Exhibit 5
THE OLSTEIN FUNDS
THE OLSTEIN FINANCIAL ALERT FUND
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between THE OLSTEIN FUNDS, a Delaware business
trust (the "Trust"), on behalf of THE OLSTEIN FINANCIAL ALERT FUND (the
"Fund"), and XXXXXXX & ASSOCIATES, L.P., a New York limited partnership (the
"Investment Manager").
W I T N E S S E T H:
WHEREAS, the Trust has been organized and operates as an investment
company registered under the Investment Company Act of 1940 (the "1940 Act")
and engages in the business of investing and reinvesting its assets in
securities; and
WHEREAS, the Investment Manager is a registered Investment Adviser under
the Investment Advisers Act of 1940 (the "Advisers Act") and engages in the
business of providing investment management services; and
WHEREAS, the Trust has selected the Investment Manager to serve as the
investment adviser for the Fund effective as of the date of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Trust on behalf of the Fund hereby employs the Investment
Manager to manage the investment and reinvestment of the Fund's
assets and to administer its affairs, subject to the direction of
the Board of Trustees and officers of the Trust, for the period and
on the terms hereinafter set forth. The Investment Manager hereby
accepts such employment and agrees during such period to render the
services and assume the obligations herein set forth for the
compensation herein provided. The Investment Manager shall for all
purposes herein, be deemed to be an independent contractor, and
shall, unless otherwise expressly provided and authorized, have no
authority to act for or to represent the Trust or the Fund in any
way, or in any way be deemed an agent of the Trust or the Fund. The
Investment Manager shall regularly make decisions as to what
securities to purchase and sell on behalf of the Fund and shall
record and implement such decisions and shall furnish the Board of
Trustees of the Trust with such information and reports regarding
the Fund's investments as the Investment Manager deems appropriate
or as the Trustees of the Trust may reasonably request. Subject to
compliance with the requirements of the 1940 Act, the Investment
Manager may retain as a sub-adviser to the Fund, at the Investment
Manager's own expense, any investment adviser registered under the
Advisers Act.
2. The Fund shall conduct its own business and affairs and shall bear
the expenses and salaries necessary and incidental thereto
including, but not in limitation of the foregoing, the costs
incurred in: the maintenance of its corporate existence; the
maintenance of its own books, records and procedures; dealing with
its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation
of share certificates; reports and notices to shareholders; calling
and holding of shareholders' meetings; miscellaneous office
expenses; brokerage commissions; custodian fees; legal and
accounting fees; and taxes. Partners and employees of the
Investment Manager may be trustees, directors, officers and
employees of the funds of which the Investment manager serves as
investment adviser. Partners and employees of the Investment
Manager who are trustees, officers and/or employees of the Trust
shall not receive any compensation from the Trust for acting in such
dual capacity.
In the conduct of the respective businesses of the parties hereto
and in the performance of this Agreement, the Trust may obtain
office space and facilities from the Investment Manager and will
reimburse the Investment Manager for its rent or other expenses
thereby incurred.
3. (a) The Investment Manager shall place and execute Fund orders
for the purchase and sale of portfolio securities with broker-
dealers. Subject to the obtaining the best available prices
and execution, the Investment Manager is authorized to place
orders for the purchase and sale of portfolio securities for
the Fund with such broker-dealers as it may select from time to
time. Subject to subparagraph (b) below, the Investment
Manager is also authorized to place transactions with brokers
who provide research or statistical information or analyses to
the Fund, to the Investment Manager, or to any other client for
which the Investment Manager provides investment advisory
services. Subject to obtaining the best available prices and
execution, the Investment Manager may also place brokerage
transactions with broker-dealers who sell shares of the Fund.
Broker-dealers who sell shares of the Fund shall only receive
orders for the purchase or sale of portfolio securities to the
extent that the placing of such orders is in compliance with
the Rules of the U.S. Securities and Exchange Commission and
the National Association of Securities Dealers, Inc. The
Investment Manager also agrees that it will cooperate with the
Trust to execute instructions that brokerage transactions be
allocated to brokers or dealers who provide benefits directly
to the Fund.
(b) Notwithstanding the provisions of subparagraph (a) above
and subject to such policies and procedures as may be adopted
by the Board of Trustees and officers of the Trust, the
Investment Manager is authorized to pay a member of an
exchange, broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer
would have charged for effecting that transaction, in such
instances where the Investment Manager has determined in good
faith that such amount of commission was reasonable in relation
to the value of the brokerage and research services provided
by such member, broker or dealer, viewed in terms of either
that particular transaction or the Investment Manager's
overall responsibilities with respect to the Fund and to other
funds for which the Investment Manager exercises investment
discretion.
(c) The Investment Manager is authorized to direct portfolio
transactions to a broker which is an affiliated person of the
Investment Manager or the Fund in accordance with such -4-
standards and procedures as may be approved by the Board in
accordance with 1940 Act Rule 17e-1, or other rules promulgated
by the Securities and Exchange Commission. Any transaction
placed with an affiliated broker must (i) be placed at best
price and execution, and (ii) may not be a principal
transaction.
4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Trust
on behalf of the Fund shall pay to the Investment Manager from the
Fund's assets an annual fee equal to 1.00% of the daily average net
assets of the Fund, payable on a monthly basis, subject to reduction
to the extent necessary to comply with the most stringent limits
prescribed by any state in which the Fund's shares are offered for
sale.
If this Agreement is terminated prior to the end of any calendar
month, the management fee shall be prorated for the portion of any
month in which this Agreement is in effect according to the
proportion which the number of calendar days, during which the
Agreement is in effect, bears to the number of calendar days in the
month, and shall be payable within 10 days after the date of
termination.
5. The services to be rendered by the Investment Manager to the Trust
on behalf of the Fund under the provisions of this Agreement are not
to be deemed to be exclusive, and the Investment Manager shall be
free to render similar or different services to others so long as
its ability to render the services provided for in this Agreement
shall not be impaired thereby.
6. The Investment Manager, its partners, employees, and agents may
engage in other businesses, may render investment advisory services
to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting
services to the Trust on behalf of the Fund or to any other
investment company, corporation, association, firm or individual.
In accordance with the Investment Advisers Act of 1940, if there is
a change in the membership of the Investment Manager, which is a
partnership, the Investment Manager shall, within a reasonable time
after such change, notify the Trust of the change.
7. In the absence of willful misfeasance, bad faith, gross negligence,
or a reckless disregard of the performance of duties of the
Investment Manager to the Fund, the Investment Manager shall not be
subject to liabilities to the Fund or to any shareholder of the Fund
for any action or omission in the course of, or connected with,
rendering services hereunder or for any: losses that may be
sustained in the purchase, holding or sale of any security, or
otherwise.
8. In accordance with the Agreement and Declaration of Trust of the
Trust, in the event that the Investment Manager ceases to be the
Fund's investment adviser for any reason, the Trust will (unless the
Investment Manager otherwise agrees in writing) promptly take all
necessary steps to propose to the Fund's shareholders at the next
regular meeting that the Fund change to a name not including the
words "Olstein" or "Olstein Financial Alert."
9. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the
outstanding voting securities of the Fund. It shall continue in
effect for a period of two years and may be renewed thereafter only
so long as such renewal and continuance is specifically approved at
least annually by the Board of Trustees or by vote of a majority of
the outstanding voting securities of the Fund and only if the terms
and the renewal hereof have been approved by the vote of a majority
of the Trustees of the Trust who are not parties hereto or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. No amendment to
this Agreement shall be effective unless the terms thereof have been
approved by the vote of a majority of the outstanding voting
securities of the Fund and by the vote of a majority of Trustees of
the Trust who are not parties to the Agreement or interested persons
of any such party, cast in person at a meeting called for the
purpose of voting on such approval. Notwithstanding the foregoing,
this Agreement may be terminated by the Trust at any time, without
the payment of a penalty, on sixty days' written notice to the
Investment Manager of the Trust's intention to do so, pursuant to
action by the Board of Trustees of the Trust or pursuant to a vote
of a majority of the outstanding voting securities of the Fund. The
Investment Manager may terminate this Agreement at any time, without
the payment, of penalty on sixty days' written notice to the Trust
of its intention to do so. Upon termination of this Agreement, the
obligations of all the parties hereunder shall cease and terminate
as of the date of such termination, except for any obligation to
respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Trust to pay to
the Investment Manager the fee provided in Paragraph 4 hereof,
prorated to the date of termination. This Agreement shall
automatically terminate in the event of its assignment.
10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities"; "interested persons"; and
"assignment" shall have the meaning defined in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals
to be affixed and duly attested and their presents to be signed by their duly
authorized officers this 18th day of August, 1995.
Attest: THE OLSTEIN FUNDS
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, President
Attest: Xxxxxxx & Associates, L.P.
By: /s/ Olstein, Inc.
General Partner
____________________ By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, President
