Exhibit 5
Xxxxxxx Pathway Series
Two International Place
Boston, Massachusetts 02110
November 15, 1996
Xxxxxxx, Xxxxxxx & Xxxxx, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Investment Management Agreement
Xxxxxxx Pathway Series
Ladies and Gentlemen:
Xxxxxxx Pathway Series (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, the Board of Trustees has divided
the Trust's shares of beneficial interest, par value $.01 per share, (the
"Shares") into separate series (the "Portfolios"). 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 Portfolios, has selected you to act as the sole
investment manager of the Portfolios 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
Portfolios agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business of investing
and reinvesting the assets of the Portfolios 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 Portfolios 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 Portfolios:
(a) Declaration of Trust of the Trust dated July 1, 1994, as amended to
date (the "Declaration").
(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 initial shareholder
of the Portfolios selecting you as investment manager and approving
the form of this Agreement.
(d) Establishment and Designation of Series of Shares of Beneficial
Interest relating to the Portfolios.
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. Sublicense to Use the Xxxxxxx Trademarks. As exclusive licensee of the
rights to use and sublicense the use of the "Xxxxxxx" and "Xxxxxxx, Xxxxxxx &
Xxxxx," trademarks (together, the "Xxxxxxx Marks"), you hereby grant the Trust
and Portfolios a nonexclusive right and sublicense to use (1) the "Xxxxxxx" name
and mark as part of their names (the "Trust Names"), and (2) the Xxxxxxx Marks
in connection with their investment products and services, in each case only for
so long as this Agreement, any other investment management agreement between you
and the Trust, or any extension, renewal or amendment hereof or thereof remains
in effect, and only for so long as you are a licensee of the Xxxxxxx Marks,
provided, however, that you agree to use your best efforts to maintain your
license to use and sublicense the Xxxxxxx Marks. The Trust and Portfolios agree
that they shall have no right to subscribe or assign rights to use the Xxxxxxx
Marks, shall acquire no interest in the Xxxxxxx Marks other than the rights
granted herein, that all of their uses of the Xxxxxxx Marks shall inure to the
benefit of Xxxxxxx Trust Company as owner and licensor of the Xxxxxxx Marks (the
"Trademark Owner"), and that the Trust and Portfolios shall not challenge the
validity of the Xxxxxxx Marks or the Trademark Owner's ownership thereof. The
Trust and Portfolios further agree that all services and products they offer in
connection with the Xxxxxxx Marks shall meet commercially reasonable standards
of quality, as may be determined by you or the Trademark Owner from time to
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time, provided that you acknowledge that the services and products the Trust and
Portfolios rendered during the one-year period preceding the date of this
Agreement are acceptable. At your reasonable request, the Trust and Portfolios
shall cooperate with you and the Trademark Owner and shall execute and deliver
any and all documents necessary to maintain and protect (including but not
limited to in connection with any trademark infringement action) the Xxxxxxx
Marks and/or enter the Trust and Portfolios as registered users thereof. At such
time as this Agreement or any other investment management agreement shall no
longer be in effect between you (or your successor) and the Trust and
Portfolios, or you no longer are a licensee of the Xxxxxxx Marks, the Trust and
Portfolios shall (to the extent that, and as soon as, it lawfully can) cease to
use the Trust Name or any other name indicating that it is advised by, managed
by or otherwise connected with you (or any organization which shall have
succeeded to your business as investment manager) or the Trademark Owner. In no
event shall the Trust and Portfolios use the Xxxxxxx Marks or any other name or
mark confusingly similar thereto (including, but not limited to, any name or
mark that includes the name "Xxxxxxx") if this Agreement or any other investment
advisory agreement between you (or your successor) and the Trust is terminated.
3. Portfolio Management Services. As manager of the assets of the
Portfolios, you shall provide continuing investment management of the assets of
the Portfolios 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 Portfolios so that they will each qualify as a regulated
investment company under Subchapter M of the Code and regulations issued
thereunder. The Portfolios 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 Portfolios in accordance with the
requirements set forth in this section 3, you shall be entitled to receive and
act upon advice of counsel to the Trust or counsel to you. You shall also make
available to the Trust promptly upon request all of the Portfolios' investment
records and ledgers as are necessary to assist the Trust to comply 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 Portfolios and place
orders with broker-dealers, foreign currency dealers, futures commission
merchants or others pursuant to your determinations and all in accordance with
the Portfolios' policies as expressed in the Registration Statement. You shall
determine what portion of the Portfolios' investment 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 Portfolios 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.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Portfolios such office space and facilities in the United States as
the Portfolios may require for their 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 Portfolios 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 Portfolio shareholders;
supervising, negotiating contractual arrangements with, to the extent
appropriate, and monitoring the performance of, custodians, depositories,
transfer and pricing agents, accountants, attorneys, printers, underwriters,
brokers and dealers, insurers and other persons in any capacity deemed to be
necessary or desirable to Portfolio 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 Portfolios'
transfer agent; assisting in the preparation and filing of the Portfolios'
federal, state and local tax returns; preparing and filing the Portfolios'
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, the calculation of net asset value and the calculation
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and payment of distributions to Portfolio shareholders; monitoring the
registration of Shares of the Portfolios under applicable federal and state
securities laws; maintaining or causing to be maintained for the Portfolios 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 Portfolios' custodian or other agents of the
Portfolios; assisting in establishing the accounting policies of the Portfolios;
assisting in the resolution of accounting issues that may arise with respect to
the Portfolios' operations and consulting with the Portfolios' independent
accountants, legal counsel and the Portfolios' other agents as necessary in
connection therewith; establishing and monitoring the Portfolios' operating
expense budgets; reviewing the Portfolios' bills; processing the payment of
bills that have been approved by an authorized person; assisting the Portfolios
in determining the amount of dividends and distributions available to be paid by
the Portfolios to their shareholders, preparing and arranging for the printing
of dividend notices to shareholders, and providing the transfer and dividend
paying agent and the custodian 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
Portfolios' 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 Portfolios or any other person not
a party to this Agreement which is obligated to provide services to the
Portfolios.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Trustees, officers and executive employees of the Trust (including the
Portfolios' share of payroll taxes) who are affiliated persons of you, and you
shall make available, without expense to the Portfolios, 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 3 hereof and the administrative services described
in section 4 hereof.
You shall not be required to pay any expenses of the Portfolios other than
those specifically allocated to you in this section 5 and under the terms of the
Special Servicing Agreement dated November 15, 1996 ("Special Servicing
Agreement") among you, the Trust, Xxxxxxx Fund Accounting Corporation, Xxxxxxx
Service Corporation, Xxxxxxx Trust Company, Xxxxxxx Investor Services, Inc. and
the various funds in which the Portfolios may invest (the "Underlying Funds").
In particular, but without limiting the generality of the foregoing, such
expenses include the following: organization expenses of the Portfolios
(including out-of-pocket expenses, but not including your overhead or employee
costs); fees payable to you and to any other Portfolio advisors or consultants;
legal expenses; auditing and accounting expenses; maintenance of books and
records which are required to be maintained by the Portfolios' 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 Portfolios in connection with membership in investment company
trade organizations; fees and expenses of the Portfolios' 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 5, other expenses in
connection with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Portfolios; expenses relating to investor
and public relations; expenses and fees of registering or qualifying Shares of
the Portfolios for sale; interest charges, bond premiums and other insurance
expense; freight, insurance and other charges in connection with the shipment of
the Portfolios' 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 Portfolios; expenses of printing and distributing reports,
notices and dividends to shareholders; expenses of printing and mailing
Prospectuses and SAIs of the Portfolios and supplements thereto; costs of
stationery; any litigation expenses or other extraordinary expenses; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Trustees and officers of the Trust who are directors, officers or
employees of you to the extent that such expenses relate to attendance at
meetings of the Board of Trustees of the Trust or any committees thereof or
advisors thereto held outside of Boston, Massachusetts or New York, New York.
Except as provided in the Special Servicing Agreement, you shall not be
required to pay expenses of any activity which is primarily intended to result
in sales of Shares of the Portfolios 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 Portfolios' 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 Portfolios shall have adopted a plan in
conformity with Rule 12b-1 under the 1940 Act providing that the Portfolios (or
some other party) shall assume some or all of such expenses. You shall be
required in any event to pay such of the foregoing sales expenses as are not
required to be paid by the principal underwriter pursuant to the underwriting
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agreement or are not permitted to be paid by the Portfolios (or some other
party) pursuant to such a plan.
6. Management Fee and Payment of Certain Expenses. As you expect to receive
additional compensation under investment management agreements currently in
effect between you and the Underlying Funds due to growth in the assets of the
Underlying Funds resulting from investments in the Underlying Funds by the
Portfolios, you will not be paid a fee for the services described in sections 3
and 4 hereof.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Portfolios, 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
Portfolios' account with brokers or dealers selected by you in accordance with
Portfolio 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 Portfolios, you shall act solely as investment counsel for such
clients and not in any way on behalf of the Portfolios.
Your services to the Portfolios 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.
8. 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 Portfolios 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 Portfolios 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. Any person, even though also employed by you, who may be or
become an employee of and paid by the Portfolios shall be deemed, when acting
within the scope of his or her employment by the Portfolios, to be acting in
such employment solely for the Portfolios and not as your employee or agent.
9. Duration and Termination of This Agreement. This Agreement shall remain
in force until September 30, 1998, 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 Portfolios. 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.
This Agreement may be terminated with respect to the Portfolios at any
time, without the payment of any penalty, by the vote of a majority of the
outstanding voting securities of the Portfolios 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.
10. 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 with respect to a Portfolio until approved by the vote of a majority
of the outstanding voting securities of that Portfolio and by the Trust's Board
of Trustees, including 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.
11. 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 "Xxxxxxx Pathway
Series" refers to the Trustees under the Declaration collectively as trustees
and not as individuals or personally, and that no shareholder of the Portfolios,
or Trustee, officer, employee or agent of the Trust, shall be subject to claims
against or obligations of the Trust or of the Portfolios 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 Portfolios pursuant to this Agreement shall be limited in
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all cases to the Portfolios and its assets, and you shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolios 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 Portfolio, or series, under the Declaration are separate and distinct
from those of any and all other series.
12. 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
Portfolios to fail to comply with the requirements of Subchapter M of the Code.
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,
XXXXXXX PATHWAY SERIES
By /s/Xxxxxx Xxxxxx
-----------------
Vice President
The foregoing Agreement is hereby accepted as of the date thereof.
XXXXXXX, XXXXXXX & XXXXX, INC.
By /s/Xxxxx X. Xxx
----------------
Managing Director
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