Exhibit 5(iv)
PERPETUAL GLOBAL PORTFOLIO
of
THE MENTOR FUNDS
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
This Management Contract dated as of February 1, 1998 between THE
MENTOR FUNDS, a Massachusetts business trust (the "Trust"), and MENTOR
PERPETUAL ADVISORS, LLC, a Virginia limited liability company (the
"Manager").
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY THE MANAGER TO TRUST.
(a) The Manager, at its expense, will furnish continuously an
investment program for the series of shares of beneficial interest of the
Trust designated for such purpose by the Trustees (the "Portfolio"), will
determine what investments shall be purchased, held, sold, or exchanged by
each of the Portfolios and what portion, if any, of the assets of a
Portfolio shall be held uninvested and shall, on behalf of each Portfolio,
make changes in the Portfolio's investments. In the performance of its
duties, the Manager will comply with the provisions of the Agreement and
Declaration of Trust and Bylaws of the Trust and each Portfolio's stated
investment objectives, policies, and restrictions, and will use its best
efforts to safeguard and promote the welfare of the Trust and to comply with
other policies which the Trustees may from time to time determine and shall
exercise the same care and diligence expected of the Trustees.
(b) The Manager, at its expense, except as such expense is paid by the
Trust as provided in Section 1(d), will furnish all necessary investment and
related management facilities, including, salaries of personnel, required
for it to execute its duties faithfully. The Manager will pay the
compensation, if any, of certain officers of the Trust carrying out the
investment management and related duties provided for by this Contract.
(c) The Manager, at its expense, shall place all orders for the
purchase and sale of portfolio investments for each Portfolio's account with
brokers or dealers selected by the Manager. In the selection of such brokers
or dealers and the placing of such orders, the Manager shall give primary
consideration to securing for each Portfolio the most favorable price and
execution available, except to the extent it may be permitted to pay higher
brokerage commissions for brokerage and research services as described
below.
In doing so, the Manager, bearing in mind the Trust's best interests at all
times, shall consider all factors it deems relevant, including, by way of
illustration, price, the size of the transaction, the nature of the market
for the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the reputation,
experience, and financial stability of the broker or dealer involved, and
the quality of service rendered by the broker or dealer in other
transactions. Subject to such policies as the Trustees of the Trust may
determine, the Manager shall not be deemed to have acted unlawfully or to
have breached any duty created by this Contract or otherwise solely by
reason of its having caused the Portfolio to pay a broker or dealer that
provides brokerage and research services to the Manager an amount of
commission for effecting a portfolio investment transaction in excess of the
amount of commission that another broker or dealer would have charged for
effecting that transaction, if the Manager determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Manager's overall
responsibilities with respect to the Portfolio and to other clients of the
Manager as to which the Manager exercises investment discretion.
(d) The Trust, on behalf of the Portfolio, hereby authorizes any entity
or person associated with the Manager which is a member of a national
securities exchange to effect any transaction on the exchange for the
account of each Portfolio which is permitted by Section 11(a) of the
Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and each
Portfolio hereby consents to the retention of compensation for such
transactions in accordance with Rule 11a2-2(T)(2)(iv).
(e) The Manager shall not be obligated to pay any expenses of or for
the Trust not expressly assumed by the Manager pursuant to this Section 1
other than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers, and
employees of the Trust may be a shareholder, director, officer, or employee
of, or be otherwise interested in, the Manager, and in any person controlled
by or under common control with the Manager, and that the Manager and any
person controlled by or under common control with the Manager may have an
interest in the Trust. It is also understood that the Manager and any person
controlled by or under common control with the Manager have and may have
advisory, management, service, or other contracts with other organizations
and persons, and may have other interests and business.
3. COMPENSATION TO BE PAID BY THE TRUST TO THE MANAGER.
As compensation for the services performed and the facilities furnished
and expenses assumed by the Manager, including the services of any
consultants retained by the Manager, each Portfolio shall pay the Manager,
as promptly as possible after the last day of each month, a fee, calculated
daily, of 1.10% annually of the Portfolio's average daily net assets up to
$75 million, and 1.00% annually of the Portfolio's average daily net assets
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over $75 million. 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 in respect of the Portfolio, and shall constitute a full payment
of the fee due the Manager 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
Manager under this Agreement and the detailed computation thereof.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment; and this Contract shall not be
amended unless such amendment be approved at a meeting by the affirmative
vote of a majority of the outstanding shares of the Portfolio, and by the
vote, cast in person at a meeting called for the purpose of voting on such
approval, of a majority of the Trustees of the Trust who are not interested
persons of the Trust or of the Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution and shall
remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
(a) Either party hereto may at any time terminate this Contract as to
one or more Portfolios or as to the Trust as a whole by not more than sixty
days nor less than thirty days written notice delivered or mailed by
registered mail, postage prepaid, to the other party, or
(b) If (i) the Trustees of the Trust or the shareholders by the
affirmative vote of a majority of the outstanding shares of any Portfolio,
and (ii) a majority of the Trustees of the Trust who are not interested
persons of the Trust or of the Manager, by vote cast in person at a meeting
called for the purpose of voting on such approval, do not specifically
approve at least annually the continuance of this Contract, then this
Contract shall automatically terminate (as to the Trust as a whole or as to
the affected Portfolio, as the case may be) at the close of business on
January 31, 2000 or the expiration of one year from the effective date of
the last such continuance, whichever is later.
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Action by the Trust under (a) above may be taken either (i) by vote of
a majority of its Trustees, or (ii) by the affirmative vote of a majority of
the outstanding shares of the affected Portfolio.
Termination of this Contract pursuant to this Section 5 will be without
the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority
of the outstanding shares" of a Portfolio means the affirmative vote, at a
duly called and held meeting of such shareholders, (a) of the holders of 67%
or more of the shares of the Portfolio present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Portfolio entitled to vote at such meeting are
present in person or by proxy, or (b) of the holders of more than 50% of the
outstanding shares of the Portfolio entitled to vote at such meeting,
whichever is less.
For the purposes of this Contract, the terms "affiliated person",
"control", "interested person," and "assignment" shall have their respective
meanings defined in the Investment Company Act of 1940, as amended, and the
Rules and Regulations thereunder, subject, however, to such exemptions as
may be granted by the Securities and Exchange Commission under said Act; the
term "specifically approve at least annually" shall be construed in a manner
consistent with the Investment Company Act of 1940, as amended, and the
Rules and Regulations thereunder; and the term "brokerage and research
services" shall have the meaning given in the Securities Exchange Act of
1934, as amended, and the Rules and Regulations thereunder.
7. NON-LIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith, or gross negligence
on the part of the Manager, or reckless disregard of its obligations and
duties hereunder, the Manager shall not be subject to any liability to the
Trust or to any shareholder of the Trust for any act or omission in the
course of, or connected with, rendering services hereunder.
8. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State 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 MENTOR FUNDS and PERPETUAL INVESTMENT ADVISERS,
INC., have each caused this instrument to be signed in duplicate in its
behalf by its President or Vice President thereunto duly authorized, all as
of the day and year first above written.
THE MENTOR FUNDS
on behalf of PERPETUAL GLOBAL PORTFOLIO
By:____________________________
MENTOR PERPETUAL ADVISORS, LLC
By:___________________________
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