Exhibit 5(v)
MENTOR FUNDS
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
This INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT, made this 1st day of
February, 1998 by and between MENTOR FUNDS, a Massachusetts business trust (the
"Trust"), and MENTOR INVESTMENT ADVISORS, LLC, a Virginia limited liability
company (the "Adviser").
RECITALS OF THE PARTIES
A. The Trust is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940 (the "1940 Act") and
has registered the shares of beneficial interest of Mentor Growth Portfolio, a
series of shares of beneficial interest of the Trust (the "Portfolio"), for sale
to the public under the Securities Act of 1933 and various state securities
laws; and
B. The Trust, on behalf of the Portfolio, wishes to retain the Adviser
to provide investment advisory and management services to the Portfolio; and
C. The Adviser is willing to furnish such services on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and mutual covenants
herein contained, it is agreed as follows:
1. Information Furnished. The Trust, on behalf of the Portfolio, shall
at all times keep the Adviser fully informed with regard to the securities owned
by the Portfolio, its funds available, or to become available, for investment,
and generally as to its investments and investment program. It shall furnish the
Adviser with such other documents and information with regard to its investments
and investment program as the Trustees may from time to time reasonably request.
2. Research, Purchase, Sale, etc. of Securities.
(a) Subject to the direction and control of the Trustees of
the Trust, the Adviser shall regularly provide the Portfolio with investment
research, investment advice, and investment management and supervision and shall
furnish a continuous investment program for the Portfolio's portfolio of
securities consistent with the Portfolio's investment goals and policies. The
Adviser shall determine from time to time what securities will be purchased,
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retained or sold by the Portfolio, and shall implement those decisions, all
subject to the supervision and direction of the Trustees, the provisions of the
Agreement and Declaration of Trust and Bylaws of the Trust, the 1940 Act, the
applicable rules and regulations of the Securities and Exchange Commission, and
other applicable federal and state law, as well as the investment goals and
policies of the Portfolio.
(b) The Trust, on behalf of the Portfolio, hereby authorizes
any entity or person associated with the Adviser which is a member of a national
securities exchange to effect any transaction on the exchange for the account of
the Portfolio which is permitted by Section 11(a) of the Securities Exchange Act
of 1934 and Rule 11a2-2(T) thereunder, and the Portfolio hereby consents to the
retention of compensation for such transactions in accordance with Rule
11a2-2(T)(2)(iv).
3. Management Policies. In providing investment management services to
the Portfolio, the Adviser shall give primary consideration to securing the most
favorable price and efficient execution. In so doing, the Adviser may consider
the financial responsibility, research and investment information and other
services provided by brokers or dealers who may effect or be a party to any such
transaction or other transactions to which other clients of the Adviser may be a
party. The Portfolio recognizes that it is desirable that the Adviser have
access to supplemental investment and market research and security and economic
analyses provided by brokers and that such brokers may execute brokerage
transactions at a higher cost to the Portfolio than may result when allocating
brokerage to other brokers on the basis of seeking the most favorable price and
efficient execution. Therefore, the Adviser is authorized to pay higher
brokerage commissions for the purchase and sale of securities for the Portfolio
to brokers who provide such research and analyses, subject to review by the
Trustees from time to time with respect to the extent and continuation of this
practice. It is understood that the services provided by such brokers may be
useful to the Adviser in connection with its services to other clients.
4. Aggregation of Orders. On occasions when the Adviser deems the
purchase or sale of a security to be in the best interest of the Portfolio as
well as other clients, the Adviser, to the extent permitted by applicable laws
and regulations, may aggregate the securities to be so sold or purchased in
order to obtain the most favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made by the
Adviser in the manner it considers to be the most equitable and consistent with
its fiduciary obligations to the Portfolio and to such other clients.
5. Nonexclusive Agreement.
(a) The Trust understands that the Adviser now acts and will
continue to act as investment adviser to various fiduciary or other managed
accounts, and the Portfolio has no objection to the Adviser's so acting. In
addition, it is understood that the persons employed by the Adviser to assist in
the performance of its duties hereunder will not devote their full
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time to such service and nothing contained herein shall be deemed to limit or
restrict the right of the Adviser or any affiliate of the Adviser to engage in
and devote time and attention to other businesses or to render services of
whatever kind or nature.
(b) The Trust understands that from time to time hereafter the
Adviser may act as investment adviser to one or more other investment companies,
and the Trust has no objection to the Adviser's so acting, provided that when
two or more companies managed by the Adviser have available funds for investment
in money market instruments, available money market investments will be
allocated in accordance with a formula believed to be equitable to each company.
It is recognized that in some cases this procedure may adversely affect the size
of the position obtainable for the Portfolio.
6. Expenses.
(1) The Adviser shall maintain all books and records with
respect to the Portfolio's securities transactions and keep the Portfolio's
books of account in accordance with all applicable federal and state laws and
regulations. The Adviser shall authorize and permit any of its directors,
officers and employees, who may be elected as Trustees or officers of the Trust,
to serve in the capacities in which they are elected.
(2) The Adviser shall bear the cost of rendering the
investment management services to be performed by it under this Agreement, and
shall, at its own expense, pay the compensation of the officers and employees,
if any, of the Trust who are employees of the Adviser.
(3) Other than as herein specifically indicated, the Adviser
shall not be responsible for the Portfolio's expenses. Specifically, the Adviser
will not be responsible, except to the extent of the reasonable compensation of
employees of the Trust whose services may be used by the Adviser hereunder, for
any of the following expenses of the Portfolio, which expenses shall be borne by
the Portfolio: interest, taxes, governmental fees or membership dues; brokerage
commissions or charges, if any; fees of custodians, transfer agents, registrars
or other agents; expense of preparing share certificates; expenses relating to
the redemption or repurchase of the Portfolio's shares; expenses of registering
and qualifying Portfolio shares for sale under applicable federal and state law;
expenses of preparing, setting in print, printing and distributing prospectuses,
reports, notices and dividends to Portfolio shareholders; cost of stationery;
costs of shareholders' and other meetings of the Portfolio; traveling expenses
of officers, Trustees and employees of the Trust, if any; fees of the Trust's
independent Trustees and salaries of any officers or employees who are not
affiliated with the Adviser; and the Portfolio's pro rata portion of premiums on
any fidelity bond and other insurance covering the Trust and its officers and
Trustees.
(4) If, in any fiscal year, the Portfolio's total operating
expenses, exclusive of taxes, interest, brokerage fees, distribution fees and
extraordinary expenses (to the extent permitted by applicable state securities
laws and regulations), exceed the lowest applicable
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annual expense limitation established pursuant to statute or regulation of any
jurisdiction in which shares of the Portfolio are offered for sale, the Adviser
will reimburse (or assume expenses of) the Portfolio for the amount of such
excess. Such expense reimbursement (or assumption), will be estimated,
reconciled and paid (or assumed) on a monthly basis.
7. Salaries. No Trustee, officer or employee of the Trust shall receive
from the Trust any salary or other compensation as such Trustee, officer or
employee while he is at the same time a Trustee, officer or employee of the
Adviser or any affiliated company of the Adviser. This paragraph shall not apply
to Trustees, executive committee members, consultants and other persons who are
not regular members of the Adviser's or any affiliated company's staff.
8. Compensation of Adviser. As compensation for the services performed
and the facilities furnished and expenses assumed by the Adviser, including the
services of any consultants retained by the Adviser, the Portfolio shall pay the
Adviser, as promptly as possible after the last day of each month, a fee,
calculated daily, of .70 of 1% annually of the Portfolio's average daily net
assets. The first payment of the fee shall be made as promptly as possible at
the end of the month next succeeding the effective date of this Agreement, and
shall constitute a full payment of the fee due the Adviser for all services
prior to that date. If this Agreement is terminated as of any date not the last
day of a month, such fee shall be paid as promptly as possible after such date
of termination, shall be based on the average daily net assets of the Portfolio
in that period from the beginning of such month to such date of termination, and
shall be that proportion of such average daily net assets as the number of
business days in such period bears to the number of business days in such month.
The average daily net assets of the Portfolio shall in all cases be based only
on business days and be computed as of the time of the regular close of business
of the New York Stock Exchange, or such other time as may be determined by the
Trustees. Each such payment shall be accompanied by a report of the Trust
prepared either by the Trust or by a reputable firm of independent accountants
which shall show the amount properly payable to the Adviser under this Agreement
and the detailed computation thereof.
9. Responsibility of Adviser. The Adviser assumes no responsibility
under this Agreement other than to render the services called for hereunder, in
good faith, and shall not be responsible for any action of the Trustees in
following or declining to follow any advice or recommendation of the Adviser;
provided, however, that nothing in this Agreement shall protect the Adviser
against any liability to the Portfolio or its shareholders to which it would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties hereunder.
10. Limitation of Employment. Nothing in this Agreement shall limit or
restrict the right of any director, officer, or employee of the Adviser who may
also be a Trustee, officer, or employee of the Trust, to engage in any other
business or to devote his time and attention in part to the management or other
aspects of any other business whether of a similar nature or a dissimilar
nature, nor to limit or restrict the right of the Adviser to engage in any other
business or to render services of any kind, including investment advisory and
management services, to any other corporation, firm, individual or association.
11. Definitions. As used in this Agreement, the terms "securities," and
"net assets," shall have the meanings ascribed or attributed to them in the
Registration Statement of the Trust on Form N-1A; and the terms "assignment,"
"interested person," and "majority of the outstanding voting securities" shall
have the meanings given to them by Section 2(a) of the 1940 Act, subject to such
exemptions as may be granted by the Securities and Exchange Commission by any
rule, regulation or order.
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12. Term. Subject to the provisions of paragraphs 13 and 14 below, this
Agreement will remain in effect for two years from the date of its execution and
from year to year thereafter, provided that the Adviser does not notify the
Trust in writing at least sixty (60) days prior to the expiration date in any
year that it does not wish continuance of the Agreement for an additional year.
13. Termination. This Agreement shall terminate automatically in the
event of its assignment by the Adviser and shall not be assignable by the
Portfolio without the consent of the Adviser. This Agreement may also be
terminated at any time, without the payment of any penalty, by the Trustees or
by vote of a majority of the outstanding voting securities of the Portfolio by
sixty (60) days' written notice addressed to the Adviser at its principal place
of business.
14. Approval of Trustees. This Agreement shall be submitted for
approval to the Trustees annually and shall continue in effect only so long as
specifically approved annually by vote of a majority of the Trustees who are not
parties to this Agreement or interested persons of such parties, cast in person
at a meeting called for that purpose, and either by vote of the holders of a
majority of the outstanding voting securities of the Portfolio or by majority
vote of the Trustees.
15. Agreement and Declaration of Trust. A copy of the Agreement and
Declaration of Trust of the Trust is on file with the Secretary of Sate of The
Commonwealth of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the Trustees of the Trust as Trustees and not
individually and that the obligations of this instrument are not binding upon
any of the Trustees, officers, or shareholders of the Trust but are binding only
upon the assets and property of the Trust.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
MENTOR FUNDS
on behalf of Mentor Growth
Portfolio
By:____________________________
Title:
MENTOR INVESTMENT ADVISORS, LLC
By:____________________________
Title:
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