XXXX XXXXXXX INVESTMENT TRUST III
Xxxx Xxxxxxx Global Fund
Second Interim Sub-Investment Management Contract
Dated January 31, 2001
XXXX XXXXXXX ADVISERS, INC.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
XXXX XXXXXXX INVESTMENT TRUST III
- Xxxx Xxxxxxx Global Fund
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT
000 Xxxx Xxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Second Interim Sub-Investment Management Contract
-------------------------------------------------
Ladies and Gentlemen:
Xxxx Xxxxxxx Investment Trust III (the "Trust") has been organized as a
business trust under the laws of The Commonwealth of Massachusetts to engage in
the business of an investment company. The Trust's shares of beneficial interest
may be classified into series, each series representing the entire undivided
interest in a separate portfolio of assets. Series may be established or
terminated from time to time by action of the Board of Trustees of the Trust. As
of the date hereof, the Trust has four series of shares, representing interests
in Xxxx Xxxxxxx Global Xxxx, Xxxx Xxxxxxx Large Cap Growth Xxxx, Xxxx Xxxxxxx
International Fund and Xxxx Xxxxxxx Mid Cap Growth Fund.
The Board of Trustees of the Trust (the "Trustees") has selected Xxxx
Xxxxxxx Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Xxxx Xxxxxxx Global Fund (the "Fund"), and to provide certain
other services, under the terms and conditions provided in the Investment
Management Contract, dated July 1, 1996, between the Trust, the Fund and the
Adviser (the "Investment Management Contract").
The Adviser and the Trustees have selected Xxxxxxxx-Xxxxxxxxx Capital
Management (the "Sub-Adviser") to provide the Adviser and the Fund with the
advice and services set forth below, and the Sub-Adviser is willing to provide
such advice and services, subject to the review of the Trustees and overall
supervision of the Adviser, under the terms and conditions hereinafter set
forth. The Sub-Adviser hereby represents and warrants that it is registered as
an investment adviser under the Investment Advisers Act of 1940, as amended.
Accordingly, the Trust, on behalf of the Fund, and the Adviser agree with the
Sub-Adviser as follows:
1. Delivery of Documents. The Trust has furnished the Sub-Adviser with
copies, properly certified or otherwise authenticated, of each of the following:
(a) Amended and Restated Declaration of Trust of the Trust, dated July
1, 1996, as amended from time to time (the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees approving the form of this Agreement by
and among the Adviser, the Sub-Adviser and the Trust, on behalf of the Fund;
(d) Resolutions of the Trustees selecting the Adviser as investment
adviser for the Fund and approving the form of the Investment Management
Contract;
(e) the Investment Management Contract;
(f) the Fund's portfolio compliance checklists;
(g) the Fund's current Registration Statement, including the Fund's
Prospectus and Statement of Additional Information; and
(h) the Fund's Code of Ethics.
The Trust will furnish to the Sub-Adviser from time to time copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
2. Investment Services. The Sub-Adviser will use its best efforts to provide to
the Fund continuing and suitable investment advice with respect to investments,
consistent with the investment policies, objectives and restrictions of the Fund
as set forth in the Fund's Prospectus and Statement of Additional Information.
In the performance of the Sub-Adviser's duties hereunder, subject always (x) to
the provisions contained in the documents delivered to the Sub-Adviser pursuant
to Section 1, as each of the same may from time to time be amended or
supplemented, and (y) to the limitations set forth in the Registration Statement
of the Trust, on behalf of the Fund, as in effect from time to time under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended (the "1940 Act"), the Sub-Adviser will have investment discretion with
respect to the Fund and will, at its own expense:
(a) furnish the Adviser and the Fund with advice and recommendations,
consistent with the investment policies, objectives and restrictions of the Fund
as set forth in the Fund's Prospectus and Statement of Additional Information,
with respect to the purchase, holding and disposition of portfolio securities
including the purchase and sale of options;
(b) furnish the Adviser and the Fund with advice as to the manner in
which voting rights, subscription rights, rights to consent to corporate action
and any other rights pertaining to the Fund's assets shall be exercised, the
Fund having the responsibility to exercise such voting and other rights;
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(c) furnish the Adviser and the Fund with research, economic and
statistical data in connection with the Fund's investments and investment
policies;
(d) submit such reports relating to the valuation of the Fund's
securities as the Trustees may reasonably request;
(e) subject to prior consultation with the Adviser, engage in
negotiations relating to the Fund's investments with issuers, investment banking
firms, securities brokers or dealers and other institutions or investors;
(f) The Sub-Adviser shall have full authority and discretion to select
brokers and dealers to execute portfolio transactions for the Fund and for the
selection of the markets on or in which the transaction will be executed. In
providing the Fund with investment management, it is recognized that the
Sub-Adviser will give primary consideration to securing the most favorable price
and efficient execution considering all circumstances. Within the framework of
this policy, the Sub-Adviser may consider the financial responsibility, research
and investment information and other research services and products provided by
brokers or dealers who may effect or be a party to any such transaction or other
transactions to which the Sub-Adviser's other clients may be a party. It is
understood that it is desirable for the Fund that the Sub-Adviser have access to
brokerage and research services and products and security and economic analysis
provided by brokers who may execute brokerage transactions at a higher cost to
the Fund than broker-dealers that do not provide such brokerage and research
services. Therefore, in compliance with Section 28(e) of the Securities Exchange
Act of 1934 ("1934 Act"), the Sub-Adviser is authorized to place orders for the
purchase and sale of securities for the Fund with such brokers, that provide
brokerage and research products and/or services that charge an amount of
commission for effecting securities transaction in excess of the amount of
commission another broker would have charged for effecting that transaction,
provided the Sub-Adviser determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research products
and/or services provided by such broker viewed in terms of either that
particular transaction or the overall responsibilities of the Sub-Adviser for
this or other advisory accounts, subject to review by the Adviser from time to
time with respect to the extent and continuation of this practice. It is
understood that the information, services and products provided by such brokers
may be useful to the Sub-Adviser in connection with the Sub-Adviser's services
to other clients;
(g) from time to time or at any time requested by the Adviser or the
Trustees, make reports to the Adviser or the Trust of the Sub-Adviser's
performance of the foregoing services;
(h) subject to the supervision of the Adviser, maintain all books and
records with respect to the Fund's securities transactions required by the 1940
Act, and preserve such records for the periods prescribed therefor by the 1940
Act (the Sub-Adviser agrees that such records are the property of the Trust and
copies will be surrendered to the Trust promptly upon request therefor);
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(i) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment of cash for the
account of the Fund, and advise the Adviser on the same day such instructions
are given; and
(j) cooperate generally with the Fund and the Adviser to provide
information necessary for the preparation of registration statements and
periodic reports to be filed with the Securities and Exchange Commission,
including Form N-1A, periodic statements, shareholder communications and proxy
materials furnished to holders of shares of the Fund, filings with state "blue
sky" authorities and with United States agencies responsible for tax matters,
and other reports and filings of like nature.
3. Expenses Paid by the Sub-Adviser. The Sub-Adviser will pay the cost of
maintaining the staff and personnel necessary for it to perform its obligations
under this Agreement, the expenses of office rent, telephone, telecommunications
and other facilities it is obligated to provide in order to perform the services
specified in Section 2, and any other expenses incurred by it in connection with
the performance of its duties hereunder.
4. Expenses of the Fund Not Paid by the Sub-Adviser. The Sub-Adviser will not be
required to pay any expenses which this Agreement does not expressly make
payable by the Sub-Adviser. In particular, and without limiting the generality
of the foregoing but subject to the provisions of Section 3, the Sub-Adviser
will not be required to pay under this Agreement:
(a) the compensation and expenses of Trustees and of independent
advisers, independent contractors, consultants, managers and other agents
employed by the Trust or the Fund other than through the Sub-Adviser;
(b) legal, accounting and auditing fees and expenses of the Trust or
the Fund;
(c) the fees and disbursements of custodians and depositories of the
Trust or the Fund's assets, transfer agents, disbursing agents, plan agents and
registrars;
(d) taxes and governmental fees assessed against the Trust or the
Fund's assets and payable by the Trust or the Fund;
(e) the cost of preparing and mailing dividends, distributions,
reports, notices and proxy materials to shareholders of the Trust or the Fund
except that the Sub-Adviser shall bear the costs of providing the information
referred to in Section 2(j) to the Adviser;
(f) brokers' commissions and underwriting fees; and
(g) the expense of periodic calculations of the net asset value of the
shares of the Fund.
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5. Compensation of the Sub-Adviser. For all services to be rendered, facilities
furnished and expenses paid or assumed by the Sub-Adviser as herein provided for
the Fund, the Adviser will pay the Sub-Adviser quarterly, in arrears, a fee at
the annual rate of 50% of the investment advisory fee.
The "average daily net assets" of the Fund shall be determined on the
basis set forth in the Fund's Prospectus or otherwise consistent with the 1940
Act and the regulations promulgated thereunder. The Sub-Adviser will receive a
pro rata portion of such fee for any periods in which the Sub-Adviser advises
the Fund less than a full quarter. The Fund shall not be liable to the
Sub-Adviser for the Sub-Adviser's compensation hereunder. Calculations of the
Sub-Adviser's fee will be based on average net asset values as provided by the
Adviser.
In addition to the foregoing, the Sub-Adviser may from time to time
agree not to impose all or a portion of its fee otherwise payable hereunder (in
advance of the time such fee or portion thereof would otherwise accrue) and/or
undertake to pay or reimburse the Fund for all or a portion of its expenses not
otherwise required to be borne or reimbursed by it. Any such fee reduction or
undertaking may be discontinued or modified by the Sub-Adviser at any time.
The fees payable to the Sub-Adviser by the Adviser under this
Sub-Investment Management Contract shall, upon receipt by the Adviser of its
fees under the Investment Management Contract, be paid by the Adviser into an
interest-bearing escrow account. If the holders of "a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Fund have
voted to approve a new Sub-Investment Management Contract with the Sub-Adviser
by May 12, 2001, the fees paid by the Adviser into such escrow account (and
interest thereon) shall be paid to the Sub-Adviser. If such approval has not
been obtained by May 12, 2001, this Sub-Investment Management Contract shall
terminate and the Sub-Adviser shall be paid from the escrow account the lesser
of: (i) the costs incurred in performing its obligations under this
Sub-Investment Management Contract (plus interest earned on that amount while in
escrow), or (ii) the total amount in the escrow account (plus interest earned).
6. Other Activities of the Sub-Adviser and Its Affiliates. Nothing herein
contained shall prevent the Sub-Adviser or any associate of the Sub-Adviser from
engaging in any other business or from acting as investment adviser or
investment manager for any other person or entity, understood that officers,
directors and employees of the Sub-Adviser or its affiliates may continue to
engage in providing portfolio management services and advice to other investment
companies, whether or not registered, to other investment advisory clients of
the Sub-Adviser or its affiliates and to said affiliates themselves.
7. Avoidance of Inconsistent Position. In connection with purchases or sales of
portfolio securities for the account of the Fund, neither the Sub-Adviser nor
any of its investment management subsidiaries nor any of such investment
management subsidiaries' directors, officers or employees will act as principal
or agent or receive any commission, except as may be permitted by the 1940 Act
and rules and regulations promulgated thereunder. The Sub-Adviser shall not
knowingly recommend that the Fund purchase, sell or retain securities of any
issuer in which the Sub-Adviser has a financial interest without obtaining prior
approval of the Adviser prior to the execution of any such transaction.
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Nothing herein contained shall limit or restrict the Sub-Adviser or any
of its officers, affiliates or employees from buying, selling or trading in any
securities for its or their own account or accounts. The Trust and Fund
acknowledge the Sub-Adviser and its officers, affiliates, and employees, and its
other clients may at any time have, acquire, increase, decrease or dispose of
positions in investments which are at the same time being acquired or disposed
of hereunder. The Sub-Adviser shall have no obligation to acquire with respect
to the Fund, a position in any investment which the Sub-Adviser, its officers,
affiliates or employees may acquire for its or their own accounts or for the
account of another client, if in the sole discretion of the Sub-Adviser, it is
not feasible or desirable to acquire a position in such investment on behalf of
the Fund. Nothing herein contained shall prevent the Sub-Adviser from purchasing
or recommending the purchase of a particular security for one or more funds or
clients while other funds or clients may be selling the same security.
8. No Partnership or Joint Venture. The Trust, the Fund, the Adviser and the
Sub-Adviser are not partners of or joint venturers with each other and nothing
herein shall be construed so as to make them such partners or joint venturers or
impose any liability as such on any of them.
9. Name of the Trust, the Fund and the Sub-Adviser. The Trust and the Fund may
use the name "Xxxx Xxxxxxx" or any name or names derived from or similar to the
names "Xxxx Xxxxxxx Advisers, Inc." or "Xxxx Xxxxxxx Life Insurance Company"
only for so long as this Agreement remains in effect. At such time as this
Agreement shall no longer be in effect, the Trust and the Fund will (to the
extent that they lawfully can) cease to use such a name or any other name
indicating that the Fund is advised by or otherwise connected with the Adviser.
The Fund acknowledges that it has adopted the name Xxxx Xxxxxxx Global Fund
through permission of Xxxx Xxxxxxx Life Insurance Company, a Massachusetts
insurance company, and agrees that Xxxx Xxxxxxx Life Insurance Company reserves
to itself and any successor to its business the right to grant the nonexclusive
right to use the name "Xxxx Xxxxxxx" or any similar name or names to any other
corporation or entity, including but not limited to any investment company of
which Xxxx Xxxxxxx Life Insurance Company or any subsidiary or affiliate thereof
shall be the investment adviser.
In addition, the Fund and the Trust hereby consent to the reasonable
use of the name of the Fund in marketing/client materials developed and
distributed by or on behalf of Sub-Adviser. In addition, it is understood that
the name "Xxxxxxxx-Xxxxxxxxx" or the name of any of its affiliates, or any
derivative associated with those names, are the valuable property of the
Sub-Adviser and its affiliates and that the Fund, Trust and/or the Adviser have
the right to use such name(s) or derivative(s) in offering materials and sales
literature so long as this Agreement is in effect. Upon termination of the
Agreement, such authorization shall forthwith cease to be in effect.
10. Limitation of Liability of Sub-Adviser. The Sub-Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Trust or the Fund or the Adviser in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the Sub-Adviser's part in the performance of its duties
or from reckless disregard by it of its obligations and duties under this
Agreement. Any person, even though also employed by the Sub-Adviser, who may be
or become an employee of and paid by the Trust or the Fund shall be deemed, when
acting within the scope of his employment by the Trust or the Fund, to be acting
in such employment solely for the Trust or the Fund and not as the Sub-Adviser's
employee or agent.
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11. Duration and Termination of this Agreement. This Agreement shall remain in
force until May 12, 2001 or shareholder approval of a new Agreement. This
Agreement may, on 10 days' written notice, be terminated at any time without the
payment of any penalty by the Trust or the Fund by vote of a majority of the
outstanding voting securities of the Fund, by the Trustees, the Adviser or the
Sub-Adviser. Termination of this Agreement with respect to the Fund shall not be
deemed to terminate or otherwise invalidate any provisions of any contract
between the Sub-Adviser and any other series of the Trust. This Agreement shall
automatically terminate in the event of its assignment or upon termination of
the Investment Management Contract. In interpreting the provisions of this
Section 11, the definitions contained in Section 2(a) of the 1940 Act
(particularly the definitions of "assignment," "interested person" or "voting
security"), shall be applied.
12. 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 which enforcement of the change, waiver, discharge
or termination is sought, and no amendment, transfer, assignment, sale,
hypothecation or pledge of this Agreement shall be effective until approved by
(a) the Trustees, including a majority of the Trustees who are not interested
persons of the Adviser, the Sub-Adviser, or (other than as Board members) of the
Trust or the Fund, cast in person at a meeting called for the purpose of voting
on such approval, and (b) a majority of the outstanding voting securities of the
Fund, as defined in the 1940 Act.
13. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Massachusetts.
14. Severability. The provisions of this Agreement are independent of
and separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be deemed invalid or unenforceable in whole or in part.
15. Miscellaneous. (a) 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. The name Xxxx Xxxxxxx Investment Trust III is the
designation of the Trustees under the Amended and Restated Declaration of Trust
dated July 1, 1996, as amended from time to time. The Declaration of Trust has
been filed with the Secretary of The Commonwealth of Massachusetts. The
obligations of the Trust and the Fund are not personally binding upon, nor shall
resort be had to the private property of, any of the Trustees, shareholders,
officers, employees or agents of the Fund, but only the Fund's property shall be
bound. The Trust or the Fund shall not be liable for the obligations of any
other series of the Trust. (b) Any information supplied by the Sub-Adviser,
which is not otherwise in the public domain, in connection with the performance
of its duties hereunder is to be regarded as confidential and for use only by
the Fund and/or its agents, and only in connection with the Fund and its
investments.
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16. Xxxxxxxx-Xxxxxxxxx undertakes to promptly notify Fund of any change in its
general partner(s).
17. The Fund agrees to obtain and maintain insurance coverage satisfying any
insurance requirements under the 1940 Act, to carry errors and omissions
coverage in the amount of $10,000,000.
18. The Adviser has received from Sub-Adviser and reviewed the disclosure
statement or "brochure" required to be delivered pursuant to Rule 204-3 of the
Act (the "Brochure"), which Xxxxxxxx was received and reviewed by the Adviser
more than 48 hours prior to entering into this Agreement.
Yours very truly,
XXXX XXXXXXX INVESTMENT TRUST III
on behalf of Xxxx Xxxxxxx Global Fund
By: /s/Xxxxxxx X. Xxxx
------------------
President
The foregoing contract is hereby agreed to as of the date hereof.
XXXX XXXXXXX ADVISERS, INC.
By: /s/Xxxxxxx X. Xxxx
------------------
President
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT
By: /s/X. Xxxxx Xxxxx, Xx.
----------------------
Name: X. Xxxxx Xxxxx, Xx.
Title: General Counsel
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