EXHIBIT (d)(vii)
SMALL COMPANY GROWTH FUND
OF
THE ENTERPRISE GROUP OF FUNDS, INC.
FUND MANAGER'S AGREEMENT
THIS AGREEMENT, made the 12th day of April, 2004, is among The
Enterprise Group of Funds, Inc. (the "Fund"), a Maryland corporation, Enterprise
Capital Management, Inc., a Georgia corporation (hereinafter referred to as the
"Adviser"), and Xxxxxxx X. Xxxxxx, Inc., a New York corporation (hereinafter
referred to as the "Fund Manager").
BACKGROUND INFORMATION
(A) The Adviser has entered into an Investment Adviser's Agreement
dated as of May 1, 1993, with the Fund ("Investment Adviser's Agreement").
Pursuant to the Investment Adviser's Agreement, the Adviser has agreed to render
investment advisory and certain other management services to all of the series
of the Fund, and the Fund has agreed to employ the Adviser to render such
services and to pay to the Adviser certain fees therefore. The Investment
Adviser's Agreement recognizes that the Adviser may enter into agreements with
other investment advisers who will serve as Fund Managers to the series of the
Fund.
(B) The parties hereto wish to enter into an agreement (the
"Agreement") whereby the Fund Manager will provide to the Small Company Growth
Fund of the Fund (the "Small Company Growth Fund") securities investment
advisory services for that Fund, subject to requisite approvals under the
Investment Company Act of 1940. The Fund, the Adviser, and the Fund Manager are
registered under the 1940 Act.
WITNESSETH THAT:
In consideration of the mutual covenants herein contained, the Fund,
Adviser and the Fund Manager agree as follows:
(1) The Fund and Adviser hereby employ the Fund Manager
to render certain investment advisory services to the Fund, as set forth herein.
The Fund Manager hereby accepts such employment and agrees to perform such
services on the terms herein set forth, and for the compensation herein
provided.
(2) The Fund Manager shall furnish the Small Company
Growth Fund advice with respect to the investment and reinvestment of the assets
of the Small Company Growth Fund, or such portion of the assets of the Fund as
the Adviser shall specify from time to time, in accordance with the investment
objectives, restrictions and limitations of the series as set forth in the
Fund's most recent Registration Statement and the Fund's governing documents.
(3) The Fund Manager shall perform a monthly
reconciliation of the Fund to the holdings report provided by the Fund's
custodian and bring any material or significant variances regarding holdings or
valuations to the attention of the Adviser.
(4) The Fund Manager shall for all purposes herein be
deemed to be an independent contractor. The Fund Manager has no authority to act
for or represent the Fund or the series in any way except to direct securities
transactions pursuant to its investment advice hereunder. The Fund Manager is
not an agent of the Fund or the series.
(5) The Fund Manager shall maintain all books and records
with respect to the Small Company Growth Fund's portfolio transactions required
by subparagraphs (b)(5), (6), (7), (9), (10) and (11) and paragraph (f) of Rule
31a-1 under the Investment Company Act of 1940 ("xxx 0000 Xxx") and shall render
to the Fund's Board of Directors such periodic and special reports as the Fund's
Board of Directors may reasonably request. The Fund Manager shall timely furnish
to the Adviser all information relating to the Fund Manager's services under
this Agreement needed by the Adviser to keep the other books and records of the
Small Company Growth Fund required by Rule 31a-1 under the 1940 Act. The Fund
Manager agrees that all records that it maintains on behalf of the Small Company
Growth Fund are property of the Small Company Growth Fund and the Fund Manager
will surrender promptly to the Small Company Growth Fund any of such records
upon the Small Company Growth Fund's request; provided, however, that the Fund
Manager may retain a copy of such records. The Fund Manager further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any such
records as are required to be maintained by it pursuant to this Agreement. The
Fund Manager shall perform a monthly reconciliation of the Small Company Growth
Fund to the holdings report provided by the Fund's custodian and bring any
material or significant variances regarding holdings or valuations to the
attention of the Adviser.
(6) It is understood that the Fund Manager does not, by
this Agreement, undertake to assume or pay any costs or expenses of the Fund or
the series.
(6)(a) The Adviser agrees to pay the Fund Manager for its
services to be furnished under this Agreement, with respect to each calendar
month after the effective date of the Agreement, on the twentieth (20th) day
after the close of each calendar month, a sum equal to 0.033 of 1% of the
average of the daily closing net asset value of the Small Company Growth Fund
managed by the Fund Manager during such month (that is, .40 of 1% per year) for
the first $1,000,000,000 of assets under management and a sum equal to 0.025 of
1% of the average of the daily closing net asset value of the Small Company
Growth Fund during such month (that is, 0.30 of 1% per year) for assets in
excess of $1,000,000,000 under management.
(6)(b) The payment of all fees provided for hereunder shall
be prorated and reduced for sums payable for a period less than a full month in
the event of termination of this Agreement on a day that is not the end of a
calendar month.
(6)(c) For the purposes of this Paragraph 6, the daily
closing net asset values of the Fund shall be computed in the manner specified
in the Registration Statement for the computation of the value of such net
assets in connection with the determination of the net asset value of the Small
Company Growth Fund's shares.
(7) The services of the Fund Manager hereunder are not to
be deemed to be exclusive, and the Fund Manager is free to render services to
others and to engage in other activities so long as its services hereunder are
not impaired thereby. Without in any way relieving the Fund Manager of its
responsibilities hereunder, it is agreed that the Fund Manager may employ others
to furnish factual information, economic advice and/or research, and investment
recommendations, upon which its investment advice and service is furnished
hereunder. The Fund Manager may, from time to time hereafter, act as investment
adviser to one or more other investment companies and fiduciary or other managed
accounts, provided that when the Fund Manager purchases or sells securities of
the same issuer on behalf of two or more advisory clients the available
securities will be allocated in a manner believed by the Fund Manager to be
equitable to each client.
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(8) In the absence of willful misfeasance, bad faith or
gross negligence in the performance of its duties hereunder, or reckless
disregard of its obligations and duties hereunder, the Fund Manager shall not be
liable to the Fund, the series or the Adviser or to any shareholder or
shareholders of the Fund, the series or the Adviser for any mistake of judgment,
act or omission in the course of, or connected with, the services to be rendered
by the Fund Manager hereunder.
(9) The Fund Manager will take necessary steps to prevent
the investment professionals of the Fund Manager who are responsible for
investing assets of the Fund from taking, at any time, a short position in any
shares of any holdings of any series of the Fund for any accounts in which such
individuals have a beneficial interest, excluding short positions, including
without limitation, short against-the-box positions, effected for tax reasons.
The Fund Manager also will cooperate with the Fund in adopting a written policy
prohibiting xxxxxxx xxxxxxx with respect to Fund series transactions insofar as
such transactions may relate to the Fund Manager.
(10) In connection with the management of the investment
and reinvestment of the assets of the Fund, the Fund Manager is authorized to
select the brokers or dealers that will execute purchase and sale transactions
for the Fund, and is directed to use its best efforts to obtain the best
available price and most favorable execution with respect to such purchases and
sales of Fund securities for the Fund. Subject to this primary requirement, and
maintaining as its first consideration the benefits for the Funds and its
shareholders, the Fund Manager shall have the right, subject to the approval of
the Board of Directors of the Fund and of the Adviser, to follow a policy of
selecting brokers and dealers who furnish statistical research and other
services to the Fund, the Adviser, or the Fund Manager and, subject to the
Conduct Rules of the National Association of Securities Dealers, Inc., to select
brokers and dealers who sell shares of series of the Fund.
(11) The Fund may terminate this Agreement by thirty (30)
days written notice to the Adviser and the Fund Manager at any time, without the
payment of any penalty, by vote of the Fund's Board of Directors, or by vote of
a majority of its outstanding voting securities. The Adviser may terminate this
Agreement by thirty (30) days written notice to the Fund Manager and the Fund
Manager may terminate this Agreement by thirty (30) days written notice to the
Adviser, without the payment of any penalty. This Agreement shall immediately
terminate in the event of its assignment, unless an order is issued by the
Securities and Exchange Commission conditionally or unconditionally exempting
such assignment from the provision of Section 15 (a) of the Investment Company
Act of 1940, in which event this Agreement shall remain in full force and
effect.
(12) Subject to prior termination as provided above, this
Agreement shall continue in force from the date of execution until April 12,
2006, and from year to year thereafter if its continuance after said date: (1)
is specifically approved on or before said date and at least annually thereafter
by vote of the Board of Directors of the Fund, including a majority of those
Directors who are not parties to this Agreement or interested persons of any
such party, or by vote of a majority of the outstanding voting securities of the
Small Company Growth Fund, and (2) is specifically approved at least annually by
the vote of a majority of Directors of the Fund who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
(13) The Adviser shall indemnify and hold harmless the
Fund Manager, its officers and directors and each person, if any, who controls
the Fund Manager within the meaning of Section 15 of the Securities Act of 1933
(any and all such persons shall be referred to as "Indemnified Party"), against
any loss, liability, claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damages or
expense and reasonable counsel fees incurred in connection therewith), arising
from the Indemnified Party's performance or non-performance of any
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duties under this Agreement. However, in no case (i) is this indemnity to be
deemed to protect any particular Indemnified Party against any liability to
which such Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of reckless disregard of its obligations and duties under this Fund
Manager's Agreement or (ii) is the Adviser to be liable under this indemnity
with respect to any claim made against any particular Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the Fund
Manager or such controlling persons.
The Fund Manager shall indemnify and hold harmless
the Adviser and each of its directors and officers and each person if any who
controls the Adviser within the meaning of Section 15 of the Securities Act of
1933, against any loss, liability, claim, damage or expense described in the
foregoing indemnity, but only with respect to the Fund Manager's willful
misfeasance, bad faith or gross negligence in the performance of its duties
under this Fund Manager's Agreement. In case any action shall be brought against
the Adviser or any person so indemnified, in respect of which indemnity may be
sought against the Fund Manager, the Fund Manager shall have the rights and
duties given to the Adviser, and the Adviser and each person so indemnified
shall have the rights and duties given to the Fund Manager by the provisions of
subsection (i) and (ii) of this section.
(14) Except as otherwise provided in paragraph 13 hereof
and as may be required under applicable federal law, this Fund Manager's
Agreement shall be governed by the laws of the State of Georgia.
(15) The Fund Manager agrees to notify the parties within
a reasonable period of time regarding a material change in the membership of the
Fund Manager.
(16) The terms "vote of a majority of the outstanding
voting securities," "assignment" and "interested persons," when used herein,
shall have the respective meanings specified in the Investment Company Act of
1940 as now in effect or as hereafter amended.
(17) This Agreement shall terminate automatically in the
event of any transfer or assignment thereof, as defined in the 1940 Act.
(18) If any provision of this Agreement shall be held or
made invalid by a count decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their duly authorized officers and attested, as of the date first above
written.
THE ENTERPRISE GROUP OF FUNDS, INC.
ATTEST: /s/ XXXXXXXXX X XXXXXXXXX By: /s/ XXXXXX XXXXXX
------------------------- ------------------------------------
Secretary Xxxxxx Xxxxxx, Chairman, President
and Chief Executive Officer
ENTERPRISE CAPITAL MANAGEMENT, INC.
ATTEST: /s/ XXXXXXXXX X XXXXXXXXX By: /s/ XXXXXX XXXXXX
------------------------- ------------------------------------
Secretary Xxxxxx Xxxxxx, Chairman, President
and Chief Executive Officer
XXXXXXX X. XXXXXX, INC.
ATTEST: /s/ XXXXXXX X XXXXXXX By: /s/ XXXX XXXXXX III
------------------------- ------------------------------------
Secretary Xxxx Xxxxxx III, President and
Chief Executive Officer
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