INVESTMENT ADVISORY AND ADMINISTRATION CONTRACT
Contract made as of April 13, 1995 between XXXXXXXX XXXXXXXX/
XXXXXX, XXXXXXX INVESTMENT TRUST III, a Massachusetts business
trust ("Fund") and XXXXXXXX XXXXXXXX ASSET MANAGEMENT INC.
("Manager"), a Delaware corporation registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended ("1934 Act"),
and as an investment adviser under the Investment Advisers Act of
1940, as amended.
WHEREAS the Fund is registered under the Investment Company
Act of 1940, as amended ("1940 Act"), as an open-end management
investment company, and intends to offer for public sale distinct
shares of beneficial interest ("Shares"), which may be offered in
separate and distinct classes of shares, each corresponding to a
distinct portfolio ("Series"); and
WHEREAS the Fund desires to retain Manager as investment
adviser and administrator to furnish certain administrative,
investment advisory and portfolio management services to the Fund
and each Series as now exists and as hereafter may be established,
and Manager is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto
as follows:
1. Appointment. The Fund hereby appoints Manager as
investment adviser and administrator of the Fund and each Series
for the period and on the terms set forth in this Contract.
Manager accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
2. Duties as Investment Adviser.
(a) Subject to the supervision of the Fund's Board of
Trustees ("Board"), Manager will provide a continuous investment
program for each Series, including investment research and
management with respect to all securities and investments and cash
equivalents in each Series. Manager will determine from time to
time what securities and other investments will be purchased,
retained or sold by each Series.
(b) Manager agrees that in placing orders with brokers, it
will attempt to obtain the best net result in terms of price and
execution; provided that, on behalf of any Series, Manager may, in
its discretion, use brokers who provide the Series with research,
analysis, advice and similar services to execute portfolio
transactions on behalf of the Series, and Manager may pay to those
brokers in return for brokerage and research services a higher
commission than may be charged by other brokers, subject to
Manager's determining in good faith that such commission is
reasonable in terms either of the particular transaction or of the
overall responsibility of Manager to such Series and its other
clients and that the total commissions paid by such Series will be
reasonable in relation to the benefits to the Series over the long
term. In no instance will portfolio securities be purchased from
or sold to Manager, or any affiliated person thereof, except in
accordance with the federal securities laws and the rules and
regulations thereunder, or any applicable exemptive orders.
Whenever Manager simultaneously places orders to purchase or sell
the same security on behalf of a Series and one or more other
accounts advised by Manager, such orders will be allocated as to
price and amount among all such accounts in a manner believed to be
equitable to each account. The Fund recognizes that in some cases
this procedure may adversely affect the results obtained for the
Series.
(c) Manager will oversee the maintenance of all books and
records with respect to the securities transactions of each Series,
and will furnish the Board with such periodic and special reports
as the Board reasonably may request. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Manager hereby
agrees that all records which it maintains for the Fund are the
property of the Fund, agrees to preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act any records which it maintains for
the Fund and which are required to be maintained by Rule 31a-1
under the 1940 Act and further agrees to surrender promptly to the
Fund any records which it maintains for the Fund upon request by
the Fund.
(d) Manager will oversee the computation of the net asset
value and the net income of each Series as described in the
currently effective registration statement of the Fund under the
Securities Act of 1933, as amended, and the 1940 Act and any
supplements thereto ("Registration Statement") or as more
frequently requested by the Board.
(e) The Fund hereby authorizes Manager and any entity or
person associated with Manager which is a member of a national
securities exchange to effect any transaction on such exchange for
the account of any Series, which transaction is permitted by
Section 11(a) of the 1934 Act, and the Fund hereby consents to the
retention of compensation by Manager or any person or entity
associated with Manager for such transaction.
3. Duties as Administrator. Manager will administer the
affairs of the Fund and each Series subject to the supervision of
the Board and the following understandings:
(a) Manager will supervise all aspects of the operations of
the Fund and each Series, including oversight of transfer agency,
custodial and accounting services, except as hereinafter set forth;
provided, however, that nothing herein contained shall be deemed to
relieve or deprive the Board of its responsibility for and control
of the conduct of the affairs of the Fund and each Series.
(b) Manager will provide the Fund and each Series with such
corporate, administrative and clerical personnel (including
officers of the Fund) and services as are reasonably deemed
necessary or advisable by the Board, including the maintenance of
certain books and records of the Fund and each Series.
(c) Manager will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of
the Fund's Registration Statement, proxy material, tax returns and
required reports to each Series' shareholders and the Securities
and Exchange Commission and other appropriate federal or state
regulatory authorities.
(d) Manager will provide the Fund and each Series with, or
obtain for it, adequate office space and all necessary office
equipment and services, including telephone service, heat,
utilities, stationery supplies and similar items.
(e) Manager will provide the Board on a regular basis with
economic and investment analyses and reports and make available to
the Board upon request any economic, statistical and investment
services normally available to institutional or other customers of
Manager.
4. Further Duties. In all matters relating to the
performance of this Contract, Manager will act in conformity with
the Declaration of Trust, By-Laws and currently effective
Registration Statement of the Fund, as delivered to Manager and
upon which it shall be entitled to rely, and with the instructions
and directions of the Board, and will comply with the requirements
of the 1940 Act, the rules thereunder, and all other applicable
federal and state laws and regulations.
5. Delegation of Manager's Duties as Investment Adviser and
Administrator. With respect to any or all Series, Manager may
enter into one or more contracts ("Sub-Advisory or Sub-
Administration Contract") with a sub-adviser or sub-administrator
in which Manager delegates to such sub-adviser or sub-administrator
any or all of its duties specified in Paragraphs 2 and 3 of this
Contract, provided that each Sub-Advisory or Sub-Administration
Contract imposes on the sub-adviser or sub-administrator bound
thereby all the duties and conditions to which Manager is subject
by Paragraphs 2, 3 and 4 of this Contract, and further provided
that each Sub-Advisory or Sub-Administration Contract meets all
requirements of the 1940 Act and rules thereunder.
6. Services Not Exclusive. The services furnished by
Manager hereunder are not to be deemed exclusive and Manager shall
be free to furnish similar services to others so long as its
services under this Contract are not impaired thereby. Nothing in
this Contract shall limit or restrict the right of any director,
officer or employee of Manager, who may also be a Trustee, officer
or employee of the Fund, to engage in any other business or to
devote his or her time and attention in part to the management or
other aspects of any other business, whether of a similar nature or
a dissimilar nature.
7. Expenses.
(a) During the term of this Contract, each Series will bear
all expenses, not specifically assumed by Manager, incurred in its
operations and the offering of its shares.
(b) Expenses borne by each Series will include but not be
limited to the following (or each Series' proportionate share of
the following): (i) the cost (including brokerage commissions) of
securities purchased or sold by the Series and any losses incurred
in connection therewith; (ii) fees payable to and expenses incurred
on behalf of the Series by Manager under this Contract; (iii)
expenses of organizing the Fund and the Series; (iv) filing fees
and expenses relating to the registrations and qualification of the
Series' shares and the Fund under federal and/or state securities
laws and maintaining such registration and qualifications; (v) fees
and salaries payable to the Fund's Trustees and officers who are
not interested persons of the Fund or Manager; (vi) all expenses
incurred in connection with the Trustees' services, including
travel expenses in the case of Trustees who are not interested
persons of the Fund or Manager; (vii) taxes (including any income
or franchise taxes) and governmental fees; (viii) costs of any
liability, uncollectible items of deposit and other insurance and
fidelity bonds; (ix) any costs, expenses or losses arising out of
a liability of or claim for damages or other relief asserted
against the Fund or Series for violation of any law and any
indemnification relating thereto; (x) legal, accounting and
auditing expenses, including legal fees of special counsel for
those Trustees of the Fund who are not interested persons of the
Fund; (xi) charges of custodians, transfer agents and other agents;
(xii) costs of preparing share certificates; (xiii) expenses of
setting in type and printing prospectuses and supplements thereto,
statements of additional information and supplements thereto,
reports and proxy materials for existing shareholders; (xiv) costs
of mailing prospectuses and supplements thereto, statements of
additional information and supplements thereto, reports and proxy
materials to existing shareholders; (xv) any extraordinary expenses
(including fees and disbursements of counsel, costs of actions,
suits or proceedings to which the Fund is a party and the expenses
the Fund may incur as a result of its legal obligation to provide
indemnification to its officers, Trustees, agents and shareholders
or to Manager) incurred by the Fund or Series; (xvi) fees,
voluntary assessments and other expenses incurred in connection
with membership in investment company organizations; (xvii) cost of
mailing and tabulating proxies and costs of meetings of
shareholders, the Board and any committees thereof; (xviii) the
cost of investment company literature and other publications
provided by the Fund to its Trustees and officers; (xix) costs of
mailing, stationery and communications equipment; (xx) expenses
incident to any dividend, withdrawal or redemption options; (xxi)
charges and expenses of any outside pricing service used to value
portfolio securities and (xxii) interest on borrowings of the Fund.
(c) Manager will assume the cost of any compensation for
services provided to the Fund received by the officers of the Fund
and by those Trustees who are interested persons of the Fund.
(d) The payment or assumption by Manager of any expenses of
the Fund or a Series that Manager is not required by this Contract
to pay or assume shall not obligate Manager to pay or assume the
same or any similar expense of the Fund or a Series on any
subsequent occasion.
8. Compensation.
(a) For the services provided and the expenses assumed
pursuant to this Contract with respect to the Xxxxxxxx
Xxxxxxxx/Xxxxxx, Xxxxxxx Small Cap Growth Fund, the Fund will pay
to Manager a fee, computed daily and paid monthly, at an annual
rate of 1.00% of such Series' average daily net assets up to $25
million; and .90% of such Series' average daily net assets over $25
million.
(b) For the services provided and the expenses assumed
pursuant to this Contract with respect to any Series hereafter
established, the Trust will pay to Manager from the assets of such
Series a fee in an amount to be agreed upon in a written fee
agreement ("Fee Agreement") executed by the Fund on behalf of such
Series and by Manager. All such Fee Agreements shall provide that
they are subject to all terms and conditions of this Contract.
(c) The fee shall be computed daily and paid monthly to
Manager on or before the first business day of the next succeeding
calendar month.
(d) If this Contract becomes effective or terminates before
the end of any month, the fee for the period from the effective day
to the end of the month or from the beginning of such month to the
date of termination, as the case may be, shall be prorated
according to the proportion which such period bears to the full
month in which such effectiveness or termination occurs.
9. Limitation of Liability of Manager. Manager and its
delegates, including any Sub-Adviser or Sub-Administrator to the
Fund, shall not be liable for any error of judgment or mistake of
law or for any loss suffered by any Series, the Fund or any of its
shareholders, in connection with the matters to which this Contract
relates, except to the extent that such a loss results from willful
misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Contract. Any person, even
though also an officer, director, employee, or agent of Manager,
who may be or become an officer, Trustee, employee or agent of the
Fund shall be deemed, when rendering services to any Series or the
Fund or acting with respect to any business of such Series or the
Fund, to be rendering such service to or acting solely for the
Series or the Fund and not as an officer, director, employee, or
agent or one under the control or direction of Manager even though
paid by it.
10. Duration and Termination.
(a) This Contract shall become effective upon the date
hereabove written provided that, with respect to any Series, this
Contract shall not take effect unless it has first been approved
(i) by a vote of a majority of those Trustees of the Fund who are
not parties to this Contract or interested persons of any such
party cast in person at a meeting called for the purpose of voting
on such approval, and (ii) by vote of a majority of that Series'
outstanding voting securities.
(b) Unless sooner terminated as provided herein, this
Contract shall continue in effect for two years from the above
written date. Thereafter, if not terminated, this Contract shall
continue automatically for successive periods of twelve months
each, provided that such continuance is specifically approved at
least annually (i) by a vote of a majority of those Trustees of the
Fund who are not parties to this Contract or interested persons of
any such party, cast in person at a meeting called for the purpose
of voting on such approval, and (ii) by the Board or by vote of a
majority of the outstanding voting securities of a Series with
respect to that Series.
(c) Notwithstanding the foregoing, with respect to any Series
this Contract may be terminated at any time, without the payment of
any penalty, by vote of the Board or by a vote of a majority of the
outstanding voting securities of such Series on sixty days' written
notice to Manager or by Manager at any time, without the payment of
any penalty, on sixty days' written notice to the Fund.
Termination of this Contract with respect to any given Series shall
in no way affect the continued validity of this Contract or the
performance thereunder with respect to any other Series. This
Contract will automatically terminate in the event of its
assignment.
11. Amendment of this Contract. No provision of this
Contract 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 material amendment of this Contract as to any
given Series shall be effective until approved by vote of a
majority of such Series' outstanding voting securities.
12. Governing Law. This Contract shall be construed in
accordance with the laws of the State of Delaware, without giving
effect to the conflicts of laws principles thereof, and in
accordance with the 1940 Act, provided, however, that Section 13
below will be construed in accordance with the laws of the
Commonwealth of Massachusetts. To the extent that the applicable
laws of the State of Delaware or the Commonwealth of Massachusetts
conflict with the applicable provisions of the 1940 Act, the latter
shall control.
13. Limitation of Liability of the Trustees and Shareholders
of the Trust. No Trustee, shareholder, officer, employee or agent
of any Series shall be liable for any obligations of any Series or
the Fund under this Contract, and Manager agrees that, in asserting
any rights or claims under this Contract, it shall look only to the
assets and property of the Fund in settlement of such right or
claim, and not to such Trustee, shareholder, officer, employee or
agent. The Fund represents that a copy of its Declaration of Trust
is on file with the Secretary of the Commonwealth of Massachusetts
and the Boston City Clerk.
14. Miscellaneous. The captions in this Contract are
included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their
construction or effect. If any provision of this Contract shall be
held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors.
As used in this Contract, the terms "majority of the outstanding
voting securities", "affiliated person", "interested person",
"assignment", "broker", "investment adviser", "national securities
exchange", "net assets", "prospectus", "sale", "sell" and
"security" shall have the same meaning as such terms have in the
1940 Act, subject to such exemption as may be granted by the
Securities and Exchange Commission by any rule, regulation or
order. Where the effect of a requirement of the 1940 Act reflected
in any provision of this Contract is affected by a rule, regulation
or order of the Securities and Exchange Commission, whether of
special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated as of the
day and year first above written.
Attest: XXXXXXXX XXXXXXXX ASSET MANAGEMENT INC.
By _____________________________________
Attest: XXXXXXXX XXXXXXXX/XXXXXX, XXXXXXX
INVESTMENT TRUST III
By _____________________________________
