EX-99.22(D)(2) 5 a2147901zex-99_22d2.txt EX 99.22(D)(2) EXHIBIT 99.22(d)(2) INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN SSGA FUNDS MANAGEMENT, INC. AND THE TUCKERMAN GROUP LLC This Agreement is made as of this 1st day of September, 2001, between SSgA Funds Management, Inc., a Massachusetts corporation (the "Adviser") and The Tuckerman Group LLC, a Delaware limited liability company (the "Sub-Adviser"). WHEREAS, the Adviser is in the business of providing investment advisory services; and WHEREAS, the Sub-Adviser is in the business of providing investment advisory services; and WHEREAS, The SSgA Funds (the "Investment Company") is a Massachusetts business trust that is an open-end, diversified management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), currently consisting of multiple portfolio series, each having its own investment policy; and WHEREAS, the SSgA Tuckerman Active REIT Fund (the "Fund") is one portfolio series of the Investment Company; and WHEREAS, pursuant to the Investment Advisory Agreement between the Investment Company and the Adviser, dated the 1st of May, 2001, the Adviser is required to perform investment advisory services to the Investment Company; and WHEREAS, the Adviser desires to retain the Sub-Adviser to render investment advisory services to the Investment Company with respect to the Fund, and the Sub-Adviser is willing to render such services; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: 1. APPOINTMENT OF SUB-ADVISER. The Adviser hereby appoints the Sub-Adviser to act as investment sub-adviser to the Fund for the period and on the terms set forth in this Agreement. The Sub-Adviser accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. The Adviser warrants that the Sub-Adviser has been duly appointed to act hereunder. 2. ADVISORY DUTIES. The Sub-Adviser shall formulate and implement a continuous investment program for the Fund, including the purchase, retention and disposition of investments therefor, in accordance with the Fund's investment objective and policies as stated in the Investment Company's Registration Statement. The Sub-Adviser's duties hereunder are subject to the following understandings: (a) Subject to the supervision and control of the Adviser, the Sub-Adviser shall provide supervision of investments, furnish a continuous investment program for the Fund, determine from time to time what investments or securities will be purchased, retained or sold by the Fund, and what portion of the assets will be invested or held uninvested as cash; (b) The Sub-Adviser, in the performance of its duties and obligations under this Agreement, shall act in conformity with the Master Trust Agreement, By-Laws and Registration Statement of the Investment Company and with the instructions and directions of the Adviser, provided, however, the Sub-Adviser shall not be responsible for acting contrary to any of the foregoing that are changed without notice of such change to the Sub-Adviser; and the Sub-Adviser shall conform to and comply with the applicable requirements of the 1940 Act and all other applicable federal or state laws and regulations; (c) The Sub-Adviser shall promptly communicate to the Adviser such information relating to Fund transactions as the Adviser may reasonably request. On occasions when the Sub-Adviser deems the purchase or sale of a security to be in the best interest of the Fund as well as other clients, the Sub-Adviser, to the extent permitted by applicable laws and regulations, may aggregate the securities to be sold or purchased, provided that in the opinion of the Sub-Adviser, all accounts are treated equitably and fairly. In such event, allocation of the securities so purchased or sold, as well as the expenses incurred in the transactions, shall be made by the Sub-Adviser in the manner it considers to be the most equitable and consistent with its fiduciary obligations to the Fund and to such other clients; (d) The Sub-Adviser shall maintain books and records with respect to the Investment Company's securities transactions and shall render to the Adviser such periodic and special reports as the Adviser may reasonably request; (e) The Sub-Adviser shall provide the Adviser with a list of all securities transactions as reasonably requested by the Adviser; (f) the investment advisory services of the Sub-Adviser with respect to the Fund under this Agreement are not to be deemed exclusive, and the Sub-Adviser shall be free to render similar services to others. 3. EXECUTION AND ALLOCATION OF PORTFOLIO BROKERAGE COMMISSION. The Sub-Adviser, subject to and in accordance with any directions which the Investment Company's Board of Trustees may issue from time to time, shall place, in the name of the Investment Company, orders for the execution of the securities transactions in which the Fund is authorized to invest. When placing such orders, the primary objective of the Sub-Adviser shall be to obtain the best net price and execution for the Investment Company but this requirement shall not be deemed to obligate the Sub-Adviser to place any order solely on the basis of obtaining the lowest commission rate if the other standards set forth in this section have been satisfied. The Investment Company recognizes that there are likely to be many cases in which different brokers are equally able to provide such best price and execution and that, in selection among such brokers with respect to particular trades, it is desirable to choose those brokers who furnish "brokerage and research services" (as defined in Section 29(e)(3) of the Securities and Exchange Act of 1934) or statistical quotations and other information to the Investment Company and/or the Sub-Adviser in accordance with the standards set forth below. Moreover, to the extent that it continues to be lawful to do so and so long as the Board determines as a matter of general policy that the Investment Company will benefit, directly or indirectly, by doing so, the Sub-Adviser may place orders with a broker who charges a commission that another broker would have charged for effecting that transaction, provided that the excess commission is reasonable in relation to the value of brokerage and research services provided by that broker. Accordingly, the Investment Company and the Sub-Adviser agree that the Sub-Adviser shall select brokers for the execution of the Fund's securities transactions from among: a. Those brokers and dealers who provide brokerage and research services, or statistical quotations and other information to the Investment Company, specifically including the quotations necessary to determine the Investment Company's net assets, in such amount of total brokerage as may reasonably be required in light of such services. b. Those brokers and dealers who provide brokerage and research services to the Sub-Adviser and/or its affiliated corporations which relate directly to portfolio securities, actual or potential, of the Investment Company, or which place the Sub-Adviser in a better position to make decisions in connection with the management of the Investment Company's assets, whether or not such data may also be useful to the Sub-Adviser and its affiliates in managing other portfolios or advising other clients, in such amount of total brokerage as may reasonably be required. c. Affiliated brokers of Adviser, when the Sub-Adviser has determined that the Fund will receive competitive execution, price and commissions. The Sub-Adviser shall render regular reports to the Investment Company, not more frequently than quarterly, of how much total brokerage business has been placed with affiliated brokers of Adviser, and the manner in which the allocation has been accomplished. The Sub-Adviser agrees that no investment decision will be made or influenced by a desire to provide brokerage for allocation in accordance with the foregoing, and that the right to make such allocation of brokerage shall not interfere with the Sub-Adviser's primary duty to obtain the best net price and execution for the Investment Company. 4. BOOKS AND RECORDS. The Sub-Adviser shall keep the Investment Company's books and records required to be maintained by it pursuant to paragraph 2(d) hereof. The Sub-Adviser agrees that all records which it maintains for the Investment Company are the property of the Investment Company and it shall surrender promptly to the Investment Company any of such records upon the Investment Company's request. The Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 of the Commission under the 1940 Act any such records as are required to be maintained by Rule 31a-1(f) of the Commission under the 1940 Act. Nothing herein shall prevent the Sub-Adviser from maintaining its own records as required by law, which may be a duplication of the Investment Company's records. 5. REPORTS TO SUB-ADVISER. The Investment Company agrees to furnish the Sub-Adviser at its principal office all prospectuses, proxy statements, reports to stockholders, sales literature or other material prepared for distribution to shareholders of the Investment Company or the public, which refer in any way to the Sub-Adviser, ten (10) days prior to use thereof and not to use such material if the Sub-Adviser should object thereto in writing within seven (7) days after receipt of such material; provided, however, that the Sub-Adviser hereby approves all uses of its name which merely refer in accurate terms to its appointment as investment adviser hereunder, which, merely identifies the Investment Company, or which are required by the Securities and Exchange Commission or a state securities commission. In the event of termination of this Agreement, the Investment Company shall, on written request of the Sub-Adviser, forthwith delete any reference to the Sub-Adviser from any materials described in the preceding sentence. The Investment Company shall furnish or otherwise make available to the Sub-Adviser such other information relating to the business affairs of the Investment Company as the Sub-Adviser at any time, or from time to time, reasonably requests in order to discharge its obligations hereunder. 6. PROXIES. Unless the Adviser or the Investment Company gives written instructions to the contrary, the Sub-Adviser shall vote or not vote all proxies solicited by or with respect to the issuers of securities in which assets of the Fund may be invested. The Sub-Adviser shall use its best good faith judgment to vote or not vote such proxies in a manner which best serves the interests of the Investment Company's shareholders. 7. EXPENSES. During the term of this Agreement, the Sub-Adviser shall pay all of its own expenses incurred by it in connection with its activities under this Agreement and the Adviser and/or Fund of the Investment Company, as they may agree from time to time, shall bear all expenses that are incurred in their operations not specifically assumed by the Sub-Adviser. Expenses borne by the Fund will include but not be limited to the following (or the Fund's proportionate share of the following): (a) brokerage commissions relating to securities purchased or sold by the Fund or any losses incurred in connection therewith; (b) fees payable to and expenses incurred on behalf of the Fund by the Investment Company's administrator; (c) expenses of organizing the Investment Company and the Fund; (d) filing fees and expenses relating to the registration and qualification of the Fund's shares and the Investment Company under federal or state securities laws and maintaining such registrations and qualifications; (e) fees and salaries payable to the Investment Company's Trustees and officers who are not officers or employees of the Investment Company's administrator, any investment adviser or underwriter of the Investment Company; (f) taxes (including any income or franchise taxes) and governmental fees; (g) costs of any liability, uncollectible items of deposit and other insurance or fidelity bonds; (h) any costs, expenses or losses arising out of any liability of or claim for damage or other relief asserted against the Investment Company or the Fund for violation of any law; (i) legal, accounting and auditing expenses, including legal fees of special counsel for the independent Trustees; (j) charges of custodians, transfer agents and other agents; (k) costs of preparing share certificates (if any); (l) expenses of setting in type and printing Prospectuses and Statements of Additional Information and supplements thereto for existing shareholders, reports and statements to shareholders and proxy material; (m) any extraordinary expenses (including fees and disbursements of counsel) incurred by the Investment Company or the Fund; and (n) fees and other expenses incurred in connection with membership in investment company organizations. 8. COMPENSATION OF THE SUB-ADVISER. For the services to be rendered by the Sub-Adviser as provided in this Agreement the Adviser shall pay to the Sub-Adviser such compensation as is designated in Exhibit A to this Agreement. 9. LIMITATION OF SUB-ADVISER'S LIABILITY; INDEMNIFICATION. In the absence of (a) willful misfeasance, bad faith or gross negligence on the part of the Sub-Adviser in performance of its obligations and duties hereunder, (b) reckless disregard by the Sub-Adviser of its obligations and duties hereunder, or (c) a loss resulting from a beach of fiduciary duty with respect to the receipt of compensation for services (in which case, any award of damages shall be limited to the period and the amount set forth in Section 36(b)(3) of the 1940 Act) (each of which is hereby referred to as a "Culpable Act"), the Sub-Adviser shall not be subject to any liability whatsoever to the Adviser or the Investment Company, or to any shareholder of the Investment Company, for any error of judgment, mistake of law or any other act or omission in the course of, or connected with, rendering services hereunder including, without limitation, for any losses that may be sustained in connection with the purchase, holding, redemption or sale of any security on behalf of the Investment Company. The Adviser shall indemnify the Sub-Adviser and its officers, directors, employees, agents or legal representatives (collectively, "Related Persons") and hold them harmless from and against any and all actions, suits or claims whether groundless or meritorious and from and against any and all losses, damages, costs, charges, reasonable counsel fees, payments, expenses and liabilities (collectively, "Damages") arising directly or indirectly out of or in connection with the performance of services by the Sub-Adviser or its Related Persons hereunder to the extent such Damages result from any Culpable Act of the Adviser or any Related Person of the Adviser. The Sub-Adviser shall indemnify the Adviser and its Related Persons from and against any Damages arising directly or indirectly out of or in connection with the performance of services by the Adviser or its Related Persons under this Agreement or the Advisory Agreement, in each case, to the extent such Damages result from any Culpable Act of the Sub-Adviser or any of its Related Persons. 10. DURATION AND TERMINATION. (a) This Agreement shall become effective with respect to the Fund on the date hereof. This Agreement, unless sooner terminated as provided herein, shall continue for the Fund for two years following the effective date of this Agreement with respect to the Fund, or the date of the first annual or special meeting of the shareholders of the Fund following such effective date, if approved by a majority of the outstanding voting securities of the Fund (as defined in the 1940 Act), and thereafter shall continue automatically for periods of one year so long as such continuance is specifically approved at least annually (a) by the vote of a majority of those members of the Board of Trustees of the Investment Company who are not parties to this Agreement or "interested persons" (as defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting such approval, and (b) by the Board of Trustees of the Investment Company or by vote of a majority of the outstanding voting securities of the Fund. (b) This Agreement may be terminated by the Investment Company at any time, without the payment of any penalty, by vote of a majority of those members of the Board of Trustees who are not "interested persons" (as defined in the 1940 Act) of the Adviser or the Investment Company or by the majority vote of either the entire Board of Trustees of the Investment Company or by vote of a majority of the outstanding voting securities of the Fund on 60 days' written notice to the Sub-Adviser. This Agreement may be terminated by the Adviser on 90 days' written notice to the Sub-Adviser. This Agreement may also be terminated by the Sub-Adviser on 90 days' written notice to the Adviser and the Investment Company. This Agreement will automatically and immediately terminate in the event of its assignment (as defined in the 1940 Act). 11. CHOICE OF LAW. This Agreement shall be construed in accordance with the laws of the Commonwealth of Massachusetts and any applicable federal law. 12. LIMITATION OF LIABILITY. The Master Trust Agreement dated October 3, 1987, as amended from time to time, establishing the Investment Company, which is hereby referred to and a copy of which is on file with the Secretary of The Commonwealth of Massachusetts, provides that the name SSgA Funds means the Trustees from time to time serving (as Trustees but not personally) under said Master Trust Agreement. It is expressly acknowledged and agreed that the obligations of the Investment Company hereunder shall not be binding upon any of the Shareholders, Trustees, officers, employees or agents of the Investment Company, personally, but shall bind only the trust property of the Investment Company, as provided in its Master Trust Agreement. The execution and delivery of this Agreement have been authorized by the Trustees of the Investment Company and signed by an officer of the Investment Company, acting as such, and neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the trust property of the Investment Company as provided in its Master Trust Agreement. IN WITNESS WHEREOF, the due execution hereof as of the date first above written. Attest: SSGA FUNDS MANAGEMENT, INC. By: By: /s/ Gustaff V. Fish, Jr. ----------------- --------------------------- Name: Gustaff V. Fish, Jr. Title: President Attest: THE TUCKERMAN GROUP, LLC By:/s/ Steven DeBara By: /s/ Charles J. Lauckhardt ----------------------------- Name: Charles J. Lauckhardt Title: President and CEO Acknowledged and agreed to as of the date first set forth above with respect to the Investment Company's obligations under this Agreement. THE SSGA FUNDS By: /s/ Lynn L. Anderson -------------------- Name: Lynn L. Anderson Title: President EXHIBIT "A" As consideration for the Sub-Adviser's services to the Fund, the Sub-Adviser shall receive from the Adviser an annual advisory fee, accrued daily at the rate of 1/365th of the applicable advisory fee rate and payable monthly on the first business day of each month, of the following annual percentages of the Fund's average daily net assets during the month: SSgA Tuckerman Active REIT Fund 0.325%*
*Provided, however, that in accordance with the terms of the Investment Advisory Agreement between the Adviser and the Investment Company, to the extent that the Adviser waives all or a portion of the advisory fee that it receives with respect to the Fund, Adviser shall only pay to Sub-Advisor 50% of the advisory fee that the Adviser receives with respect to the Fund.