XXXX XXXXXXX INVESTMENT TRUST III
Xxxx Xxxxxxx International Fund
Sub-Investment Management Contract
Dated May 9, 2003
XXXX XXXXXXX ADVISERS, LLC
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
XXXX XXXXXXX INVESTMENT TRUST III
Xxxx Xxxxxxx International Fund
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT
000 Xxxx Xxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
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 three series of shares, representing interests
in 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, LLC (the "Adviser") to provide overall investment advice and
management for the Xxxx Xxxxxxx International 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 March 1, 2002,
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. 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.
The Sub-Adviser has furnished the Adviser with a copy of the Sub-Adviser's Code
of Ethics, and will furnish the Adviser from time to time with copies of any
amendments to the code. The restrictions of the Sub-Adviser may differ from
those of the Trust where appropriate as long as they maintain the same intent
consistent with the Sub-Adviser's own procedures for recommending and purchasing
securities.
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; (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 as reasonably 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 and the compliance by the
Fund with applicable statutory and regulatory requirements relating to the
management of the Fund's assets and the Fund's investment objectives, policies
and restrictions and upon request, which may be without notice, to make the
Sub-Adviser's records and premises available for compliance audits by the
Adviser or the Fund's accountants or counsel; (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); (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. 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 : (i) 0.45% of
the first $200,000,000 of the average daily net asset value of the Fund; and
(ii) 0.40% of the average daily net asset value of the Fund in excess of
$200,000,000. 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. 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. It is 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. 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, LLC"
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 International 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. 11. Duration and Termination of this Agreement. This
Agreement shall remain in force until June 30, 2004. This Agreement may, on 60
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. Provision of Certain
Information by the Sub-Adviser. The Sub-Adviser will promptly notify the Adviser
in writing of the occurrence of any of the following events: (a) the Sub-Adviser
fails to be registered as an investment adviser under the Advisers Act or under
the laws of any jurisdiction in which the Sub-Adviser is required to be
registered as an investment adviser in order to perform its obligations under
this Agreement; (b) the Sub-Adviser is served or otherwise receives notice of
any action, suit, proceeding, inquiry or investigation, at law or in equity,
before or by any court, public board, or body, involving the affairs of the Fund
(excluding class action suits in which the Fund is a member of the plaintiff
class by reason of the Fund's ownership of shares in the defendant) or the
compliance by the Sub-Adviser with the federal or state securities laws; (c) the
controlling stockholder or executive committee of the Sub-Adviser changes, there
is otherwise an actual change in control (whether through sale of all or
substantially all the assets of the Sub-Adviser or a material change in
management of the Sub-Adviser) or an "assignment" (as defined in the 1940 Act)
has or is proposed to occur; (d) any occurrence of any event that would
disqualify the Sub-Adviser under applicable law from serving as a Sub-Adviser
with respect to the Fund; or (e) any representation of the Sub-Adviser under
this Agreement is no longer true in all material respects. 14. Governing Law.
This Agreement shall be governed and construed in accordance with the laws of
the Commonwealth of Massachusetts. 15. 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. 16. 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 March 1, 2002, 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. 17. Xxxxxxxx-Xxxxxxxxx undertakes to promptly notify
Fund of any change in its general partner(s). 18. 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. Yours
very truly, XXXX XXXXXXX INVESTMENT TRUST III on behalf of Xxxx Xxxxxxx
International Fund By: ______________________________________ President The
foregoing contract is hereby agreed to as of the date hereof. XXXX XXXXXXX
ADVISERS, LLC By: ______________________________________ President
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT By: ____________________________ Name:
Title: s:\funds\invtriii\interntl\xxxxxxxxxxxxxxxxxxx0-9-03 7
