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EXHIBIT (5)(a)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of November 27, 1989 between CONESTOGA FAMILY OF
FUNDS, a Massachusetts trust with transferrable shares (herein called the
"Company"), and Meridian Investment Company (herein called the "Investment
Adviser").
WHEREAS, the Company is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS, the Company desires to retain the Investment Adviser to
furnish investment advisory and administrative services to certain investment
portfolios of the Company (the "Funds") and the Investment Adviser represents
that it is willing and possesses legal authority to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Company hereby appoints the Investment
Adviser to act as investment adviser to the Funds identified on Schedule A
hereto for the period and on the terms set forth in this Agreement. The
Investment Adviser accepts such appointment and agrees to furnish the services
herein set forth for the compensation herein provided. Additional Funds may be
added to those covered by this Agreement from time to time by the parties
executing a new Schedule A which shall become effective upon its execution and
shall supersede any Schedule A having an earlier date.
2. DELIVERY OF DOCUMENTS. The Company has furnished the
Investment Adviser with copies properly certified or authenticated of each of
the following:
(a) the Company's Agreement and Declaration of Trust, as
executed on August 1, 1989 and as filed with the Secretary of State of the
Commonwealth of Massachusetts on August 2, 1989, and all amendments thereto or
restatements thereof (such document, as presently in effect and as it shall
from time to time be amended or restated, is herein called the "Declaration of
Trust");
(b) the Company's Code of Regulations and any amendments
thereto;
(c) resolutions of the Company's Board of Trustees
authorizing the appointment of the Investment Adviser and approving this
Agreement;
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(d) the Company's Notification of Registration on Form
N-8A under the 1940 Act as filed with the Securities and Exchange Commission on
August 9, 1989 and any amendments thereto;
(e) the Company's Registration Statement on Form N-1A
under the Securities Act of 1933, as amended ("1933 Act") (File No. 33-30431)
and under the 1940 Act as filed with the Securities and Exchange Commission and
all amendments thereto; and
(f) the Funds' most recent prospectuses and Statement of
Additional Information (such prospectuses and Statement of Additional
Information, as presently in effect, and all amendments and supplements thereto
are herein collectively called the "Prospectus").
The Company will furnish the Investment Adviser from time to time with
copies of all amendments of or supplements to the foregoing.
3. MANAGEMENT. Subject to the supervision of the Company's Board
of Trustees, the Investment Adviser will provide a continuous investment
program for each Fund, including investment research and management with
respect to all securities and investments and cash equivalents in said Funds.
The Investment Adviser will determine from time to time what securities and
other investments will be purchased, retained or sold by the Company with
respect to each Fund. The Investment Adviser will provide the services under
this Agreement in accordance with each Fund's investment objective, policies,
and restrictions as stated in the Prospectus and resolutions of the Company's
Board of Trustees. The Investment Adviser further agrees that it:
(a) will use the same skill and care in providing such
services as it uses in providing services to other accounts for which it has
investment responsibilities;
(b) will conform with all applicable Rules and
Regulations of the Securities and Exchange Commission and in addition will
conduct its activities under this Agreement in accordance with any applicable
regulations of any governmental authority pertaining to the investment advisory
activities of the Investment Adviser;
(c) will not make loans to any person to purchase or
carry units of beneficial interest in the Company or make interest-bearing
loans to the Company;
(d) will place orders pursuant to its investment
determinations for the Company either directly with the issuer or with any
broker or dealer. In placing orders with brokers and dealers, the Investment
Adviser will attempt to obtain prompt
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execution of orders in an effective manner at the most favorable price.
Consistent with this obligation, when the execution and price offered by two or
more brokers or dealers are comparable, the Investment Adviser may, in its
discretion, purchase and sell portfolio securities to and from brokers and
dealers who provide the Investment Adviser with research advice and other
services. In no instance will portfolio securities be purchased from or sold to
The Winsbury Company, Meridian Investment Company, or any affiliated person of
either the Company, The Winsbury Company, or Meridian Investment Company;
(e) will maintain all books and records with respect to
the Company's securities transactions and will furnish the Company's Board of
Trustees such periodic and special reports as the Board may request;
(f) will treat confidentially and as proprietary
information of the Company all records and other information relative to the
Company and prior, present, or potential interestholders, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Company, which approval shall not be unreasonably
withheld and may not be withheld where the Investment Adviser may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Company; and
(g) will maintain its policy and practice of conducting
its fiduciary functions independently. In making investment recommendations
for the Company, the Investment Adviser's personnel will not inquire or take
into consideration whether the issuers of securities proposed for purchase or
sale for the Company's account are customers of the Investment Adviser or of
its parent or its subsidiaries or affiliates. In dealing with such customers,
the Investment Adviser and its parent, subsidiaries, and affiliates will not
inquire or take into consideration whether securities of those customers are
held by the Company.
4. SERVICES NOT EXCLUSIVE. The investment management services
furnished by the Investment Adviser hereunder are not to be deemed exclusive,
and the Investment Adviser shall be free to furnish similar services to others
so long as its services under this Agreement are not impaired thereby.
5. BOOKS AND RECORDS. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Investment Adviser hereby agrees that all
records which it maintains for the Company are the property of the Company and
further agrees to surrender promptly to the Company any of such records upon
the Company's
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request. The Investment Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. EXPENSES. During the term of this Agreement, the Investment
Adviser will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Company.
7. COMPENSATION. For the services provided and the expenses
assumed pursuant to this Agreement, each of the Funds will pay the Investment
Adviser and the Investment Adviser will accept as full compensation therefor a
fee equal to the lesser of (i) the fee computed daily and paid monthly at the
applicable annual rate set forth on Schedule A hereto, or (ii) such fee as may
from time to time be agreed upon in writing by the Company and the Investment
Adviser in advance of the period to which the fee relates. Each Fund's
obligation to pay the above-described fee to the Investment Adviser will begin
as of the date of the initial public sale of shares in that Fund.
If in any fiscal year the aggregate expenses of any of the Funds (as
defined under the securities regulations of any state having jurisdiction over
the Company) exceed the expense limitations of any such state, the Investment
Adviser will reimburse such Fund for a portion of such excess expenses equal to
such excess times the ratio of the fees otherwise payable by such Fund to the
Investment Adviser hereunder to the sum of the aggregate fees otherwise payable
by the Fund to the Investment Adviser hereunder and to The Winsbury Company
under the Administration Agreement between The Winsbury Company and the
Company. The obligation of the Investment Adviser to reimburse the Funds
hereunder is limited in any fiscal year to the amount of its fee hereunder for
such fiscal year, provided, however, that notwithstanding the foregoing, the
Investment Adviser shall reimburse the Funds for such proportion of such excess
expenses regardless of the amount of fees paid to it during such fiscal year to
the extent that the securities regulations of any state having jurisdiction
over the Company so require. Such expense reimbursement, if any, will be
estimated daily and reconciled and paid on a monthly basis.
The fee attributable to each Fund shall be the several (and not joint
or joint and several) obligation of each such Fund.
8. LIMITATION OF LIABILITY. The Investment Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Funds in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for
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services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Adviser in the performance of its
duties or from reckless disregard by it of its obligations and duties under
this Agreement.
9. DURATION AND TERMINATION. This Agreement will become
effective as to each Fund as of the date first written above, provided that it
shall have been approved by vote of a majority of the outstanding voting
securities of such Fund in accordance with the requirements under the 1940 Act,
and, unless sooner terminated as provided herein, shall continue in effect for
two years after such effective date. Thereafter, if not terminated, this
Agreement shall continue in effect as to each Fund for successive yearly
periods, provided that such continuance is specifically approved at least
annually (a) by the vote of a majority of those members of the Company's Board
of Trustees who are not parties to this Agreement or interested persons of any
party to this Agreement, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the vote of a majority of the Company's
Board of Trustees or by the vote of a majority of the outstanding voting
securities of such Fund. Notwithstanding the foregoing, this Agreement may be
terminated as to a particular Fund at any time on 60 days' written notice,
without the payment of any penalty, by the Company (by vote of the Company's
Board of Trustees or by vote of a majority of the-outstanding voting securities
of such Fund) or by the Investment Adviser. This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement, the
terms "majority of the outstanding voting securities," "interested persons" and
"assignment" shall have the meaning given to such terms by the 1940 Act.)
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement
may be changed, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, discharge
or termination is sought.
11. MISCELLANEOUS. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. 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. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by the law of the State of Ohio.
The names "Conestoga Family of Funds" and "Trustees of
Conestoga Family of Funds" refer respectively to the Trust created and the
Trustees, as trustees but not individually or personally, acting from time to
time under a Declaration of Trust
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dated August 1, 1989 which is hereby referred to and a copy of which is on file
at the office of the State Secretary of The Commonwealth of Massachusetts and
at the principal office of the Trust. The obligations of "Conestoga Family of
Funds" entered into in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually, but in such capacities,
and are not binding upon any of the Trustees, Shareholders or representatives
of the Trust personally, but bind only the Trust Property, and all persons
dealing with any class of shares of the Trust must look solely to the Trust
Property belonging to such class for the enforcement of any claims against the
Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers designated below as of the day
and year first above written.
CONESTOGA FAMILY OF FUNDS
Seal By:s/ J. Xxxxx Xxxxx
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Title: President
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MERIDIAN INVESTMENT COMPANY
Seal By:s/ Xxxxxx X. Xxxxx, XX
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Title: President
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SCHEDULE A
TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN CONESTOGA FAMILY OF FUNDS AND
MERIDIAN INVESTMENT COMPANY
DATED NOVEMBER 27, 1989
NAME OF FUND COMPENSATION*
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US. Treasury Securities Fund .40%
Cash Management Fund .40%
Tax-Free Fund .40%
Limited Maturity Fund .74%
Fixed Income Fund .74%
Equity Fund .74%
CONESTOGA FAMILY OF FUNDS
By:s/ J. Xxxxx Xxxxx
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Title: President
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Date: November 27, 1989
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MERIDIAN INVESTMENT COMPANY
By:s/ Xxxxxx X. Xxxxx XX
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Title: President
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Date: November 27, 1989
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* All fees are stated as an annual rate based upon the particular Fund's
average daily net assets and are computed daily and payable monthly.
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