Exhibit 5(i)
MENTOR FUNDS
MANAGEMENT AGREEMENT
February 1, 1998
Mentor Investment Advisors, LLC
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Mentor Funds (the "Trust"), a Massachusetts business trust, confirms
its agreement with Mentor Investment Advisors, LLC (the "Adviser") with respect
to the Adviser's serving as investment adviser of the Trust as set forth below.
Section 1. Investment Description; Appointment
The Trust desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the investment objectives,
policies and limitations specified in the prospectus (the "Prospectus") and in
the statement of additional information (the "Statement of Additional
Information") filed with the Securities and Exchange Commission (the "SEC") as
part of the Trust's Registration Statement on Form N-1A, as amended from time to
time (the "Registration Statement"). Copies of the Trust's Prospectus and the
Statement of Additional Information have been or will be submitted to the
Adviser. The Trust desires to employ and hereby appoints the Adviser to act as
its investment manager. The Adviser accepts the appointment and agrees to
furnish the services described in Section 2 of this Agreement for the
compensation set forth in Section 6 of, and Appendix I to, this Agreement.
Section 2. Services as Adviser; Appointment of Sub-Advisers
(a) Subject to the supervision and direction of the Trust's Board of
Trustees, the Adviser shall provide such services reasonably requested by the
Trust, including but not limited to the following:
(i) monitoring and supervising the services provided to the
Trust by its administrator (the "Administrator") pursuant to a separate
agreement between the Trust and the
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Administrator, a copy of which has been or will be submitted to the Adviser; and
(ii) providing to the Trust investment management evaluation
services principally by performing initial due diligence on prospective
investment advisers ("Sub-Advisers") for each existing series of its capital
stock and any series or class which the Trust may offer from time to time in the
future (each, a "Portfolio"), thereafter monitoring and supervising Sub-Adviser
performance through quantitative and qualitative analysis as well as periodic
in-person, telephonic and written consultations with Sub-Advisers and
considering and approving investments and use of certain investment strategies
when the Trust requests review and consideration of such matters by the Adviser.
The Adviser will be responsible for communicating performance expectations and
evaluations to Sub-Advisers and ultimately recommending to the Board of Trustees
of the Trust whether Sub-Advisers' contracts should be renewed, modified or
terminated. The Adviser will provide written reports to the Board of Trustees
regarding the results of its evaluation and monitoring functions; and
(iii) conducting all operations of the Trust except those
operations contracted to the Sub-Advisers, custodian, transfer agent and
administrator.
(b) The Adviser will, at its own expense, maintain sufficient staff,
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 3. Brokerage
The Adviser is authorized to permit the Sub-Advisers to execute
portfolio transactions for the Trust. In executing transactions and selecting
brokers or dealers, each Sub-Adviser will seek the best overall terms available.
In assessing the best overall terms available for any portfolio transaction, the
Sub-Adviser will consider all factors it deems relevant including, but not
limited to, the breadth of the market in the security or commodity interest, the
price of the security or commodity interest, the financial condition and
execution capability of the broker or dealer and the reasonableness of any
commission for the specific transaction and on a continuing basis. In selecting
brokers or dealers to execute a particular transaction and in evaluating the
best overall terms available, the Adviser shall have the right to request of the
Sub-Advisers in writing that transactions giving rise to brokerage commissions
shall be executed by brokers and dealers that provide brokerage and research
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934) to the Trust and/or other accounts over which the Sub-Adviser or an
affiliate exercises investment discretion. In addition, subject to the above and
the applicable Rules of Fair Practice of the National Association of Securities
Dealers, Inc., the Trust shall have the right to request that such transactions
be executed by brokers and dealers by or through whom sales of shares of the
Trust are made.
Section 4. Information Provided to the Trust
The Adviser will keep the Trust informed of developments materially
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affecting the Sub-Advisers and the Portfolios and, in addition to providing the
Trust with whatever statistical or other information the Trust may reasonably
request with respect to its investments, the Adviser will, on its own
initiative, furnish the Trust from time to time with whatever information the
Adviser believes is appropriate for this purpose.
Section 5. Standard of Care
The Adviser shall 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, provided that nothing in this Agreement shall be
deemed to protect or purport to protect the Adviser against any liability to the
Trust or to holders of the Trust's shares of beneficial interest to which the
Adviser would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties or by reason of
the Adviser's reckless disregard of its obligations and duties under this
Agreement.
Section 6. Compensation
(a) In consideration of services rendered pursuant to this Agreement,
each of the Trust's Portfolios will accrue daily and pay monthly a fee at the
annual rate applied to the value of that Portfolio's average daily net assets as
set forth in the schedule attached hereto as Appendix I. From time to time the
Adviser may agree to reimburse the Trust additional expenses or waive a portion
or all of its fee, in the sole discretion of the Adviser.
(b) The fee for the period from the commencement of investment
operations to the end of the month during which investment operations commence
will be prorated according to the proportion that such period bears to the full
monthly period, and will be payable that month. Upon any termination of this
Agreement before the end of a month, the fee for such part of that month shall
be prorated according to the proportion that such period bears to the full
monthly period and will be payable upon the date of termination of this
Agreement.
(c) For the purpose of determining fees payable to the Adviser under
this Agreement, the value of the Trust's net assets will be computed in the
manner described in the Trust's current Prospectus and/or Statement of
Additional Information.
Section 7. Costs and Expenses
The Adviser will bear all expenses in connection with the performance
of its services under this Agreement, including the payment of salaries of all
officers and employees who are employed by it and the Trust as well as the
payment of the fees of the Sub-Advisers.
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Section 8. Reimbursement to the Trust
From time to time the Adviser may agree to reimburse the Trust
additional expenses or waive a portion or all of its fee payable pursuant to
Section 6, in the sole discretion of the Adviser. If, in any fiscal year of the
Trust, the aggregate expenses of the Trust (including fees pursuant to this
agreement and the Trust's Administration Agreement with the Administrator, but
excluding interest, taxes, brokerage fees, and, if permitted by state securities
commissions, extraordinary expenses) exceed the expense limitation imposed by
any state having jurisdiction over the Trust, the Adviser will reimburse the
Trust to the extent required by state law in the same proportion as its fees
bear to the combined fees paid by the Trust for investment management and
administration. The Adviser's expense reimbursement obligation will be limited
to the amount of its fees received pursuant to this Agreement. Such expense
reimbursement, if any, will be estimated, reconciled and paid on a monthly
basis.
Section 9. Service to Other Companies or Accounts
The Trust understands that the Adviser and the Sub-Advisers may act as
investment managers or advisers to fiduciary and other managed accounts,
including other investment companies, and the Trust has no objection to the
Adviser's and Sub-Advisers' so acting, provided that whenever the Trust and one
or more other accounts advised by any Sub-Adviser have available funds for
investment, investments suitable and appropriate for each will be allocated in
accordance with a formula believed to be equitable to each account or company.
The Trust recognizes that in some cases this procedure may adversely affect the
size of the position obtainable for the Trust. In addition, the Trust
understands and acknowledges that the persons employed by the Adviser to assist
in the performance of the Adviser's duties under this Agreement will not devote
their full time to such service and nothing contained in this Agreement shall 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 any kind or nature.
Section 10. Term of Agreement
(a) This Agreement shall become effective upon its execution and shall
continue for an initial period of two years and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually by (i) the Trust's Board of Trustees or
(ii) a vote of a "majority" of the Trust's outstanding voting securities (as
defined in the Investment Company Act of 1940, as amended (the "Act")), provided
that in either event the continuance is also approved by a majority of Trustees
who are not "interested persons" (as defined in the Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval.
(b) This Agreement is terminable, without penalty, on 60 days' written
notice, by the Trust's Trustees or by vote of holders of a majority of the
Trust's outstanding voting securities, or upon 60 days' written notice, by the
Adviser.
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(c) This Agreement will terminate automatically in the event of its
assignment (as defined in the Act or in rules adopted under the Act).
Section 11. Amendments
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 whom enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until approved in
accordance with applicable law.
Section 12. Limitations of Liability of Trustees, Officers,
Employees, Agents and Shareholders of the Trust
The Adviser is expressly put on notice of the limitation of liability
as set forth in the Declaration of Trust and agrees that the obligations assumed
by the Trust pursuant to this Agreement shall be limited in any case to the
Trust and its assets and that the Adviser shall not seek satisfaction of any
such obligations from the shareholders of the Trust, the Trustees, officers,
employees or agents of the Trust, or any of them.
Section 13. Miscellaneous
(a) This Agreement shall be governed by the laws of the Commonwealth of
Virginia, provided that nothing herein shall be construed in a manner
inconsistent with the Act, the Investment Advisers Act of 1940, as amended, or
rules or orders of the Securities and Exchange Commission thereunder.
(b) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(c) 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 and, to this extent, the provisions of this
Agreement shall be deemed to be severable.
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(d) Nothing herein shall be construed as constituting the Adviser as an
agent of the Trust.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning the enclosed
copy of this Agreement.
Very truly yours,
MENTOR FUNDS
By:_____________________________
Name:
Title:
Accepted:
MENTOR INVESTMENT ADVISORS, LLC
By:_____________________________________
Name:
Title:
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APPENDIX I
ADVISER'S RATE OF
FEE IN ACCORDANCE
WITH SECTION 6 OF
MENTOR FUNDS THE AGREEMENT
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Mentor Capital Growth Portfolio .80%
Mentor Quality Income Portfolio .60%
Mentor Municipal Income Portfolio .60%
Mentor Income & Growth Portfolio .75%
MENTOR FUNDS
By:__________________________
Name:
Title:
Accepted:
MENTOR INVESTMENT ADVISORS
By:______________________________________
Name:
Title:
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