-1-
EXHIBIT 5.A
November 20, 1995
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made this ______ day of ___________,
1995, between EAI Select Managers Equity Fund, a business trust organized under
the laws of the Commonwealth of Massachusetts ("Company") and Evaluation
Associates Capital Markets, Incorporated, a corporation organized under the
laws of the State of Delaware ("Manager"). This Agreement shall not become
effective unless the shareholders of the Company approve this Agreement.
WHEREAS, the Company has been organized and will operate as an
investment company registered under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), for the purpose of investing and
reinvesting its assets in securities pursuant to investment objectives and
policies as set forth more fully in its Declaration of Trust, its By-Laws and
its Registration Statement under the Investment Company Act and the Securities
Act of 1933, as amended, all as amended and supplemented from time to time; and
the Company desires to avail itself of the services, information, advice,
assistance and facilities of a fund manager and to have a fund manager provide
or perform for it various administrative, management, statistical, research,
sub-advisor selection, allocation and other services; and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and has, together with its
affiliates and predecessors, been engaged in the business of rendering
investment manager recommendations and certain other investment advisory
services to clients for an extended period; and
WHEREAS, the Manager has undertaken the initiative of organizing the
Company in order to have a means to invest the assets of certain clients and
desires to provide services to the Company in consideration of and on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, the Company and the Manager agree as follows:
1. Employment of the Manager. The Company hereby employs the
Manager to manage the investment and reinvestment of the assets of the Company
in the manner set forth in Section 2(B) of this Agreement and to administer its
business and administrative operations, subject to the direction of the
Trustees and the officers of the Company, for the period, in the manner, and on
the terms hereinafter set forth. The Manager hereby accepts such employment
and agrees during such period to render the services and to assume the
obligations herein set forth. The Manager shall for all purposes herein be
deemed to be an independent contractor and shall, except as expressly provided
or authorized (whether herein or otherwise), have no authority to act for or
represent the Company in any way or otherwise be deemed an agent of the
Company.
2. Obligation of and Services to be Provided by the Manager. The
Manager undertakes to provide the services hereinafter set forth and to assume
the following obligations:
A. Corporate Management and Administrative Services.
(a) The Manager shall furnish to the Company adequate
(i) office space, which may be space within the
offices of the Manager or in such other place as
may be agreed upon from time to time, and (ii)
office furnishings, facilities and equipment as
may be reasonably required for managing and
administering the operations and conducting the
business of the Company, including complying with
the securities, tax and other reporting
requirements of the United States and the various
states in which the Company does business,
conducting correspondence and other
communications with the shareholders of the
Company, and maintaining or supervising the
maintenance of all internal bookkeeping,
accounting and auditing services and records in
connection with the Company's investment and
business activities. The Company agrees that its
shareholder recordkeeping services, its
accounting and auditing, the computing of net
asset value, the preparation of certain of its
records required by Section 31 of the Investment
Company Act and the Rules promulgated thereunder
and certain other functions may be performed by
the Company's transfer agent, custodian or
subadvisors or a third party servicing agent, and
that with respect to these services Manager's
obligations under this Section 2(A) are
supervisory in nature only.
(b) The Manager shall employ or provide and
compensate the executive, administrative,
secretarial and clerical personnel necessary to
supervise the provision of the services set forth
in subparagraph 2(A)(a) above, and shall bear the
expense of providing such services, except as may
otherwise be provided in Section 4 of this
Agreement. The Manager shall also compensate all
officers and employees of the Company who are
officers or employees of the Manager.
B. Investment Management Services.
(a) The Manager shall have overall supervisory
responsibility for the general management and
investment of the assets and securities portfolio
of the Company subject to and in accordance
with the investment objectives, policies and
restrictions of the Company and any directions
which the Company's Trustees may issue to the
Manager from time to time.
(b) The Manager shall provide overall investment
programs and strategies for the Company, shall
modify such programs from time to time as
necessary and shall monitor and report
periodically to the Trustees concerning the
implementation of such programs.
(c) The Company intends, and is hereby authorized, to
appoint one or more persons or companies
("Subadvisors") subject to the approval of the
Company's Trustees, and each Subadvisor shall
have full investment discretion and shall make
all determinations with respect to the investment
of the portion of the Company's assets allocated
to that Subadvisor and the purchase and sale of
portfolio securities with those assets, and
take such steps as may be necessary to implement
such appointments. The Manager shall not be
responsible or liable for the investment merits
of any decision by a Subadvisor to purchase, hold
or sell a security for the portion of the
Company's portfolio for which it acts as
Subadvisor.
(d) The Manager shall evaluate the Subadvisors and
shall advise the Trustees of the Company of the
Subadvisors which the Manager believes are best
suited to invest the assets of the Company;
shall monitor and evaluate the investment
performance of each Subadvisor employed by the
Company; shall allocate the portion of the
Company's assets to be managed by each
Subadvisor; shall recommend changes of or
additional Subadvisors when appropriate; shall
coordinate the investment activities of the
Subadvisors and shall compensate the Subadvisors.
(e) The Manager shall render regular reports to the
Company, at regular meetings of the Trustees, of,
among other things, the decisions which it has
made with respect to the allocation of
assets among Subadvisors.
C. Provision of Information Necessary for Preparation of
Securities Registration Statements, Amendments and Other
Materials.
The Manager will make available and provide financial,
accounting and statistical information required by the
Company in the preparation of registration statements,
reports and other documents required by federal and
state securities laws, and such information as the
Company may reasonably request for use in the
preparation of registration statements, reports and
other documents required by federal and state
securities laws and such information as the Company may
reasonably request for use in the preparation of such
documents or of other materials necessary or helpful for
the underwriting and distribution of the Company's
shares.
D. Other Obligations and Services.
The Manager shall make available its officers and
employees to the Trustees and officers of the Company
for consultation and discussions regarding the
administration and management of the Company and its
investment activities.
3. Execution and Allocation of Portfolio Brokerage Commissions.
The Subadvisors (and sometimes the Manager), subject to and in accordance with
any directions the Company's Trustees may issue from time to time, shall place,
in the name of the Company, orders for the execution of the Company's portfolio
transactions. When placing such orders, the primary objective of the Manager
and Subadvisors shall be to obtain the best net price and execution for the
Company, but this requirement shall not be deemed to obligate the Manager or a
Subadvisor to place any order solely on the basis of obtaining the lowest
commission rate if the other standards set forth in this section have been
satisfied. The Company recognizes that there are likely to be many cases in
which different brokers are equally able to provide such best price and
execution and that, in the selection among such brokers with respect to
particular trades, it is desirable to choose those brokers who furnish
"brokerage and research services" (as defined in Section 28(e)(3) of the
Securities Exchange Act of 1934) or statistical quotations and other
information to the Company, the Manager and/or the Subadvisors in accordance
with the standards set forth below. In addition, the Company recognizes that,
in many instances, it is desireable for the Manager and/or the Subadvisors to
enter into "directed brokerage" arrangements in which they will direct the
brokerage for certain of the Company's securities transactions to a certain
broker in exchange for that broker's agreement to pay a portion of the
custodian, transfer agent or other administrative fees incurred by the Company.
Moreover, to the extent that it continues to be lawful to do so and so long as
the Trustees determine as a matter of general policy that the Company will
benefit, directly or indirectly, by doing so, the Manager or a Subadvisor may
place orders with a broker who charges a commission for that transaction
which is in excess of the amount of commission that another broker would have
charged for effecting that transaction, provided that the excess commission is
reasonable in relation to (i) the value of brokerage and research services
provided by that broker or (ii) the custodian, transfer agent or other
administrative fees of the Company paid by that broker. Accordingly, the
Company and the Manager agree that the Manager and the Subadvisors may select
brokers for the execution of the Company's portfolio transactions from among:
A. Those brokers and dealers who provide brokerage and
research services, or statistical quotations and other
information to the Company, specifically including the
quotations necessary to determine the value of the
Company's net assets, in such amount of total
brokerage as may reasonably be required in light of such
services;
B. Those brokers and dealers who supply brokerage and
research services to the Manager or the Subadvisors
which relate directly to portfolio securities, actual or
potential, of the Company, or which place the
Manager or Subadvisors in a better position to make
decisions in connection with the management of the
Company's assets and portfolio, whether or not such data
may also be useful to the Manager and its affiliates, or
the Subadvisors and their affiliates, in managing
other portfolios or advising other clients, in such
amount of total brokerage as may reasonably be required;
and
C. Those brokers and dealers who pay a portion of the
custodian, transfer agent or other administrative fees
incurred by the Company, in such amount as may
reasonably be required in light of such payments.
The Manager shall render regular reports to the Company of the total
brokerage business placed and the manner in which the allocation has been
accomplished.
The Manager agrees and each Subadvisor will be required to agree that
no investment decision will be made or influenced by a desire to provide
brokerage for allocation in accordance with the foregoing, and that the right
to make such allocation of brokerage shall not interfere with the Manager's or
Subadvisors' primary duty to obtain the best net price and execution for the
Company.
4. Expenses of the Company. It is understood that the Company will
pay all its expenses other than those expressly assumed by the Manager herein,
which expenses payable by the Company shall include, without limitation:
A. Expenses of all audits by independent public
accountants;
B. Expenses of transfer agent, registrar, dividend
disbursing agent, shareholder recordkeeping services and
administrative services;
C. Expenses of custodial services including recordkeeping
services provided by the Custodian;
D. Expenses of obtaining quotations for calculating the
value of the Company's net assets;
E. Salaries and other compensation of any of its executive
officers and employees, if any, who are not officers,
directors, stockholders or employees of the Manager;
F. Taxes levied against the Company;
G. Brokerage fees and commissions in connection with the
purchase and sale of portfolio securities for the
Company;
H. Costs, including the interest expense, of borrowing
money;
I. Costs and/or fees incident to Trustee and shareholder
meetings of the Company, the preparation and mailing of
prospectuses and reports of the Company to its
shareholders, the filing of reports with regulatory
bodies, the maintenance of the Company's corporate
existence, and the registration of shares with federal
and state securities authorities;
J. Legal fees, including the legal fees related to the
registration and continued qualification of the
Company's shares for sale;
K. Costs of printing certificates representing shares of
beneficial interests in the Company;
L. Trustees' fees and expenses of Trustees who are not
directors, officers, employees or stockholders of the
Manager or any of its affiliates; and
M. Its pro rata portion of the fidelity bond required by
Section 17(g) of the Investment Company Act, or other
insurance premiums.
Any amounts paid by the Manager in connection with the costs set forth
above shall be reimbursed to the Manager by the Company.
5. Activities and Affiliates of the Manager.
A. The services of the Manager to the Company hereunder are
not to be deemed exclusive, and the Manager and any of
its affiliates shall be free to render similar services
to others. The Manager shall use the same skill and
care in the management of the Company's assets as it
uses in the administration of other accounts to which it
provides asset management, consulting and subadvisor
selection services, but shall not be obligated to give
the Company more favorable or preferential treatment
vis-a-vis its other clients.
B. Subject to and in accordance with the Declaration of
Trust and By-Laws of the Company and to Section 10(a) of
the Investment Company Act, it is understood that
Trustees, officers, agents and shareholders of the
Company are or may be interested in the Manager
or its affiliates as directors, officers, agents or
stockholders of the Manager or its affiliates; that
directors, officers, agents and stockholders of the
Manager or its affiliates are or may be interested in
the Company as trustees, officers, agents, shareholders
or otherwise; that the Manager or its affiliates may be
interested in the Company as shareholders or otherwise;
and that the effect of any such interests shall be
governed by said Declaration of Trust, By-Laws and the
Investment Company Act.
6. Compensation of the Manager. As compensation for the services
it provides hereunder, the Manager will be paid a fee at the end of each
calendar quarter equal to an annual rate of 0.92% of the Company's average
daily net assets. Average daily net assets shall be determined using the net
assets of the Fund on each business day during the calendar quarter. This fee
shall be pro-rated for any calendar quarter during which the Agreement is in
effect for only a portion of that quarter. From such fee, the Manager will
pay each Subadvisor all amounts due to it in connection with the services
rendered by such Subadvisor to the Company. The Manager may, but is not
required to, waive all or any portion of the fee due to it hereunder, and any
such waiver may be terminated or reduced at any time by the Manager in its sole
discretion. Notwithstanding anything herein to the contrary, the Manager
shall, for the first year of the term hereof, waive that portion of its
fee that, when combined with all other expenses incurred by the Fund, is in
excess of 1.15%.
7. Liabilities of the Manager.
A. In the absence of willful misfeasance, bad faith,
negligence, or reckless disregard of obligations or
duties hereunder on the part of the Manager, the Manager
shall not be subject to liability to the Company
or to any shareholder of the Company 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.
B. No provision of this Agreement shall be construed to
protect any Trustee or officer of the Company, or the
Manager, from liability in violation of Sections 17(h)
and (i) of the Investment Company Act.
C. The Manager will reimburse the Company for the amount,
if any, of the expenses of the Company (including the
Manager's compensation but excluding interest, brokerage
costs, taxes and expenses not incurred in the ordinary
course of the Company's business) for any fiscal year of
the Company which exceeds the level of expenses which
the Company is permitted to bear under the most
restrictive expense limitation imposed (and not waived)
on the Company by any state in which the shares of the
Company are then qualified for sale.
8. Renewal and Termination.
A. This Agreement shall become effective on the date
written above and shall continue in effect until the
earlier of __________, 1996 [one year after execution]
or the first special meeting of the shareholders of the
Company. This Agreement may be continued annually
thereafter for successive one-year periods (a) by a vote
of a majority of the outstanding shares of beneficial
interest of the Company or (b) by a vote of a majority
of the Trustees of the Company, and in either case
by a majority of the Trustees who are not parties to the
Agreement or interested persons of any parties to the
Agreement (other than as Trustees of the Company) cast
in person at a meeting called for the purpose of voting
on the Agreement. The aforesaid provision that this
Agreement may be continued "annually" shall be construed
in a manner consistent with the Investment Company Act
and the Rules and Regulations promulgated thereunder.
B. This Agreement
(a) may at any time be terminated without the payment
of any penalty by (i) vote of the Trustees of the
Company; or (ii) by vote of a majority of the
outstanding voting securities of the Company, in
each case on sixty (60) days' written notice to
the Manager;
(b) shall immediately terminate in the event of its
assignment; and
(c) may be terminated by the Manager on sixty (60)
days' written notice to the Company.
C. As used in this Section 8, the terms "assignment," "interested
person" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Investment
Company Act.
D. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postpaid, to the other party
to this Agreement at its principal place of business.
9. 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.
10. Governing Law. To the extent that state law has not been
preempted by the provisions of any law of the United States heretofore or
hereafter enacted, as the same may be amended from time to time, this Agreement
shall be administered, construed and enforced according to the laws of the
State of Connecticut.
11. Amendments. This Agreement may be amended by an instrument in
writing signed by the parties, subject to the Company obtaining such approvals
as may be required by the Investment Company Act.
12. Limitation of Liability. No shareholder, Trustee, officer,
employee or agent of the Company shall be subject to any personal liability
whatsoever to the Manager or any officer, employee or agent thereof solely in
connection with the provisions of this Agreement, and the Manager and each
officer, employee and agent thereof shall look solely to the Company and its
property for satisfaction of claims of any nature arising in connection
herewith.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
ATTEST EAI SELECT MANAGERS EQUITY FUND
By:
Name: Name:
ATTEST EVALUATION ASSOCIATES CAPITAL
MARKETS, INCORPORATED
By:
Name: Name:
