EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this _____ day of September, 1996, by and between
DRIEHAUS MUTUAL FUNDS, a Delaware business trust (the "Trust"), and DRIEHAUS
CAPITAL MANAGEMENT, INC., an Illinois corporation (the "Adviser").
WHEREAS, the Trust is an open-end, diversified management investment
company registered under the Investment Company Act of 1940 ("1940 Act"), the
shares of beneficial interest ("Shares") of which are registered under the
Securities Act of 1933;
WHEREAS, the Trust is authorized to issue Shares in separate series or
portfolios with each representing the interests in a separate portfolio of
securities and other assets;
WHEREAS, the Trust currently intends to offer Shares in one portfolio, the
Driehaus International Growth Fund, (the "Initial Portfolio"), together with any
other Trust portfolios which may be established later and served by the Adviser
hereunder, being herein referred to collectively as the "Portfolios" and
individually referred to as a "Portfolio"; and
WHEREAS, the Trust desires at this time to retain the Adviser to render
investment advisory and management services to the Initial Portfolio, and the
Adviser is willing to render such services;
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. Employment; Services To Be Performed. The Trust hereby employs the
Adviser to act as the investment adviser for the Initial Portfolio and for any
other Portfolio that is made subject to this Agreement pursuant to Section 2
hereunder; to manage the investment and reinvestment of the assets of such
Portfolio, to continuously review, supervise and administer the Portfolio's
investment programs; to determine in its discretion the securities to be
purchased or sold and the portion of the Portfolio's assets to be held
uninvested, in accordance with the applicable investment objectives and policies
and limitations; to oversee the performance of the Trust's Administrator,
Transfer Agent and Custodian with respect to the Portfolio; to provide the Trust
with records concerning the Adviser's activities that the Trust is required to
maintain; and to render regular reports to the Trust's officers and Board of
Trustees concerning the Adviser's discharge of the foregoing responsibilities,
all for the period and upon the terms herein set forth. The Adviser shall
discharge the foregoing responsibilities subject to the control of the officers
and the Board of Trustees of the Trust, and in compliance with the objectives,
policies and limitations set forth in the Trust's prospectus, the Agreement and
Declaration of Trust and the By-Laws of the Trust, as may from time to time be
in force, as well as applicable laws and regulations.
The Adviser accepts such employment and agrees during such period to render
such services, to pay all costs and expenses of maintaining the offices of the
Trust, wherever located, and to arrange for payment by the Trust of all expenses
payable by the Trust. The Adviser agrees to permit any of its officers or
employees to serve without compensation as trustees or officers of the Trust if
elected to such positions, and to assume the obligations herein set forth for
the compensation herein provided. It is understood and agreed that the Adviser,
by separate agreements with the Trust, may also serve the Trust in other
capacities. Notwithstanding anything in this Agreement to the contrary, the
Adviser may arrange for some investment advisory services to be provided by
another person at the expense of the Adviser; provided that any such arrangement
shall comply with the Investment Company Act of 1940 ("1940 Act"), including
Section 15 thereof.
2. Additional Portfolios. In the event that the Trust establishes one or
more portfolios other than the Initial Portfolio with respect to which it
desires to retain the Adviser to render investment advisory and management
services hereunder, it shall notify the Adviser in writing. If the Adviser is
willing to render such services, it shall notify the Trust in writing whereupon
such portfolio or portfolios shall become a Portfolio or Portfolios hereunder.
3. Portfolio Transactions. (a) The Adviser shall determine the securities
to be purchased or sold by the Portfolio and will place orders pursuant to its
determinations either directly with the issuer or underwriter or with any
broker-dealer (including, as set forth below, a broker-dealer which is an
affiliated person of the Adviser) who deals in the securities in which the
Portfolio is active. In placing orders with broker-dealers, the Adviser will
attempt to obtain the best combination of price and execution. In seeking to
achieve the best combination of price and execution, an effort shall be made to
evaluate the overall quality and reliability of broker-dealers and the service
they provide, including their general execution capability, reliability and
integrity, willingness to take positions in securities, general operational
capabilities and financial condition. However, the responsibility of the Adviser
to attempt to obtain the best combination of price and execution does not
obligate it to solicit a competitive bid for each transaction, and the Adviser
shall have no obligation to seek the lowest available commission cost to the
Portfolio, so long as the Adviser determines in good faith that the commission
paid to a broker-dealer is reasonable in relation to the value of the brokerage,
research, statistical or other services provided by such broker-dealer to the
Portfolio or the Adviser. The Adviser will not place orders with broker-dealers
which are affiliated persons of the Adviser or the Fund without the prior
written authorization of the Fund, and then will do so subject to (i) the
provisions of Sections 17(e)(2) and Rule 17e-1 and Section 10(f) and Rule 10f-3
under the 1940 Act, Rule 206(3)-2 under the 1940 Advisers Act, Section 11(a)
under the Securities Exchange Act of 1934 (the "1934 Act") and any other
applicable laws or regulations, and (ii) procedures properly adopted by the Fund
with respect thereto.
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(b) On occasions when the Adviser deems the purchase or sale of a security
to be in the best interest of a Portfolio as well as other clients, if any
(including any other Portfolio), or when the Adviser determines to purchase the
same securities for its own account or proprietary accounts, the Adviser, to the
extent permitted by applicable laws and regulations, may aggregate the
securities to be purchased or sold. In such event, allocation of the securities
so purchased or sold will be made by the Adviser in a manner it considers to be
equitable and consistent with its fiduciary obligations to each.
4. Compensation of the Adviser. (a) For the services described in this
Agreement, the Trust will pay to the Adviser a fee, computed daily and payable
monthly, at the annual rate of 1.5% of the average daily net assets of the
Initial Portfolio. For the month and year in which this Agreement becomes
effective or terminates, there shall be an appropriate proration on the basis of
the number of days that the Agreement is in effect during the month and year,
respectively. Such fee is attributable to the Portfolio and if there are
multiple Portfolios of the Trust, the fee shall be a separate obligation of such
Portfolio.
(b) For purposes of computing compensation to the Adviser, the net asset
value for each Portfolio shall be calculated in accordance with the provisions
of the Trust's prospectus or at such other time or times as the trustees may
determine in accordance with the provisions of the 1940 Act. On each day when
net asset value is not calculated, the net asset value of a share of a Portfolio
shall be deemed to be the net asset value of such a share as of the close of
business on the last day on which such calculation was made for the purpose of
the foregoing computations.
5. Expenses. In addition to the fee of the Adviser, the Trust shall
assume and pay any expenses for services rendered by a custodian for the
safekeeping of the Trust's securities or other property, for keeping its books
of account, for any other charges of the custodian. The Trust shall assume and
pay any expenses for services rendered under an administration and accounting
services agreement, including the calculation of the net asset value per share
of the Portfolio. The Adviser shall not be required to pay and the Trust shall
assume and pay the charges and expenses of its operations, including
compensation of the trustees (other than those affiliated with the Adviser),
charges and expenses of independent auditors, of legal counsel, of any transfer
or dividend disbursing agent, and of any registrar of the Trust, costs of
acquiring and disposing of portfolio securities, interest, if any, on
obligations incurred by the Trust, costs of share certificates, if any, and of
reports, membership dues in the Investment Company Institute or any similar
organization, costs of reports and notices to shareholders, stationery,
printing, postage, other like miscellaneous expenses and all taxes and fees
payable to federal, state or other governmental agencies on account of the
registration of securities issued by the Trust, filing of trust documents or
otherwise. The Trust shall not pay or incur any obligation for any expenses for
which the Trust intends to seek reimbursement from the Adviser as herein
provided without first obtaining the written approval of the Adviser.
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6. Affiliations. Subject to applicable statutes and regulations, it is
understood that trustees, officers or agents of the Trust are or may be
interested in the Adviser as officers, directors, agents, shareholders or
otherwise, and that the officers, directors, shareholders and agents of the
Adviser may be interested in the Trust otherwise than as a trustee, officer or
agent.
7. Liability of Adviser. The Adviser shall not be liable for any error of
judgment or of law or for any loss suffered by the Trust in connection with the
matters to which this Agreement relates, except for a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Adviser in
the performance of its obligations and duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
8. Activities of the Adviser. The services of the Adviser to the Trust
under this Agreement are not to be deemed exclusive, and the Adviser shall be
free to render similar services or other services to others including other
separate or pooled accounts managed in a like manner, so long as its services
hereunder are not impaired thereby. It is agreed that the Adviser may use any
supplemental research obtained for the benefit of the Trust in providing
investment advice to its other investment advisory accounts or for managing its
own or its affiliates accounts. The Adviser shall for all purposes herein
provided be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent the Trust in any way or otherwise be deemed an agent of the Trust.
9. Term; Termination; Amendment. (a) This Agreement shall become
effective with respect to the Initial Portfolio on the date first written above
and shall remain in full force until September 30, 1998, unless sooner
terminated as hereinafter provided. This Agreement shall continue in force from
year to year thereafter with respect to each Portfolio, but only as long as such
continuance is specifically approved for each Portfolio at least annually in the
manner required by the 1940 Act and the rules and regulations thereunder;
provided, however, that if the continuation of this Agreement is not approved
for a Portfolio, the Adviser may continue to serve in such capacity for such
Portfolio in the manner and to the extent permitted by the 1940 Act and the
rules and regulations thereunder.
(b) This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Trust or by the Adviser on sixty (60) days written notice to the other
party. The Trust also may effect termination with respect to any Portfolio by
action of the Board of Trustees or by a vote of a majority of the outstanding
voting securities of such Portfolio.
(c) This Agreement may be terminated with respect to any Portfolio at any
time without the payment of any penalty by the Board of Trustees or by vote of a
majority of the outstanding voting securities of such Portfolio in the event
that it shall have been established
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by a court of competent jurisdiction that the Adviser or any officer or director
of the Adviser has taken any action which results in a breach of the covenants
of the Adviser set forth herein.
(d) The terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the 1940 Act and the
rules and regulations thereunder.
(e) Termination of this Agreement shall not affect the right of the
Adviser to receive payments on any unpaid balance of the compensation described
in Section 4 earned prior to such termination.
(f) No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the other
party against which enforcement of the charge, waiver, discharge or termination
is sought.
10. Notice. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notice.
11. Names. The name "Driehaus Mutual Funds" refers to the trust created
and the trustees, as trustees but not individually or personally, acting from
time to time under a Declaration of Trust dated May 31, 1996, as amended, which
is hereby referred to and a copy of which is on file at the principal office of
the Trust. The trustees, officers, employees and agents of the Trust shall not
personally be bound by or liable under any written obligation, contract,
instrument, certificate or other interest or undertaking of the Trust made by
the trustees or by an officer, employee or agent of the Trust, in his or her
capacity as such, nor shall resort be had to their private property for the
satisfaction of any obligation or claim thereunder. All persons dealing with any
series or class of shares of the Trust may enforce claims against the Trust only
against the assets belonging to such series or class.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby. This Agreement will be binding upon and shall inure to the benefit of
the parties hereto and their respective successors.
13. Applicable Law. This Agreement shall be construed in accordance with
applicable federal law and the laws of the State of Illinois (without regard to
principals of conflicts of law).
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IN WITNESS WHEREOF, the Trust and the Adviser have caused this Agreement to
be executed as of the day and year first above written.
DRIEHAUS MUTUAL FUNDS
By:
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ATTEST: Title:
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Title:
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DRIEHAUS CAPITAL MANAGEMENT,
INC.
By:
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ATTEST: Title:
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Title:
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