OUANTITATIVE ADVISORS, INC.
ADVISORY CONTRACT
Advisory Contract ("Contract") dated as of May 1, 2001,
between QUANTITATIVE ADVISORS, INC., a Massachusetts
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, a Massachusetts business
trust (the "Trust"), and the Manager, the Advisor, at its expense, will
furnish continuously an investment program for the Quantitative
Growth and Income 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 which 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 I.
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 proper1y 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 0.375% of the first $20 million and 0.30% of amounts in excess
of $20 million of average daily total net assets, with an annual
minimum of $25,000. 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 al1 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 May 1, 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 ill 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. REPRESENTATIONS 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 J 940
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 31 a-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 Pal1y 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 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.
QUANTITATIVE
ADVISORS, INC
By:
__________________________
Xxxxxxx X. Xxxxxxx,
President
SSGA FUNDS
MANAGEMENT, INC.
By:
_____________________________
Xxxxxxx X. Xxxx, Xx.
