1
EXHIBIT 5
THE KENWOOD FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of January 26, 1996, by and between THE KENWOOD
FUNDS, a Delaware business trust (hereinafter called the "Trust"), and THE
KENWOOD GROUP, INC., an Illinois corporation (hereinafter called the
"Adviser").
W I T N E S S E T H:
In consideration of the mutual covenants hereinafter contained, IT IS
HEREBY AGREED by and between the parties hereto as follows:
1. The Trust, a registered investment company under the
Investment Company Act of 1940 and Regulations thereunder (the "Act"), employs
the Adviser to act as its investment adviser and to manage the investment and
reinvestment of the assets of each series of the Trust (each a "Fund")
identified in a currently effective addendum to this Agreement pursuant to
Section 11 of this Agreement, subject to the supervision of the Board of
Trustees of the Trust and in conformity with the Registration Statement of the
Trust as in effect from time to time for the period and on the terms herein set
forth. The Adviser hereby accepts such employment and agrees during such
period to render the services and to assume the obligations herein set forth
for the compensation herein provided. The Adviser from time to time or at any
time may also be employed by the Board of Trustees to provide administrative,
underwriting or other services to the Trust not directly related to management
of investments upon such terms and conditions, including compensation, as may
be agreed between the parties. The Adviser shall be an independent contractor
and, unless otherwise expressly provided or authorized hereunder or by the
Board of Trustees, shall have no authority to act for or represent the Trust in
any way or otherwise be deemed an agent of the Trust.
2
2. The Adviser shall, at its own expense, furnish suitable office
space in its own offices or in such other place as may be agreed upon from time
to time, and all necessary office facilities, equipment and personnel for
carrying out its duties hereunder and shall arrange, if desired by the Trust,
for members of the Adviser's organization to serve, without compensation from
the Trust, as trustees, officers or agents of the Trust if duly elected or
appointed to such positions by the shareholders or by the Board of Trustees,
subject to their individual consent and to any limitations imposed by law.
3. The Adviser shall be responsible only for those expenses
expressly stated in paragraph 2 to be the responsibility of the Adviser and
shall not be responsible for any other expenses of the Trust including, as
illustrative and without limitation, maintenance and verification of books and
records; filings with state and federal authorities; fees and charges of any
custodian (including charges as custodian and for keeping books and records and
similar services); fees and expenses of trustees, other than trustees described
in paragraph 2; fees and expenses of independent auditors, legal counsel,
transfer agents, dividend disbursing agents, and registrars; costs of and
incident to issuance, redemption and transfer of shares, and distributions to
shareholders (including dividend payments and reinvestment of dividends); costs
of acquiring portfolio securities, including brokers' commissions; interest
charges; taxes and corporate fees payable to any government or governmental
body or agency (including those incurred on account of the registration or
qualification of securities issued by the Trust); dues and other expenses
incident to the Trust's membership in the Investment Company Institute and
other like associations; cost of stock certificates, stockholder meetings,
corporate reports, reports and notices to stockholders; costs of printing,
stationery, and bookkeeping forms; and amounts to be paid by the Trust in
accordance with any Rule 12b-1 Distribution Plan. The Adviser shall be
reimbursed by the Trust on or before the fifteenth day of each calendar month
for all expenses paid or incurred during the preceding
2
3
calendar month by the Adviser for or on behalf of or at the request or
direction of the Trust which are not the responsibility of the Adviser
hereunder.
4. Services of the Adviser herein provided are not to be deemed
exclusive, and the Adviser shall be free to render similar services or other
services to others so long as its services hereunder shall not be impaired
thereby. In the absence of willful misfeasance, bad faith or gross negligence
or reckless disregard of obligations or duties hereunder on the part of the
Adviser, the Adviser shall not be subject to liability to the Trust or any
shareholder of the Trust for any act or omission in the course of, or in
connection with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
5. As compensation for the services rendered and obligations
assumed hereunder by the Adviser, the Trust shall pay to the Adviser out of the
assets of the Fund on or before the fifteenth day of each calendar month a fee
calculated on the basis of average daily net assets at the annual rates for the
Fund set forth in the written addendum to this Agreement executed by both
parties. Such fee shall be computed and accrued daily. Upon termination of
this Agreement as to any Fund before the end of any calendar month, the fee of
that Fund for such period shall be prorated. For purposes of calculating the
fee of the Adviser, the daily value of each Fund's net assets shall be computed
by the same method as the Trust uses to compute the value of net assets in
connection with the determination of the net asset value of each Fund's shares.
6. If the total expenses of a Fund shall exceed any applicable
expense limitation prescribed by any statute or regulatory authority of a
jurisdiction in which a Fund's shares are qualified for offer and sale, the
Adviser shall reimburse that Fund in the amount of such excess to the extent
required by such securities law or regulation.
3
4
7. It is understood that the officers, trustees, agents and
shareholders of the Trust are or may be interested in the Adviser as officers,
employees or agents and that the officers, employees and agents of the Adviser
may be interested in the Trust otherwise than as shareholders.
8. The Trust acknowledges that the use of the term "Kenwood" in
its name is with the permission of the Adviser. If for any reason, the Adviser
no longer acts as the Trust's investment adviser, the Trust shall cease using
the name "Kenwood" upon demand made by the Adviser.
9. This Agreement shall be effective as to a Fund on the date of
initial effectiveness stated in the addendum with respect to that Fund and
continue with respect to the Fund for an initial term specified in such
addendum unless sooner terminated as hereinafter provided. It shall continue
from year to year thereafter as long as its continuance with respect to the
Fund is approved annually in accordance with the Act. This Agreement may be
terminated as to any Fund at any time, without payment of any penalty, by the
Trust's Board of Trustees, or by a vote of the holders of a majority of the
eligible votes of such Fund upon 60 days' prior written notice to the Adviser
and by the Adviser upon 60 days' prior written notice to the Trust. This
Agreement may be amended as to a Fund at anytime by the parties, subject to
approval by the Trust's Board of Trustees and, if required by law or applicable
regulations, the affirmative vote of the holders of a majority of the total
votes entitled to vote thereon. This Agreement shall terminate automatically
in the event of its assignment as defined under the Act except as the
application of such term to a particular transaction is suspended or modified
by reason of any exemption order issued pursuant to the Act or any no-action
letter issued by the staff of the Securities and Exchange Commission.
10. As of the date of this Agreement, the Trust has one series of
shares, the Growth & Income Fund. This Agreement shall apply to and be
effective as to such series and any series hereafter created by the Trust for
which this Agreement has been approved in the manner required by the Act,
provided
4
5
that there is a written addendum to this Agreement executed by both parties
which identifies such series as a Fund to be managed pursuant to this
Agreement, specifies the fee payable to the Adviser with respect to such
series, and states the initial effective and termination dates of this
Agreement with respect to each Fund.
11. The Adviser acknowledges that it has received notice of and
accepts the limitations upon the Trust's liability set forth in Article II of
its Declaration of Trust. The Adviser agrees that the Trust's obligations
hereunder in any case shall be limited to the Trust and its assets and that the
Adviser shall not seek satisfaction of any such obligation from any current or
former shareholder of the Trust nor from any current or former Trustee,
officer, employee or agent of the Trust.
12. This Agreement shall be construed in accordance with
applicable federal law and the laws of the State of Illinois.
IN WITNESS WHEREOF, the parties hereto have caused this Management
Agreement to be executed and made effective as of January 26, 1996.
THE KENWOOD FUNDS
By: /s/Xxxxxxx X. Xxxxxx
-------------------------------
Its: President
THE KENWOOD GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Its: President
5
6
ADDENDUM TO INVESTMENT ADVISORY AGREEMENT
DATED JANUARY 26, 1996 BETWEEN
THE KENWOOD FUNDS AND THE KENWOOD GROUP, INC.
IN RESPECT TO THE GROWTH & INCOME FUND
The Investment Advisory Agreement shall be effective as to the series
designated The Growth & Income Fund on the date that the registration statement
for the shares of this series is effective under the Securities Act of 1933
and shall continue for an initial term ending no more than two years from such
date unless sooner terminated as provided in the Agreement. The compensation
payable out of the assets of the Fund pursuant to the Agreement shall be at the
following annual rates:
Annual Rate Value of Average Daily Net Assets
----------- ---------------------------------
0.75% First $500 Million
0.70% Next $500 Million
0.65% $1 Billion and above
Dated: January 26, 1996
THE KENWOOD FUNDS
By: /s/Xxxxxxx X. Xxxxxx
------------------------------
Its: President
THE KENWOOD GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Its: President
