SUB-ADVISORY AGREEMENT
AGREEMENT made as of the ____ day of July, 1998, by and
between IPS ADVISORY, INC. ("IPS"), and High Street(TM)
Financial, Inc., a Florida corporation ("High Street").
W I T N E S S E T H:
WHEREAS, IPS FUNDS (the "Trust") is engaged in business as
an open-end management investment company registered under the
Investment Company Act of 1940, as amended (hereinafter referred
to as the "Investment Company Act") and has one class of shares
(the "Shares") which may be divided into two or more series (the
"Series"), each representing an interest in a separate portfolio
of investments (the "Funds"); and
WHEREAS, the Shares of the Trust have, in fact, been divided
into separate Series, one such Series being the Dynamic Style
Rotation Fund (the "DSR(SM) Fund"); and
WHEREAS, IPS and High Street is engaged principally in
rendering investment advisory services and are registered as
investment advisers under the Investment Advisers Act of 1940;
and
WHEREAS, IPS has entered into an Investment Advisory
Agreement with the Trust (the "IPS Investment Advisory
Agreement"), pursuant to which IPS will provide investment
advisory services to the DSR(SM) Fund; and
WHEREAS, High Street is willing to provide investment
advisory services to IPS in connection with the Trust's
operations on the terms and conditions hereinafter set forth;
WHEREAS, it is understood by the parties that this Agreement
is solely between the parties, and that this Agreement is not
intended to, and shall not, impose any obligation on the Trust,
the trustees of the Trust, and the shareholders of the Trust.
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, IPS and High Street hereby agree
as follows:
ARTICLE I
DUTIES OF HIGH STREET
IPS hereby employs High Street to act as sub-adviser to
IPS and to furnish, or arrange for affiliates of High Street to
furnish the investment advisory services described below, subject
to the broad supervision of IPS and the Trust, for the period and
on the terms and conditions set forth in this Agreement. High
Street hereby accepts such employment and agrees during such
period, at its own expense, to render, or arrange for the
rendering of, such services and to assume the obligations herein
set forth for the compensation provided for herein. High Street
and its affiliates shall for all purposes herein be deemed to be
independent contractors and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent
the Trust or the DSR(SM) Fund of the Trust in any way or
otherwise be deemed an agent of the Trust or the DSR(SM) Fund.
High Street hereby agrees to manage the investment
operations of the DSR(SM) Fund, subject to the supervision of the
Trust's trustees (the "Trustees") and IPS. Specifically High
Street agrees to perform the following services for the Trust,
IPS and the DSR(SM) Fund:
(a) to manage the investment and reinvestment of all
the assets, now or hereafter acquired, by the DSR(SM) Fund;
(b) to maintain a continuous investment program for
the DSR(SM) Fund, consistent with (i) the DSR(SM) Fund's and
Trust's investment policies as set forth in the Trust's
Declaration of Trust, By-laws, Registration Statement, as from
time to time amended, under the Investment Company Act of 1940,
as amended (the "1940 Act"), and in any prospectus and/or
statement of additional information of the Trust or of the
DSR(SM) Fund, as from time to time amended and in use under the
Securities Act of 1933, as amended, and (ii) the Trust's status
as a regulated investment company under the Internal Revenue Code
of 1986, as amended;
(c) to determine what securities are to be purchased
or sold for the DSR(SM) Fund, unless otherwise directed by the
Trustees of the Trust or IPS, and to execute transactions
accordingly;
(d) to provide to the Trust and the DSR(SM) Fund the
benefit of all of the investment analyses and research, the
reviews of current economic conditions and of trends, and the
consideration of long-range investment policy now or hereafter
generally available to investment advisory customers of High
Street;
(e) to determine what portion of the DSR(SM) Fund
should be invested in Government obligations, commercial paper,
certificates of deposit, bankers' acceptances, variable amount
notes and corporate debt obligations; and
(f) to make recommendations as to the manner in which
voting rights, rights to consent to Trust and/or DSR(SM) Fund
action and any other rights pertaining to the DSR(SM) Fund's
portfolio securities shall be exercised.
In connection with purchases or sales of portfolio
securities for the Fund, it is understood that High Street will
arrange for the placing of all orders for the purchase and sale
of portfolio securities for the account with brokers or dealers
selected by High Street, subject to review of this selection by
the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and
portfolio brokerage. In the selection of such brokers or dealers
and the placing of such orders, High Street is directed at all
times to seek for the series the best qualitative execution,
taking into account such factors as price (including the
applicable brokerage commission or dealer spread), the execution
capability, financial responsibility and responsiveness of the
broker or dealer and the brokerage and research services provided
by the broker or dealer.
High Street should generally seek favorable prices and
commission rates that are reasonable in relation to the benefits
received. In seeking best qualitative execution, High Street is
authorized to select brokers or dealers who also provide
brokerage and research services (as those terms are defined in
-2-
Section 28(e) of the Securities Exchange Act of 1934) to the
Trust and/or the other accounts over which High Street exercise
investment discretion. You are authorized to pay a broker or
dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Fund
which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if High
Street determines in good faith that the amount of the commission
is reasonable in relation to the value of the brokerage and
research services provided by the executing broker or dealer.
Except as provided below, High Street is also
authorized to engage in the Brokerage/Services Arrangements (as
defined in the IPS Investment Advisory Agreement) on behalf of
the Fund, subject to the best qualitative execution requirements
set forth above. Notwithstanding the foregoing, any payments
through the Brokerage/Services Arrangements must be approved by
the Trust's Board of Trustees and be the product of arms-length
negotiation, must directly and exclusively benefit the Fund and
may only be for any one or a combination of the following: the
Service Fees (as defined in the IPS Investment Advisory
Agreement), administrative fees, accounting fees, consulting
fees, printing fees, independent trustee expenses, proxy
solicitation expenses, association membership fees, insurance
premiums, interest expenses and taxes.
Brokerage determinations may be viewed in terms of
either a particular transaction or High Street's overall
responsibilities with respect to the Fund and to accounts over
which High Street exercises investment discretion. The parties
understand and acknowledge that, although the information may be
useful to the parties, it is not possible to place a dollar value
on such information. The Board shall periodically review the
commissions paid by the Fund to determine if the commissions paid
over representative periods of time were reasonable in relation
to the benefits to the Fund.
Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., and subject to
seeking best qualitative execution as described above, High
Street may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
-3-
Subject to the provisions of the Investment Company Act
of 1940, as amended, and other applicable law, High Street or any
of High Street's affiliates may retain compensation in connection
with effecting the Fund's portfolio transactions, including
transactions effected through others. If any occasion should
arise in which High Street gives any advice to clients of High
Street's concerning the shares of the Fund, High Street will act
solely as investment counsel for such client and not in any way
on behalf of the Fund. High Street's services to the Fund
pursuant to this Agreement are not to be deemed to be exclusive
and it is understood that High Street may render investment
advice, management and other services to others.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
High Street assumes and shall pay for maintaining the staff
and personnel necessary to perform its obligations under this
Agreement, and shall at its own expense, provide the office
space, equipment and facilities which it is obligated to provide
under Article I hereof.
ARTICLE III
COMPENSATION OF HIGH STREET
For the services rendered, the facilities furnished and
expenses assumed by High Street, IPS shall pay to High Street an
annual fee, computed on a daily basis and paid on a monthly
basis, using for each daily calculation the most recently
determined net asset value of the DSR(SM) Fund, as determined by
valuation made in accordance with the DSR(SM) Fund's procedure
for calculating its net asset value as described in the
Prospectus and/or SAI. Upon an annual basis, the advisory fee
shall be .75% of the average net asset value of net assets of the
DSR(SM) Fund. During any period when the determination of net
asset value is suspended by the Trustees of the Trust, the net
asset value of a share of the DSR(SM) Fund as of the last
business day prior to such suspension shall, for the purpose of
this Article III, be deemed to be the net asset value at the
close of each succeeding business day until it is again
determined.
ARTICLE IV
LIMITATION OF LIABILITY OF HIGH STREET
High Street shall not be liable for any error of judgment,
mistake of law or for any loss arising out of any investment or
for any act or omission in the performance of sub-advisory
services rendered with respect to the Trust or, in particular,
the DSR(SM) Fund, except for willful misfeasance, bad faith or
gross negligence in the performance of its duties or by reason of
reckless disregard of its obligations and duties hereunder. As
used in this Article IV, High Street shall include any affiliates
of High Street performing services contemplated hereby and
directors, officers and employees of High Street and such
affiliates.
-4-
ARTICLE V
ACTIVITIES OF HIGH STREET
The services of High Street to the Trust are not deemed to
be exclusive. High Street and any person controlled by or under
common control with High Street (for purpose of this Article V
referred to as "affiliates") may render services to others.
Trustees, officers, employees and shareholders of the Trust are
or may become interested in High Street and its affiliates, as
directors, officers, employees and shareholders or otherwise and
that directors, officers, employees and shareholders of High
Street and its affiliates are or may become interested in the
Trust as trustees, officers and employees, and that High Street,
IPS and the directors, officers, employees, partners and
shareholders of IPS and its affiliates may become interested in
the Trust as a shareholder or otherwise.
ARTICLE VIII
USE OF NAME "DYNAMIC STYLE ROTATION"
High Street hereby grants to the Trust and IPS the right to
use the name "Dynamic Style Rotation" in connection with the
DSR(SM) Fund in the United States as long as High Street
continues to serve as sub-adviser for IPS in connection with the
DSR(SM) Fund. If, for any reason, High Street no longer serves
as sub-adviser for IPS in connection with the DSR(SM) Fund or if
this Agreement is terminated as provided in Section (8) below,
High Street hereby reserves the right, upon 30 days' written
notice to the Trust and IPS, to terminate the Trust's and IPS's
right to use the name "Dynamic Style Rotation" in connection with
the DSR(SM) Fund Upon such notification by High Street, the
Trust and IPS will immediately commence to take all appropriate
steps to discontinue use of the name "Dynamic Style Rotation" in
connection with the DSR(SM) Fund and shall take all steps
necessary under applicable laws to change the name of the DSR(SM)
Fund to a name not confusingly similar to "Dynamic Style
Rotation." If within a reasonable period of time, but in no event
longer than four months, after receiving notification from High
Street as provided in this paragraph, the Trust and IPS do not
discontinue the use of the name "Dynamic Style Rotation" in
connection with the DSR(SM) Fund, High Street may seek such legal
and equitable relief as it may deem appropriate. High Street
hereby reserves the right also to grant the right to use the name
"Dynamic Style Rotation" to another investment company, business
or enterprise. IPS hereby acknowledges and agrees that the name
"Dynamic Style Rotation" is a valuable asset of High Street and
that High Street has established a property right to its use.
-5-
ARTICLE VII
AVOIDANCE OF INCONSISTENT POSITIONS AND COMPLIANCE
WITH THE LAWS
In connection with purchases or sales of securities for the
investment portfolio of the DSR(SM) Fund, neither High Street nor
any of its directors, officers or employees will act as a
principal or agent for any party other than the Trust or DSR(SM)
Fund, as applicable, or receive any commissions. High Street
will comply with all applicable laws in acting hereunder
including, without limitation, the 1940 Act, the Investment
Advisers Act of 1940, as amended, and all rules and regulations
duly promulgated under the foregoing.
ARTICLE VIII
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date first
above written and shall remain in force until July __, 2000 and
thereafter, but only so long as such continuance is specifically
approved at least annually by (i) the trustees of the Trust, or
by the vote of a majority of the outstanding voting securities of
the DSR(SM) Fund, and (ii) a majority of those trustees 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.
This Agreement may be terminated at any time, without the
payment of any penalty, by IPS, the Trustees of the Trust or by
vote of a majority of the outstanding voting securities of the
DSR(SM) Fund, or by High Street, on sixty days' written notice to
the applicable party(ies). This Agreement shall automatically
terminate in the event of its assignment or in the event of the
termination of the IPS Management Agreement.
ARTICLE IX
AMENDMENTS OF THIS AGREEMENT
This Agreement may be amended by the parties only if such
amendment is specifically approved by (i) the vote of a majority
of outstanding voting securities of the DSR(SM) Fund, and (ii) a
majority of those Trustees 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.
ARTICLE X
DEFINITIONS OF CERTAIN TERMS
The terms "vote of a majority of the outstanding voting
securities," "assignments," "affiliated person" and "interested
person," when used in this Agreement, shall have the respective
meanings specified in the Investment Company Act and the Rules
and Regulations thereunder, subject, however, to such exemptions
as may be granted by the Securities and Exchange Commission under
said Act.
-6-
ARTICLE XI
GOVERNING LAW
This Agreement shall be construed in accordance with laws of
the State of Georgia and the applicable provisions of the
Investment Company Act. To the extent that the applicable laws
of the State of Georgia, or any of the provisions herein,
conflict with the application provisions of the Investment
Company Act, the latter shall control.
ARTICLE XII
PERSONAL LIABILITY
HIGH STREET EXPRESSLY ACKNOWLEDGES THAT THE DECLARATION OF
TRUST ESTABLISHING THE IPS FUNDS, DATED AS OF AUGUST 10, 1994, A
COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
DECLARATION"), IS ON FILE IN THE OFFICE OF THE SECRETARY OF THE
STATE OF OHIO PROVIDES THAT THE NAME IPS FUNDS REFERS TO THE
TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT
AS INDIVIDUALS OR PERSONALLY; AND NO TRUSTEE, SHAREHOLDER,
OFFICER, EMPLOYEE OR AGENT OF IPS FUNDS SHALL BE HELD TO ANY
PERSONAL LIABILITY, NOR SHALL RESORT BE HAD TO THEIR PRIVATE
PROPERTY FOR THE SATISFACTION OF ANY OBLIGATION OR CLAIM OR
OTHERWISE, IN CONNECTION WITH THE AFFAIRS OF SAID IPS FUNDS, BUT
THE "TRUST PROPERTY" (AS DEFINED IN THE DECLARATION) ONLY SHALL
BE LIABLE.
-7-
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
IPS ADVISORY, INC.
By:___________________________
Xxxx X'Xxxxx, President
HIGH STREET FINANCIAL, INC.
By:___________________________
Xxxx X. Xxxxxxxxxx,
President
ACKNOWLEDGED AND ACCEPTED BY:
IPS FUNDS
By:___________________________
Xxxx X'Xxxxx, President
-8-
