Exhibit #5
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
This INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT, made this 14th day of
June, 1995, by and between State Bond Income Funds, Inc., a Maryland Corporation
(hereinafter called the "Fund"), and ARM Capital Advisors, Inc., a Delaware
Corporation (hereinafter called the "Manager").
WHEREAS, The Fund is registered as an open-ended, diversified investment
company under the Investment Company Act of 1940, and wishes to retain the
Manager to provide investment advisory services, and certain management and
administrative services to the Fund; and the Manager is willing to furnish such
services on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed as follows:
1. The Fund shall at all times keep the Manager fully informed with regard
to the securities owned by it, its funds available, or to become available, for
investment, and generally as to the condition of its affairs. It shall furnish
the Manager with such other documents and information with regard to its affairs
as the Manager may from time to time reasonably request.
2. Subject to the direction and control of the Fund's Board of Directors,
the Manager shall regularly provide the Fund with investment research, advice,
management and supervision and shall furnish a continuous investment program for
the Fund's portfolio of securities consistent with the Fund's investment goals
and policies. The Manager will determine from time to time what securities will
be purchased, retained or sold by the Fund, and will implement those decisions,
all subject to the provisions of the Fund's Articles of Incorporation and By-
Laws, the Investment Company Act of 1940, applicable rules and regulations of
the Securities and Exchange Commission, and other applicable federal and state
law, and to the investment goals and policies of the Fund. The Manager shall
also provide advice and recommendations with respect to other aspects of the
business and affairs of the Fund, and shall perform such other functions of
management and supervision as may be directed by the Board of Directors of the
Fund.
3. (a) The Manager, at its expense, shall supply the Board of Directors and
officers of the Fund with all statistical information and reports reasonably
required by them and reasonably available to the Manager and shall furnish the
Fund with office facilities, including space, furniture and equipment and all
personnel reasonably necessary for the operation of the Fund to the extent of
services hereby undertaken by the Manager. The Manager shall authorize and
permit any of its directors, officers and employees, who may be elected as
directors or officers of the Fund, to serve in the capacities in which they are
elected.
(b) Other than are herein specifically indicated, the Manager will not
be responsible for the Fund's expenses. Specifically, the Manager will not be
responsible for any of the following expenses of the Fund, which expenses shall
be borne by the Fund: outside legal, auditing and accounting expenses;
bookkeeping, record keeping, and Fund portfolio and Fund shares pricing
expenses; interest, taxes, and governmental fees; expenses incurred in
connection with membership in investment company organizations; brokerage
commissions or charges, if any; fees of custodians, transfer agents, registrars,
accounting services agents, or other agents; expense of preparing share
certificates; expenses relating to the redemption or repurchase of the Fund's
shares; investor services expenses; expenses of registering and qualifying Fund
shares for sale under applicable federal and state law; expenses of preparing,
setting in print, printing and distributing prospectuses, statements of
additional information, reports, notices and dividends to Fund shareholders;
cost of stationery; costs of stockholders and other meetings of the Fund;
traveling expenses of officers, directors and employees of the Fund, if any;
fees of the Fund's independent directors and salaries of any officers or
employees who are not affiliated with the Manager; the Fund's pro rata portion
of premiums on any fidelity bond and insurance covering the Fund; and general
corporate fees and expenses.
4. No director, officer or employee of the Fund shall receive from the Fund
any salary or other compensation as such director, officer or employee while he
is at the same time a director, officer or employee of the Manager. This
paragraph shall not apply to directors, executive committee members, consultants
and other persons who are not regular members of the Manager's staff.
5. 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, the Fund shall pay the Manager, as promptly as possible
after the last day of each month, a monthly fee, calculated daily, of 1/12th of
.65 of 1% (.65 of 1% annually) of the average daily net assets of the Fund. 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 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 Fund 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 Fund shall in all cases be based only on business days
and be computed as of such time as may be determined by the Board of Directors
of the Fund. Each such payment shall be accompanied by a report of the Fund
prepared either by the Fund 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. Upon receipt of each such payment from the
Fund, the Manager shall pay to SBM Financial Services, Inc., the principal
underwriter for the Fund, a portion of the payment received by the Manager equal
to 1/12th of .25 of 1% of the average daily net assets of the Fund for the month
as SBM Financial Services, Inc.'s fee under the Fund's Plan of Distribution.
6. The Manager 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 Board of Directors of the fund in following or
declining to follow any advice or recommendations of the Manager; provided, that
nothing in this Agreement shall protect the Manager against any liability to the
Fund or its stockholders 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.
7. Nothing in the Agreement shall limit or restrict the right of any
director, officer, or employee of the Manager who may also be a director,
officer, or employee of the Fund, 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 Manager 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.
8. As used in this Agreement, 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 Investment Company Act of 1940, subject to
such exemptions as may be granted by the Securities and Exchange Commission by
any rule, regulation or order.
9. This Agreement shall terminate automatically in the event of its
assignment by the Manager and shall not be assignable by the Fund without the
consent of the Manager.
10. This Agreement may be terminated at any time, without the payment of
any penalty, (a) by the Board of Directors of the Fund or by vote of a majority
of the outstanding voting securities of the Fund by sixty days' written notice
addressed to the Manager at its principal place of business; and (b) by the
Manager by sixty days' written notice addressed to the Fund at its principal
place of business.
11. This Agreement shall be submitted for approval to the Board of
Directors of the Fund annually and shall continue in effect only so long as
specifically approved annually by vote of a majority of the directors of the
Fund who are not parties to the 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 Fund or by
majority vote of the Fund's Board of Directors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
STATE BOND INCOME FUNDS, INC.
By: /s/ Xxxxxxx Xxxxx
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Its: /s/ Vice President
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ARM CAPITAL ADVISORS, INC.
By: /s/ Xxxxxx X. Xxxx
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Its: /s/ CEO
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