CAPSTONE CHRISTIAN VALUES FUND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, effective commencing on ______________, 2000, between
CAPSTONE ASSET MANAGEMENT COMPANY (the "Adviser") and CAPSTONE CHRISTIAN VALUES
FUND, INC. (the "Fund") with respect to its Series, the Christian Stewardship
Bond Index Fund, the Christian Stewardship Large Cap Equity Index Fund, the
Christian Stewardship Small Cap Equity Index Fund and the Christian Stewardship
International Index Fund (the "Series").
WHEREAS, the Fund is a Maryland corporation organized under Articles of
Incorporation dated May 11, 1992, (the "Articles") and is authorized to divide
and classify its shares of beneficial interest into separate series of shares
and is registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end, diversified management investment company;
WHEREAS, the Series are separate series of the Fund's shares of
beneficial interest;
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 ("Advisers Act");
WHEREAS, the Fund wishes to retain the Adviser to render investment
advisory services to the Series and the Adviser is willing to furnish such
services to the Series;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Fund and the Adviser as follows:
1. Appointment. The Fund hereby appoints the Adviser to act as
investment adviser to the Series for the periods and on the terms set forth in
this Agreement. The Adviser accepts such appointment and agrees to furnish the
services herein set forth, for the compensation herein provided.
2. Investment Advisory Duties. Subject to the supervision of the
Directors of the Fund, the Adviser will (a) provide a program of continuous
investment management for the Series in accordance with the Series' investment
objectives, policies and limitations as stated in the Fund's combined prospectus
and Statement of Additional Information included as part of the Fund's
Registration Statement filed with the Securities and Exchange Commission, as
they may be amended from time to time, copies of which shall be provided to the
Adviser by the Fund; (b) make investment decisions for the Series; and (c) place
orders to purchase and sell securities for the Series.
In performing its investment management services to the Series
hereunder, the Adviser will provide the Series with ongoing investment guidance
and policy direction, including oral and written research, analysis, advice,
statistical and economic data and judgments regarding individual investments,
general economic conditions and trends and long-range investment policy. The
Adviser will determine the securities, instruments, currencies, repurchase
agreements, futures, options and other investments and techniques that the
Series will purchase, sell, enter into or use, and will provide an ongoing
evaluation of the Series' portfolios. The Adviser will determine what portion of
the Series' portfolios shall be invested in securities and other assets and what
portion, if any, should be held uninvested.
The Adviser further agrees that it will:
(a) comply with the 1940 Act and all rules and regulations thereunder,
the Advisers Act, the Internal Revenue Code (the "Code") and all
other applicable federal and state laws and regulations, and with
any applicable procedures adopted by the Directors;
(b) use reasonable efforts to manage the Series so that the Fund will
qualify, and continue to qualify, as a regulated investment
company under Subchapter M of the Code and regulations issued
thereunder;
(c) place orders pursuant to its investment determinations for the
Series directly with the issuer, or with any broker or dealer, in
accordance with applicable policies expressed in the Fund's
combined prospectus and/or Statement of Additional Information and
in accordance with applicable legal requirements;
(d) furnish to the Series whatever statistical information the Series
may reasonably request with respect to the Series' assets or
contemplated investments. In addition, the Adviser will keep the
Series and the Directors informed of developments materially
affecting the Series' portfolios and shall, on the Adviser's own
initiative, furnish to the Series and the Fund from time to time
whatever information the Adviser believes appropriate for this
purpose;
(e) make available to the Series' administrator, Capstone Asset
Management Company (the "Administrator"), and the Series, promptly
upon their request, copies of all its investment records and
ledgers with respect to the Series to assist the Administrator and
the Series in their compliance with applicable laws and
regulations. The Adviser will furnish the Directors with such
periodic and special reports regarding the Series as they may
reasonably request;
(f) immediately notify the Fund in the event that the Adviser or any
of its affiliates: (1) becomes subject to a statutory
disqualification that prevents the Adviser from serving as
investment adviser pursuant to this Agreement; or (2) has been the
subject of an administrative proceeding or enforcement action by
the Securities and Exchange Commission ("SEC") or other regulatory
authority. The Adviser further agrees to notify the Fund
immediately of any material fact known to the Adviser respecting
or relating to the Adviser that is not contained in the Fund's
Registration Statement with respect to the Series, or any
amendment or supplement thereto, and of any statement contained
therein that becomes untrue in any material request.
3. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 3, the Adviser shall pay the compensation and expenses
of all its directors, officers and employees who serve as officers and executive
employees of the Fund (including the Fund's share of payroll taxes) and of all
Directors of the Fund who are interested persons of the Adviser, and the Adviser
shall make available, without expense to the Fund or the Series, the service of
its directors, officers and employees who may be duly elected officers of the
Fund, subject to their individual consent to serve and to any limitations
imposed by law.
The Adviser shall not be required to pay any expenses of the Fund or
the Series other than those specifically allocated to the Adviser in this
section 3. In particular, but without limiting the generality of the foregoing,
the Adviser shall not be responsible, except to the extent of the reasonable
compensation of such of the Fund's employees as are directors, officers or
employees of the Adviser whose services may be involved, for the following
expenses of the Fund or the Series: organization and certain offering expenses
of the Series (including out-of-pocket expenses, but not including the Adviser's
overhead and employee costs); fees payable to the Adviser and to any other Fund
advisers or consultants; legal expenses; auditing and accounting expenses;
interest expenses; telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; fees, dues and expenses incurred by or
with respect to the Series in connection with membership in investment company
trade organizations; cost of insurance relating to fidelity coverage for the
Fund's officers and employees, fees and expenses of the Series' Administrator or
of any custodian, subcustodian, transfer agent, registrar, or dividend
disbursing agent of the Fund on behalf of the Series; payments for portfolio
pricing or valuation services to pricing agents, accountants, bankers and other
specialists; expenses in connection with the issuance, offering, distribution or
sale of securities issued by the Series; expenses relating to investor and
public relations; expenses of registering and qualifying shares of the Series
for sale; freight, insurance and other charges in connection with the shipment
of the Series' portfolio securities; brokerage commissions or other costs of
acquiring or disposing of any portfolio securities or other assets of the
Series, or of entering into other transactions or engaging in any investment
practices with respect to the Fund; expenses of printing and distributing
prospectuses, Statements of Additional Information, reports, notices and
dividends to shareholders; costs of stationery; any litigation expenses; costs
of shareholders' and other meetings; the compensation and all expenses
(specifically including travel expenses relating to the Fund business) of
Directors, officers and employees of the Fund who are not interested persons of
the Adviser or Administrator; and travel expenses (or an appropriate portion
thereof) of Directors and officers of the Fund who are directors, officers or
employees of the Adviser or the Administrator to the extent that such expenses
relate to attendance at meetings of the Board of Directors of the Fund or any
committees thereof or advisers thereto.
The Adviser shall not be required to pay expenses of any activity which
is primarily intended to result in sales of shares of the Series if and to the
extent that (i) such expenses are assumed or required to be borne by the Series'
principal underwriter or some other party, or (ii) the Fund on behalf of the
Series shall have adopted a plan in conformity with Rule 12b-1 under the 1940
Act providing that the Series (or some other party) shall assume some or all of
such expenses. The Adviser shall be required to pay such of the foregoing sales
expenses as are not assumed or required to be paid by the principal underwriter
or some other party or are not permitted to be paid by the Series (or some other
party) pursuant to such a plan.
4. Compensation. As compensation for the services provided and expenses
assumed by the Adviser under this Agreement, each Series will pay the Adviser at
the end of each calendar month an advisory fee computed daily at the following
rates based on the average net assets of each Series:
Name of Series Fee
Each of Christian Stewardship Bond Index Fund,
Christian Stewardship Large Cap Equity Index Fund, 0.15% of the first $500 million
Christian Stewardship Small Cap Equity Index Fund, 0.125% of the next $500 million
Christian Stewardship International Index Fund 0.10% of assets over $1 billion
The "average daily net assets" of a Fund shall mean the average of the values
placed on the Fund's net assets as of 4:00 p.m. (New York time) on each day on
which the net asset value of the Fund is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines
the value of its net assets as of some other time on each business day, as of
such other time. The value of net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Articles and the Registration
Statement. If, pursuant to such provisions, the determination of net asset value
is suspended for any particular business day, then for the purposes of this
section 4, 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 the New York Stock
Exchange, or as of such other time as the value of the net assets of the Fund's
portfolio may lawfully be determined, on that day. If the determination of the
net asset value of the shares of the Fund has been so suspended for a period
including any month end when the Adviser's compensation is payable pursuant to
this section, then the Adviser's compensation payable at the end of 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). If the Fund determines
the value of the net assets of its portfolio more than once on any day, then the
last such determination thereof on that day shall be deemed to be the sole
determination thereof on that day for the purposes of this section 4.
5. Books and Records. The Adviser agrees to maintain such books and
records with respect to its services to the Fund on behalf of the Series as are
required by Section 31 under the 1940 Act, and rules adopted thereunder, and by
other applicable legal provisions, and to preserve such records for the periods
and in the manner required by that Section, and those rules and legal
provisions. The Adviser also agrees that records it maintains and preserves
pursuant to Rules 31a-1 and Rule 31a-2 under the 1940 Act and otherwise in
connection with its services hereunder are the property of the Fund and will be
surrendered promptly to the Fund upon its request. And the Adviser further
agrees that it will furnish to regulatory authorities having the requisite
authority any information or reports in connection with its services hereunder
which may be requested in order to determine whether the operations of the Fund
or the Series are being conducted in accordance with applicable laws and
regulations.
6. Standard of Care and Limitation of Liability. The Adviser shall
exercise its best judgment in rendering the services provided by it under this
Agreement. The Adviser shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Fund or the Series in connection with the
matters to which this Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect the Adviser against any
liability to the Fund, the Series or to holders of the Series' shares to which
the Adviser would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or by
reason of the Adviser's reckless disregard of its obligations and duties under
this Agreement.
7. Services Not Exclusive. It is understood that the services of the
Adviser are not exclusive, and nothing in this Agreement shall prevent the
Adviser from providing similar services to other investment companies (whether
or not their investment objectives and policies are similar to those of the
Series) or from engaging in other activities, provided such other services and
activities do not, during the term of this Agreement, interfere in a material
manner with the Adviser's ability to meet its obligations to the Series and to
the Fund hereunder. When the Adviser recommends the purchase or sale of a
security for other investment companies and other clients, and at the same time
the Adviser recommends the purchase or sale of the same security for a Fund, it
is understood that in light of its fiduciary duty to the Fund on behalf of the
Series, such transactions will be executed on a basis that is fair and equitable
to the Fund. In connection with purchases or sales of portfolio securities for
the account of the Series, neither the Adviser nor any of its directors,
officers or employees shall act as a principal or agent or receive any
commission. If the Adviser provides any advice to its clients concerning the
shares of the Series, the Adviser shall act solely as investment counsel for
such clients and not in any way on behalf of the Series.
8. Duration and Termination. This Agreement shall continue with respect
to each Series until ___________, 2002, and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved with respect to each Series at least annually by (i) the
Directors or (ii) a vote of a "majority" (as defined in the 0000 Xxx) of each
Series' outstanding voting securities (as defined in the 1940 Act), provided
that in either event the continuance is also approved by a majority of the
Directors who are not "interested persons" (as defined in the 0000 Xxx) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. Notwithstanding the foregoing, this
Agreement may be terminated with respect to any or all Series: (a) at any time
without penalty by the Fund upon the vote of a majority of the Directors or by
vote of the majority of each affected Series' outstanding voting securities,
upon sixty (60) days' written notice to the Adviser or (b) by the Adviser at any
time without penalty, upon ninety (90) days' written notice to the Fund. This
Agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act).
9. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
with respect to a Series until approved by an affirmative vote of (i) a majority
of the outstanding voting securities of that Series, and (ii) a majority of the
Directors who are not interested persons of any part to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval, if such
approval is required by applicable law.
10. Miscellaneous.
(a) This Agreement shall be governed by the laws of the State of
Maryland, provided that nothing herein shall be construed in a
manner inconsistent with the 1940 Act, the Advisers Act, or rules
or orders of the SEC thereunder.
(b) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
(c) 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 hereby and, to this extent,
the provisions of this Agreement shall be deemed to be severable.
(d) Nothing herein shall be construed as constituting the Adviser as
an agent of the Fund or the Series.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of _________________, 2000.
CAPSTONE CHRISTIAN VALUES FUND, INC.
By __________________________________
President
CAPSTONE ASSET MANAGEMENT COMPANY
By ___________________________________
President
