EXHIBIT 5
FORM OF
INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement ("Agreement") made this ____ day of
___________, 1997 between MONUMENT SERIES FUND, INC., a Maryland corporation
(the "Company"), and MONUMENT ADVISORS, LTD., a Maryland corporation (the
"Advisor") (collectively, the "Parties").
WHEREAS, the Company is organized and intends to operate as an open-end
management investment company and is so registered under the Investment
Company Act of 1940, as amended, (the "Act"); and
WHEREAS, the Company's articles of incorporation ("Articles") permit the
Company's Board of Directors ("Board") to establish and authorize the issuance
of shares of one or more series of common stock ("series") representing
separate investment portfolios, each with its own investment objectives,
program, policies and restrictions; and
WHEREAS, the Board has established and authorized the issuance of the
shares of the series listed on Schedule A hereto (each, a "Portfolio" and
collectively, the "Portfolios"), as the same may be amended from time to time
by mutual written agreement of the Parties ("Schedule A"); and
WHEREAS, the Company has registered, or will register, the shares of each
Portfolio under the Securities Act of 1933, as amended, ("1933 Act"), to the
extent required thereby; and
WHEREAS, the Advisor is registered as an investment adviser under the
Investment Advisers Act of 1940, and is engaged principally in the business of
rendering investment advisory services; and
WHEREAS, the Company desires to have the Advisor perform the investment
advisory services and provide the facilities described herein, and the Advisor
desires to provide these services and facilities to the Company and each
Portfolio thereof; and
WHEREAS, the Company has entered into a Custodian Agreement with
Investors Fiduciary Trust Company (the "Custodian") pursuant to which the
Custodian has agreed to determine the net asset value of the shares of each
Portfolio.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
other good and valuable consideration the receipt of which is hereby
acknowledged, the Parties agree as follows:
1. APPOINTMENT OF THE ADVISOR.
(a) The Company hereby appoints the Advisor, and the Advisor hereby
accepts such appointment, to act as the investment adviser to each Portfolio
for the period and on the terms herein set forth, for the compensation
provided on Schedule A hereto.
(b) The Advisor 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
Company or any Portfolio in any way or otherwise be deemed an agent of the
Company.
2. SERVICES AND FACILITIES TO BE PROVIDED BY THE ADVISOR.
The Advisor, at its own expense or pursuant to arrangements with others
to bear the expenses, shall furnish the services and facilities described
below to the Company, on behalf of each Portfolio, subject to the overall
supervision and review of the Company's Board of Directors and in accordance
with, as in effect from time to time, the provisions of the Company's
Articles, By-Laws, registration statement, and applicable law (including,
without limitation, the Act, the 1933 Act, and the Internal Revenue Code). The
Advisor shall give the Company and each Portfolio the benefit of its best
judgment and efforts in rendering its services as investment adviser.
(a) INVESTMENT PROGRAM. The Advisor shall continuously furnish an
investment program for each Portfolio. In connection therewith, the Advisor
shall:
(i) determine what investments each Portfolio shall purchase, hold,
sell, or exchange and what portion, if any, of each Portfolio's
assets shall remain uninvested, and shall take such steps as
may be necessary to implement the same;
(ii) determine the manner in which to exercise any voting rights,
rights to consent to corporate action, or other rights
pertaining to a Portfolio's investment securities; and
(iii) render regular reports to the Company, at regular meetings of
its Board and at such other times as may be reasonably
requested by the Board, of (x) the decisions which it has made
with respect to the investment of the assets of each Portfolio
and the purchase and sale of its investment securities, (y) the
reasons for such decisions and (z) the extent to which it has
implemented those decisions.
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(b) PORTFOLIO SECURITIES TRANSACTIONS. The Advisor, subject to and in
accordance with any directions which the Company's Board may issue from time
to time, shall place orders for the execution of each Portfolio's securities
transactions. When placing orders, the Advisor shall seek to obtain the best
net price and execution ("best execution") for each Portfolio, but this
requirement shall not be deemed to obligate the Advisor to place any order
solely on the basis of obtaining the lowest commission rate if the other
standards set forth in this section have been satisfied. The Parties recognize
that there are likely to be many cases in which different brokers are equally
able to provide best execution and that, in selecting among such brokers with
respect to particular trades, it may be desirable to choose those brokers who
furnish research, statistical, quotations and other information to the Company
and its Portfolios, as well as the Advisor, in accordance with the standards
set forth below. Moreover, to the extent that it continues to be lawful to do
so and so long as the Board determines that a Portfolio will benefit, directly
or indirectly, by doing so, the Advisor may place orders with a broker who
charges a commission for a securities transaction which is in excess of the
amount of commission that another broker would have charged for effecting that
transaction, provided that the excess commission is reasonable in relation to
the value of "brokerage and research services" (as defined in Section 28(e)(3)
of the Securities Exchange Act of 1934) provided by that broker. Accordingly,
the Company, on behalf of each Portfolio, and the Advisor agree that the
Advisor shall select brokers for the execution of each Portfolio's
transactions from among:
(i) those brokers and dealers who provide quotations and other
services to the Company, with respect to one or more
Portfolios, specifically including the quotations necessary to
determine the net assets of the Portfolios, in such amount of
total brokerage as may reasonably be required in light of such
services; and
(ii) those brokers and dealers who supply research, statistical and
other data to the Advisor or its affiliates, which the Advisor
or its affiliates may lawfully and appropriately use in their
investment advisory capacities, which relate directly to
securities, actual or potential, of the Portfolios, or which
place the Advisor in a better position to make decisions in
connection with the management of each Portfolio's assets,
whether or not such data may also be useful to the Advisor and
its affiliates in managing other portfolios or advising other
clients, in such amount of total brokerage as may reasonably be
required. The Advisor also may consider the sale of Portfolio
shares as a factor in the selection of broker-dealers to
execute each Portfolio's securities transactions, subject to
the Advisor's obligation to seek best execution for each
Portfolio.
The Advisor shall render regular reports to the Company, not less frequently
than quarterly, of how much total brokerage business has been placed by the
Advisor with brokers falling into each of the categories referred to above and
the manner in which the allocation has been accomplished. The Advisor agrees
that no investment decision will be made or influenced by a desire to provide
brokerage for allocation in accordance with the foregoing, and that the right
to make such allocation of brokerage shall not interfere with the Advisor's
paramount duty to obtain the best execution for the Company.
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(c) TENDER OFFER SOLICITATION FEES. The Advisor shall use its best
efforts to recapture all available tender offer solicitation fees in
connection with tenders of the securities of any Portfolio, and any similar
payments, provided, however, that neither the Advisor, nor any affiliate of
the Advisor shall be required to register as a broker-dealer for this purpose.
The Advisor shall advise the Board of any fees or payments of whatever type
which it may be possible for the Advisor or an affiliate of the Advisor to
receive in connection with the purchase or sale of investment securities for
any Portfolio.
(d) VALUATION OF INVESTMENTS. The Advisor shall assist the Custodian (i)
in valuing the securities of each Portfolio in such manner and on such basis
as described in the then-current prospectus and statement of additional
information of the Company and (ii) in calculating the net asset value per
share of each Portfolio, as described in the then-current prospectus and
statement of additional information of the Company, at the close of the
regular trading of the New York Stock Exchange (the "Exchange"), usually 4:00
p.m. Eastern time, each Monday through Friday, except days on which the
Exchange is closed. The Company shall provide, or arrange for others to
provide, all necessary information for the calculation of the net asset value
per share of each Company, including the total number of Trust shares
outstanding. The Company shall arrange for the Custodian to provide the
Advisor or its designee with the net asset value per share of each Portfolio
as soon as reasonably practical each day after the net asset value per share
has been calculated.
(e) ASSISTANCE WITH REGULATORY MATTERS. The Advisor shall provide such
assistance, cooperation, and information to the Company or its designee, as
the same may reasonably request from time to time, with respect to the the
following matters:
(i) the preparation, amendment, filing, and/or delivery of the
Company's registration statement, regulatory reports, periodic
reports to shareholders and other documents (including tax
returns), required by applicable law; and
(ii) the development, implementation, maintenance, and monitoring of
a compliance program for assuring compliance with all federal
and state securities law matters.
The Parties acknowledge that the Company or its designee shall have primary
responsibility for the foregoing matters.
(f) INFORMATION, RECORDS, AND CONFIDENTIALITY.
(i) The Company or its designees shall provide timely information
to the Advisor regarding such matters as purchases and
redemptions of shares in each Portfolio, the cash requirements
and cash available for investment in each Portfolio, and all
other information as may be reasonably necessary or appropriate
for the Advisor to perform its responsibilities hereunder.
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(ii) The Company shall own and control all records maintained
hereunder by the Advisor on the Company's behalf and, upon
request of the Company or in the event of termination of this
Agreement with respect to any Portfolio for any reason, the
Advisor shall promptly return to the Company all records
relating to that Portfolio, free from any claim or retention of
rights by the Advisor and without charge by the Advisor except
for the Advisor's direct expense.
(iii) The Advisor shall not disclose or use any records or
information obtained pursuant hereto except as expressly
authorized herein, and shall keep confidential any information
obtained pursuant hereto, and disclose such information only if
the Company has authorized such disclosure, or if such
disclosure is expressly required by applicable federal or state
regulatory authorities.
(g) FACILITIES AND PERSONNEL. The Advisor shall, at its expense, furnish
to the Company adequate facilities and personnel necessary for the Directors
and officers of the Company to manage the affairs and conduct of the Company's
business, including corresponding and communicating with shareholders of the
Company, and maintaining all internal bookkeeping, accounting and auditing
services and records in connection with the Company's investment and business
activities. The foregoing shall not be construed to require the Advisor to
provide facilities or personnel to any third party service provider retained
by the Company. Such facilities and personnel shall include:
(i) office space, which may be space within the offices of the
Advisor or in such other place as may be agreed upon from time
to time,
(ii) office furnishings and supplies, including telephone service,
utilities, and simple business equipment, and
(iii) executive, secretarial and clerical personnel as may be
reasonably requested by the Company.
The Advisor shall compensate all Directors, officers and employees of the
Company who are directors, officers, stockholders, or employees of the Advisor
or its affiliates.
(h) DELEGATION TO SUB-ADVISORS. Subject to the approval of the Board and
the shareholders of the Portfolios, the Advisor may delegate to a sub-advisor
certain of its duties herein, provided that the Advisor shall continue to
supervise the performance of any such sub-advisor.
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3. EXPENSES OF THE COMPANY.
Except for expenses that the Advisor expressly assumes pursuant to this
Agreement, the Company shall bear, or cause others to bear, all expenses for
its operations and activities, and shall cause the Advisor to be reimbursed,
by the Company or others, for any such expense that the Advisor incurs. The
expenses borne by the Company include, without limitation:
(a) fees and expenses paid to the Advisor as provided herein;
(b) expenses of all audits by independent public accountants;
(c) expenses of transfer or dividend disbursing agent, registrar,
custodian, or depository appointed for safekeeping of each Portfolio's cash,
securities, and other property, and shareholder record-keeping services,
including the expenses of issuing, repurchasing or redeeming Portfolio shares;
(d) expenses of obtaining quotations for calculating the value of the net
assets of each Portfolio;
(e) salaries and other compensation of executive officers of the Company
who are not directors, officers, stockholders or employees of the Advisor or
its affiliates;
(f) all taxes levied against the Company, including issuance and transfer
taxes, and corporate fees payable by the Company to federal, state or other
governmental agencies;
(g) brokerage fees and commissions in connection with the purchase and
sale of securities for each Portfolio, and similar fees and charges for the
acquisition, disposition, lending or borrowing of such securities;
(h) costs, including the interest expense, of borrowing money;
(i) costs incident to meetings of the Board and shareholders of the
Company, (exclusive of costs of those Directors and employees of the Company
who are "interested persons" of the Company within the meaning of the Act);
(j) fees and expenses of Directors who are not "interested persons" of
the Company within the meaning of the Act;
(k) legal fees, including the legal fees related to the registration and
continued qualification of the shares of each Portfolio for sale;
(l) costs and expense of registering and maintaining the registration of
the Company and the shares of each Portfolio under federal and any applicable
state laws;
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(m) the preparation, setting in type, printing in quantity and
distribution of materials distributed to then-current shareholders of each
Portfolio of such materials as prospectuses, statements of additional
information, supplements to prospectuses and statements of additional
information, periodic reports, communications, and proxy materials (including
proxy statements and proxy cards) relating to the Company or the Portfolio and
the processing, including tabulation, of the results of voting instruction and
proxy solicitations;
(n) the fees and expenses involved in the preparation of all reports as
required by federal or state law;
(o) postage;
(p) extraordinary or non-recurring expenses, such as legal claims and
liabilities and litigation costs and indemnification payments by the Company
in connection therewith;
(q) trade association dues for the Investment Company Institute or
similar organizations; and
(r) the cost of the fidelity bond required by Rule 17g-1 under the Act,
and any errors and omissions or other liability insurance premiums covering
the Directors, officers, and employees.
4. COMPENSATION OF THE ADVISOR.
As compensation to the Advisor for services rendered and facilities
furnished hereunder, the Company shall pay the Advisor a fee in the amount and
manner set forth in Schedule A. The fee shall be reduced by any tender
solicitation fees received by the Advisor, or any affiliated person of the
Advisor, in connection with the tender of investments of any Portfolio or any
similar payments (less any direct expenses incurred by the Advisor, or any
affiliated person of the Advisor, in connection with such fees or payments).
5. ACTIVITIES OF THE ADVISOR.
The services of the Advisor to the Company under this Agreement are not
exclusive, and the Advisor and any of its affiliates shall be free to render
similar services to others, so long as its services hereunder are not impaired
thereby. Subject to and in accordance with the Company's Articles, by-laws,
the Articles of Incorporation and By-Laws of the Adviser, and any applicable
requirements of the Act, it is understood that Directors, officers, agents and
shareholders of the Company are or may be interested persons of the Advisor or
its affiliates as directors, officers, agents, or stockholders, or otherwise;
that directors, officers, agents, or stockholders, of the Advisor or its
affiliates are or may be interested persons of the Company as Directors,
officers, agents, shareholders or otherwise; that the Advisor or its
affiliates may be interested in the
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Company as shareholders or otherwise; and the effect of such interest shall be
governed by the Act.
6. LIABILITIES OF THE ADVISOR.
The Advisor shall indemnify and hold harmless the Company and each of its
Directors and officers (or former Directors and officers) and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, "Indemnitees") from all loss, cost, liability, claim, damage,
or expense (including the reasonable cost of investigating and defending
against the same and any counsel fees reasonably incurred in connection
therewith) incurred by any Indemnitees under the 1933 Act or under common law
or otherwise which arise out of or are based upon or are a result of (i) the
Advisor's willful misfeasance, bad faith, or negligence in the performance of
its duties, or (ii) the reckless disregard of its obligations and duties under
this Agreement, or that of its officers, agents, and employees, in the
performance of this Agreement, or (iii) the failure at any time of any
Portfolio to operate as a regulated investment company in compliance with
Subchapter M of the Internal Revenue Code.
In case any action shall be brought against any Indemnitee, the Advisor
shall not be liable under its indemnity agreement contained in this paragraph
with respect to any claim made against any Indemnitee, unless the Indemnitee
shall have notified the Advisor in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon the Indemnitee (or after the Indemnitee
shall have received notice of such service on any designated agent), but
failure to notify the Advisor of any such claim shall not relieve it from
liability to the Indemnitees against whom such action is brought otherwise
than on account of this Section 6. The Advisor shall be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but if the
Advisor elects to assume the defense, such defense shall be conducted by
counsel chosen by it and satisfactory to the Indemnitees that are defendants
in the suit. In the event the Advisor elects to assume the defense of any such
suit and retain such counsel, the Indemnitees that are defendants in the suit
shall bear the fees and expenses of any additional counsel retained by them,
but, in case the Advisor does not elect to assume the defense of any such
suit, the Advisor will reimburse the Indemnitees that are defendants in the
suit for the reasonable fees and expenses of any counsel retained by them. The
Advisor shall promptly notify the Company of the commencement of any
litigation or proceedings in connection with the issuance or sales of the
shares
7. TERM AND TERMINATION.
(a) TERM. This Agreement shall become effective with respect to each
Portfolio on the date hereof, or, with respect to any Portfolio subsequently
included on Schedule A ("additional Portfolio"), on the date the Schedule is
amended to include such Portfolio. Unless terminated as herein provided, this
Agreement shall remain in full force and effect until _____________, 1999
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with respect to each Portfolio and, with respect to each additional Portfolio,
until two years following the date on which such Portfolio becomes a Portfolio
hereunder, and shall continue in full force and effect thereafter with respect
to each Portfolio so long as such continuance with respect to the Portfolio is
approved at least annually (a) by either the Directors of the Company or by
vote of a majority of the outstanding voting securities of the Portfolio, and
(b) in either event by the vote of a majority of the Directors of the Company
who are not parties to this 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, the Directors may, from time to time,
establish a new effective date for the continuance of this Agreement with
respect to any Portfolio and/or additional Portfolio; provided, that such new
effective date precedes the then current termination date of the Agreement.
Any approval of this Agreement by the holders of a majority of the outstanding
voting securities of any Portfolio shall be effective to continue this
Agreement with respect to that Portfolio notwithstanding (i) that this
Agreement has not been approved by the vote of a majority of the outstanding
voting securities of any other Portfolio affected thereby, and (ii) that this
Agreement has not been approved by the vote of a majority of the outstanding
voting securities of the Company, unless such approval shall be required by
any other applicable law or otherwise.
(b) TERMINATION. This Agreement:
(i) may at any time be terminated with respect to any Portfolio
without the payment of any penalty either by vote of the Board
or by vote of a majority of the outstanding voting securities
of such Portfolio, on 60 days' written notice to the Advisor;
(ii) shall automatically and immediately terminate in the event of
its assignment; and
(iii) may be terminated with respect to any Portfolio by the Advisor
on 60 days' written notice to the Company.
As used in this Section 7, the terms "assignment", "interested persons" and
"vote of a majority of the outstanding voting securities" shall have the
meanings set forth for any such terms in the Act.
8. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered, or mailed post-paid, to the other party at any office
of such party.
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.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective as of the date first written above.
MONUMENT SERIES FUND, INC.
By:____________________________
ATTEST
By:________________________________
MONUMENT ADVISORS, LTD.
By:____________________________
ATTEST
By:________________________________
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SCHEDULE A
This schedule is an integral part of the Agreement to which it is
attached. Capitalized terms used herein have the same meaning as given to them
in the Agreement, except as otherwise noted. This schedule sets out the names
of the Portfolios covered by the Agreement and the compensation of the Advisor
for services rendered and facilities furnished with respect thereto.
The Company shall pay the Advisor, as full compensation for all services
rendered and all facilities furnished under the Agreement, an annual fee,
payable at the end of each calendar month, determined by applying the annual
rates set out below to the average daily net assets of each Portfolio named
below. The average daily net asset value of the Portfolios shall be determined
in the manner set forth in the Company's Articles and registration statement
under the 1933 Act, as amended from time to time.
PORTFOLIO: WASHINGTON AREA GROWTH FUND
ADVISORY FEE:
NET ASSETS ANNUAL RATES
First $50,000,000 1.00%
Next $50,000,000 0.75%
Over $100,000,000 0.625%
PORTFOLIO: WASHINGTON AREA AGGRESSIVE GROWTH FUND
ADVISORY FEE:
NET ASSETS ANNUAL RATES
First $50,000,000 1.00%
Next $50,000,000 0.75%
Over $100,000,000 0.625%
Adopted: ___________, 1997
Last Amended: Not applicable
