SUB-INVESTMENT ADVISORY AGREEMENT
April 13, 1995
Xxxxxx X. Xxxxxxx & Associates
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
Xxxxxxxx Xxxxxxxx/Xxxxxx, Xxxxxxx Investment Trust III,
a business trust formed under the laws of the Commonwealth of
Massachusetts (the "Trust") and Xxxxxxxx Xxxxxxxx Asset
Management Inc. ("Xxxxxxxx Xxxxxxxx"), the Trust's manager,
confirm their agreement with Xxxxxx X. Xxxxxxx & Associates (the
"Adviser"), with respect to the Adviser's serving as the
investment adviser of Xxxxxxxx Xxxxxxxx/Xxxxxx, Xxxxxxx Small Cap
Growth Fund (the "Fund"), a series of the Trust, as follows:
Section 1. Services as Investment Adviser.
(a) The Trust anticipates that the Fund will employ
its capital by investing and reinvesting in investments of the
type specified in the Trust's Declaration of Trust dated April 8,
1993 as amended from time to time (the "Declaration of Trust"),
and in the current Prospectus and Statement of Additional
Information describing the Fund as from time to time in effect,
and in the manner and to the extent approved by the Board of
Trustees of the Trust. Copies of the current Prospectus and
Statement of Additional Information describing the Fund have been
submitted to the Adviser and Xxxxxxxx Xxxxxxxx.
(b) Under an agreement dated as of April 13, 1995
between the Trust and Xxxxxxxx Xxxxxxxx relating to the Fund (the
"Management Agreement"), Xxxxxxxx Xxxxxxxx serves as the Fund's
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manager and has the responsibility of selecting and compensating
an investment adviser to the Fund. Acting pursuant to the
authority provided in the Management Agreement, Xxxxxxxx Xxxxxxxx
selects the Adviser to serve as the Fund's investment adviser for
the compensation set out in Section 4 of this Agreement.
(c) Subject to the supervision and direction of the
Trust's Board of Trustees, and subject to review by Xxxxxxxx
Xxxxxxxx, the Adviser, as the Fund's investment adviser, will
manage the Fund's portfolio in accordance with the investment
objective and stated policies of the Fund, will make investment
decisions for the Fund and will transmit substantially all
purchase and sale orders for the Fund's portfolio transactions to
Xxxxxxxx Xxxxxxxx, which will place such transactions for
execution with brokers or dealers selected by Xxxxxxxx Xxxxxxxx.
It is understood that a limited portion of the Fund's portfolio
transactions may be placed with brokers or dealers selected by
the Adviser, subject to the supervision of the Board of Trustees
and review by Xxxxxxxx Xxxxxxxx.
(d) The Adviser will, at its own expense, maintain
sufficient staff, and employ or retain sufficient personnel and
consult with any other persons that it determines may be
necessary or useful to the performance of its obligations under
this Agreement.
Section 2. Portfolio Transactions.
Unless otherwise set forth in the current Prospectus
describing the Fund or directed by Xxxxxxxx Xxxxxxxx or the
Trust, the adviser will, in selecting brokers or dealers to
effect transactions on behalf of the Fund, give primary
consideration to securing the most favorable price and efficient
execution. In so doing, the Adviser may consider the financial
responsibility, research and investment information and other
services provided by brokers or dealers who may effect or be a
party to any transaction to which the Fund is a party or other
transactions to which other clients of the Adviser may be a
party. The Trust recognizes the desirability of the Adviser's
having access to supplemental investment and market research and
security and economic analyses provided by brokers and that those
brokers may execute brokerage transactions at a higher cost to
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the Fund than would be the case if the transactions were executed
on the basis of the most favorable price and efficient execution.
The Trust, thus, authorizes the Adviser, to the extent permitted
by applicable law and regulations, to pay higher brokerage
commissions for the purchase and sale of securities for the Fund
to brokers who provide supplemental investment and market
research and security and economic analyses, subject to review by
the Trustees of the Trust and of Xxxxxxxx Xxxxxxxx from time to
time with respect to the extent and continuation of this
practice. The Trust understands that the services provided by
those brokers may be useful to the Adviser in connection with its
services to other clients.
Section 3. Costs and Expenses.
The Adviser will bear the cost of rendering the
services it is obligated to provide under this Agreement and
will, at its own expense, pay the salaries of all officers and
employees who are employed by both it and the Trust. The Adviser
will provide the Fund with investment officers who are authorized
by the Trust's Board of Trustees to determine purchases and sales
of securities on behalf of the Fund and will employ a
professional staff of portfolio managers who draw upon a variety
of sources for research information for the Fund. Other expenses
to be incurred in the operation of the Fund and not specifically
borne by Xxxxxxxx Xxxxxxxx or the Adviser will be borne by the
Fund, including: Xxxxxxxx Xxxxxxxx' fees for services rendered
under the Management Agreement; shareholder servicing and
distribution fees paid to Xxxxxxxx Xxxxxxxx under the terms of
the Trust's plan adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act");
charges and expenses of any registrar, custodian, transfer and
dividend disbursing agent providing services to the Trust in
connection with the Fund; brokerage fees and commissions; taxes;
engraving and printing of the Fund's share certificates, if any;
registration costs of the Fund and its shares under federal and
state securities laws; the cost and expense of printing,
including typesetting, and distributing of prospectuses
describing the Fund and supplements to those prospectuses to
regulatory authorities and the Fund's shareholders; all expenses
incurred in conducting meetings of the Fund's shareholders and
meetings of the Trust's Board of Trustees relating to the Fund;
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all expenses incurred in preparing, printing and mailing proxy
statements and reports to shareholders of the Fund; fees and
travel expenses of members of the Trust's Board of Trustees or
members of any advisory board or committee who are not employees
of Xxxxxxxx Xxxxxxxx, the Adviser, or any of their affiliates;
all expenses incident to any dividend, withdrawal or redemption
options provided to Fund shareholders; charges and expenses of
any outside service used for pricing the Fund's portfolio
securities and calculating the net asset value of the Fund's
shares; fees and expenses of legal counsel, including counsel to
the members of the Trust's Board of Trustees who are not
interested persons of the Fund, Xxxxxxxx Xxxxxxxx or the Adviser,
and independent auditors; membership dues of industry
associations; interest on Fund borrowings; postage; insurance
premiums on property or personnel (including officers and
Trustees) of the Trust that inure to their benefit; extraordinary
expenses (including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification relating
thereto); and all other costs of the Fund's operations.
Section 4. Compensation.
In consideration of services rendered pursuant to this
Agreement, Xxxxxxxx Xxxxxxxx will pay the Adviser on the Trust's
first business day of each month a fee that is accrued daily at
the annual rate, for the previous month, of .50% of the value of
the Fund's average daily net assets on assets up to but not
including $25 million and .40% thereafter. The fee for the
period from the date the Trust's registration statement
describing the Fund (the "Registration Statement") is declared
effective by the Securities and Exchange Commission (the
"Commission") to the end of the month during which the
Registration Statement is declared effective by the Commission
will be prorated according to the proportion that the period
bears to the full monthly period. Upon any termination of this
Agreement before the end of a month, the fee for the portion of
the month in which this Agreement is in effect will be prorated
according to the proportion that the portion bears to the full
monthly period and will be payable upon the date of termination
of this Agreement. For the purpose of determining fees payable
to the Adviser under this Agreement, the value of the Fund's net
assets will be computed in the manner described in the Trust's
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current Prospectus and/or Statement of Additional Information
describing the Fund.
Section 5. Services to Other Companies or Accounts.
(a) The Trust and Xxxxxxxx Xxxxxxxx understand and
acknowledge that the Adviser now acts and will continue to act as
investment manager or adviser to various fiduciary or other
managed accounts and the Trust and Xxxxxxxx Xxxxxxxx have no
objection to the Adviser's so acting, so long as that when the
Fund and any account served by the Adviser are prepared to invest
in, or desire to dispose of the same security, available
investments or opportunities for sales will be allocated in a
manner believed by the Adviser to be equitable to the Fund and
the account. The Trust and Xxxxxxxx Xxxxxxxx recognize that, in
some cases, this procedure may adversely affect the price paid or
received by the Fund or the size of the position obtained or
disposed of by the Fund.
(b) The Trust and Xxxxxxxx Xxxxxxxx understand and
acknowledge that the persons employed by the Adviser to assist in
the performance of its duties under this Agreement will not
devote their full time to that service; nothing contained in this
Agreement will be deemed to limit or restrict the right of the
Adviser or any affiliate of the Adviser to engage in and devote
time and attention to other businesses or to render services of
whatever kind or nature.
Section 6. Continuance and Termination of the
Agreement.
(a) This Agreement will become effective as of
April 13, 1995, and will continue for an initial two-year term
and will continue thereafter so long as the continuance is
specifically approved at least annually (a) by the Trustees of
the Trust or (b) by a vote of a majority of the Fund's
outstanding voting securities, as defined in the 1940 Act,
provided that in either event the continuance is also approved by
a majority of the Trustees who are not "interested persons" (as
defined in the 0000 Xxx) of any party to this Agreement, by vote
cast in person at a meeting called for the purpose of voting on
the approval.
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(b) This Agreement is terminable without penalty, by
the Trust on not more than 60 nor less than 30 days' notice to
Xxxxxxxx Xxxxxxxx and the Adviser, by vote of holders of a
majority of the Fund's outstanding voting securities, as defined
in the 1940 Act, or by Xxxxxxxx Xxxxxxxx or the Adviser on not
more than 60 nor less than 30 days' notice to the Trust.
(c) This Agreement will terminate automatically in the
event of its assignment (as defined in the 1940 Act or in rules
adopted under the 1940 Act).
Section 7. Filing of Declaration of Trust.
The Trust represents that a copy of the Declaration of
Trust is on file with the Secretary of the Commonwealth of
Massachusetts and with the Boston City Clerk.
Section 8. Limitation of Liability.
(a) The Adviser will not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust
in connection with the matters to which this Agreement relates,
except for a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Adviser 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 an
officer, director, employee or agent of the Adviser, who may be
or become an officer, Trustee, employee or agent of the Trust,
will be deemed, when rendering services to the Trust or acting on
any business of the Trust, to be rendering services to, or acting
solely for, the Trust and not as an officer, director, employee
or agent, or one under the control or direction of, the Adviser
even though paid by the Adviser.
(b) The Trust, Xxxxxxxx Xxxxxxxx and the Adviser agree
that the obligations of the Trust under this Agreement will not
be binding upon any of the Trustees, shareholders, nominees,
officers, employees or agents, whether past, present or future,
of the Trust, individually, but are binding only upon the assets
and property of the Trust, as provided in the Declaration of
Trust. The execution and delivery of this Agreement have been
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authorized by the Trustees of the Trust, and signed by an
authorized officer of the Trust, acting as such, and neither the
authorization by the Trustees nor the execution and delivery by
the officer will be deemed to have been made by any of them
individually or to impose any liability on any of them
personally, but will bind only the trust property of the Trust as
provided in the Declaration of Trust. No series of the Trust,
including the Fund, will be liable for any claims against any
other series.
Section 9. Dates.
This Agreement has been executed by the Trust and
Xxxxxxxx Xxxxxxxx as of April 13, 1995 and will become effective
as of that date.
* * * * *
If the terms and conditions described above are in
accordance with your understanding, kindly indicate your
acceptance of this Agreement by signing and returning to us the
enclosed copy of this Agreement.
XXXXXXXX XXXXXXXX/XXXXXX, XXXXXXX
INVESTMENT TRUST III
By /s/ Xxxxxx X. X'Xxxxxxx
--------------------------------------
XXXXXX X. X'XXXXXXX
SECRETARY AND VICE PRESIDENT
XXXXXXXX XXXXXXXX ASSET MANAGEMENT INC.
By /s/ Xxxxx Xxxxxxxxx
--------------------------------------
PRESIDENT
Accepted:
XXXXXX X. XXXXXXX & ASSOCIATES
By:
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