N:\SHAREDAT\CORP_ACT\CONTRACT\XXXXXX\KSECT\imaS_s98 6
INVESTMENT MANAGEMENT AGREEMENT
Xxxxxx Securities Trust
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
September 7, 1998
Xxxxxxx Xxxxxx Investments, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Investment Management Agreement
Xxxxxx Small Cap Relative Value Fund
Ladies and Gentlemen:
Xxxxxx Securities Trust (the "Trust") has been established as
a Massachusetts business Trust to engage in the business of an
investment company. Pursuant to the Trust's Declaration of
Trust, as amended from time-to-time (the "Declaration"), the
Board of Trustees is authorized to issue the Trust's shares of
beneficial interest, par value $0.01 per share, (the "Shares")
in separate series, or funds. The Board of Trustees has
authorized Xxxxxx Small Cap Relative Value Fund (the "Fund").
Series may be abolished and dissolved, and additional series
established, from time to time by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as
the investment manager of the Fund and to provide certain
other services, as more fully set forth below, and you have
indicated that you are willing to act as such investment
manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Trust on
behalf of the Fund agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business
of investing and reinvesting the assets of the Fund in the
manner and in accordance with the investment objectives,
policies and restrictions specified in the currently effective
Prospectus (the "Prospectus") and Statement of Additional
Information (the "SAI") relating to the Fund included in the
Trust's Registration Statement on Form N-1A, as amended from
time to time (the "Registration Statement"), filed by the
Trust under the Investment Company Act of 1940, as amended
(the "1940 Act"), and the Securities Act of 1933, as amended.
Copies of the documents referred to in the preceding sentence
have been furnished to you by the Trust. The Trust has also
furnished you with copies properly certified or authenticated
of each of the following additional documents related to the
Trust and the Fund:
(a) The Declaration dated October 2, 1997, as amended to
date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust
and the shareholders of the Fund selecting you as
investment manager and approving the form of this
Agreement.
(d) Establishment and Designation of Series of
Shares of Beneficial Interest dated January 21, 1998
relating to the Fund.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the
Prospectus, the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, you shall provide continuing investment management
of the assets of the Fund in accordance with the investment
objectives, policies and restrictions set forth in the
Prospectus and SAI; the applicable provisions of the 1940 Act
and the Internal Revenue Code of 1986, as amended (the
"Code"), relating to regulated investment companies and all
rules and regulations thereunder; and all other applicable
federal and state laws and regulations of which you have
knowledge; subject always to policies and instructions adopted
by the Trust's Board of Trustees. In connection therewith,
you shall use reasonable efforts to manage the Fund so that it
will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder.
The Fund shall have the benefit of the investment analysis and
research, the review of current economic conditions and trends
and the consideration of long-range investment policy
generally available to your investment advisory clients. In
managing the Fund in accordance with the requirements set
forth in this section 2, you shall be entitled to receive and
act upon advice of counsel to the Trust. You shall also make
available to the Trust promptly upon request all of the Fund's
investment records and ledgers as are necessary to assist the
Trust in complying with the requirements of the 1940 Act and
other applicable laws. To the extent required by law, you
shall furnish to regulatory authorities having the requisite
authority any information or reports in connection with the
services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with
applicable laws and regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other
contracts relating to investments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers,
foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance
with Fund policies as expressed in the Registration Statement.
You shall determine what portion of the Fund's portfolio shall
be invested in securities and other assets and what portion,
if any, should be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic
reports on the investment performance of the Fund and on the
performance of your obligations pursuant to this Agreement,
and you shall supply such additional reports and information
as the Trust's officers or Board of Trustees shall reasonably
request.
3. Administrative Services. In addition to the portfolio
management services specified above in section 2, you shall
furnish at your expense for the use of the Fund such office
space and facilities in the United States as the Fund may
require for its reasonable needs, and you (or one or more of
your affiliates designated by you) shall render to the Trust
administrative services on behalf of the Fund necessary for
operating as an open end investment company and not provided
by persons not parties to this Agreement including, but not
limited to, preparing reports to and meeting materials for the
Trust's Board of Trustees and reports and notices to Fund
shareholders; supervising, negotiating contractual
arrangements with, to the extent appropriate, and monitoring
the performance of, accounting agents, custodians,
depositories, transfer agents and pricing agents, accountants,
attorneys, printers, underwriters, brokers and dealers,
insurers and other persons in any capacity deemed to be
necessary or desirable to Fund operations; preparing and
making filings with the Securities and Exchange Commission
(the "SEC") and other regulatory and self-regulatory
organizations, including, but not limited to, preliminary and
definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and
notices pursuant to Rule 24f-2 under the 1940 Act; overseeing
the tabulation of proxies by the Fund's transfer agent;
assisting in the preparation and filing of the Fund's federal,
state and local tax returns; preparing and filing the Fund's
federal excise tax return pursuant to Section 4982 of the
Code; providing assistance with investor and public relations
matters; monitoring the valuation of portfolio securities and
the calculation of net asset value; monitoring the
registration of Shares of the Fund under applicable federal
and state securities laws; maintaining or causing to be
maintained for the Fund all books, records and reports and any
other information required under the 1940 Act, to the extent
that such books, records and reports and other information are
not maintained by the Fund's custodian or other agents of the
Fund; assisting in establishing the accounting policies of the
Fund; assisting in the resolution of accounting issues that
may arise with respect to the Fund's operations and consulting
with the Fund's independent accountants, legal counsel and the
Fund's other agents as necessary in connection therewith;
establishing and monitoring the Fund's operating expense
budgets; reviewing the Fund's bills; processing the payment of
bills that have been approved by an authorized person;
assisting the Fund in determining the amount of dividends and
distributions available to be paid by the Fund to its
shareholders, preparing and arranging for the printing of
dividend notices to shareholders, and providing the transfer
and dividend paying agent, the custodian, and the accounting
agent with such information as is required for such parties to
effect the payment of dividends and distributions; and
otherwise assisting the Trust as it may reasonably request in
the conduct of the Fund's business, subject to the direction
and control of the Trust's Board of Trustees. Nothing in this
Agreement shall be deemed to shift to you or to diminish the
obligations of any agent of the Fund or any other person not a
party to this Agreement which is obligated to provide services
to the Fund.
4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the
compensation and expenses of all Trustees, officers and
executive employees of the Trust (including the Fund's share
of payroll taxes) who are affiliated persons of you, and you
shall make available, without expense to the Fund, the
services of such of your directors, officers and employees as
may duly be elected officers of the Trust, subject to their
individual consent to serve and to any limitations imposed by
law. You shall provide at your expense the portfolio
management services described in section 2 hereof and the
administrative services described in section 3 hereof.
You shall not be required to pay any expenses of the Fund
other than those specifically allocated to you in this section
4. In particular, but without limiting the generality of the
foregoing, you shall not be responsible, except to the extent
of the reasonable compensation of such of the Fund's Trustees
and officers as are directors, officers or employees of you
whose services may be involved, for the following expenses of
the Fund: organization expenses of the Fund (including out of-
pocket expenses, but not including your overhead or employee
costs); fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses;
maintenance of books and records which are required to be
maintained by the Fund's custodian or other agents of the
Trust; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees,
dues and expenses incurred by the Fund in connection with
membership in investment company trade organizations; fees and
expenses of the Fund's accounting agent for which the Trust is
responsible pursuant to the terms of the Fund Accounting
Services Agreement, custodians, subcustodians, transfer
agents, dividend disbursing agents and registrars; payment for
portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses
of preparing share certificates and, except as provided below
in this section 4, other expenses in connection with the
issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating
to investor and public relations; expenses and fees of
registering or qualifying Shares of the Fund for sale;
interest charges, bond premiums and other insurance expense;
freight, insurance and other charges in connection with the
shipment of the Fund's portfolio securities; the compensation
and all expenses (specifically including travel expenses
relating to Trust business) of Trustees, officers and
employees of the Trust who are not affiliated persons of you;
brokerage commissions or other costs of acquiring or disposing
of any portfolio securities of the Fund; expenses of printing
and distributing reports, notices and dividends to
shareholders; expenses of printing and mailing Prospectuses
and SAIs of the Fund and supplements thereto; costs of
stationery; any litigation expenses; indemnification of
Trustees and officers of the Trust; and costs of shareholders'
and other meetings.
You shall not be required to pay expenses of any activity
which is primarily intended to result in sales of Shares of
the Fund if and to the extent that (i) such expenses are
required to be borne by a principal underwriter which acts as
the distributor of the Fund's Shares pursuant to an
underwriting agreement which provides that the underwriter
shall assume some or all of such expenses, or (ii) the Trust
on behalf of the Fund shall have adopted a plan in conformity
with Rule 12b-1 under the 1940 Act providing that the Fund (or
some other party) shall assume some or all of such expenses.
You shall be required to pay such of the foregoing sales
expenses as are not required to be paid by the principal
underwriter pursuant to the underwriting agreement or are not
permitted to be paid by the Fund (or some other party)
pursuant to such a plan.
5. Management Fee. For all services to be rendered, payments
to be made and costs to be assumed by you as provided in
sections 2, 3 and 4 hereof, the Trust on behalf of the Fund
shall pay you in United States Dollars on the last day of each
month the unpaid balance of a fee equal to the excess of 1/12
of 0.75 of 1 percent of the average daily net assets as
defined below of the Fund for such month; provided that, for
any calendar month during which the average of such values
exceeds $250 million, the fee payable for that month based on
the portion of the average of such values in excess of $250
million up to and including $1.0 billion shall be 1/12 of 0.72
of 1 percent of such portion; provided further that, for any
calendar month during which the average of such values exceeds
$1.0 billion, the fee payable for that month based on the
portion of the average of such values in excess of $1.0
billion up to and including $2.5 billion shall be 1/12 of 0.70
of 1 percent of such portion; provided that, for any calendar
month during which the average of such values exceeds $2.5
billion, the fee payable for that month based on the portion
of the average of such values in excess of $2.5 billion up to
and including $5.0 billion shall be 1/12 of 0.68 of 1 percent
of such portion; provided that, for any calendar month during
which the average of such values exceeds $5.0 billion, the fee
payable for that month based on the portion of the average of
such values in excess of $5.0 billion up to and including $7.5
billion shall be 1/12 of 0.65 of 1 percent of such portion;
provided that, for any calendar month during which the average
of such values exceeds $7.5 billion, the fee payable for that
month based on the portion of the average of such values in
excess of $7.5 billion up to and including $10.0 billion shall
be 1/12 of 0.64 of 1 percent of such portion; provided that,
for any calendar month during which the average of such values
exceeds $10.0 billion, the fee payable for that month based on
the portion of the average of such values in excess of $10.0
billion up to and including $12.5 billion shall be 1/12 of
0.63 of 1 percent of such portion; and provided that, for any
calendar month during which the average of such values exceeds
$12.5 billion, the fee payable for that month based on the
portion of the average of such values in excess of $12.5
billion shall be 1/12 of 0.62 of 1 percent of such portion
over the lowest applicable expense fully described below or
over any compensation waived by you from time to time (as more
fully described below). You shall be entitled to receive
during any month such interim payments of your fee hereunder
as you shall request, provided that no such payment shall
exceed 75 percent of the amount of your fee then accrued on
the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the
average of the values placed on the Fund's net assets as of
4:00 p.m. (New York time) on each day on which the net asset
value of the Fund is determined consistent with the provisions
of Rule 22c-1 under the 1940 Act or, if the Fund lawfully
determines the value of its net assets as of some other time
on each business day, as of such time. The value of the net
assets of the Fund shall always be determined pursuant to the
applicable provisions of the Declaration and the Registration
Statement. If the determination of net asset value does not
take place for any particular day, then for the purposes of
this section 5, the value of the net assets of the Fund as
last determined shall be deemed to be the value of its net
assets as of 4:00 p.m. (New York time), or as of such other
time as the value of the net assets of the Fund's portfolio
may be lawfully determined on that day. If the Fund determines
the value of the net assets of its portfolio more than once on
any day, then the last such determination thereof on that day
shall be deemed to be the sole determination thereof on that
day for the purposes of this section 5.
You may waive all or a portion of your fees provided for
hereunder and such waiver shall be treated as a reduction in
purchase price of your services. You shall be contractually
bound hereunder by the terms of any publicly announced waiver
of your fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were fully set forth herein.
6. Avoidance of Inconsistent Position; Services Not Exclusive.
In connection with purchases or sales of portfolio securities
and other investments for the account of the Fund, neither you
nor any of your directors, officers or employees shall act as
a principal or agent or receive any commission. You or your
agent shall arrange for the placing of all orders for the
purchase and sale of portfolio securities and other
investments for the Fund's account with brokers or dealers
selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise
in which you give any advice to clients of yours concerning
the Shares of the Fund, you shall act solely as investment
counsel for such clients and not in any way on behalf of the
Fund.
Your services to the Fund pursuant to this Agreement are not
to be deemed to be exclusive and it is understood that you may
render investment advice, management and services to others.
In acting under this Agreement, you shall be an independent
contractor and not an agent of the Trust. Whenever the Fund
and one or more other accounts or investment companies advised
by you have available funds for investment, investments
suitable and appropriate for each shall be allocated in
accordance with procedures believed by you to be equitable to
each entity. Similarly, opportunities to sell securities
shall be allocated in a manner believed by you to be
equitable. The Fund recognizes that in some cases this
procedure may adversely affect the size of the position that
may be acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to
your undertaking to render services pursuant to this
Agreement, the Trust agrees that you shall not be liable under
this Agreement for any error of judgment or mistake of law or
for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, provided that nothing
in this Agreement shall be deemed to protect or purport to
protect you against any liability to the Trust, the Fund or
its shareholders to which you would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence
in the performance of your duties, or by reason of your
reckless disregard of your obligations and duties hereunder.
8. Duration and Termination of This Agreement. This Agreement
shall remain in force until September 30, 1999, and continue
in force from year to year thereafter, but only so long as
such continuance is specifically approved at least annually
(a) by the vote of a majority of the Trustees who are not
parties to this Agreement or interested persons of any party
to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the Trustees of
the Trust, or by the vote of a majority of the outstanding
voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with
the 1940 Act and the rules and regulations thereunder and any
applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Fund at
any time, without the payment of any penalty, by the vote of a
majority of the outstanding voting securities of the Fund or
by the Trust's Board of Trustees on 60 days' written notice to
you, or by you on 60 days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its
assignment.
This Agreement may be terminated with respect to the Fund at
any time without the payment of any penalty by the Board of
Trustees or by vote of a majority of the outstanding voting
securities of the Fund in the event that it shall have been
established by a court of competent jurisdiction that you or
any of your officers or directors has taken any action which
results in a breach of your covenants set forth herein.
9. 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 whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this
Agreement shall be effective until approved in a manner
consistent with the 1940 Act and rules and regulations
thereunder and any applicable SEC exemptive order therefrom.
10. Limitation of Liability for Claims. The Declaration, a
copy of which, together with all amendments thereto, is on
file in the Office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "Xxxxxx Securities
Trust" refers to the Trustees under the Declaration
collectively as Trustees and not as individuals or personally,
and that no shareholder of the Fund, or Trustee, officer,
employee or agent of the Trust, shall be subject to claims
against or obligations of the Trust or of the Fund to any
extent whatsoever, but that the Trust estate only shall be
liable.
You are hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and you agree that
the obligations assumed by the Trust on behalf of the Fund
pursuant to this Agreement shall be limited in all cases to
the Fund and its assets, and you shall not seek satisfaction
of any such obligation from the shareholders or any
shareholder of the Fund or any other series of the Trust, or
from any Trustee, officer, employee or agent of the Trust.
You understand that the rights and obligations of each Fund,
or series, under the Declaration are separate and distinct
from those of any and all other series.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way
define or limit any of the provisions hereof or otherwise
affect their construction or effect. This Agreement may be
executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
In interpreting the provisions of this Agreement, the
definitions contained in Section 2(a) of the 1940 Act
(particularly the definitions of "affiliated person,"
"assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied,
subject, however, to such exemptions as may be granted by the
SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws
of the Commonwealth of Massachusetts, provided that nothing
herein shall be construed in a manner inconsistent with the
1940 Act, or in a manner which would cause the Fund to fail to
comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory
or management agreements entered into between you and the
Trust on behalf of the Fund.
If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this
letter and return such counterpart to the Trust, whereupon
this letter shall become a binding contract effective as of
the date of this Agreement.
Yours very truly,
Xxxxxx Securities Trust, on
behalf of
Xxxxxx Small Cap Relative Value
Fund,
By: ___________________________
President
The foregoing Agreement is hereby accepted as of the date
hereof.
XXXXXXX XXXXXX INVESTMENTS, INC.
By: ___________________________
Treasurer
