EXHIBIT 99.5
ADVISORY AGREEMENT
ADVISORY AGREEMENT made as of the 29th day of August, 1989, as restated
July 1, 1992, by and between XXXX XXXXXXX ADVISERS, INC. (successor to FREEDOM
CAPITAL MANAGEMENT CORPORATION), a corporation organized under the laws of
Delaware having its principal place of business in Boston, Massachusetts (the
"Adviser"), and FREEDOM INVESTMENT TRUST III, a Massachusetts business trust
having its principal place of business in Boston, Massachusetts (the "Trust").
WHEREAS, the Trust is engaged in business as an open-end diversified
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser is engaged principally in the business of
rendering investment management services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust is authorized to issue shares of beneficial interest
in separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust intends initially to offer shares in one series, the
Freedom Environmental Fund, such series (the "Initial Fund"), together with all
other series subsequently established by the Trust with respect to which the
Adviser renders management and investment advisory services pursuant to the
terms of this Agreement, being herein collectively referred to as the "Funds"
and individually as a "Fund."
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the
parties hereto as follows:
1. APPOINTMENT OF ADVISER.
(a) Initial Fund. The Trust hereby appoints the Adviser to act as
manager and investment adviser to the Initial Fund for the period and on the
terms herein set forth. The Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
(b) Additional Funds. In the event that the Trust establishes one or
more series of shares other than the Initial Fund with respect to which it
desires to retain the Adviser to render management and investment advisory
services hereunder, it shall so notify the Adviser in writing, indicating the
advisory fee to be payable with respect to the additional series of shares. If
the Adviser is willing to render such services, it shall so notify the Trust in
writing, whereupon such series of shares shall become a Fund hereunder.
2. DUTIES OF ADVISER.
The Adviser, at its own expense, shall furnish the following services
and facilities to the Trust:
(a) Investment Program. The Adviser shall (i) furnish continuously an
investment program for each Fund, (ii) determine (subject to the overall
supervision and review of the Board of Trustees of the Trust) what investments
shall be purchased, held, sold or exchanged by each Fund and what portion, if
any, of the assets of each Fund shall be held uninvested, and (iii) make changes
on behalf of the Trust in the investments of each Fund. The Adviser shall also
manage, supervise and conduct the other affairs and businesses of the Trust and
each Fund thereof and matters incidental thereto, subject always to the control
of the Board of Trustees of the Trust and to the provisions of the Master Trust
Agreement and By-Laws of the Trust, as amended, and the 1940 Act.
(b) Regulatory Reports. The Adviser shall furnish to the Trust
necessary assistance in:
(i) the preparation of all reports now or hereafter required
by federal or other laws; and
(ii) the preparation of prospectuses, registration statements
and amendments thereto that may be required by federal or
other laws or by the rules or regulations of any duly
authorized commission or administrative body.
(c) Office Space and Facilities. The Adviser shall furnish the Trust
office space in the offices of the Adviser, or in such other place or places as
may be agreed upon from time to time, and all necessary office facilities,
simple business equipment, supplies, utilities, and telephone service.
(d) Services of Personnel. The Adviser shall provide all necessary
executive and administrative personnel for managing the affairs of the Trust,
including personnel to perform clerical, bookkeeping, accounting and other
office functions. These services are exclusive of bookkeeping and accounting
services of any dividend disbursing agent, transfer agent, registrar or
custodian. The Adviser shall compensate all personnel, officers and Trustees of
the Trust if such persons are also employees of the Adviser or its affiliates.
(e) Fidelity Bond. The Adviser shall arrange for providing and
maintaining a bond issued by a reputable insurance company authorized to do
business in the place where the bond is issued against larceny and embezzlement
covering each officer and employee of the Trust and/or the Adviser who may
singly or jointly with others have access to funds or securities of the Trust,
with direct or indirect authority to draw upon such funds or to direct generally
the disposition of such funds. The bond shall be in such reasonable amount as a
majority of the Trustees who are not "interested persons" of the Trust, as
defined in the 1940 Act, shall determine, with due consideration given to the
aggregate assets of the Trust to which any such officer or employee may have
access. The premium for the bond shall be payable by the Trust in accordance
with paragraph 3(p).
3. ALLOCATION OF EXPENSES.
Except for the services and facilities to be provided by the Adviser as
set forth in paragraph 2 above, the Trust assumes and shall pay all expenses for
all other Trust operations and activities and shall reimburse the Adviser for
any such expenses incurred by the Adviser (it being understood that the Trust
shall allocate such expenses between or among its Funds to the extent
contemplated by its Master Trust Agreement). the Expenses to be borne by the
Trust shall include, without limitation:
(a) all expenses of organizing the Trust or forming any series thereof;
(b) all expenses (including information, materials and services other
than services of the Adviser) of preparing, printing and mailing all
annual, semiannual and periodic reports, proxy materials and other
communications (including registration statements, prospectuses and
amendments and revisions thereto) furnished to existing shareholders of
the Trust and/or regulatory authorities;
(c) fees involved in registering and maintaining registration of the
Trust and its shares with the Securities and Exchange Commission and
state regulatory authorities;
(d) any other registration, filing or other fees in connection with
requirements of regulatory authorities;
(e) expenses, including the cost of printing of certificates, relating
to issuance of shares of the Trust;
(f) the expenses of maintaining a shareholder account and furnishing,
or causing to be furnished, to each shareholder a statement of his
account, including the expense of mailing;
(g) expenses related to the redemption of its shares, including
expenses attributable to any program of periodic redemption;
(h) all issue and transfer taxes, brokers' commissions and other costs
chargeable to the Trust in connection with securities transactions to
which the Trust is a party, including any portion of such commissions
attributable to research and brokerage services as defined by Section
28(e) of the Securities Exchange Act of 1934, as amended from time to
time;
(i) the charges and expenses of the custodian appointed by the Trust,
or any depository utilized by such custodian, for the safekeeping of
its property;
(j) charges and expenses of any shareholder servicing agents, transfer
agents and registrars appointed by the Trust, including costs of
servicing shareholder investment accounts;
(k) charges and expenses of independent accountants retained by the
Trust;
(l) legal fees and expenses in connection with the affairs of the
Trust, including legal fees and expenses in connection with registering
and qualifying its shares with Federal and state regulatory
authorities;
(m) compensation and expenses of Trustees of the Trust who are not
"interested persons" of the Trust (as defined in the 1940 Act);
(n) expenses of shareholders' and Trustees' meetings;
(o) membership dues in, and assessments of , the Investment Company
Institute or similar organizations;
(p) insurance premiums on fidelity, errors and omissions and other
coverages;
(q) expenses incurred in connection with any distribution plan adopted
by the Trust in compliance with Rule 12b-1 of the 1940 Act; and
(r) such other non-recurring expenses of the Trust as may arise,
including expenses of actions, suits or proceedings to which the Trust
is a party and the legal obligation which the Trust may have to
indemnify its Trustees or shareholders with respect thereto.
4. ADVISORY FEE.
For the services and facilities to be provided by the Adviser as set
forth in paragraph 2 hereof, the Trust agrees that the Initial Fund shall pay to
the Adviser a monthly fee as soon as practical after the last day of each
calendar month, which fee shall be paid at an annual rate equal to .75% of the
first $500 million of the average daily net assets of the Initial Fund, and .65%
of the average daily net assets in excess of that amount and agrees that Xxxx
Xxxxxxx Discovery Fund shall pay to the Adviser a monthly fee as soon as
practical after the last day of each calendar month, which fee shall be paid at
an annual rate equal to 1.00% of the first $250 million of the average daily net
assets of the Xxxx Xxxxxxx Discovery Fund, .80% of the next $250 million of the
average daily net assets of the Xxxx Xxxxxxx Discovery Fund, .80% of the next
$250 million of the average daily net assets and .75% of the average daily net
assets over $500 million. Such fee shall be accrued daily and paid as soon as
practical after the last day of each calendar month.
In the case of commencement or termination of this Agreement with
respect to any Fund during any calendar month, the fee with respect to such Fund
for that month shall be reduced proportionately based upon the number of
calendar days during which it is in effect, and the fee shall be computed upon
the average daily net assets of such Fund for the days during which it is in
effect.
5. EXPENSE LIMITATION.
The Adviser agrees that if the total expenses of any Fund (exclusive of
interest, taxes, brokerage expenses and extraordinary items such as litigation
expenses) for any fiscal year of the Trust exceed limitation imposed in any
jurisdiction in which that Fund is then making sales of its shares or in which
its shares are then qualified for sale, if any, the Adviser will pay or
reimburse such Fund for that excess up to the amount of its advisory fees
payable with respect to that Fund during that fiscal year. The amount of the
monthly advisory fee payable by any Fund under paragraph 4 hereof shall be
reduced to the extent that the monthly expenses of that Fund on an annualized
basis, would exceed the foregoing limitation. At the end of each fiscal year of
the Trust, if the aggregate annual expenses chargeable to any Fund for that year
exceed the foregoing limitation, the Adviser will promptly reimburse that fund
for the amount of such excess to the extent not already reimbursed by reduction
of the monthly advisory fee, but if such expenses are within the foregoing
limitation, any excess amount previously withheld from the monthly advisory fee
during that fiscal year will be promptly paid over to the Adviser.
In the event that this Agreement (i) is terminated with respect to any
one or more Funds as of a date other than the last day of the fiscal year of the
Trust or (ii) commences with respect to one or more Funds as of a date other
than the first day of the fiscal year of the Trust, then the expenses of such
Fund or Funds shall be annualized and the Adviser shall pay to, or receive from,
the applicable Fund or Funds a pro rata portion of the amount that the Adviser
would have been required to pay or would have been entitled to receive, if any,
had this Agreement been in effect with respect to such Fund or Funds for the
full fiscal year.
6. PORTFOLIO TRANSACTIONS.
In connection with the management of the investment and reinvestment of
the assets of the Trust, the Adviser, acting by its own officers, directors or
employees or by a duly authorized subcontractor, is authorized to select the
brokers or dealers that will execute purchase and sale transactions for the
Trust. In executing portfolio transactions and selecting brokers or dealers, if
any, the Adviser will use its best efforts to seek on behalf of a Fund the best
overall terms available.
In assessing the best overall terms available for any transaction, the
Adviser shall consider all factors it deems relevant, including the breadth of
the market in and the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of the
commission, if any (for the specific transaction and on a continuing basis). In
evaluating the best overall terms available, and in selecting the broker or
dealer, if any, to execute a particular transaction, the Adviser may also
consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) provided to any Fund of
the Trust and/or other accounts over which the Adviser or an affiliate of the
Adviser exercises investment discretion. The Adviser may take into consideration
and may pay to a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction which is in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction if, but only if, the Adviser determines in good faith
that such commission was reasonable in relation to the value of the brokerage
and research services provided. In addition, subject to obtaining the best price
and execution, the Adviser may also allocate brokerage transactions of the Funds
in a manner which takes into account the sale of shares of the Funds.
7. RELATIONS WITH TRUST.
It is understood that the Trustees, officers and shareholders of the
Trust or a Fund are or may be or become interest in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Trust or a Fund, and
that the Adviser may be or become interested in the Trust or a Fund as a
shareholder or otherwise.
8. LIABILITY OF ADVISER
The Adviser shall not be liable to the Trust or any Fund for any error
of judgment or mistake of law or for any loss suffered by the Trust or any Fund
in connection with the matters to which this Agreement relates; provided,
however, that no provision of this Agreement shall be deemed to protect the
Adviser against any liability to the Trust or any Fund or its shareholders to
which it might otherwise be subject by reason of any willful misfeasance, bad
faith or gross negligence in the performance of its duties or the reckless
disregard of its obligations and duties under this Agreement, nor shall any
provision hereof be deemed to protect any Trustee or officer of the Trust
against any such liability to which he might otherwise be subject by reason of
any willful misfeasance, bad faith or gross negligence in the performance of his
duties or the reckless disregard of his obligations and duties. If any provision
of this Agreement shall be held or made invalid by a court decision, stature,
rule or otherwise, the remainder of this Agreement shall not be affected
thereby.
9. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to the
Initial Fund on the date hereof and, with respect to any additional Fund, on the
date of receipt by the Trust of notice from the Adviser in accordance with
paragraph 1(b) hereof that the Adviser is willing to serve as Adviser with
respect to such Fund. Unless terminated as herein provided, this Agreement shall
remain full force and effect for two years from the date hereof with respect to
the Initial Fund and, with respect to each additional Fund, for two years from
the date on which such Fund becomes a Fund hereunder. Subsequent to such initial
periods of effectiveness, this Agreement shall continue in full force and effect
for periods of one year thereafter with respect to each Fund so long as such
continuance with respect to such Fund is approved at least annually (a) by
either the Trustees of the Trust or by vote of a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of such fund, and (b) in either
event, by the vote of a majority of the Trustees of the Trust who are not
parties to this Agreement or "interested persons" (as defined in the 0000 Xxx)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval; provided, however, that the continuance of this Agreement with
respect to the Initial Fund or any additional Fund is subject to the approval of
this Agreement by a majority of the outstanding voting securities (as defined in
the 0000 Xxx) of that Fund at the first annual or special meeting of
shareholders after this Agreement becomes effective with respect to that Fund.
(b) Amendment. Any amendment to this Agreement shall become effective
with respect to a Fund upon approval of the Adviser and a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of that Fund.
(c) Termination. This Agreement may be terminated with respect to any
Fund at any time, without payment of any penalty, by vote of the Trustees or by
vote of a majority of the outstanding voting securities (as defined in the 0000
Xxx) of that Fund, or by the Adviser, in each case on sixty (60) days' prior
written notice to the other party.
(d) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (as defined in the 1940
Act).
(e) Approval, Amendment or Termination by Individual Fund. Any
approval, amendment or termination of this Agreement by the holders of a
majority of the outstanding voting securities (as defined in the 0000 Xxx) of
any Fund shall be effective to continue, amend or terminate this Agreement with
respect to such Fund notwithstanding (i) that such action has not been approved
by the holders of a majority of the outstanding voting securities of any other
Fund affected thereby, and (ii) that such action has not been approved by the
vote of a majority of the outstanding voting securities of the Trust, unless
such action shall be required by any applicable law or otherwise.
10. SERVICES NOT EXCLUSIVE.
The services of the Adviser to the Trust hereunder are not to be deemed
exclusive, and the Adviser shall be free to render similar services to others so
long as its services hereunder are not impaired thereby.
11. SUBCONTRACTORS.
The Trust hereby agrees that the Adviser may subcontract for the
performance of any of the services contemplated to be rendered by the Adviser to
any Fund hereunder; provided, however, that each subcontract meets all of the
requirements of the 1940 Act.
12. LIMITATION OF LIABILITY.
The term "Freedom Investment Trust III" means and refers to the
Trustees from time to time serving under the Master Trust Agreement of the Trust
dated June 16, 1989 as the same may subsequently hereto have been, or
subsequently hereto may be, amended. It is expressly agreed that the obligations
of the Trust thereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Trust as
individuals or personally, but shall bind only the trust property of the Trust,
as provided in the Master Trust Agreement of the Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of the Trust and
signed by the President of the Trust, acting as such, and neither such
authorization nor such execution and delivery shall be deemed to have been made
individually or to impose any personal liability, but shall bind only the trust
property of the Trust as provided in its Master Trust Agreement.
13. MISCELLANEOUS.
(a) Notice. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate in writing for the receipt of such
notices.
(b) Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder
shall not be thereby affected.
(c) Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
FREEDOM INVESTMENT TRUST III
Attest:
/s/ Xxxxxx X. Xxxxxx By: /s/Xxxx X. Xxxxxx, Xx.
---------------------------- ----------------------------
Secretary President
XXXX XXXXXXX ADVISERS, INC.
Attest:
/s/ Xxxxxx X. Xxxxxx By: /s/Xxxxxx X. Xxxxxxxx
---------------------------- ----------------------------
Secretary President
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