XXXXXXXXX XXXXXXXX INVESTMENT TRUST
INVESTMENT ADVISORY AGREEMENT
This INVESTMENT ADVISORY AGREEMENT ("Agreement") is made as
of the ____ day of __________, 1998, by and between XXXXXXXXX XXXXXXXX
INVESTMENT TRUST, a business trust organized and existing under the laws of the
Commonwealth of Massachusetts (the "Trust"), with respect to its series of
shares known as XXXXXXXXX XXXXXXXX LARGE CAPITALIZATION EQUITY INCOME FUND (the
"Fund"), and XXXXXXXXX, XXXXXXXX & COMPANY INVESTMENT MANAGEMENT, L.P. (the
"Adviser")
W I T N E S S E T H :
WHEREAS, the Trust is an open-end, management investment company,
registered as such under the Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, the Trust desires to retain the Adviser to render advice
and services to the Trust and Fund pursuant to the terms and provisions of this
Agreement, and the Adviser is interested in furnishing said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties hereto mutually agree as follows:
1. Employment of Adviser. (a) The Trust hereby employs the
Adviser, and the Adviser hereby accepts such employment, to render investment
advice and investment management services with respect to the assets of the
Fund, consistent with the investment objective and policies of the Fund and
subject to the supervision and direction of the Trust's Board of Trustees. The
Adviser shall, except as otherwise provided for herein, as part of its duties
hereunder, (i) furnish the Trust with investment advice, research and
recommendations with respect to the investment of the Fund's assets and the
purchase and sale of its portfolio securities, including the taking of such
other steps as may be necessary to implement such advice and recommendations,
(ii) furnish the Trust and Fund with reports, statements and other data on
securities, economic conditions and other pertinent subjects in respect of the
investment management of the Fund which the Trust's Board of Trustees may
request, and (iii) in general superintend and manage the investments of the
Fund, subject to the ultimate supervision and direction of the Trust's Board of
Trustees.
(b) The Adviser shall determine the securities to be purchased
or sold by the Fund and will place orders pursuant to its determinations with or
through such
-1-
persons, brokers or dealers (including BancAmerica Xxxxxxxxx
Xxxxxxxx) in conformity with the policy with respect to brokerage as set forth
in the Trust's Registration Statement and the Fund's Prospectus and Statement of
Additional Information or as the Trustees may direct from time to time.
(c) In all matters relating to the performance of this
Agreement, the Adviser will act in conformity with the Trust's Declaration of
Trust, By-Laws and Registration Statement, the Fund's current Prospectus and
Statement of Additional Information and all procedures adopted by the Trust's
Board of Trustees from time to time, and will conform to and comply with all
applicable requirements of the Investment Company Act of 1940, as amended, the
rules and regulations thereunder, and all other applicable Federal or state laws
and regulations.
2. Sub-advisers and Consultants. The Adviser may from time to
time, in its discretion, delegate certain of its responsibilities under this
Agreement to one or more qualified companies, each of which is registered under
the Investment Advisers Act of 1940, as amended, provided that the separate
costs of employing such companies and of the companies themselves are borne by
the Adviser and not by the Fund.
3. Adviser is Independent Contractor. The Adviser shall, for
all purposes herein, be deemed to be an independent contractor, and shall,
unless otherwise expressly provided and authorized, have no authority to act for
or represent the Trust or Fund in any way, or in any way be deemed an agent for
the Trust or Fund. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Trust and Fund under the provisions of this
Agreement are not to be deemed exclusive, and the Adviser shall be free to
render similar or different services to others so long as its ability to render
the services provided for in this Agreement shall not be impaired thereby.
4. Responsibilities and Personnel of Adviser. The Adviser
agrees to use its best efforts in the furnishing of investment advice, research
and recommendations to the Fund, in the preparation of reports and information,
and in the management of the Fund's assets, all pursuant to this Agreement, and
for this purpose the Adviser shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other persons as it shall
from time to time determine to be necessary to the performance of its
obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Adviser shall be deemed to include
persons employed or retained by the Adviser to furnish statistical, research,
and other factual information, advice regarding economic factors and trends,
information with respect to technical and scientific developments, and such
other information, advice and assistance as the Adviser may desire and request.
5. Furnishing of Statements and Reports. The Trust shall from
time to time furnish to the Adviser detailed statements of the portfolio
investments and assets of the Fund and information as to its investment
objectives and needs, and shall make available to the Adviser such financial
reports, business descriptions and plans, proxy statements, legal and
-2-
other information relating to its investments as may be in the possession of the
Trust or available to it and such other information as the Adviser may
reasonably request.
6. Expenses of Each Party. (a) The Adviser shall bear all
expenses in connection with the performance of its services under this
Agreement. The Adviser shall also pay (i) all compensation, if any, to the
executive officers of the Fund and their related expenses and (ii) all
compensation, if any, and out-of-pocket expenses of the Trust's trustees, who
are "interested persons" of the Trust (as defined in the Act).
(b) The Trust shall bear all expenses of the Fund's
organization, operations, and business not specifically assumed or agreed to be
paid by the Adviser as provided in this Agreement. In particular, but without
limiting the generality of the foregoing, the Trust on behalf of the Fund and
out of its assets shall pay:
(A) Custody and Accounting Services. All expenses of
the transfer, receipt, safekeeping, servicing and accounting
for the cash, securities, and other property of the Fund,
including all charges of depositories, custodians, and other
agents, if any;
(B) Shareholder Servicing. All expenses of
maintaining and servicing shareholder accounts, including all
charges for transfer, shareholder recordkeeping, dividend
disbursing, redemption, and other agents for the benefit of
the Fund;
(C) Books and Records. All costs and expenses
associated with the maintenance of the Fund's books of account
and records as required by the Act;
(D) Shareholder Meetings. All fees and expenses
incidental to holding meetings of shareholders, including the
printing of notices and proxy material, and proxy solicitation
therefor, provided that the Adviser shall be responsible for
and assume all expenses and fees with respect to meetings of
the Fund's shareholders held solely for the benefit of the
Adviser;
(E) Prospectuses and Statements of Additional
Information. All expenses of preparing and printing of annual
or more frequent revisions of the Prospectus and Statement of
Additional Information relating to the offering of the Fund's
shares and of mailing them to shareholders;
(F) Pricing. All expenses of computing the Fund's net
asset value per share, including the cost of any equipment or
services used for obtaining price quotations;
-3-
(G) Communication Equipment. All charges for
equipment or services used for communication between the
Adviser or the Trust and the custodian, transfer agent or any
other agent selected by the Trust;
(H) Legal and Accounting Fees and Expenses. All
charges for services and expenses of the Trust's legal counsel
and independent auditors for the benefit of the Trust;
(I) Trustees' Fees and Expenses. All compensation of
trustees, other than those who are interested persons of or
affiliated with the Adviser, and all expenses incurred in
connection with their service and meetings;
(J) Federal Registration Fees. All fees and expenses
of registering and maintaining the registration of the Trust
under the Act and the registration of Fund shares under the
Securities Act of 1933, as amended (the "1933 Act"), including
all fees and expenses incurred in connection with the
preparation, printing and filing of any registration
statement, Prospectus and Statement of Additional Information
under the 1933 Act or the Act, and any amendments or
supplements thereto that may be made from time to time;
(K) State Registration Fees. All fees and expenses
(including the compensation of personnel who may be employed
by the Adviser or an affiliate) of qualifying and maintaining
qualification of the Trust and of the Fund shares for sale
under securities laws of various states or jurisdictions, and
of registration and qualification of the Trust under all other
laws applicable to the Trust or its business activities
(including registering the Trust as a broker-dealer, or any
officer of the Trust or any person as agent or salesman of the
Trust in any state);
(L) Issue and Redemption of Trust Shares. All
expenses incurred in connection with the issue, redemption,
and transfer of Fund shares, including the expense of
confirming all Fund share transactions, and of preparing and
transmitting the Fund's share certificates;
(M) Bonding and Insurance. All expenses of bond,
liability, and other insurance coverage required by law or
deemed advisable by the Board of Trustees;
(N) Brokerage Commissions. All brokerage commissions
and other charges incident to the purchase, sale, or lending
of the Fund's portfolio securities;
-4-
(O) Taxes. All taxes or governmental fees payable by
or in respect of the Trust or Fund to federal, state, or other
governmental agencies, domestic or foreign, including stamp or
other transfer taxes;
(P) Trade Association Fees. All fees, dues, and other
expenses incurred in connection with the Trust's membership in
any trade association or other investment organization;
(Q) Interest. All interest which may accrue and be
payable as a result of the Fund's activities;
(R) Stationery and Postage. The cost of all
stationery and postage required by the Fund, unless otherwise
payable by another party with respect to an activity or
expense referred to above; and
(S) Nonrecurring and Extraordinary Expenses. Such
nonrecurring expenses as may arise, including the costs of
actions, suits, or proceedings to which the Trust on behalf of
the Fund is a party and the expenses the Trust on behalf of
the Fund may incur as a result of its legal obligation to
provide indemnification to its officers, trustees, and agents.
(c) In the event that the Trust offers other series
of its shares in the future, then the Fund shall only be responsible for
expenses directly attributable to it and its operations and for such other costs
and expenses of the Trust as the Board of Trustees may by resolution or
otherwise direct.
7. Reimbursement for Advanced Costs and Expenses. To the
extent the Adviser incurs any costs or performs any services which are an
obligation of the Trust or Fund, as set forth herein, the Trust on behalf of the
Fund and out of the Fund's assets shall promptly reimburse the Adviser for such
costs and expenses. To the extent the services for which the Fund is obligated
to pay are performed by the Adviser, the Adviser shall be entitled to recover
from the Fund only to the extent of its actual costs for such services.
8. Fees. (a) The Trust on behalf of the Fund and out of the
Fund's assets agrees to pay to the Adviser, and the Adviser agrees to accept, as
full compensation for all services furnished or provided to the Trust and Fund
hereunder, and as full reimbursement for all expenses assumed by the Adviser, a
management fee computed at the rate of 0.75% per annum of the average daily net
assets of the Fund.
(b) The management fee shall be accrued daily during
each month by the Trust on behalf of the Fund and paid to the Adviser on the
first business day of the succeeding month. The initial monthly fee under this
Agreement shall be payable on the first business day of the first month
following the effective date of this Agreement. The fee to the
-5-
Adviser shall be prorated for the portion of any month in which this Agreement
is in effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect
bears to the calendar days in the month. If this Agreement is terminated prior
to the end of any month, the fee to the Adviser shall be payable within ten (10)
days after the date of termination.
(c) The Adviser may reduce or waive any portion of the
compensation due to it hereunder, or for reimbursement of expenses by the Trust
pursuant to Paragraph 7 of this Agreement, and any such reduction or waiver
shall be applicable only with respect to the specific items waived and shall not
constitute a waiver of any future compensation or reimbursement due to the
Adviser hereunder. In the event that expenses of the Fund for any fiscal year
should exceed the expense limitation on investment company expenses imposed by
any statute or regulatory authority of any jurisdiction in which shares of the
Fund are qualified for offer or sale, the compensation due the Adviser for such
fiscal year shall be reduced by the amount of such excess by a reduction or
refund thereof, or by the Adviser's assumption of expenses of the Fund. Any fee
withheld pursuant to this paragraph from the Adviser (including by way of the
assumption of expenses by the Adviser) shall be reimbursed by the Trust to the
Adviser in the first fiscal year or the second fiscal year next succeeding the
fiscal year of the withholding to the extent permitted by the applicable state
law to the extent the expenses of the Fund for the next succeeding fiscal year
or second succeeding fiscal year do not exceed any such expense limitation in
effect at the time, or any more restrictive limitation to which the Adviser has
agreed.
(d)The Adviser may agree not to require payment of any
portion of the compensation or reimbursement of expenses otherwise due to it
pursuant to this Agreement prior to the time such compensation or reimbursement
has accrued as a liability of the Trust. Any such agreement shall be applicable
only with respect to the specific items covered thereby and shall not constitute
an agreement not to require payment of any future compensation or reimbursement
due to the Adviser hereunder.
9. Short Positions in Fund's Shares. The Adviser agrees that
neither it nor any of its officers or employees shall take any short position in
the shares of the Fund. This prohibition shall not prevent the purchase of such
shares by any of the officers and Trustees or employees of the Adviser or any
trust, pension, profit-sharing or other benefit plan for such persons or
affiliates thereof, at a price not less than the net asset value thereof at the
time of purchase, as allowed pursuant to rules promulgated under the Act.
10. Relationship to Provisions of Agreement and Declaration of
Trust. Nothing herein contained shall be deemed to require the Trust to take any
action contrary to its Agreement and Declaration of Trust or any applicable
statute or regulation, or to relieve or deprive the Board of Trustees of the
Trust of its responsibility for and control of the conduct of the affairs of the
Trust and Fund.
-6-
11. Duties and Standards of Care. (a) In the absence of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
obligations or duties hereunder on the part of the Adviser, the Adviser shall
not be subject to liability to the Fund or to any shareholder of the Fund for
any act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security by the Fund.
(b) No provision of this Agreement shall be
construed to protect any Trustee or officer of the Trust or director or officer
of the Adviser from liability in violation of Sections 17(h) and (i) of the Act.
(c) A copy of the Agreement and Declaration of
Trust of the Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that this Agreement is executed on
behalf of the Trustees of the Trust as Trustees, and not individually, and that
the obligations arising out of this Agreement are not binding upon the Trustees
or holders of the Trust's shares individually but are binding only upon the
assets and property of the Fund. The Adviser acknowledges that it has received
notice of and accepts the limitations of liability as set forth in the Agreement
and Declaration of Trust of the Trust. The Adviser agrees that the Trust's
obligations hereunder shall be limited to the Fund and to its assets, and that
the Adviser or any affiliated or related party shall not seek satisfaction of
any such obligation from any shareholder of the Fund nor from any trustee,
officer, employee or agent of the Trust.
12. Term and Renewal. This Agreement shall remain in effect
for a period of two (2) years, unless sooner terminated in accordance with
Paragraph 13 hereof, and shall continue in effect from year to year thereafter
so long as such continuation is approved at least annually by (i) the Board of
Trustees of the Trust or by the vote of a majority of the outstanding voting
securities of the Fund, and (ii) the vote of a majority of the Trustees of the
Trust who are not parties to this Agreement or interested persons of any such
party, cast in person at a meeting for the purpose of voting on such approval.
13. Termination. This Agreement may be terminated at any time,
without payment of any penalty, by the Board of Trustees of the Trust or by a
vote of a majority of its outstanding voting securities, upon sixty (60) days'
written notice to the Adviser, and by the Adviser upon sixty (60) days' written
notice to the Trust. This Agreement shall also terminate in the event of any
transfer or assignment thereof, as defined in the Act.
14. Certain Definitions. The terms "majority of the
outstanding voting securities" of the Trust or Fund and "interested persons"
shall have the meanings as set forth in the Act. The term "net assets" shall
have the meaning and shall be calculated as set forth in the Trust's
Registration Statement from time to time.
-7-
15. Severability. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule, or otherwise, the
remainder of this Agreement shall not be affected thereby.
16. Headings. The headings used herein are for convenience and
ease of reference only. No legal effect is intended, nor is to be derived from
such headings.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested by their duly authorized officers,
all as of the day and year first above written.
XXXXXXXXX XXXXXXXX INVESTMENT
TRUST
-------------------------------
President
XXXXXXXXX, XXXXXXXX & COMPANY
INVESTMENT MANAGEMENT, L.P.
By: Bayview Holdings, Inc.,
General Partner
-------------------------------
President
