MONARCH FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the 30/th/ day of December, 2005 between Monarch Funds (the
"Trust"), a business trust organized under the laws of the Commonwealth of
Massachusetts with its principal office and place of business at Two Xxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxx 00000, and Monarch Investment Advisors, LLC (the
"Adviser"), a corporation organized under the laws of the State of Delaware
with its principal place of business at 000 X. Xxxxxx Xx., Xxxxxxx Xxxxx, XX
00000.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "Act") as an open-end management investment company and is
authorized to issue interests (as defined in the Trust's Trust Instrument) in
separate series; and
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for the series listed in Appendix A hereto (each a "Fund," and
collectively the "Funds"), and the Adviser is willing to provide those services
on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS
The Trust is engaged in the business of investing and reinvesting its assets
in securities of the type and in accordance with the limitations specified in
its Trust Instrument and Registration Statement filed with the Securities and
Exchange Commission (the "Commission") under the Act, as may be supplemented
from time to time, all in such manner and to such extent as may from time to
time be authorized by the Trust's Board of Trustees (the "Board"). The Trust is
currently authorized to issue four series of interests and the Board is
authorized to issue interests in any number of additional series. The Trust has
delivered to the Adviser copies of the Trust's Trust Instrument and
Registration Statement and will from time to time furnish the Adviser with any
amendments thereof.
SECTION 2. INVESTMENT ADVISER; APPOINTMENT
The Trust hereby employs the Adviser, subject to the direction and
supervision of the Board, to manage the investment and reinvestment of the
assets in each Fund and, without limiting the generality of the foregoing, to
provide other services specified in Section 3 hereof.
SECTION 3. DUTIES OF THE ADVISER
(a) The Adviser shall make decisions with respect to all purchases and sales
of securities and other investment assets in each Fund. To carry out such
decisions, the Adviser is hereby authorized, as agent and attorney-in-fact for
the Trust, for the account of, at the risk of and
in the name of the Trust, to place orders and issue instructions with respect
to those transactions of the Funds. In all purchases, sales and other
transactions in securities for the Funds, the Adviser is authorized to exercise
full discretion and act for the Trust in the same manner and with the same
force and effect as the Trust might or could do with respect to such purchases,
sales or other transactions, as well as with respect to all other things
necessary or incidental to the furtherance or conduct of such purchases, sales
or other transactions.
(b) The Adviser will report to the Board at each meeting thereof all changes
in each Fund since the prior report, and will also keep the Board informed of
important developments affecting the Trust, the Funds and the Adviser, and on
its own initiative, will furnish the Board from time to time with such
information as the Adviser may believe appropriate for this purpose, whether
concerning the individual companies whose securities are included in the Funds'
holdings, the industries in which they engage, or the economic, social or
political conditions prevailing in each country in which the Funds maintain
investments. The Adviser will also furnish the Board with such statistical and
analytical information with respect to securities in the Funds as the Adviser
may believe appropriate or as the Board reasonably may request.
(c) In making purchases and sales of securities for the Funds, the Adviser
will follow and comply with the policies set from time to time by the Board as
well as the limitations imposed by the Trust's Trust Instrument and
Registration Statement under the Act, the limitations in the Act and in the
Internal Revenue Code of 1986, as amended, in respect of regulated investment
companies and the investment objectives, policies and restrictions of the Funds.
(d) The Adviser will from time to time employ or associate with such persons
as the Adviser believes to be particularly qualified to assist in the execution
of the Adviser's duties hereunder, the cost of performance of such duties to be
borne and paid by the Adviser. No obligation may be incurred on the Trust's
behalf in any such respect.
(e) The Adviser shall either monitor the performance of brokers, dealers and
other persons who introduce or execute purchases, sales and other transactions
of securities and other investment assets of the Funds or select an introducing
broker who shall, as part of its transaction charges, monitor such performance.
Such persons may be affiliated with the Adviser, any investment subadviser or
other affiliates of the Trust to the extent permitted by the Act.
(f) The Adviser shall maintain records relating to portfolio transactions
and the placing and allocation of brokerage orders as are required to be
maintained by the Trust under the Act. The Adviser shall prepare and maintain,
or cause to be prepared and maintained, in such form, for such periods and in
such locations as may be required by applicable law, all documents and records
relating to the services provided by the Adviser pursuant to this Agreement
required to be prepared and maintained by the Trust pursuant to the rules and
regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Commission and the Internal Revenue
Service. The books and records pertaining to the Trust, which are in possession
of the Adviser, shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at all
times during the Adviser's
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normal business hours. Upon the reasonable request of the Trust, copies of any
such books and records shall be provided promptly by the Adviser to the Trust
or the Trust's authorized representatives.
SECTION 4. DELEGATION OF THE ADVISER'S DUTIES
The Adviser may carry out any of its obligations under this Agreement by
entering into a contract with a person(s) who (i) is registered as an
investment adviser pursuant to the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), or who is exempt from registration thereunder or (ii) is
under the control of, and is supervised by, the Adviser ("Controlled Person")
with respect to any investment advisory functions performed by such Controlled
Person. The Adviser may not delegate any of its obligations under this
Agreement unless it has instituted appropriate procedures for the supervision
of the Controlled Person's activities.
SECTION 5. EXPENSES
The Trust hereby confirms that the Trust shall be responsible and shall
assume the obligation for payment of all the Trust's expenses, including:
interest charges, taxes, brokerage fees and commissions; certain insurance
premiums; fees, interest charges and expenses of the Trust's custodian and
transfer agent; telecommunications expenses; auditing, legal and compliance
expenses; costs of the Trust's formation and maintaining its existence; costs
of preparing the Trust's registration statement, account application forms and
interestholder reports and delivering them to existing and prospective
interestholders; costs of maintaining books of original entry for portfolio and
fund accounting and other required books and accounts and of calculating the
net asset value of interests in the Trust; costs of reproduction, stationery
and supplies; compensation of the Trust's trustees, officers and employees and
the costs of other personnel performing services for the Trust; costs of Trust
meetings; registration fees and related expenses for registration with the
Commission and the securities regulatory authorities of other countries in
which the Trust's interests are sold; state securities law registration fees
and related expenses; and fees and out-of-pocket expenses payable to Foreside
Fund Services, LLC under any placement agent, management or similar agreement.
SECTION 6. STANDARD OF CARE
(a) The Adviser shall give the Trust the benefit of its best judgment and
efforts in rendering its services to the Trust and shall not be liable for
error of judgment or mistake of law, for any loss arising out of any
investment, or in any event whatsoever, provided that nothing herein shall be
deemed to protect, or purport to protect, the Adviser against any liability to
the Trust or to the security holders of the Trust to which it would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties hereunder, or by reason of reckless disregard of
its obligations and duties hereunder. No provision of this Agreement shall be
construed to protect any Trustee or officer of the Trust, or the Adviser, from
liability in violation of Sections 17(h), 17(i) or 36(b) of the Act.
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(b) The Adviser shall not be held responsible for any loss incurred by
reason of any act or omission of any dealer, broker or custodian; provided that
such loss is not the result of the Adviser's willful misfeasance, bad faith or
gross negligence in the performance of its duties hereunder, or the result of
the Adviser's reckless disregard of its obligations and duties hereunder.
(c) This Section shall survive the termination of this Agreement and shall
be binding upon the Trust's and the Adviser's successors and personal
representatives.
SECTION 7. COMPENSATION
For the services provided by the Adviser pursuant to this Agreement, the
Trust shall pay the Adviser an advisory fee as set forth in Appendix B.
SECTION 8. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to each Fund on date
referenced above.
(b) This Agreement shall remain in effect with respect to a Fund for a
period of one year from the date of its effectiveness and shall continue in
effect for successive twelve-month periods (computed from each anniversary date
of the approval) with respect to the Fund; provided that such continuance is
specifically approved at least annually (i) by the Board or by the vote of a
majority of the outstanding voting interests of the Fund, and, in either case,
(ii) by a majority of the Trust's trustees who are not parties to this
Agreement or interested persons of any such party (other than as trustees of
the Trust); provided further, however, that if this Agreement or the
continuation of this Agreement is not approved as to a Fund, the Adviser may
continue to render to that Fund the services described herein in the manner and
to the extent permitted by the Act and the rules and regulations thereunder.
(c) This Agreement may be terminated with respect to a Fund at any time,
without the payment of any penalty, (i) by the Board or by a vote of a majority
of the outstanding voting securities of the Fund on 60 days' written notice to
the Adviser or (ii) by the Adviser on 60 days' written notice to the Trust.
This agreement shall terminate upon assignment.
SECTION 9. ACTIVITIES OF THE ADVISER
(a) Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Adviser's right, or the
right of any of the Adviser's officers, directors or employees who may also be
a trustee, officer or employee of the Trust, or persons otherwise affiliated
persons of the Trust to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of
a similar or dissimilar nature, or to render services of any kind to any other
corporation, trust, firm, individual or association.
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(b) The Adviser represents that it is currently registered, and will during
the entire period this Agreement is in effect be registered, as an investment
adviser under the Advisers Act.
SECTION 10. LIMITATION OF INTERESTHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the interestholders of each Fund shall not be
liable for any obligations of the Trust or of the Funds under this Agreement,
and the Adviser agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Fund to which the Adviser's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust or the interestholders
of the Funds.
SECTION 11. NOTICE
Any notice or other communication required to be given pursuant to this
Agreement shall be in writing or by telex and shall be effective upon receipt.
Notices and communications shall be given,
if to the Trust, at:
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Attention: Secretary
if to the Adviser at:
000 X. Xxxxxx Xx.
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
SECTION 12. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any manner
except by a written agreement properly authorized and executed by both parties
hereto and, if required by the Act, by a vote of a majority of the outstanding
voting interests of the Funds thereby affected. No amendment to this Agreement
or the termination of this Agreement with respect to a Fund shall effect this
Agreement as it pertains to any other Fund.
(b) If any part, term or provision of this Agreement is held to be illegal,
in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
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(c) This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
(d) Section headings in this Agreement are included for convenience only and
are not to be used to construe or interpret this Agreement.
(e) This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the State of Delaware.
(f) The terms "vote of a majority of the outstanding voting interests,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act to the terms "vote of a majority of the
outstanding voting securities," "interested person," "affiliated person" and
"assignment," respectively.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed all as of the day and year first above written.
MONARCH FUNDS
/s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
MONARCH INVESTMENT ADVISORS, LLC
Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: CEO
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MONARCH FUNDS
INVESTMENT ADVISORY AGREEMENT
APPENDIX A
FUNDS OF THE TRUST
Daily Assets Treasury Fund
Daily Assets Government Fund
Daily Assets Cash Fund
Daily Assets Government Obligations Fund
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MONARCH FUNDS
INVESTMENT ADVISORY AGREEMENT
APPENDIX B
FEE SCHEDULE
FEE AS A % OF THE
ANNUAL AVERAGE DAILY
FUNDS OF THE TRUST NET ASSETS OF THE FUNDS COMBINED
------------------ -------------------------------------------
Daily Assets Treasury Fund, 0.06% for the first $200 million in assets,
Daily Assets Government Cash Fund, 0.04% of the next $300 million in assets,
and Daily Assets Cash Fund and 0.03% of the remaining assets.
Daily Assets Government Obligations Fund 0.05%
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