SUB-ITEM 77Q1(e)(3): New Investment Sub-Advisory Contract
GE INVESTMENTS FUNDS, INC.
REAL ESTATE SECURITIES FUND
SUB-ADVISORY AGREEMENT
This Sub-Advisory Agreement (this "Agreement") is made as of July 1, 2016,
by and among SSGA FUNDS MANAGEMENT, INC. ("SSGA FM"), a Massachusetts
corporation, GE INVESTMENTS FUNDS, INC. (the "Company"), a Virginia
corporation, on behalf of the REAL ESTATE SECURITIES FUND (the "Fund"), a
series of the Company, solely with respect to Section 10 of this Agreement, and
CENTERSQUARE INVESTMENT MANAGEMENT, INC., a Pennsylvania corporation (the
"Sub-Adviser").
RECITALS
WHEREAS, SSGA FM has entered into an Investment Advisory and Administration
Agreement dated July 1, 2016 (the "Advisory Agreement") with the Company, an
open-end management investment company registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), with respect to the Fund;
WHEREAS, pursuant to the Advisory Agreement, SSGA FM may delegate portfolio
management responsibilities to other investment sub-advisers, subject to the
requirements of the 1940 Act; and
WHEREAS, SSGA FM wishes to retain the Sub-Adviser to furnish certain
investment advisory services to SSGA FM and the Fund, and the Sub-Adviser is
willing to furnish those services.
NOW, THEREFORE, in consideration of the promises and mutual covenants herein
contained, the parties agree as follows:
1. Appointment. SSGA FM 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. Sub-Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent SSGA FM, the Company or
the Fund or otherwise be deemed an agent of SSGA FM, the Company or the Fund.
2. Duties as Sub-Adviser.
(a) Subject to the oversight and supervision of SSGA FM and the Company's
Board of Directors (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 be responsible for voting proxies of issuers of securities
held by the Fund.
The Sub-Adviser will consult with SSGA FM 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 Company's current registration statement on Form N-1A and any
amendments or supplements thereto (the "Registration Statement") and the
Company's articles of incorporation and by-laws (the "Constituent Documents").
In connection therewith and in connection with the further duties set forth in
paragraphs 2(b) - (h) below, the Sub-Adviser shall provide SSGA FM and the
Board with such periodic reports and documentation as SSGA FM or the Board
shall reasonably request regarding the Sub-Adviser's management of the Fund's
assets and compliance with the Registration Statement, applicable law and
regulations, and all requirements hereunder. The Sub-Adviser acknowledges that
copies of the current Registration Statement, and the Constituent Documents,
each as currently in effect, have been delivered to the Sub-Adviser.
(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, and (4) applicable law and regulations. SSGA
FM shall promptly notify the Sub-Adviser of changes to (1), (2), and (3) above.
In particular, the Sub-Adviser shall be responsible to ensure that the Fund:
(1) continuously qualifies as a regulated investment company under sub-chapter
M of the Internal Revenue Code of 1986, as amended (the "Code"), (2) complies
with the diversification requirements of Section 817(h) of the Code and
regulations thereunder as these apply to separate accounts through which
variable life insurance contracts and variable annuity contracts are issued,
and (3) is notified promptly, but in any event on the same day and prior to the
earlier of (1) the release of the Fund's net asset value or (ii) 6:00pm Eastern
Time, of any and all instances in which the Sub-Adviser knows or should have
reason to know that the available price or value of a portfolio instrument does
not represent the fair value of the instrument, or that there is no price or
value available from any source with respect to a particular instrument and
that such instrument should accordingly be subject to a fair valuation
determination in accordance with procedures adopted by the Board, as amended
from time to time.
(c) The Sub-Adviser shall take all actions that it considers necessary to
implement the investment objective and principal strategies 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. To that end,
the Sub-Adviser is authorized as the agent of the Company to give instructions
to the Company'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") and applicable guidance of the Securities and Exchange Commission (the
"SEC"), the Sub-Adviser is also authorized to take
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into consideration other relevant factors which may include, without
limitation: (1) the execution capabilities of such brokers and dealers,
(2) research, custody and other services provided by brokers and dealers which
the Sub-Adviser believes will enhance its general portfolio management
capabilities, (3) the size of the transaction, (4) the difficulty of execution,
(5) the operational facilities of such brokers and dealers, (6) the risk to
such a broker or dealer of positioning a block of securities, and (7) the
overall quality of brokerage and research services provided by such brokers and
dealers. 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 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 SSGA
FM 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 Company for such services in
addition to the Sub-Adviser's fees for services under this Agreement.
(e) The Sub-Adviser agrees to maintain, in the form and for the periods
required by Rule 31a-2 under the 1940 Act, all records relating to the Fund's
investments that are required to be maintained by the Company pursuant to the
requirements of paragraphs (b)(2)(ii), (b)(2)(iii), (b)(5), (b) (6), (b)(7),
(b)(9), (b)(10) and (f) of Rule 31a-1 under the 1940 Act. The Sub-Adviser
agrees that all books and records which it maintains for the Fund or the
Company are the property of the Company and further agrees to surrender the
same to SSGA FM or the Company upon SSGA FM's or the Company's request
(provided, however, that Sub-Adviser may retain copies of such records). The
Sub-Adviser agrees to furnish the Board and SSGA FM with such periodic and
special reports regarding the Fund's investments and records relating to the
same as the Board or SSGA FM reasonably may request.
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(f) At such times as shall reasonably be requested by the Board or SSGA FM,
the Sub-Adviser will provide the Board and SSGA FM 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 SSGA FM 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
SSGA FM 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
Company's accounting services agent or SSGA FM to obtain independent sources of
market value for all other portfolio securities.
(h) Sub-Adviser shall not consult with other sub-advisers of the Fund, or
with sub-advisers of other funds of the Company, concerning transactions in
portfolio securities or other portfolio investments of the Fund.
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 SSGA FM and will comply with the applicable
requirements of the 1940 Act, the Advisers Act, the rules under each,
Subchapter M and Section 817(h) of the Code and regulations issued thereunder.
In addition, the Sub-Adviser will act in conformity with all other applicable
federal and state laws and regulations. SSGA FM agrees to provide to the
Sub-Adviser copies of the Constituent Documents, Registration Statement and any
amendments or supplements to any of these materials as soon as reasonably
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, SSGA FM shall pay the Sub-Adviser, no later than the
ninetieth (90th) business day following the end of each calendar quarter, a fee
based on the average daily net assets of the Fund for such quarter at the
following annual rates (the "Fee Rate Schedule"):
REDACTED
The Sub-Adviser's fee shall be paid by SSGA FM. 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 Company, 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
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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
sixty (60) 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.
6. Compliance Matters.
(a) The Sub-Adviser understands and agrees that it is a "service provider"
to the Company as contemplated by Rule 38a-1 under the 1940 Act. As such, the
Sub-Adviser agrees to cooperate fully with SSGA FM and the Company and its
directors and officers, including the Company's Chief Compliance Officer
("CCO"), with respect to all compliance-related matters, including the
Company's efforts to assure that each of its service providers adopts and
maintains written policies and procedures that are reasonably designed to
prevent violation of the "federal securities laws" (as that term is defined by
Rule 38a-1) by the Company, SSGA FM and Sub-Adviser. In this regard, the
Sub-Adviser shall:
(1) submit to the Board for its consideration and approval, the
Sub-Adviser's applicable compliance policies and procedures;
(2) submit to the Board for its consideration and approval, annually (and
at such other times as the Company may request), a written report
("Report") fully describing the results of the Sub-Adviser's review of
the adequacy of its compliance policies and procedures, including its
assessment of the effectiveness of such policies and procedures and a
description of any material amendments to such policies and procedures
since the more recent of: (A) the Board's approval of such policies and
procedures or (B) the most recent Report;
(3) provide periodic reports discussing the Sub-Adviser's compliance
program and special reports in the event of material compliance matters;
(4) permit SSGA FM and the Company and its directors and officers to become
familiar with the Sub-Adviser's operations and understand those aspects
of the Sub-Adviser's operations that may expose SSGA FM and the Company
to compliance risks or lead to a violation by the Company, SSGA FM or
the Sub-Adviser of the federal securities laws;
(5) provide SSGA FM, the Company and its directors and CCO with such
certifications regarding compliance as may be reasonably requested; and
(6) make the Sub-Adviser's personnel and compliance policies and procedures
reasonably available to such personnel as SSGA FM and the Company and
its directors and officers may designate to evaluate the effectiveness
of the Sub-Adviser's compliance controls, policies and procedures.
(b) The Sub-Adviser agrees to maintain and implement a compliance program
that complies with the requirements of Rule 206(4)-7 under the Advisers Act.
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7. Limitation of Liability. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund, the
Company or its shareholders or by SSGA FM in connection with the matters to
which this Agreement relates, except (a) a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or from reckless disregard by it of its obligations and duties under
this Agreement, and (b) to the extent otherwise provided 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. Notwithstanding the
foregoing, the Sub-Adviser shall be liable for any loss suffered by the Fund,
the Company or its shareholders or by SSGA FM as a result of any negligent act
or omission by Sub-Adviser relating to or arising out of any breach by the
Sub-Adviser of the second paragraph of Section 2(b) of this Agreement.
8. Representations and Warranties of Sub-Adviser. The Sub-Adviser
represents, warrants and agrees as follows:
(a) The Sub-Adviser: (1) is registered as an adviser under the Advisers Act
and will continue to be so registered for so long as this Agreement remains in
effect; (2) is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement; (3) has met, and will
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; (4) 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; (5) will promptly notify SSGA FM 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;
and (6) is duly organized and validly existing under the laws of the
Commonwealth of Pennsylvania 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 pursuant to Rule
204A-1 under the Advisers Act that also complies with Rule 17j-1 under the 1940
Act, and will provide SSGA FM and the Board with a copy of that code of ethics,
together with evidence of its adoption. Within fifteen days of the end of the
last calendar quarter of each year that this Agreement is in effect, the
president, any vice president or chief compliance officer of the Sub-Adviser
shall certify to SSGA FM that the Sub-Adviser has complied with the
requirements of Rule 204A-1 under the Advisers Act and Rule 17j-1 under the
1940 Act during the previous year and that there has been no violation of the
Sub-Adviser's code of ethics or, if such a violation has occurred, the details
of such violation and of the appropriate action that was taken in response to
such violation. Upon the written request from SSGA FM, the Sub-Adviser shall
permit SSGA FM, its employees or its agents to examine the reports made to the
Sub-Adviser pursuant to Rule 204A-1(b) under the Advisers Act and Rule
17j-1(c)(2) under the 1940 Act and all other records relevant to the
Sub-Adviser's code of ethics. SSGA FM shall be solely responsible for ensuring
the confidentiality of such reports and shall be solely liable for any
unauthorized abuse or misuse of information in such reports by its employees or
agents.
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9. Representations and Warranties of SSGA FM. SSGA FM represents, warrants
and agrees that SSGA FM (a) 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; (b) is not prohibited by the 1940 Act or the
Advisers Act from performing the obligations contemplated by the Advisory
Agreement; (c) 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 obligations
contemplated by the Advisory Agreement; (d) has the authority to enter into and
perform the obligations contemplated by the Advisory Agreement and the
execution, delivery and performance by SSGA FM of the Advisory Agreement does
not contravene or constitute a default under any agreement binding upon SSGA
FM; (e) will promptly notify the Sub-Adviser of the occurrence of any event
that would disqualify SSGA FM from serving as an investment adviser of an
investment company pursuant to Section 9(a) of the 1940 Act or otherwise; and
(f) is duly 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.
10.Indemnification.
(a) The Company 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 and indirect liabilities, losses or damages (including
reasonable attorneys' fees) arising out of any claim, demand, action, suit or
proceeding arising out of any actual or alleged material misstatement or
omission in the Company's registration statement, any proxy statement, or any
annual or semi-annual report to investors in the Fund (other than a
misstatement or omission relating to disclosure about the Sub-Adviser approved
by the Sub-Adviser or provided to SSGA FM or the Company by the Sub-Adviser or
relating to an incorrect valuation of a Fund portfolio instrument that resulted
from any breach by the Sub-Adviser of the second paragraph of Section 2(b) of
this Agreement).
(b) The Sub-Adviser agrees to indemnify and hold the Company and SSGA FM,
their respective officers and directors, and any person who controls them
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) arising out of any claim, demand, action, suit or proceeding:
(1) arising out of any actual or alleged material misstatement or omission
in the Company's registration statement, any proxy statement, or any
annual or semi-annual report to investors in the Fund relating to
disclosure about the Sub-Adviser provided to SSGA FM by the Sub-Adviser
or relating to an incorrect valuation of a Fund portfolio instrument
that resulted from any breach by the Sub-Adviser of the second
paragraph of Section 2(b) of this Agreement; and
(2) arising out of the Sub-Adviser's failure to ensure that the Fund
(A) complies with the diversification requirements of Section 817(h) of
the Code and the regulations issued thereunder as these apply to
separate accounts through which variable life insurance contracts and
variable annuity contracts are issued, and (B) continuously qualifies
as a regulated investment company under Sub-Chapter M of the Code.
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11. Duty to Update Information. The parties hereto shall promptly notify
each other in writing regarding any change to the foregoing representations and
warranties. Likewise, the Sub-Adviser agrees to notify SSGA FM of any change of
control of the Sub-Adviser, including any change of its general partner or 25%
shareholders, as applicable, and any changes in the key personnel of the
Sub-Adviser, including in particular portfolio management personnel responsible
for the Fund's assets in each case prior to or promptly after notice of such
change.
12. [RESERVED]
13. Duration and Termination.
(a) This Agreement shall become effective upon the date of its execution.
This Agreement will continue for an initial two-year term and will continue
thereafter so long as the continuance is specifically approved at least
annually (1) by the Board or (2) 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 penalty, by SSGA
FM: (1) upon 60 days' written notice to the Sub-Adviser, (2) upon material
breach by the Sub-Adviser of any of the representations and warranties set
forth in Paragraph 8 of this Agreement, or (3) 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 SSGA FM. This Agreement will terminate automatically in
the event of its assignment (as defined under the 1940 Act, the rules
thereunder or SEC staff interpretations thereof) or upon termination of the
Advisory Agreement.
14. 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 Company receives an order from
the SEC or opinion of counsel permitting it to modify the Agreement without
such vote).
15. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of New York, without giving effect to the conflicts of laws
principles thereof, and applicable provisions of the 1940 Act and the Advisers
Act. To the extent that the applicable laws of the State of New York conflict
with the applicable provisions of the 1940 Act and the Advisers Act, the latter
shall control.
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16. Miscellaneous. 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," "control," "investment adviser," "net assets," 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 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 counterparts, each of which shall be
deemed to be an original, but both of which shall together constitute one and
the same instrument.
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.
SSGA FUNDS MANAGEMENT, INC.
BY: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: President
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GE INVESTMENTS FUNDS, INC., ON BEHALF
OF THE REAL ESTATE SECURITIES FUND,
SOLELY WITH RESPECT TO SECTION 10 OF
THIS AGREEMENT
BY: /s/ Xxxxxx X. Xx Xxxxx
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Name: Xxxxxx X. Xx Xxxxx
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Title: President and Director
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CENTERSQUARE INVESTMENT MANAGEMENT,
INC.
BY: /s/ X. Xxxxxx Law
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Name: X. Xxxxxx Law
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Title: Chief Financial Officer/Chief
Compliance Officer
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