Xxxxxxxx, Story and Rose, LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: New Advisory Agreement
Ladies and Gentlemen:
Xxxxxxxx, Story and Rose Investment Trust (the "Trust") is a diversified
open-end management investment company registered under the Investment Company
Act of 1940, as amended (the "Act"), and subject to the rules and regulations
promulgated thereunder. The Trust's shares of beneficial interest are divided
into two separate series, the Xxxxxxxx, Story and Rose Equity Fund and the
Xxxxxxxx, Story and Xxxx Xxxxx/Intermediate Term Fixed Income Fund (the
"Funds"). Each such share of a Fund represents an undivided interest in the
assets, subject to the liabilities, allocated to that Fund. Each Fund has a
separate investment objective and separate investment policies.
1. APPOINTMENT AS ADVISER. The Trust being duly authorized hereby
appoints and employs Xxxxxxxx, Story and Rose, LLC ("Adviser") as discretionary
portfolio manager, on the terms and conditions set forth herein, of the Funds.
2. ACCEPTANCE OF APPOINTMENT; STANDARD OF PERFORMANCE. Adviser accepts
the appointment as discretionary portfolio manager and agrees to use its best
professional judgment to make timely investment decisions for the Funds in
accordance with the provisions of this Agreement.
3. PORTFOLIO MANAGEMENT SERVICES OF ADVISER. Adviser is hereby employed
and authorized to select portfolio securities for investment by the Trust on
behalf of the Funds, to purchase and sell securities of the Funds, and upon
making any purchase or sale decision, to place orders for the execution of such
portfolio transactions in accordance with paragraphs 5 and 6 hereof. In
providing portfolio management services to the Funds, Adviser shall be subject
to such investment restrictions as are set forth in the Act and the rules
thereunder, the Internal Revenue Code of 1986, applicable state securities laws,
the supervision and control of the Trustees of the Trust, such specific
instructions as the Trustees may adopt and communicate to Adviser and the
investment objectives, policies and restrictions of the Trust applicable to the
Funds furnished pursuant to paragraph 4. Adviser is not authorized by the Trust
to take any action, including the purchase or sale of securities for the Funds,
in contravention of any restriction, limitation, objective, policy or
instruction described in the previous sentence. Adviser shall maintain on behalf
of the Trust the records listed in Schedule A hereto (as amended from time to
time). At the Trust's reasonable request, Adviser will consult with the Trust
with respect to any decision made by it with respect to the investments of the
Funds.
4. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Trust will
provide Adviser with the statement of investment objectives, policies and
restrictions applicable to the Funds as contained in the Trust's registration
statements under the Act and the Securities Act of 1933, and any instructions
adopted by the Trustees supplemental thereto. The Trust will provide Adviser
with such further information concerning the investment objectives, policies and
restrictions applicable thereto as Adviser may from time to time reasonably
request. The Trust retains the right, on written notice to Adviser from the
Trust, to modify any such objectives, policies or restrictions in any manner at
any time.
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5. TRANSACTION PROCEDURES. All transactions will be consummated by
payment to or delivery by The Fifth Third Bank or any successor custodian (the
"Custodian"), or such depositories or agents as may be designated by the
Custodian in writing, as custodian for the Trust, of all cash and/or securities
due to or from the Funds, and Adviser shall not have possession or custody
thereof. Adviser shall advise Custodian and confirm in writing to the Trust and
to Integrated Fund Services, Inc., or any other designated agent of the Trust,
all investment orders for the Funds placed by it with brokers and dealers.
Adviser shall issue to the Custodian such instructions as may be appropriate in
connection with the settlement of any transaction initiated by the Adviser.
6. ALLOCATION OF BROKERAGE. Adviser shall have authority and discretion
to select brokers and dealers to execute portfolio transactions initiated by
Adviser and to select the markets on or in which the transactions will be
executed.
In doing so, the Adviser will give primary consideration to securing the
most favorable price and efficient execution. Consistent with this policy, the
Adviser may consider the financial responsibility, research and investment
information and other services provided by brokers or dealers who may effect or
be a party to any such transaction or other transactions to which other clients
of the Adviser may be a party. It is understood that neither the Trust nor the
Adviser has adopted a formula for allocation of the Trust's investment
transaction business. It is also understood that it is desirable for the Trust
that the Adviser have access to supplemental investment and market research and
security and economic analyses provided by certain brokers who may execute
brokerage transactions at a higher commission to the Trust than may result when
allocating brokerage to other brokers on the basis of seeking the lowest
commission. Therefore, the Adviser is authorized to place orders for the
purchase and sale of securities for the
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Funds with such certain brokers, subject to review by the Trust's Trustees from
time to time with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Adviser in connection with its services to other clients.
On occasions when the Adviser deems the purchase or sale of a security to
be in the best interest of the Funds as well as other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be sold or purchased in order to
obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as expenses incurred in the transaction, will be made by the Adviser in the
manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Trust and to such other clients.
For each fiscal quarter of the Trust, Adviser shall prepare and render
reports to the Trust's Trustees of the total brokerage business placed and the
manner in which the allocation has been accomplished. Such reports shall set
forth at a minimum the information required to be maintained by Rule 31a-1(b)(9)
under the Act.
7. PROXIES. The Trust will vote all proxies solicited by or with respect
to the issuers of securities in which assets of the Funds may be invested from
time to time. At the request of the Trust, Adviser shall provide the Trust with
its recommendations as to the voting of such proxies.
8. REPORTS TO ADVISER. The Trust will provide Adviser with such periodic
reports concerning the status of the Funds as Adviser may reasonably request.
9. FEES FOR SERVICES. For all of the services to be rendered and payments
made as provided in this Agreement, the Xxxxxxxx, Story and Rose Equity Fund
will pay the Adviser a
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fee, computed and accrued daily and paid monthly, at the annual rate of .65% of
the Fund's average daily net assets and the Xxxxxxxx, Story and Xxxx
Xxxxx/Intermediate Term Fixed-Income Fund will pay the Adviser a fee, computed
and accrued daily and paid monthly, at the annual rate of .50% of the Fund's
average daily net assets.
10. ALLOCATION OF CHARGES AND EXPENSES. Adviser shall employ or provide
and compensate the executive, administrative, secretarial and clerical personnel
necessary to provide the services set forth herein, and shall bear the expense
thereof. Adviser shall compensate all Trustees, officers and employees of the
Trust who are also partners or employees of Adviser.
Adviser will pay all expenses incurred in connection with the sale or
distribution of the Funds' shares to the extent such expenses are not assumed by
the Funds under the Trust's Distribution Expense Plan. Adviser will reimburse
the Trust's principal underwriter for any expenses incurred by it in the
performance of its obligations under the Underwriting Agreement with the Trust.
The Funds will be responsible for the payment of all operating expenses of
the Trust, including fees and expenses incurred by the Trust in connection with
membership in investment company organizations, brokerage fees and commissions,
legal, auditing and accounting expenses, expenses of registering shares under
Federal and State securities laws, insurance expenses, taxes or governmental
fees, fees and expenses of the custodian, the transfer, shareholder service and
dividend disbursing agent and the accounting and pricing agent of the Funds,
expenses including clerical expenses of issue, sale, redemption or repurchase of
shares of the Funds, the fees and expenses of Trustees of the Trust who are not
affiliated with the Adviser, the cost of preparing and distributing reports and
notices to shareholders, the cost of printing or preparing
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prospectuses for delivery to the Funds' shareholders, the cost of printing or
preparing stock certificates or any other documents, statements or reports to
shareholders, expenses of shareholders' meetings and proxy solicitations, such
extraordinary or non-recurring expenses as may arise, including litigation to
which the Trust may be a party and indemnification of the Trust's officers and
Trustees with respect thereto, or any other expense not specifically described
above incurred in the performance of the Trust's obligations. All other expenses
not expressly assumed by Adviser herein incurred in connection with the
organization, registration of shares and operations of the Funds will be borne
by the Funds.
11. OTHER INVESTMENT ACTIVITIES OF ADVISER. The Trust acknowledges that
Adviser or one or more of its affiliates may have investment responsibilities or
render investment advice to or perform other investment advisory services for
other individuals or entities and that Adviser, its affiliates or any of its or
their directors, officers, agents or employees may buy, sell or trade in any
securities for its or their respective accounts ("Affiliated Accounts"). Subject
to the provisions of paragraph 2 hereof, the Trust agrees that Adviser or its
affiliates may give advice or exercise investment responsibility and take such
other action with respect to other Affiliated Accounts which may differ from the
advice given or the timing or nature of action taken with respect to the Funds,
provided that Adviser acts in good faith, and provided further, that it is
Adviser's policy to allocate, within its reasonable discretion, investment
opportunities to the Funds over a period of time on a fair and equitable basis
relative to the Affiliated Accounts, taking into account the investment
objectives and policies of the Funds and any specific investment restrictions
applicable thereto. The Trust acknowledges that one or more of the Affiliated
Accounts may at any time hold, acquire, increase, decrease, dispose of or
otherwise deal with positions in investments in which the Funds may have an
interest from time to time, whether in transactions which involve the Funds or
otherwise. Adviser shall have no obligation
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to acquire for the Funds a position in any investment which any Affiliated
Account may acquire, and the Trust shall have no first refusal, co-investment or
other rights in respect of any such investment, either for the Funds or
otherwise.
12. CERTIFICATE OF AUTHORITY. The Trust and the Adviser shall furnish to
each other from time to time certified copies of the resolutions of their
Trustees or Board of Directors or executive committees, as the case may be,
evidencing the authority of officers and employees who are authorized to act on
behalf of the Trust, the Funds and/or the Adviser.
13. LIMITATION OF LIABILITY. Adviser shall not be liable for any action
taken, omitted or suffered to be taken by it in its reasonable judgment, in good
faith and believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement, or in accordance with (or in the
absence of) specific directions or instructions from the Trust, provided,
however, that such acts or omissions shall not have resulted from Adviser's
willful misfeasance, bad faith or gross negligence, a violation of the standard
of care established by and applicable to Adviser in its actions under this
Agreement or breach of its duty or of its obligations hereunder. Nothing in this
paragraph 13 shall be construed in a manner inconsistent with Sections 17(h) and
(i) of the Act.
14. CONFIDENTIALITY. Subject to the duty of Adviser and the Trust to
comply with applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as confidential
all information pertaining to the Funds and the actions of Adviser and the Trust
in respect thereof.
15. ASSIGNMENT. No assignment of this Agreement shall be made by Adviser,
and this Agreement shall terminate automatically in the event of such
assignment. Adviser shall notify the Trust in writing sufficiently in advance of
any proposed change of control, as defined in
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Section 2(a)(9) of the Act, as will enable the Trust to consider whether an
assignment will occur, and to take the steps necessary to enter into a new
contract with Adviser.
16. REPRESENTATION, WARRANTIES AND AGREEMENTS OF THE TRUST. The Trust
represents, warrants and agrees that:
A. Adviser has been duly appointed by the Trustees of the Trust to
provide investment services to the Funds as contemplated hereby.
B. The Trust will deliver to Adviser a true and complete copy of its
then current prospectus and statement of additional information as effective
from time to time and such other documents or instruments governing the
investments of the Funds and such other information as is necessary for Adviser
to carry out its obligations under this Agreement.
C. The Trust is currently in compliance and shall at all times comply
with the requirements imposed upon the Trust by applicable law and regulations.
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF ADVISER. Adviser
represents, warrants and agrees that:
A. Adviser is registered as an investment adviser under the Investment
Advisers Act of 1940.
B. Adviser will maintain, keep current and preserve on behalf of the
Trust, in the manner and for the time periods required or permitted by the Act,
the records identified in Schedule A. Adviser agrees that such records (unless
otherwise indicated on Schedule A) are the property of the Trust, and will be
surrendered to the Trust promptly upon request.
C. Adviser will complete such reports concerning purchases or sales of
securities on behalf of the Funds as the Trust may from time to time require to
ensure compliance with the Act, the Internal Revenue Code of 1986 and applicable
state securities laws.
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D. Adviser has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the Act and will provide the Trust with a copy
of the code of ethics and evidence of its adoption. Within forty-five (45) days
of the end of the last calendar quarter of each year while this Agreement is in
effect, a partner of Adviser shall certify to the Trust that Adviser has
complied with the requirements of Rule 17j-1 during the previous year and that
there has been no violation of the Adviser's code of ethics or, if such a
violation has occurred, that appropriate action was taken in response to such
violation. Upon the written request of the Trust, Adviser shall permit the
Trust, its employees or its agents to examine the reports required to be made to
Adviser by Rule 17j-1(c)(1).
E. Adviser will promptly after filing with the Securities and Exchange
Commission an amendment to its Form ADV furnish a copy of such amendment to the
Trust.
F. Upon request of the Trust, Adviser will provide assistance to the
Custodian in the collection of income due or payable to the Funds.
G. Adviser will immediately notify the Trust of the occurrence of any
event which would disqualify Adviser from serving as an investment adviser of an
investment company pursuant to Section 9(a) of the Act or otherwise.
18. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between Adviser and the Trust, which amendment, other than
amendments to Schedule A, is subject to the approval of the Trustees and the
shareholders of the Funds in the manner required by the Act and the rules
thereunder, subject to any applicable exemptive order of the Securities and
Exchange Commission modifying the provisions of the Act with respect to approval
of amendments to this Agreement.
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19. EFFECTIVE DATE; TERM. This Agreement shall become effective on the
date of its execution and shall remain in force for a period of one (1) year
from such date, and from year to year thereafter but only so long as such
continuance is specifically approved at least annually by the vote of a majority
of the Trustees who are not interested persons of the Trust or the Adviser, cast
in person at a meeting called for the purpose of voting on such approval, and by
a vote of the Board of Trustees or of a majority of the outstanding voting
securities of the Funds. The aforesaid requirement that this Agreement may be
continued "annually" shall be construed in a manner consistent with the Act and
the rules and regulations thereunder.
20. TERMINATION. This Agreement may be terminated by either party hereto,
without the payment of any penalty, immediately upon written notice to the other
in the event of a breach of any provision thereof by the party so notified, or
otherwise upon sixty (60) days' written notice to the other, but any such
termination shall not affect the status, obligations or liabilities of any party
hereto to the other.
21. LIMITATION OF LIABILITY. The term "Xxxxxxxx, Story and Rose Investment
Trust" means and refers to the trustees from time to time serving under the
Trust's Agreement and Declaration of Trust as the same may subsequently thereto
have been, or subsequently hereto may be, amended. It is expressly agreed that
the obligations of the Trust hereunder shall not be binding upon any of the
trustees, shareholders, nominees, officers, agents or employees of the Trust,
personally, but bind only the trust property of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees of the Trust and
signed by an officer of the Trust, acting as such, and neither such
authorization by such trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust.
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22. USE OF NAME. The name "Xxxxxxxx, Story and Rose" is a property right
of the Adviser. The Adviser may use the name "Xxxxxxxx, Story and Rose" in other
connections and for other purposes, including without limitation in the name of
other investment companies, corporations or business that it may manage, advise,
sponsor or own, or in which it may have a financial interest. The Trust will
discontinue any use of the name "Xxxxxxxx, Story and Rose" if the Adviser ceases
to be employed as the Trust's portfolio manager.
23. DEFINITIONS. As used in paragraphs 15 and 19 of this Agreement, the
terms "assignment," "interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.
24. APPLICABLE LAW. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter enacted, as
the same may be amended from time to time, this Agreement shall be administered,
construed and enforced according to the laws of the State of New York.
XXXXXXXX, STORY and ROSE
INVESTMENT TRUST
Attest: ____________________ By: /s/ Xxxxxxx X. Xxxxxx, Xx.
--------------------------
Xxxxxxx X. Xxxxxx, Xx.
Title: President
Date: February 26, 2001
ACCEPTANCE
The foregoing Agreement is hereby accepted.
XXXXXXXX, STORY and ROSE, LLC
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
--------------------------
Xxxxxxx X. Xxxxxx, Xx.
Title: Managing Director
Date: February 26, 2001
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SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISER
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1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all other
portfolio purchases or sales, given by the Adviser on behalf of the Funds
for, or in connection with, the purchase or sale of securities, whether
executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modification or
cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the Trust.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within ten
(10) days after the end of the quarter, showing specifically the basis or
bases upon which the allocation of orders for the purchase and sale of
portfolio securities to named brokers or dealers was effected, and the
division of brokerage commissions or other compensation on such purchase
and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Trust by brokers or dealers.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) The Trust;
(b) The Adviser;
(c) The Trust's principal underwriter; and
(d) Any person affiliated with the foregoing persons.
(iii)Any other consideration other than the technical qualifications
of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made available.
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C. Shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions or
other compensation.
D. The name of the person responsible for making the determination of
such allocation and such division of brokerage commissions or other
compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is made by
a committee or group, a record shall be kept of the names of its members
who participate in the authorization. There shall be retained as part of
this record: any memorandum, recommendation or instruction supporting or
authorizing the purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are required to
be maintained by registered investment advisers by rule adopted under
Section 204 of the Investment Advisers Act of 1940, to the extent such
records are necessary or appropriate to record the Adviser's transactions
with respect to the Funds.
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* Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from
brokerage firms (including their recommendation; i.e., buy, sell,
hold) or any internal reports or portfolio adviser reviews.
