EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement ("Agreement") made this 30 day of October,
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 will register shares of each
Portfolio (defined below) under the Securities Act of 1933 ("1933 Act"), to
the extent required thereby, on Form N-1A (collectively, "Registration
Statement"); and
WHEREAS, the Company's Articles of Incorporation ("Articles") permit the
Company's Board of Directors ("Board" or "Directors") 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 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 Custody and Investment Accounting
Agreement, a Transfer Agency and Service Agreement, and an Administration
Agreement with other entities pursuant to which these entities have agreed to
provide a range of services to the Company and each Portfolio thereof.
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) and,
to the extent necessary or appropriate, in coordination with service
agreements entered into by the Company with other entities, such as, for
example, the Company's Custody and Investment Accounting Agreement, Transfer
Agency and Service Agreement, and Administration Agreement. 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 (w) 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, (x) the reasons for such decisions, (y) the
extent to which it has implemented those decisions, and (z) the manner in
which it has exercised any voting rights, rights to consent to corporate
action, or other rights pertaining to a Portfolio's investment
securities.
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(b) PORTFOLIO SECURITIES TRANSACTIONS. The Advisor, subject to and in
accordance with any directions that the 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 broker-dealers are
equally able to provide best execution and that, in selecting among such
broker-dealers with respect to particular trades, it may be desirable to
choose those broker-dealers 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-dealer who charges a commission for a securities
transaction which is in excess of the amount of commission that another
broker-dealer 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-dealer. Accordingly, the Company, on
behalf of each Portfolio, and the Advisor agree that the Advisor shall select
broker-dealers for the execution of each Portfolio's transactions from among:
(i) those broker-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 broker-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 broker-dealers 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
that 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 of
the Company's assets ("Custodian") in (i) 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)
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 Portfolio, including the total number
of shares outstanding of each Portfolio. 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
of each Portfolio, the cash requirements and cash available for
investment in each Portfolio, and all other information as may be
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reasonably necessary or appropriate for the Advisor to perform its
responsibilities hereunder.
(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 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 law, and making
and maintaining any notice filings and fees required under 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,
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officers, agents, shareholders or otherwise; that the Advisor or its
affiliates may be interested in the 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. This indemnity provision, however,
shall not operate to protect any officer or Director of the Company from any
liability to the Company or any shareholder by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of his or her duties.
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.
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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 for two years from the date of
its execution 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.
8. DEFINITIONS.
As used herein, the terms "net asset value," "offering price,"
"investment company," "open-end management investment company," "assignment,"
"investment adviser," "interested person," "affiliated person," and "majority
of the outstanding voting securities" shall have the meanings set forth in the
1933 Act or the Act, and the rules and regulations thereunder. Nothing herein
contained shall require the Company to take any action contrary to any
provision of its Articles, By-Laws, or any applicable statute or regulation.
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9. NOTICES.
Any notice under this Agreement shall be in writing, addressed and
delivered, or mailed postage prepaid, to the other party at such address as
the other party may designate for the receipt of notices. Until further notice
to the other party, it is agreed that the address of both the Company and the
Advisor shall be 0000 Xxxxxx Xxxx, Xxxxxx, Xxxxxxxx 00000.
10. 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.
11. CONFIDENTIALITY.
The Advisor shall not disclose or use any records or information obtained
pursuant to this Agreement, pursuant to its relationship with the Company, or
in the course of discharging its obligations hereunder, in any manner
whatsoever except as expressly authorized by this Agreement or in a writing by
the Company, or as expressly required by applicable federal or state
regulatory authorities.
12. APPLICABLE LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Maryland, notwithstanding the conflict of laws provisions
thereof, and shall be construed to promote the operation of the Company as an
open-end management investment company.
13. PARTIES TO COOPERATE.
The Company and the Advisor agree to fully cooperate with each other in
assuring compliance under this Agreement with all federal and state laws and
regulations.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
effective as of the date first written above.
MONUMENT SERIES FUND, INC.
By:/s/XXXXX X. XXXXXX
---------------------
Xxxxx X. Xxxxxx
President
ATTEST
By:/s/XXXXXXX XXXXX, III
---------------------
Xxxxxxx Xxxxx, III
Secretary
MONUMENT ADVISORS, LTD.
By:/s/XXXXX X. XXXXXX
---------------------
Xxxxx X. Xxxxxx
President
ATTEST
By:/s/XXXXXXX XXXXX, III
---------------------
Xxxxxxx Xxxxx, III
Secretary
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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.
PORTFOLIO:
MONUMENT WASHINGTON REGIONAL 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:
MONUMENT WASHINGTON REGIONAL AGGRESSIVE GROWTH FUND
Net Assets Annual Rates
---------- ------------
First $50,000,000 1.00%
Next $50,000,000 0.75%
Over $100,000,000 0.625%
Adopted: 30 October, 1997
Last Amended: Not applicable
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