and
businesses.
Nothing in this Contract shall prohibit the Advisor or any of
its affiliates from providing any services for any other person or
entity or limit the services which the Advisor or any such affiliate
can provide to any person or entity. The Manager understands and
agrees that the Advisor and its affiliates perform investment
advisory and investment management services for various clients
other than the Manager and the Trust. The Manager agrees that the
Advisor and its affiliates may give advice and take action in the
performance of duties with respect to any other client which may
differ from advice given, or the timing or nature of action taken,
with respect to the Fund. Nothing in this Contract shall be deemed
to impose upon the Advisor any obligation to purchase or sell or to
recommend for purchase or sale for the Fund any security or other
property which the Advisor or any of its affiliates may purchase or
sell for its own account or for the account of any other client, so
long as it continues to be the policy and practice of the Advisor not
to favor or disfavor consistently or consciously any client or class
of clients in the allocation of investment opportunities, so that to
the extent practical, such opportunities will be allocated among
clients over a period of time on a fair and equitable basis.
3. COMPENSATION TO BE PAID BY THE MANAGER
TO THE ADVISOR
The Manager will pay to the Advisor, as compensation for
the Advisor's services rendered and for the expenses borne by the
Advisor pursuant to Section 1, a fee, computed and paid monthly at
the annual rate of 0.50% of the first $30 million, 0.40% of amounts
in excess of $30 million but less than $100 million and 0.35% of
amounts in excess of $100 million of average daily total net assets,
with an annual minimum of $75,000. Such fee shall be paid by the
Manager and not by the Fund out of the management fee paid by
the Trust to the Manager pursuant to the Management Contract
between the Manager and the Trust or out of any other funds
available to the Manager. Such average daily net asset value of the
Fund shall be determined by taking an average of all the
determinations of such net asset value during such month at the
close of business on each business day, and for non-business days,
the net asset value determined on the previous business day, during
such month while this Contract is in effect. Such fee shall be
payable for each month within 30 days after the end of each month.
If the Advisor shall serve for less than the whole of a month,
the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT;
AMENDMENTS TO THIS CONTRACT
This Contract shall automatically terminate, without the
payment of any penalty, in the event of its assignment or in the
event that the Management Contract between the Trust and the
Manager is terminated generally, or with respect to the Fund; and
this Contract shall not be amended unless (i) such amendment is
approved at a meeting by an affirmative vote of a majority of the
outstanding shares of the Fund, and (ii) by the vote, cast in person
at a meeting called for the purpose of voting on such approval, of a
majority of the Trustees of the Trust who are not interested persons
of the Trust or of the Manager or of the Advisor. Notwithstanding
the foregoing, shareholder approval will not be required for
amendments to this Contract if the Fund obtains an exemptive order
from the Securities and Exchange Commission permitting
amendments to this Contract without shareholder approval.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS
CONTRACT.
This Contract shall become effective on _______, 2001 or
such other time as shall be agreed upon by the Manager and the
Advisor, and shall remain in full force and effect as to the Fund
continuously thereafter (unless terminated automatically as set forth
in Section 4) until terminated as follows:
(a) The Trust or the Manager may at any time terminate
this Contract as to the Fund by not more than sixty days' or less
than thirty days' written notice delivered or mailed by registered
mail, postage prepaid, to the Advisor, or
(b) The Advisor may at any time terminate this Contract
as to the Fund by not less than one hundred fifty days' written
notice delivered or mailed by registered mail, postage prepaid, to
the Manager, or
(c) If (i) the Trustees of the Trust, or the shareholders by
the affirmative vote of a majority of the outstanding shares of the
Fund, and (ii) a majority of the Trustees of the Trust who are not
interested persons of the Trust or of the Manager or of the Advisor,
by vote cast in person at a meeting called for the purpose of voting
on such approval, do not specifically approve at least annually the
continuance of this Contract, then this Contract shall automatically
terminate as to the Fund at the close of business on the second
anniversary of the effective date hereof or the expiration of one year
from the effective date of the last such continuance, whichever is
later; provided, however, that if the continuance of this Contract is
submitted to the shareholders of the Fund for their approval and
such shareholders fail to approve such continuance of this Contract
as provided herein, the Advisor may continue to serve hereunder in
a manner consistent with the 1940 Act and the Rules and
Regulations thereunder.
Action by the Trust under (a) above may be taken either (i)
by vote of a majority of its Trustees, or (ii) by the affirmative vote
of a majority of the outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be
without the payment of any penalty.
6. CERTAIN DEFINITIONS
For the purposes of this Contract, the "affirmative vote of a
majority of the outstanding shares" means the affirmative vote, at a
duly called and held meeting of shareholders, (a) of the holders of
67% or more of the shares of the Trust or the Fund, as the case may
be, present (in person or by proxy) and entitled to vote at such
meeting, if the holders of more than 50% of the outstanding shares
of the Trust or the Fund, as the case may be, entitled to vote at such
meeting are present in person or by proxy, or (b) of the holders of
more than 50% of the outstanding shares of the Trust or the Fund, as
the case may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated
person", "control", "interested person" and "assignment" shall have
their respective meanings defined in the 1940 Act and the Rules and
Regulations thereunder, subject, however, to such exemptions as
may be granted by the Securities and Exchange Commission
("SEC") under said Act; the term "specifically approve at least
annually" shall be construed in a manner consistent with the 1940
Act and the Rules and Regulations thereunder; and the term
"brokerage and research services" shall have the meaning given by
the Securities Exchange Act of 1934 and the Rules and Regulations
thereunder.
7. NONLIABILITY OF ADVISOR.
Notwithstanding any other agreement to the contrary, in the
absence of willful misfeasance, bad faith or gross negligence on the
part of the Advisor, its partners, officers, directors, employees or
agents or reckless disregard of the Advisor's obligations and duties
hereunder, neither the Advisor nor its officers, directors, employees
or agents shall be subject to any liability to the Trust or to the
Manager, or to any shareholder of the Trust, for any act or omission
in the course of, or connected with, rendering services hereunder,
unless the Advisor is claiming indemnity from any of them in
connection herewith, but then only to the extent of the indemnity
obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or
by proxy, all securities in which assets of the Fund may be invested
from time to time and shall not be required to seek or take
instructions from the Manager or the Trustees of the Trust, or to
take any action, with respect thereto.
9. REPRESENTATI ONS AND COVENANTS OF THE
MANAGER.
(a) The Manager represents that the terms of this
Contract do not violate any obligation by which it is bound, whether
arising by contract, operation of law or otherwise, and that it has the
power, capacity and authority to enter into this Contract and to
perform in accordance herewith. In addition, the Manager
represents, warrants and covenants to the Advisor that it has the
power, capacity and authority to commit the Trust to this Contract;
that a true and complete copy of the Agreement and Declaration of
Trust and By-Laws of the Trust and the stated objectives, policies
and restrictions of the Fund have been delivered to the Advisor; and
that true and complete copies of every amendment thereto will be
delivered to the Advisor as promptly as practicable after the
adoption thereof. The Manager agrees that notwithstanding any
other provision of this Contract to the contrary, the Advisor will not
be bound by any such amendment until the Advisor has received a
copy thereof and has had a reasonable opportunity to review it.
(b) The Manager shall indemnify and hold
harmless the Advisor, its partners, officers, employees and agents
and each person, if any, who controls the Advisor within the
meaning of any applicable law (each individually an "Indemnified
Party") from and against all losses, claims, damages, liabilities and
expenses (including, without limitation, reasonable fees and other
expenses of an Indemnified Party's counsel, other than attorneys'
fees and costs in relation to the preparation of this Contract; each
party bearing responsibility for its own such costs and fees), joint or
several, (other than liabilities, losses, expenses, attorneys' fees and
costs or damages arising from the failure of the Advisor to perform
its responsibilities hereunder or claims arising from its acts or
failure to act in performing this Contract) to which the Advisor or
any other Indemnified Party may become subject under any federal
or state law as a result of any failure of the Manager or, if caused
by any failure of the Manager, of the Trust or the Fund, to disclose
a material fact, or any omission by the Manager, or, if caused by
any failure of the Manager, of the Trust or the Fund, to disclose a
material fact, in any document relating to the Trust or the Fund,
except any failure or omission caused solely by (i) the
incorporation in any such document of information relating to the
Advisor which is furnished to the Manager in writing by or with the
consent of the Advisor expressly for inclusion in such document or
(ii) a breach, of which the Manager was not aware, by the Advisor
of its duties hereunder. With respect to any claim for which an
Indemnified Party is entitled to indemnity hereunder, the Manager
shall assume the reasonable expenses and costs (including any
reasonable attorneys' fees and costs) of the Indemnified Party or
investigating and/or defending any claim asserted or threatened by
any party, subject always to the Manager first receiving a written
undertaking from the Indemnified Party to repay any amounts paid
on its behalf in the event and to the extent of any subsequent
determination that the Indemnified Party was not entitled to
indemnification hereunder with respect of such claim.
(c) No public reference to, or description of, the
Advisor or its methodology or work shall be made by the Manager
or the Trust, whether in a prospectus, Statement of Additional
Information or otherwise, unless the Manager provides the Advisor
with a reasonable opportunity to review any such reference or
description prior to the first use of such reference or description.
10. REPRESENTATIONS AND COVENANTS OF THE
ADVISOR.
(a) The Advisor represents that the terms of this
Contract do not violate any obligation by which it is bound,
whether arising by contract, operation of law, or otherwise, and that
it has the power, capacity and authority to enter into this Contract
and to perform in accordance herewith.
(b) The Advisor shall immediately notify the Manager
in the event that the Advisor or any of its affiliates: (1) becomes
aware that it is subject to a statutory disqualification that prevents
the Advisor from serving as investment advisor pursuant to this
Contract; or (2) becomes aware that it is the subject of an
administrative proceeding or enforcement action by the SEC or any
other regulatory authority. The Advisor further agrees to notify the
Manager immediately of any material fact known to the Advisor
respecting or relating to the Advisor that is not contained in the
Trust's Registration Statement regarding the Fund, or any
amendment or supplement thereto, but that is required to be
disclosed therein, and of any statement contained therein that
becomes untrue in any material respect.
(c) The Advisor agrees to maintain such books and
records with respect to its services to the Fund as are required under
the 1940 Act, and rules adopted thereunder, and by other applicable
legal provisions, and to preserve such records for the periods and in
the manner required by that Section, and those rules and legal
provisions. The Advisor also agrees that records it maintains and
preserves pursuant to Rule 31a-l and Rule 31a-2 under the 1940
Act and otherwise in connection with its services hereunder are the
property of the Trust and will be surrendered promptly to the Trust
upon its request. The Advisor further agrees that it will furnish to
regulatory authorities having the requisite authority any
information or reports in connection with its services hereunder
which may be requested in order to determine whether the
operations of the Fund are being conducted in accordance with
applicable laws and regulations.
(d) The Advisor shall provide the Manager with
quarterly representations regarding the compliance of its employees
with the Advisor's code of ethics governing personal securities
transactions. The Advisor shall provide the Manager with copies of
any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the
Manager, the Fund, their partners, officers, employees and agents
and each person, if any, who controls the Manager or Fund within
the meaning of any applicable law (each individually an
"Indemnified Party") from and against all losses, claims, damages,
liabilities and expenses (including, without limitation, reasonable
fees and other expenses of an Indemnified Party's counsel, other
than attorneys' fees and costs in relation to the preparation of this
Contract; each party bearing responsibility for its own such costs
and fees), joint or several, (other than liabilities, losses, expenses,
attorneys' fees and costs or damages arising from the failure of the
Manager to perform its responsibilities hereunder or claims arising
from its acts or failure to act in performing this Contract) arising
from Advisor's (or its respective agents' and employees') failure to
perform its duties and assume its obligations hereunder, including
any action or claim against the Manager based on any alleged
untrue statement or misstatement of a material fact made or
provided in writing by or with the consent of Advisor contained in
any registration statement, prospectus, shareholder report or other
information or materials relating to the Fund and shares issued by
the Fund, or the failure or alleged failure to state a material fact
therein required to be stated in order that the statements therein are
not misleading, which fact should have been made known or
provided by the Advisor to the Manager. With respect to any claim
for which an Indemnified Party is entitled to indemnity hereunder,
the Advisor shall assume the reasonable expenses and costs
(including any reasonable attorneys' fees and costs) of the
Indemnified Party of investigating and/or defending any claim
asserted or threatened by any party, subject always to the Advisor
first receiving a written undertaking from the Indemnified Party to
repay any amounts paid on its behalf in the event and to the extent
of any subsequent determination that the Indemnified Party was not
entitled to indemnification hereunder with respect of such claim.
11. USE OF NAME.
It is understood that the name of the Fund (as it may be
changed from time to time while the Advisor provides services
pursuant to this Contract) or any derivative thereof or logo
associated with that name is the valuable property of the Trust
and/or its affiliates, and that the Advisor has the right to use such
name (or derivative or logo) only with the approval of the
Manager and only so long as the Advisor is Advisor to the Trust
and/or the Fund. Upon termination of this Contract the Advisor
shall forthwith cease to use such name (or derivative or logo).
12. GOVERNING LAW.
This Contract shall be governed by, and construed and
enforced in accordance with, the substantive laws of The
Commonwealth of Massachusetts without regard to its principles
of conflicts of laws, except to the extent such laws shall be
preempted by the Investment Company Act of 1940 or by other
applicable laws.
13. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed
to be an independent contractor and, except as otherwise expressly
provided herein, shall have no authority to act for, bind or
represent the Fund in any way or otherwise be deemed to be an
agent of the Fund. Likewise, the Fund, the Manager and their
affiliates, agents and employees shall not be deemed agents of the
Advisor and shall have no authority to bind the Advisor.
14. MISCELLANEOUS.
(a) The captions of this Contract are included for
convenience only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
(b) In the event that the Advisor or Manager is or
becomes a party to any action or proceedings in respect of which
indemnification may be sought hereunder, the party seeking
indemnification shall promptly notify the other party thereof. The
party from whom indemnification is sought shall not be liable
hereunder for any settlement of any action or claim effected
without its written consent, which consent shall not be reasonably
withheld.
(c) This Contract may be executed in one or more
counterparts, all of which taken together shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, QUANTITATIVE INVESTMENT
ADVISORS, INC d/b/a QUANTITATIVE ADVISORS, INC. and
SSGA FUNDS MANAGEMENT, INC. have each caused this
instrument to be signed in duplicate in its behalf, all as of the day and
year first above written.
QUANTITATlVE
INVESTMENT
ADVISORS, INC.
d/b/a QUANTITATIVE
ADVISORS, INC.
By:
_____________________
_____
Xxxxxxxxx X.
Marius, President
SSGA FUNDS
MANAGEMENT, INC.
By:
_____________________
______
