MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made this day of ________, 1998, between
Dunhill Investment Trust (the "Trust"), a business trust organized under the
laws of the State of Ohio, and Dunhill Investment Advisors, Limited (the
"Manager"), a limited liability company organized under the laws of the State of
Ohio.
WHEREAS, the Trust has been organized to operate as an investment
company registered under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the Trust's shares of beneficial interest are divided into
separate series and each such share of a series represents an undivided interest
in the assets, subject to the liabilities, located to that series, and each
series has separate investment objectives and policies; and
WHEREAS, the Regional Opportunity Fund: Ohio Indiana Kentucky (the
"Fund"), a series of the Trust, has been created for the purpose of investing
and reinvesting its assets in securities pursuant to the investment objectives
and policies as set forth in its registration statement under the Act and the
Securities Act of 1933 ("Registration Statement"), as heretofore amended and
supplemented; and the Trust desires to avail itself of the services,
information, advice, assistance and facilities of a manager and to have a
manager provide or perform for it
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various management, statistical, portfolio adviser selection and other services
for the Fund; and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended;
NOW, THEREFORE, the Trust and Manager agree as follows:
1. Employment of the Manager. The Trust hereby employs the Manager to
manage the investment and reinvestment of the assets of the Fund in the manner
set forth in subparagraph 2A of this Agreement, subject to the direction of the
Board of Trustees and the officers of the Trust, for the period, in the manner,
and on the terms hereinafter set forth. The Manager hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth. The Manager shall for all purposes herein be
deemed to be an independent contractor and shall, except as expressly provided
or authorized (whether herein or otherwise), have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund.
2. Obligation of and Services to be Provided by the Manager. The
Manager undertakes to provide the services hereinafter set forth and to assume
the following obligations:
A. Investment Management Services.
(a) The Manager shall have overall supervisory
responsibility for the general management and
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investment of the assets and portfolio securities of
the Fund subject to and in accordance with the
investment objectives and policies of the Fund, and
any directions which the Trust's Board of Trustees
may issue to the Manager from time to time.
(b) The Manager shall provide overall investment programs
and strategies for the Fund, shall revise such
programs as necessary and shall monitor and report
periodically to the Board of Trustees concerning the
implementation of the programs.
(c) The Manager, with the approval of the Board of
Trustees of the Trust as to particular appointments,
intends to (i) appoint one or more persons or
companies (the "Adviser") and, subject to the terms
and conditions of this Agreement, the Adviser shall
have full investment discretion and shall make all
determinations with respect to the investment of the
Fund's assets and the purchase and sale of portfolio
securities with those assets, and (ii) take such
steps as may be necessary to implement such
appointments. The Manager shall be solely responsible
for paying the fees and expenses of the Adviser for
its services
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to the Fund. The Manager shall not be responsible or
liable for the investment merits of any decision by
the Adviser to purchase, hold or sell a portfolio
security for the Fund.
(d) The Manager shall evaluate advisers and shall
recommend to the Board of Trustees the Adviser which
the Manager believes is best suited to invest the
assets of the Fund; shall monitor and evaluate the
investment performance of the Adviser; shall
recommend changes in the Adviser when appropriate;
shall coordinate the investment activities of the
Adviser to ensure compliance with applicable
restrictions and limitations applicable to the Fund;
and shall compensate the Adviser.
(e) The Manager shall render regular reports to the
Trust, at regular meetings of the Board of Trustees,
of, among other things, the portfolio investments of
the Fund and measurement and analysis of the results
achieved by the Fund.
(f) The Manager shall employ or provide and compensate
the executive, administrative, secretarial and
clerical personnel necessary to provide the services
set forth in this subparagraph 2B, and
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shall bear the expense thereof, except as may
otherwise be provided in Section 4 of this Agreement.
The Manager shall also compensate all officers and
employees of the Trust who are officers or employees
of the Manager.
(g) The Manager shall pay all advertising and promotion
expenses incurred in connection with the sale or
distribution of the Fund's shares to the extent such
expenses are not assumed by the Fund under its Plan
of Distribution.
B. Provision of Information Necessary for Preparation of
Securities Registration Statement, Amendments and Other
Materials.
The Manager will make available and provide financial,
accounting and statistical information required by the Trust
in the preparation of the Registration Statement, reports and
other documents required by federal and state securities laws,
and such information as the Trust may reasonably request for
use in the preparation of the Registration Statement, reports
and other documents required by federal and state securities
laws.
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C. Other Obligations and Services.
The Manager shall make available its officers and employees to
the Board of Trustees and officers of the Trust for
consultation and discussions regarding the administration and
management of the Fund and its investment activities.
3. Execution and Allocation of Portfolio Brokerage Commissions. The
Adviser, subject to the supervision of the Manager and the limitations contained
in this paragraph 3, shall place, on behalf of the Fund, orders for the
execution of portfolio transactions. The Adviser is not authorized by the Fund
to take any action, including the purchase or sale of securities for the Fund's
account, (a) in contravention of (i) any investment restrictions set forth in
the Act and the rules thereunder, (ii) specific instructions adopted by the
Board of Trustees and communicated to the Adviser, (iii) the investment
objectives, policies and restrictions of the Fund as set forth in the
Registration Statement, or (iv) instructions from the Manager communicated to
the Adviser, or (b) which would have the effect of causing the Fund to fail to
qualify or to cease to qualify as a regulated investment company under the
Internal Revenue Code of 1986, as amended, or any succeeding statute.
Subject to the foregoing, the Adviser shall determine the securities to
be purchased or sold by the Fund and will place
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orders with or through such persons, brokers or dealers in conformity with the
policies with respect to brokerage as set forth in the Registration Statement or
as the Board of Trustees may direct from time to time. It is recognized that, in
providing the Fund with investment supervision of the placing of orders for
portfolio transactions, the Adviser will give primary consideration to securing
the best qualitative execution, taking into account such factors as price
(including the applicable brokerage commission or dealer spread), the execution
capability, financial responsibility and responsiveness of the broker or dealer
and the brokerage and research services provided by the broker or dealer.
Consistent with this policy, the Adviser may select brokers or dealers who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the other accounts over which
it exercises investment discretion. It is understood that neither the Trust nor
the Manager nor the Adviser have adopted a formula for allocation of the Fund's
investment transaction business. It is also understood that it is desirable for
the Fund that the Manager and/or the Adviser have access to supplemental
investment and market research and security and economic analyses provided by
certain brokers who may execute brokerage transactions at a higher commission to
the Fund than may result when allocating brokerage to other brokers on the
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basis of seeking the lowest commission. Therefore, the Adviser is authorized to
place orders for the purchase and sale of securities for the Fund with such
certain brokers, subject to review by the Trust's Board of Trustees from time to
time with respect to the extent and continuation of this practice, provided that
the Adviser determines in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or the Adviser's overall
responsibilities with respect to the Fund and to other accounts over which it
exercises investment discretion. It is understood that although the information
may be useful to the Trust, the Manager and the Adviser, it is not possible to
place a dollar value on such information. Consistent with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., and subject to
seeking best qualitative execution, the Adviser may give consideration to sales
of shares of the Fund as a factor in the selection of brokers and dealers to
execute portfolio transactions of the Fund.
On occasions when the Adviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to,
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aggregate the securities to be 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 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 Trust with respect to the Fund and to such other clients.
The Adviser will not execute any portfolio transactions for the Fund's
account with a broker or dealer which is an "affiliated person" (as defined in
the Act) of the Trust, the Manager or the Adviser without the prior approval of
the Manager. The Manager agrees that it will provide the Adviser with a list of
brokers and dealers which are "affiliated persons" of the Trust, the Manager or
the Adviser.
The Manager shall render regular reports to the Trust of the total
brokerage business placed by the Fund and the manner in which the allocation has
been accomplished.
4. Expenses of the Fund. It is understood that the Fund will pay, or
that the Fund will enter into arrangements that require third parties to pay,
all its expenses other than those expressly assumed by the Manager herein, which
expenses payable by the Fund shall include:
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A. Expenses of all audits by independent public accountants;
B. Expenses of transfer agent, dividend disbursing agent,
accounting and pricing agent and shareholder recordkeeping
services;
C. Expenses of custodial services including recordkeeping
services provided by the custodian;
D. Expenses of obtaining security valuation quotations for
calculating the value of the Fund's net assets;
E. Salaries and other compensation of any of its executive
officers and employees, if any, who are not officers,
directors, stockholders or employees of the Manager or the
Adviser;
F. Taxes or governmental fees levied against the Fund;
G. Brokerage fees and commissions in connection with the purchase
and sale of the Fund's portfolio securities;
H. Costs, including the interest expenses, of borrowing money;
I. Costs and/or fees incident to Board of Trustee and shareholder
meetings, the preparation and mailings of prospectuses,
reports and notices to the existing shareholders of the Fund,
the filing of reports with regulatory bodies, the maintenance
of the Trust's existence as a business trust, membership in
investment
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company organizations, and the registration of shares with
federal and state securities authorities;
J. Legal fees, including the legal fees related to the
registration and continued qualification of the Fund's shares
for sale and legal fees arising from litigation to which the
Trust may be a party and indemnification of the Trust's
officers and Trustees with respect thereto;
K. Costs of printing share certificates (in the event such
certificates are issued) representing shares of the Fund;
L. Trustees' fees and expenses of Trustees who are not directors,
officers, employees or stockholders of the Manager, the
Adviser or any of their affiliates; and
M. The Fund's pro rata portion of the fidelity bond required by
Section 17(g) of the Act and other insurance premiums.
5. Activities and Affiliates of the Manager.
A. The services of the Manager hereunder are not to be deemed
exclusive, and the Manager and any of its affiliates shall be
free to render similar services to others. The Manager shall
use the same skill and care in the management of the Fund's
assets as it uses in the administration of other accounts to
which it
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provides asset management, consulting and portfolio manager
selection services, but shall not be obligated to give the
Fund more favorable or preferential treatment vis-a-vis its
other clients.
B. Subject to and in accordance with the Declaration of Trust and
Bylaws of the Trust and to Section 10(a) of the Act, it is
understood that Trustees, officers and agents of the Trust and
shareholders of the Fund are or may be interested in the
Manager or its affiliates as directors, officers, agents or
stockholders of the Manager or its affiliates; that directors,
officers, agents and stockholders of the Manager or its
affiliates are or may be interested in the Trust as Trustees,
officers, agents, shareholders or otherwise; that the Manager
or its affiliates may be interested in the Trust as
shareholders or otherwise; and that the effect of any such
interests shall be governed by said Declaration of Trust,
Bylaws and the Act.
6. Compensation of the Manager. For all services to be rendered and
payments made as provided in this Agreement, the Fund will pay the Manager a
daily fee equal to the annual rate of 1.2% of the value of the daily net assets
of the Fund. Manager's fee shall be payable monthly and shall be due with
respect to any
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month as of the first business day following the end of such month.
The value of the daily net assets of the Fund shall be determined
pursuant to the applicable provisions of the Declaration of Trust and to
resolutions to the Board of Trustees of the Trust. If, pursuant to such
provisions, the determination of net asset value is suspended for any particular
business day, then for the purposes of this paragraph 6, the value of the net
assets of the Fund as last determined shall be deemed to be the value of its net
assets as of the close of business on that day, or as of such other time as the
value of the Fund's net assets may lawfully be determined on that day. If the
determination of the net asset value of the Fund's shares has been suspended for
a period including such month, the Manager's compensation payable for such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
7. Liabilities of the Manager.
The Manager (including its directors, officers, shareholders,
employees, control persons and affiliates of any thereof) shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence
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on the part of the Manager in the performance of its duties or from the reckless
disregard by the Manager of its obligations and duties under this Agreement
("disabling conduct"). However, the Manager will not be indemnified for any
liability unless (1) a final decision is made on the merits by a court or other
body before whom the proceeding was brought that the Manager was not liable by
reason of disabling conduct, or (2) in the absence of such a decision, a
reasonable determination is made, based upon a review of the facts, that the
Manager was not liable by reason of disabling conduct, by (a) the vote of a
majority of a quorum of Trustees who are neither "interested persons" of the
Trust as defined in the Act nor parties to the proceeding ("disinterested,
non-party trustees"), or (b) an independent legal counsel in a written opinion.
The Fund will advance attorneys' fees or other expenses incurred by the Manager
in defending a proceeding, upon the undertaking by or on behalf of the Manager
to repay the advance unless it is ultimately determined that the Manager is
entitled to indemnification, so long as the Manager meets at least one of the
following as a condition to the advance: (1) the Manager shall provide a
security for its undertaking, (2) the Fund shall be insured against losses
arising by reason of any lawful advances, or (3) a majority of a quorum of the
disinterested, non-party trustees of the Trust, or an independent legal counsel
in a written opinion, shall determine, based on a
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review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Manager ultimately will be found
entitled to indemnification. Any person employed by the Manager who may also be
or become an employee of the Trust shall be deemed, when acting within the scope
of his employment by the Trust, to be acting in such employment solely for the
Trust and not as the Manager's employee or agent.
8. Renewal and Termination.
A. This Agreement shall become effective upon its execution,
shall remain in force for an initial term of two (2) years
from such date and from year to year thereafter, but only so
long as such continuance is specifically approved at least
annually by the vote of a majority of the Trustees who are not
interested persons of the Trust, the Manager or the Adviser,
cast in person at a meeting called for the purpose of voting
on such approval and by a vote of the Board of Trustees or of
a majority of the outstanding voting securities. The aforesaid
provision that this Agreement may be continued "annually"
shall be construed in a manner consistent with the Act and the
rules and regulations thereunder.
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B. This Agreement:
(a) may at any time be terminated without the payment of
any penalty either by vote of the Board of Trustees
of the Trust or by vote of a majority of the
outstanding voting securities of the Fund, on sixty
(60) days' written notice to the Manager;
(b) shall immediately terminate in the event of its
assignment; and
(c) may be terminated by the Manager on sixty (60) days'
written notice to the Trust.
C. As used in this Section 8, the terms "assignment," "interested
person" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.
D. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postpaid, to the other party
to this Agreement at its principal place of business.
9. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
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10. Limitation of Liability. It is expressly agreed that the
obligations of the Fund hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Trust, personally,
but bind only the trust property of the Fund, as provided in the Declaration of
Trust of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and the shareholders of the Fund and
signed by the officers of the Trust, acting as such, and neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officers shall be deemed to have been made by any of them individually
or to impose any liability on any of them personally, but shall bind only the
trust property of the Fund as provided in the Trust's Declaration of Trust.
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, and no amendment of this
Agreement shall be effective until approved by vote of the holders of a majority
of the outstanding voting securities of the Fund and by the Board of Trustees,
including a majority of the Trustees who are not interested persons of the
Manager or of the Trust, cast in person at a meeting called for the purpose of
voting on such approval.
12. Governing Law. To the extent that state law has not been preempted
by the provisions of any law of the United States
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heretofore or hereafter enacted, as the same may be amended from time to time,
this Agreement shall be administered, construed and enforced according to the
laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
DUNHILL INVESTMENT TRUST
ATTEST: By:
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Title: President
DUNHILL INVESTMENT ADVISORS, LIMITED
ATTEST: By:
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Title: President
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