INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT
GE INSTITUTIONAL FUNDS
EUROPE EQUITY FUND
GE INVESTMENT MANAGEMENT INCORPORATED
Agreement made as of December 9, 1998 between GE INVESTMENT
MANAGEMENT INCORPORATED ("GEIM") and GE INSTITUTIONAL FUNDS (the "Trust") on
behalf of its Europe 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
1
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
2
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 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
3
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).
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 .75
Next $50 million .65
Over $75 million .55
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.
4
(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.
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
5
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.
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
-----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman of the Board
and President
GE INVESTMENT MANAGEMENT
INCORPORATED
By: S/XXXX X. XXXXX
-----------------------------
Name: Xxxx X. Xxxxx
Title: Executive Vice President
6
