INVESTMENT ADVISORY AND ADMINISTRATION CONTRACT
Contract made as of April 13, 1995 between XXXXXXXX XXXXXXXX/
XXXXXX, XXXXXXX INVESTMENT TRUST III, a Massachusetts business trust
("Fund") and XXXXXXXX XXXXXXXX ASSET MANAGEMENT INC. ("Manager"), a
Delaware corporation registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended ("1934 Act"), and as an investment
adviser under the Investment Advisers Act of 1940, as amended.
WHEREAS the Fund is registered under the Investment Company Act
of 1940, as amended ("1940 Act"), as an open-end management investment
company, and intends to offer for public sale distinct shares of
beneficial interest ("Shares"), which may be offered in separate and
distinct classes of shares, each corresponding to a distinct portfolio
("Series"); and
WHEREAS the Fund desires to retain Manager as investment adviser
and administrator to furnish certain administrative, investment advisory
and portfolio management services to the Fund and each Series as now
exists and as hereafter may be established, and Manager is willing to
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. Appointment. The Fund hereby appoints Manager as
investment adviser and administrator of the Fund and each Series for the
period and on the terms set forth in this Contract. Manager accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. Duties as Investment Adviser.
(a) Subject to the supervision of the Fund's Board of
Trustees ("Board"), Manager will provide a continuous investment program
for each Series, including investment research and management with respect
to all securities and investments and cash equivalents in each Series.
Manager will determine from time to time what securities and other
investments will be purchased, retained or sold by each Series.
(b) Manager agrees that in placing orders with brokers, it
will attempt to obtain the best net result in terms of price and
execution; provided that, on behalf of any Series, Manager may, in its
discretion, use brokers who provide the Series with research, analysis,
advice and similar services to execute portfolio transactions on behalf of
the Series, and Manager may pay to those brokers in return for brokerage
and research services a higher commission than may be charged by other
brokers, subject to Manager's determining in good faith that such
commission is reasonable in terms either of the particular transaction or
of the overall responsibility of Manager to such Series and its other
clients and that the total commissions paid by such Series will be
reasonable in relation to the benefits to the Series over the long term.
In no instance will portfolio securities be purchased from or sold to
Manager, or any affiliated person thereof, except in accordance with the
federal securities laws and the rules and regulations thereunder, or any
applicable exemptive orders. Whenever Manager simultaneously places
orders to purchase or sell the same security on behalf of a Series and one
or more other accounts advised by Manager, such orders will be allocated
as to price and amount among all such accounts in a manner believed to be
equitable to each account. The Fund recognizes that in some cases this
procedure may adversely affect the results obtained for the Series.
(c) Manager will oversee the maintenance of all books and
records with respect to the securities transactions of each Series, and
will furnish the Board with such periodic and special reports as the Board
reasonably may request. In compliance with the requirements of Rule 31a-3
under the 1940 Act, Manager hereby agrees that all records which it
maintains for the Fund are the property of the Fund, agrees to preserve
for the periods prescribed by Rule 31a-2 under the 1940 Act any records
which it maintains for the Fund and which are required to be maintained by
Rule 31a-1 under the 1940 Act and further agrees to surrender promptly to
the Fund any records which it maintains for the Fund upon request by the
Fund.
(d) Manager will oversee the computation of the net asset
value and the net income of each Series as described in the currently
effective registration statement of the Fund under the Securities Act of
1933, as amended, and the 1940 Act and any supplements thereto
("Registration Statement") or as more frequently requested by the Board.
(e) The Fund hereby authorizes Manager and any entity or
person associated with Manager which is a member of a national securities
exchange to effect any transaction on such exchange for the account of any
Series, which transaction is permitted by Section 11(a) of the 1934 Act,
and the Fund hereby consents to the retention of compensation by Manager
or any person or entity associated with Manager for such transaction.
3. Duties as Administrator. Manager will administer the
affairs of the Fund and each Series subject to the supervision of the
Board and the following understandings:
(a) Manager will supervise all aspects of the operations of
the Fund and each Series, including oversight of transfer agency,
custodial and accounting services, except as hereinafter set forth;
provided, however, that nothing herein contained shall be deemed to
relieve or deprive the Board of its responsibility for and control of the
conduct of the affairs of the Fund and each Series.
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(b) Manager will provide the Fund and each Series with such
corporate, administrative and clerical personnel (including officers of
the Fund) and services as are reasonably deemed necessary or advisable by
the Board, including the maintenance of certain books and records of the
Fund and each Series.
(c) Manager will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of the
Fund's Registration Statement, proxy material, tax returns and required
reports to each Series' shareholders and the Securities and Exchange
Commission and other appropriate federal or state regulatory authorities.
(d) Manager will provide the Fund and each Series with, or
obtain for it, adequate office space and all necessary office equipment
and services, including telephone service, heat, utilities, stationery
supplies and similar items.
(e) Manager will provide the Board on a regular basis with
economic and investment analyses and reports and make available to the
Board upon request any economic, statistical and investment services
normally available to institutional or other customers of Manager.
4. Further Duties. In all matters relating to the
performance of this Contract, Manager will act in conformity with the
Declaration of Trust, By-Laws and currently effective Registration
Statement of the Fund, as delivered to Manager and upon which it shall be
entitled to rely, and with the instructions and directions of the Board,
and will comply with the requirements of the 1940 Act, the rules
thereunder, and all other applicable federal and state laws and
regulations.
5. Delegation of Manager's Duties as Investment Adviser and
Administrator. With respect to any or all Series, Manager may enter into
one or more contracts ("Sub-Advisory or Sub-Administration Contract") with
a sub-adviser or sub-administrator in which Manager delegates to such sub-
adviser or sub-administrator any or all of its duties specified in
Paragraphs 2 and 3 of this Contract, provided that each Sub-Advisory or
Sub-Administration Contract imposes on the sub-adviser or sub-
administrator bound thereby all the duties and conditions to which Manager
is subject by Paragraphs 2, 3 and 4 of this Contract, and further provided
that each Sub-Advisory or Sub-Administration Contract meets all
requirements of the 1940 Act and rules thereunder.
6. Services Not Exclusive. The services furnished by
Manager hereunder are not to be deemed exclusive and Manager shall be free
to furnish similar services to others so long as its services under this
Contract are not impaired thereby. Nothing in this Contract shall limit
or restrict the right of any director, officer or employee of Manager, who
may also be a Trustee, officer or employee of the Fund, to engage in any
other business or to devote his or her time and attention in part to the
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management or other aspects of any other business, whether of a similar
nature or a dissimilar nature.
7. Expenses.
(a) During the term of this Contract, each Series will bear
all expenses, not specifically assumed by Manager, incurred in its
operations and the offering of its shares.
(b) Expenses borne by each Series will include but not be
limited to the following (or each Series' proportionate share of the
following): (i) the cost (including brokerage commissions) of securities
purchased or sold by the Series and any losses incurred in connection
therewith; (ii) fees payable to and expenses incurred on behalf of the
Series by Manager under this Contract; (iii) expenses of organizing the
Fund and the Series; (iv) filing fees and expenses relating to the
registrations and qualification of the Series' shares and the Fund under
federal and/or state securities laws and maintaining such registration and
qualifications; (v) fees and salaries payable to the Fund's Trustees and
officers who are not interested persons of the Fund or Manager; (vi) all
expenses incurred in connection with the Trustees' services, including
travel expenses in the case of Trustees who are not interested persons of
the Fund or Manager; (vii) taxes (including any income or franchise taxes)
and governmental fees; (viii) costs of any liability, uncollectible items
of deposit and other insurance and fidelity bonds; (ix) any costs,
expenses or losses arising out of a liability of or claim for damages or
other relief asserted against the Fund or Series for violation of any law
and any indemnification relating thereto; (x) legal, accounting and
auditing expenses, including legal fees of special counsel for those
Trustees of the Fund who are not interested persons of the Fund; (xi)
charges of custodians, transfer agents and other agents; (xii) costs of
preparing share certificates; (xiii) expenses of setting in type and
printing prospectuses and supplements thereto, statements of additional
information and supplements thereto, reports and proxy materials for
existing shareholders; (xiv) costs of mailing prospectuses and supplements
thereto, statements of additional information and supplements thereto,
reports and proxy materials to existing shareholders; (xv) any
extraordinary expenses (including fees and disbursements of counsel, costs
of actions, suits or proceedings to which the Fund is a party and the
expenses the Fund may incur as a result of its legal obligation to provide
indemnification to its officers, Trustees, agents and shareholders or to
Manager) incurred by the Fund or Series; (xvi) fees, voluntary assessments
and other expenses incurred in connection with membership in investment
company organizations; (xvii) cost of mailing and tabulating proxies and
costs of meetings of shareholders, the Board and any committees thereof;
(xviii) the cost of investment company literature and other publications
provided by the Fund to its Trustees and officers; (xix) costs of mailing,
stationery and communications equipment; (xx) expenses incident to any
dividend, withdrawal or redemption options; (xxi) charges and expenses of
any outside pricing service used to value portfolio securities and (xxii)
interest on borrowings of the Fund.
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(c) Manager will assume the cost of any compensation for
services provided to the Fund received by the officers of the Fund and by
those Trustees who are interested persons of the Fund.
(d) The payment or assumption by Manager of any expenses of
the Fund or a Series that Manager is not required by this Contract to pay
or assume shall not obligate Manager to pay or assume the same or any
similar expense of the Fund or a Series on any subsequent occasion.
8. Compensation.
(a) For the services provided and the expenses assumed
pursuant to this Contract with respect to the Xxxxxxxx Xxxxxxxx/Xxxxxx,
Xxxxxxx Small Cap Growth Fund, the Fund will pay to Manager a fee,
computed daily and paid monthly, at an annual rate of 1.00% of such
Series' average daily net assets up to $25 million; and .90% of such
Series' average daily net assets over $25 million.
(b) For the services provided and the expenses assumed pursuant
to this Contract with respect to any Series hereafter established, the
Trust will pay to Manager from the assets of such Series a fee in an
amount to be agreed upon in a written fee agreement ("Fee Agreement")
executed by the Fund on behalf of such Series and by Manager. All such
Fee Agreements shall provide that they are subject to all terms and
conditions of this Contract.
(c) The fee shall be computed daily and paid monthly to
Manager on or before the first business day of the next succeeding
calendar month.
(d) If this Contract becomes effective or terminates before
the end of any month, the fee for the period from the effective day to the
end of the month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated according to the
proportion which such period bears to the full month in which such
effectiveness or termination occurs.
9. Limitation of Liability of Manager. Manager and its
delegates, including any Sub-Adviser or Sub-Administrator to the Fund,
shall not be liable for any error of judgment or mistake of law or for any
loss suffered by any Series, the Fund or any of its shareholders, in
connection with the matters to which this Contract relates, except to the
extent that such a loss results 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
Contract. Any person, even though also an officer, director, employee, or
agent of Manager, who may be or become an officer, Trustee, employee or
agent of the Fund shall be deemed, when rendering services to any Series
or the Fund or acting with respect to any business of such Series or the
Fund, to be rendering such service to or acting solely for the Series or
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the Fund and not as an officer, director, employee, or agent or one under
the control or direction of Manager even though paid by it.
10. Duration and Termination.
(a) This Contract shall become effective upon the date
hereabove written provided that, with respect to any Series, this Contract
shall not take effect unless it has first been approved (i) by a vote of a
majority of those Trustees of the Fund who are not parties to this
Contract or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval, and (ii) by
vote of a majority of that Series' outstanding voting securities.
(b) Unless sooner terminated as provided herein, this
Contract shall continue in effect for two years from the above written
date. Thereafter, if not terminated, this Contract shall continue
automatically for successive periods of twelve months each, provided that
such continuance is specifically approved at least annually (i) by a vote
of a majority of those Trustees of the Fund who are not parties to this
Contract or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) by the
Board or by vote of a majority of the outstanding voting securities of a
Series with respect to that Series.
(c) Notwithstanding the foregoing, with respect to any Series
this Contract may be terminated at any time, without the payment of any
penalty, by vote of the Board or by a vote of a majority of the
outstanding voting securities of such Series on sixty days' written notice
to Manager or by Manager at any time, without the payment of any penalty,
on sixty days' written notice to the Fund. Termination of this Contract
with respect to any given Series shall in no way affect the continued
validity of this Contract or the performance thereunder with respect to
any other Series. This Contract will automatically terminate in the event
of its assignment.
11. Amendment of this Contract. No provision of this
Contract 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 of this Contract as to any given Series shall be effective until
approved by vote of a majority of such Series' outstanding voting
securities.
12. Governing Law. This Contract shall be construed in
accordance with the laws of the State of Delaware, without giving effect
to the conflicts of laws principles thereof, and in accordance with the
1940 Act, provided, however, that Section 13 below will be construed in
accordance with the laws of the Commonwealth of Massachusetts. To the
extent that the applicable laws of the State of Delaware or the
Commonwealth of Massachusetts conflict with the applicable provisions of
the 1940 Act, the latter shall control.
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13. Limitation of Liability of the Trustees and Shareholders
of the Trust. No Trustee, shareholder, officer, employee or agent of
any Series shall be liable for any obligations of any Series or the Fund
under this Contract, and Manager agrees that, in asserting any rights or
claims under this Contract, it shall look only to the assets and property
of the Fund in settlement of such right or claim, and not to such Trustee,
shareholder, officer, employee or agent. The Fund represents that a copy
of its Declaration of Trust is on file with the Secretary of the
Commonwealth of Massachusetts and the Boston City Clerk.
14. Miscellaneous. The captions in this Contract 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 Contract shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this
Contract shall not be affected thereby. This Contract shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors. As used in this Contract, the terms "majority of
the outstanding voting securities", "affiliated person", "interested
person", "assignment", "broker", "investment adviser", "national
securities exchange", "net assets", "prospectus", "sale", "sell" 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 Securities and Exchange
Commission by any rule, regulation or order. Where the effect of a
requirement of the 1940 Act reflected in any provision of this Contract is
affected by a rule, regulation or order of the Securities and Exchange
Commission, whether of special or general application, such provision
shall be deemed to incorporate the effect of such rule, regulation or
order.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated as of the day and
year first above written.
Attest: XXXXXXXX XXXXXXXX ASSET MANAGEMENT INC.
_____________________ By _____________________________________
Attest: XXXXXXXX XXXXXXXX/XXXXXX, XXXXXXX
INVESTMENT TRUST III
_____________________ By _____________________________________
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