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INVESTMENT MANAGEMENT AND ADMINISTRATION AGREEMENT
Agreement made as of July 18, 1997, between XXXXXXXX CAPITAL TRUST, a
Massachusetts business trust ("Trust"), and XXXXXXXX & CO. ("Xxxxxxxx"), an
Ohio corporation registered as an investment adviser under the Investment
Advisers Act of 1940, as amended (the "Contract").
RECITALS
(1) The Trust is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company and
offers for public sale distinct series of shares of beneficial interest, each
corresponding to a distinct portfolio; and
(2) The Trust desires to retain Xxxxxxxx as investment adviser and
administrator to furnish certain administrative, investment advisory and
portfolio management services to the Trust and its Xxxxxxxx Value International
Fund series, Xxxxxxxx Basic Value Fund series, Xxxxxxxx Europe Fund series, and
to such other series that the parties may hereafter designate ("Series"), and
Xxxxxxxx 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 Trust hereby appoints Xxxxxxxx as investment
adviser and administrator of the Trust and each Series for the period and on
the terms set forth in this Contract. Xxxxxxxx accepts such appointment and
agrees to render the services set forth herein for the compensation herein
provided.
2. Duties as Investment Adviser.
(a) Subject to the supervision of and any guidelines
adopted by the Trust's Board of Trustees (the "Board"), Xxxxxxxx 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.
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Xxxxxxxx will determine from time to time what securities investments will be
purchased, retained or sold by each Series, and will be responsible for placing
purchase and sell orders for the securities investments and for other related
transactions. Xxxxxxxx will provide services under this Contract in accordance
with each Series' investment objective, policies and restrictions as stated in
the Trust's currently effective registration statement under the Securities Act
of 1933, as amended, and the 1940 Act ("Registration Statement"), and any
amendments or supplements thereto.
(b) Xxxxxxxx agrees that, in placing orders with brokers
and dealers, it will attempt to obtain the best net result in terms of price
and execution; provided that, on behalf of any Series, Xxxxxxxx may, in its
discretion, purchase and sell portfolio securities through brokers who provide
the Series with research, analysis, advice and similar services, and Xxxxxxxx
may pay to those brokers, in return for brokerage and research services, a
higher commission than may be charged by other brokers, subject to Xxxxxxxx'x
determining in good faith that such commission is reasonable in terms either of
the particular transaction or of the overall responsibility of Xxxxxxxx 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
Xxxxxxxx, or any affiliated person thereof, except in accordance with the
federal securities laws and the rules and regulations thereunder. Xxxxxxxx, or
any affiliated person thereof, may act as broker in connection with
transactions in portfolio securities on behalf of a Series, provided that such
actions are in compliance with the federal securities laws and the rules and
regulations thereunder, including Section 17(e) of the 1940 Act and Rule 17e-1
thereunder. Whenever Xxxxxxxx simultaneously places orders to purchase or sell
the same security on behalf of a Series and one or more other accounts advised
by Xxxxxxxx, the orders will be allocated as to price and amount among all such
accounts in a manner believed to be equitable to each account. The Trust
recognizes that in some cases this procedure may adversely affect the results
obtained for the Series.
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(c) Xxxxxxxx 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, Xxxxxxxx hereby agrees that all records which it maintains
for the Trust are the property of the Trust, agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any records which it maintains for
the Trust and which are required to be maintained by Rule 31a-1 under the 1940
Act, and further agrees to surrender promptly to the Trust any records which it
maintains for the Trust upon request by the Trust.
(d) Xxxxxxxx will oversee the computation of the net asset
value and the net income of each Series as described in the Registration
Statement or as more frequently requested by the Board.
(e) The Trust hereby authorizes Xxxxxxxx and any entity or
person associated with Xxxxxxxx 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 Securities
Exchange Act of 1934, as amended, and Rule 11a2-2(T) thereunder, and the Trust
hereby consents to the retention of compensation by Xxxxxxxx or any person or
entity associated with Xxxxxxxx for such transactions in accordance with Rule
11a2-2(T)(a)(2)(iv).
3. Duties as Administrator. Xxxxxxxx will administer the affairs
of the Trust and each Series subject to the supervision of the Board and the
following understandings:
(a) Xxxxxxxx will supervise all aspects of the operations
of the Trust and each Series, including the 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 Trust and each Series.
(b) Xxxxxxxx will provide the Trust and each Series
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with such corporate, administrative and clerical personnel (including officers
of the Trust) and services as are reasonably deemed necessary or advisable by
the Board, including the maintenance of certain books and records of the Trust
and each Series.
(c) Xxxxxxxx will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of the Trust's
Registration Statement, proxy material, tax returns and required reports to
each Series' shareholders and the Securities and Exchange Commission ("SEC")
and other appropriate federal or state regulatory authorities.
(d) Xxxxxxxx will provide the Trust and each Series with,
or obtain for it, adequate office space and all necessary office equipment and
services, including telephone service, heat, utilities and similar items.
(e) Xxxxxxxx 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 Xxxxxxxx.
4. Further Duties. In all matters relating to the performance of
this Contract, Xxxxxxxx will act in conformity with the Declaration of Trust,
By-Laws and Registration Statement of the Trust 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 Xxxxxxxx'x Duties as Investment Adviser and
Administrator. With respect to any Series, Xxxxxxxx may enter into one or more
contracts ("Sub-Advisory or Sub-Administration Contract") with a sub-adviser or
sub-administrator in which Xxxxxxxx delegates to such sub-adviser or
sub-administrator any or all 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 of the duties
and conditions to which Xxxxxxxx is subject by
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Paragraphs 2, 3 and 4 of this Contract, and further provided that each
Sub-Advisory or Sub-Administration Contract meets all of the requirements of
the 1940 Act and rules thereunder.
6. Services Not Exclusive. The services furnished by Xxxxxxxx
hereunder are not to be deemed exclusive and Xxxxxxxx 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 Xxxxxxxx, who may also be a trustee,
officer or employee of the Trust, 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 terms of this Contract, each Series will
bear all expenses not specifically assumed by Xxxxxxxx, 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 a Series by
Xxxxxxxx under this Contract; (iii) expenses of organizing the Trust and any
Series; (iv) filing fees and expenses relating to the registration and
qualification of a Series' shares under federal and/or state securities laws
and maintaining such registrations and qualifications; (v) fees and salaries
payable to the Trust's Trustees and officers who are not interested persons of
the Trust or Xxxxxxxx; (vi) all expenses incurred in connection with the
Trustees' services, including travel expenses; (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 Trust or Series for
violation of any law; (x) legal, accounting and auditing expenses, including
legal
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fees of special counsel for those Trustees of the Trust who are not interested
persons of the Trust; (xi) charges of custodians, transfer agents and other
agents; (xii) 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; (xiii) costs of
mailing prospectuses and supplements thereto, statements of additional
information and supplements thereto, reports and proxy materials to existing
shareholders; (xiv) any extraordinary expenses (including fees and
disbursements of counsel, costs of actions, suits or proceedings to which the
Trust is a party and the expenses the Trust may incur as a result of its legal
obligation to provide indemnification to its officers, Trustees, agents and
shareholders) incurred by the Trust or a Series; (xv) fees, voluntary
assessments and other expenses incurred in connection with membership in
investment company organizations; (xvi) costs of mailing and tabulating proxies
and costs of meetings of shareholders, the Board and any Committees thereof;
(xvii) the cost of investment company literature and other publications
provided by the Trust to its Trustees and officers; and (xviii) costs of
mailing, stationery and communications equipment.
(c) The Trust or a Series may pay directly any expense
incurred by it in its normal operations and, if any such payment is consented
to by Xxxxxxxx and acknowledged as otherwise payable by Xxxxxxxx pursuant to
this Contract, the Series may reduce the fee payable to Xxxxxxxx pursuant to
Paragraph 8 hereof by such amount. To the extent that such deductions exceed
the fee payable to Xxxxxxxx on any monthly payment date, such excess shall be
carried forward and deducted in the same manner from the fee payable on
succeeding monthly payment dates. Xxxxxxxx may also directly pay any expense
of the Trust or a Series if such payment is consented to by Xxxxxxxx and
acknowledged as otherwise payable by Xxxxxxxx pursuant to this Contract.
(d) Xxxxxxxx will assume the cost of any compensation for
services paid to the Trust and to those Trustees who are interested persons of
the Trust.
8. Compensation.
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(a) For the services provided and the expenses assumed
pursuant to this Contract, with respect to a Series, the Trust will pay to
Xxxxxxxx a fee, computed daily and paid monthly, at the annual rate set forth
in Schedule A, together with a schedule showing the manner in which the fee was
computed.
(b) The fee shall be computed daily and paid monthly to
Xxxxxxxx on or before the last business day of the next succeeding calendar
month.
(c) If this Contract becomes effective or terminates before
the end of any month, the fee for the period from the effective date 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 Xxxxxxxx. Xxxxxxxx shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
any Series or the Trust in connection with the matters to which this Contract
relates except a loss resulting 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 Xxxxxxxx, who may
be or become an officer, Trustee, employee or agent of the Trust shall be
deemed, when rendering services to any Series or the Trust or acting with
respect to any business of such Series or the Trust, to be rendering such
service to or acting solely for the Series or the Trust and not as an officer,
director, employee or agent or one under the control or direction of Xxxxxxxx,
even though paid by Xxxxxxxx.
10. Limitation of Liability to Assets of Trust or Series. The
obligations of the Trust hereunder shall not be personally binding upon any of
the trustees, nominees, officers, agents or employees of the Trust, or the
shareholders of any Series to which this Contract relates, but shall bind only
the assets of the Trust or such Series as set forth in its Declaration of
Trust, as amended. Xxxxxxxx agrees that, in asserting any rights or claims
under this Contract, it shall look only to such assets in
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settlement of any such right or claim. Notice is hereby provided that the
Trust's Declaration of Trust is on file with the Secretary of the Commonwealth
of Massachusetts. The execution and delivery of this Contract by an officer of
the Trust has been authorized by the trustees of the Trust and the shareholders
of each Series to which this Contract relates. Such authorization and
execution and delivery shall not be deemed to have been made by any trustee,
shareholder or officer individually or to impose any personal liability upon
them.
11. Duration and Termination.
(a) This Contract shall become effective upon the date
written above provided that, with respect to any Series to which this Contract
relates, this Contract shall not take effect unless it first has been approved
by a vote of a majority of those Trustees of the Trust 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 by a vote of the
holders 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 Trust 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 with respect to any given
Series by vote of the holders of a majority of the outstanding voting
securities of such Series.
(c) Notwithstanding the foregoing, with respect to any
Series to which this Contract relates, this Contract may be terminated at any
time, without the payment of any penalty, by vote of the Board or by a vote of
the holders of a majority of the outstanding voting securities of such Series
on sixty days'
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written notice to Xxxxxxxx or by Xxxxxxxx at any time, without the payment of
any penalty, on sixty days' written notice to the Trust. 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.
12. Use of Name. The Trust and Xxxxxxxx acknowledge that all
rights to the name "Xxxxxxxx" belong to Xxxxxxxx and that the Trust is being
granted a limited license to use such word in its name or in any Series' name.
In the event that Xxxxxxxx ceases to be the investment adviser to the Trust,
the Trust's right to use the name "Xxxxxxxx" shall automatically cease on the
thirtieth (30th) day following the termination of this Contract. The right to
use the name may also be withdrawn by Xxxxxxxx during the term of this Contract
upon thirty (30) days' written notice by Xxxxxxxx to the Trust. Nothing
contained herein shall impair or diminish in any respect Xxxxxxxx'x right to
use the name "Xxxxxxxx" in the name of or in connection with any other business
enterprises with which Xxxxxxxx is or may become associated. There is no
charge to the Trust for the right to use this name.
13. 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 amendment of this Contract as to any
given Series shall be effective until approved by the Board, including a
majority of its independent trustees, cast in person at a meeting called for
the purpose of voting on such approval, and, if required by the 1940 Act, by
the vote of the holders of a majority of the outstanding voting securities of
the Series to which the amendment relates.
14. Governing Law. This Contract shall be construed in accordance
with the laws of the Commonwealth of Massachusetts and the 1940 Act. To the
extent that the applicable laws of the Commonwealth of Massachusetts conflict
with the applicable provisions of the 1940 Act, the latter shall control.
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15. Miscellaneous. The captions in this Contract 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. 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,"
"interested person," "assignment," "broker," "dealer," "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 replaced 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.
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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 CAPITAL TRUST
/s/ XXXXXX X. XXXXXX By: /s/ XXXX X. XXXXXXX
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Attest: XXXXXXXX & CO.
/s/ XXXX X. XXXXXXX By: /s/ XXXXXX X. XXXXXX
------------------------- -------------------------------------
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SCHEDULE A
Xxxxxxxx Europe Fund: The Trust shall pay Xxxxxxxx a fee, computed daily and
paid monthly, at the annual rate of 1.00% of Europe Fund's average daily net
assets, depending whether any fee waiver arrangements are in place for Europe
Fund.
For the period ending July 31, 1998, Xxxxxxxx agrees to waive a portion or all
of its fees to the extent that Europe Fund's total expenses for its Class A
shares exceeds 1.75% of the average daily net assets of such class.
Xxxxxxxx Basic Value Fund: The Trust shall pay Xxxxxxxx a fee, computed daily
and paid monthly, at the annual rate of 0.75% of Basic Value Fund's average
daily net assets, depending whether any fee waiver arrangements are in place
for Basic Value Fund.
For the period ending July 31, 1998, Xxxxxxxx agrees to waive a portion or all
of its fees to the extent that Basic Value Fund's total expenses for its Class
A shares exceeds 1.15% of the average daily net assets of such class.
Xxxxxxxx Value International Fund: The Trust shall pay Xxxxxxxx a fee,
computed daily and paid monthly, at the annual rate of 1.25% of Value
International Fund's average daily net assets, depending whether any fee waiver
arrangements are in place for Value International Fund.
For the period ending July 31, 1998, Xxxxxxxx agrees to waive a portion or all
of its fees to the extent that Value International Fund's total expenses for
its Class A shares exceeds 1.80% of the average daily net assets of such class.
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