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EXHIBIT (d)(xviii)
MANAGED FUND
OF
THE ENTERPRISE GROUP OF FUNDS, INC.
FUND MANAGER'S AGREEMENT
THIS AGREEMENT, made the 26th day of October, 1999, 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. Xxxxxxxxx & Co., 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 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 funds 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 funds.
(B) The parties hereto wish to enter into an agreement whereby the Fund
Manager will provide to the Managed Fund of the Fund (the "Managed Fund")
securities investment advisory services for the Managed Fund.
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 Managed 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 Managed Fund advice with
respect to the investment and reinvestment of the assets of the Managed
Fund, or such portion of the assets of the Managed Fund as the Adviser
shall specify from time to time, in accordance with the investment
objectives, restrictions and limitations applicable to the Managed Fund
which are set forth in the Fund's most recent Registration Statement.
(3) The Fund Manager shall perform a monthly reconciliation of the
Managed 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 funds 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 funds.
(5) 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 funds.
(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 this Agreement, on the
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twentieth (20th) day after the close of each calendar month, a sum equal to
0.03333 of 1% of the average of the daily closing net asset value of the
Managed Fund managed by the Fund Manager during such month (that is, 0.40
of 1% per year) for the first $10,000,000 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 Managed Fund during such month (that is, 0.30 of 1% per year)
for the next $40,000,000 of assets under management (up to $50,000,000);
and a sum equal to 0.0166667 of 1% of the average of the daily closing net
asset value of the Managed Fund during such month (that is 0.20 of 1% per
year) for the next $50,000,000 of assets under management (up to
$100,000,000); and a sum equal to 0.0083333 of 1% of the average of the
daily closing net asset value of the Managed Fund during such month (that
is 0.10% per year) for assets under management over $100,000,000.
(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 Portfolio 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
Managed Fund 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.
(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 Managed Fund or the Adviser or to any
shareholder or shareholders of the Fund, the Managed Fund 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 Managed Fund from taking, at any time, a short
position in any shares of any holdings of the Managed 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 Managed Fund 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 Managed Fund, the Fund Manager is
authorized to select the brokers or dealers that will execute purchase and
sale transactions for the Managed 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 Managed
Fund. Subject to this primary requirement, and maintaining as its first
consideration the benefits for the Managed Fund 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 Managed 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 the funds.
In lieu of selecting broker-dealers to execute transactions for the
Managed Fund, the Fund Manager may execute such transactions for the
Managed Fund provided that it "steps-out" such transactions to the
broker-dealers selected by the Fund Manager. A step-out is a service
provided by the New York Stock Exchange and other markets which allows the
Fund Manager to provide the Managed Fund with the benefit of the Fund
Manager's execution capabilities at no additional charge and then transfer
or step-
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out the confirmation and settlement responsibilities of such transactions
to the broker-dealer(s) selected by the Fund Manager. In connection with a
step-out, transaction charges shall be paid by the Managed Fund to the
broker-dealers selected by the Fund Manager and not to the Fund Manager.
In addition to selecting brokers or dealers to execute transactions
for the Managed Fund, the Fund Manager may, subject to obtaining best
execution, also act as a broker for the Managed Fund from time to time at
rates not exceeding the usual and customary broker's commission. Under
Federal law, the Fund Manager must obtain the Fund's and the Adviser's
consent to effect agency cross transactions for the Managed Fund, which
consent is hereby granted. The Fund Manager represents, warrants and
covenants that all agency cross transactions for the Managed Fund will be
effected by the Fund Manager strictly in accordance with Rule 206(3)-2
under the Investment Advisers Act of 1940. An agency cross transaction is
where the Fund Manager purchases or sells securities from or to a
non-managed account on behalf of a client's managed account. Pursuant to
this consent, the Fund Manager will only effect an agency cross transaction
for the Managed Fund with a non-managed account. When the Fund Manager
crosses transactions in connection with a step-out, the Fund Manager will
receive a commission from the transaction only with respect to the
non-managed account and will not receive a commission from the transaction
with respect to the Managed Fund. In an agency cross transaction where the
Fund Manager acts as broker for the Managed Fund, the Fund Manager receives
commissions from both sides of the trade and there is a potentially
conflicting division of loyalties and responsibilities. However, as both
sides to the trade want to execute the transaction at the best price
without moving the market price in either direction, the Fund Manager
believes that an agency cross transaction will aid both sides to the trade
in obtaining the best price for the trade. The fund or the adviser may
revoke this consent by written notice to the fund manager at any time.
(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 December 31, 2000
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 of
interested persons of any such party, or by vote of a majority of the
outstanding voting securities of the 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, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, damages or expense
and reasonable counsel fees incurred in connection therewith), arising by
reason of any matter to which this Fund Manager's Agreement relates.
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
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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, 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 Paragraph 13.
(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) Unless otherwise permitted, all notices, instructions and advice
with respect to security transactions or any other matters contemplated by
this Agreement shall be deemed duly given when received in writing:
by the Fund Manager: Xxxxxxx X. Xxxxxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
by the Adviser: Enterprise Capital Management, Inc.
0000 Xxxxxxxxx Xxxx, X.X., Xxxxx 000
Xxxxxxx, XX 00000-0000
by the Fund: The Enterprise Group of Funds, Inc.
c/o Enterprise Capital Management, Inc.
0000 Xxxxxxxxx Xxxx, X.X., Xxxxx 000
Xxxxxxx, XX 00000-0000
or by such other person or persons at such address or addresses as shall be
specified by the applicable party, in each case, in a notice similarly
given. Each party may rely upon any notice or other communication from the
other reasonably believed by it to be genuine.
(18) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original and all of which, when taken
together, shall constitute one and the same agreement.
(19) This Agreement constitutes the entire agreement between the Fund
Manager, the Adviser and the Fund relating to the Managed Fund.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their duly authorized officers and their corporate seals hereunder duly affixed
and attested, as of the date first above written.
(SEAL) THE ENTERPRISE GROUP OF FUNDS, INC.
ATTEST: /s/ XXXXXXXXX X. XXXXXXXXX By: /s/ XXXXXX XXXXXX
----------------------------------------- -------------------------------------------------
Secretary Xxxxxx Xxxxxx, Chairman, President
and Chief Executive Officer
(SEAL) ENTERPRISE CAPITAL MANAGEMENT, INC.
ATTEST: /s/ XXXXXXXXX X. XXXXXXXXX By: /s/ XXXXXX XXXXXX
----------------------------------------- -------------------------------------------------
Secretary Xxxxxx Xxxxxx, Chairman, President
and Chief Executive Officer
(SEAL) XXXXXXX X. XXXXXXXXX & CO., INC.
ATTEST: /s/ XXXX XXXXX XXXX By: /s/ XXXXX XXXXXX
----------------------------------------- -------------------------------------------------
Title: SVP & Secretary Name: Xxxxx Xxxxxx
Title: President
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