EXHIBIT (d)(5)
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the 19th day of November, 2004, between Trusco
Capital Management, Inc. (the "Adviser") and Xxxxxxxxxxx Capital Investments LLC
(the "Subadviser").
WHEREAS, the STI Classic Funds (the "Trust"), a Massachusetts business
trust, is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into investment advisory agreements with
the Trust (the "Advisory Agreements") pursuant to which the Adviser acts as
investment adviser to the series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain
the Subadviser to provide investment advisory services to the Adviser in
connection with the management of the series of the Trust set forth on Schedule
A attached hereto (each a "Fund," and collectively, the "Funds"), as such
schedule may be amended by mutual agreement of the parties hereto, and the
Subadviser is willing to render such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. Duties of the Subadviser. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Subadviser shall manage all of the
securities and other assets of each Fund entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets
in accordance with the Fund's investment objectives, policies, and
restrictions as stated in each Fund's then current prospectus and
statement of additional information, as may be amended or supplemented
from time to time (referred to collectively as the "Prospectus"), and
subject to the following:
(a) The Subadviser will provide investment advisory services to the Fund
and shall, in such capacity, determine from time to time what Assets
will be purchased, retained, or sold by the Fund, and what portion
of the Assets will be invested or held uninvested in cash, subject
to the direction of the Adviser and the Board of Trustees of the
Trust.
(b) In the performance of its duties and obligations under this
Agreement, the Subadviser shall act in conformity with the Trust's
Declaration of Trust (as defined herein), the Prospectus, and the
instructions and directions of the Adviser and of the Board of
Trustees of the Trust and will conform to and comply with the
requirements of the 1940 Act, the Internal Revenue Code of 1986 (the
"Code"), and all other applicable federal and state laws and
regulations, as each is amended from time to time.
(c) The Subadviser shall determine the Assets to be purchased or sold by
each Fund as provided in subparagraph (a) above and will place
orders with or through such persons, brokers or dealers to carry out
the policy with respect to brokerage set forth in each Fund's
Prospectus or as the Board of Trustees or the Adviser may direct in
writing from time to time, in conformity with all federal securities
laws. In executing Fund transactions and selecting brokers or
dealers, the Subadviser will use its best efforts to seek on behalf
of each Fund the best overall terms available. In assessing the best
overall terms available for any transaction, the Subadviser shall
consider all factors that it deems relevant, including the breadth
of the market in the security, the price of the security, the
financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. In evaluating
the best overall terms available, and in selecting the broker-dealer
to execute a particular transaction, the Subadviser may also
consider the brokerage and research services provided (as those
terms are defined in Section 28(e) of the Securities Exchange Act of
1934 (the "Exchange Act")). Consistent with any guidelines
established by the Board of Trustees of the Trust and Section 28(e)
of the Exchange Act, the Subadviser is authorized to pay to a broker
or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for each Fund that
is in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if, but only if,
the Subadviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer viewed in terms of that
particular transaction or in terms of the overall responsibilities
of the Subadviser to its discretionary clients, including the Funds.
In addition, the Subadviser is authorized to allocate purchase and
1
sale orders for securities to brokers or dealers (including brokers
and dealers that are affiliated with the Adviser, Subadviser, or the
Trust's principal underwriter) if the Subadviser believes that the
quality of the transaction and the commission are comparable to what
they would be with other qualified firms. In no instance, however,
will the Funds' Assets be purchased from or sold to the Adviser,
Subadviser, the Trust's principal underwriter, or any affiliated
person of either the Trust, Adviser, the Subadviser, or the
principal underwriter, acting as principal in the transaction,
except to the extent permitted by the Securities and Exchange
Commission ("SEC") and the 1940 Act.
(d) The Subadviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5),
(b)(6), (b)(7), (b)(9), (b)(10), and (b)(11) and paragraph (f) of
Rule 31a-1 under the 1940 Act. The Subadviser shall provide to the
Adviser or the Board of Trustees such periodic and special reports,
balance sheets or financial information, and such other information
with regard to its affairs as the Adviser or Board of Trustees may
reasonably request.
The Subadviser shall keep the books and records relating to the
Assets required to be maintained by the Subadviser under this
Agreement and shall timely furnish to the Adviser all information
relating to the Subadviser's services under this Agreement needed by
the Adviser to keep the other books and records of the Funds
required by Rule 31a-1 under the 1940 Act. The Subadviser shall also
furnish to the Adviser any other information relating to the Assets
that is required to be filed by the Adviser or the Trust with the
SEC or sent to shareholders under the 1940 Act (including the rules
adopted thereunder) or any exemptive or other relief that the
Adviser or the Trust obtains from the SEC. The Subadviser agrees
that all records that it maintains on behalf of the Funds are
property of the Funds and the Subadviser will surrender promptly to
the Funds any of such records upon the Funds' request; provided,
however, that the Subadviser may retain a copy of such records. In
addition, for the duration of this Agreement, the Subadviser shall
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any such records as are required to be maintained by it pursuant to
this Agreement, and shall transfer said records to any successor
subadviser upon the termination of this Agreement (or, if there is
no successor subadviser, to the Adviser).
(e) The Subadviser shall provide the Funds' custodian on each business
day with information relating to all transactions concerning the
Funds' Assets and shall provide the Adviser with such information
upon request by the Adviser.
(f) The investment management services provided by the Subadviser under
this Agreement are not to be deemed exclusive and the Subadviser
shall be free to render similar services to others as long as such
services do not impair the services rendered to the Adviser or the
Trust.
(g) The Subadviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Subadviser's ability to
fulfill its commitment under this Agreement.
(h) The Subadviser shall not be responsible for reviewing proxy
solicitation materials or voting and handling proxies in relation to
the securities held as Assets in the Funds. If the Subadviser
receives a misdirected proxy, it shall promptly forward such
misdirected proxy to the Adviser.
(i) In performance of its duties and obligations under this Agreement,
the Subadviser shall not consult with any other subadviser to the
Funds or a subadviser to a portfolio that is under common control
with the Funds concerning the Assets, except as permitted by the
policies and procedures of the Funds. The Subadviser shall not
provide investment advice to any assets of the Funds other than the
Assets.
Services to be furnished by the Subadviser under this Agreement may
be furnished through the medium of any of the Subadviser's control
affiliates, partners, officers or employees.
2. Duties of the Adviser. The Adviser shall continue to have responsibility
for all services to be provided to the Funds pursuant to the Advisory
Agreements and shall oversee and review the Subadviser's performance of
its duties under this Agreement; provided, however, that in connection
with its management of the Assets, nothing herein shall be construed to
relieve the Subadviser of responsibility for compliance with the Trust's
Declaration of Trust (as defined herein), the Prospectus, the instructions
and directions of the Board of Trustees of the Trust,
2
the requirements of the 1940 Act, the Code, and all other applicable
federal and state laws and regulations, as each is amended from time to
time.
3. Delivery of documents. The Adviser has furnished the Subadviser with
copies of each of the following documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts (such
Agreement and Declaration of Trust, as in effect on the date of this
Agreement and as amended from time to time, herein called the
"Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date of this Agreement and
as amended from time to time; and
(c) Prospectus of each Fund.
4. Compensation to the Subadviser. For the services to be provided by the
Subadviser pursuant to this Agreement, the Adviser will pay the
Subadviser, and the Subadviser agrees to accept as full compensation
therefor, a subadvisory fee at the rate specified in Schedule B attached
hereto and made part of this Agreement. The fee will be calculated based
on the average daily value of the Assets under the Subadviser's management
and will be paid to the Subadviser quarterly. Except as may otherwise be
prohibited by law or regulation (including any then current SEC staff
interpretation), the Subadviser may, in its discretion and from time to
time, waive a portion of its fee.
5. Indemnification. The Subadviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities, or
damages (including reasonable attorney's fees and other related expenses)
howsoever arising from or in connection with the performance of the
Subadviser's obligations under this Agreement; provided, however, that the
Subadviser's obligation under this Paragraph 5 shall be reduced to the
extent that the claim against, or the loss, liability, or damage
experienced by the Adviser, is caused by or is otherwise directly related
to the Adviser's own willful misfeasance, bad faith, or negligence, or to
the reckless disregard of its duties under this Agreement.
The Adviser shall indemnify and hold harmless the Subadviser from and
against any and all claims, losses, liabilities, or damages (including
reasonable attorney's fees and other related expenses) howsoever arising
from or in connection with the performance of the Adviser's obligations
under this Agreement; provided, however, that the Adviser's obligation
under this Paragraph 5 shall be reduced to the extent that the claim
against, or the loss, liability, or damage experienced by the Subadviser,
is caused by or is otherwise directly related to the Subadviser's own
willful misfeasance, bad faith, or negligence, or to the reckless
disregard of its duties under this Agreement.
6. Duration and termination. With respect to a Fund, this Agreement shall
become effective upon approval by the Trust's Board of Trustees and its
execution by the parties hereto, and approval of the Agreement by a
majority of the outstanding voting securities of that Fund.
This Agreement shall continue in effect for a period of more than two
years from the date hereof only so long as continuance is specifically
approved at least annually in conformance with the 1940 Act; provided,
however, that this Agreement may be terminated with respect to the Funds
(a) by the Funds at any time, without the payment of any penalty, by the
vote of a majority of Trustees of the Trust or by the vote of a majority
of the outstanding voting securities of the Funds, (b) by the Adviser at
any time, without the payment of any penalty, on not more than 60 days nor
less than 30 days written notice to the Subadviser, or (c) by the
Subadviser at any time, without the payment of any penalty, on 90 days
written notice to the Adviser. This Agreement shall terminate
automatically and immediately in the event of its assignment or in the
event of a termination of the relevant Advisory Agreement with the Trust.
As used in this Paragraph 6, the terms "assignment" and "vote of a
majority of the outstanding voting securities" shall have the respective
meanings set forth in the 1940 Act and the rules and regulations
thereunder, subject to such exceptions as may be granted by the SEC under
the 1940 Act.
3
7. Governing Law. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
8. Severability. Should any part of this Agreement be held 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.
9. Notice: Any notice, advice, or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified, or overnight mail, postage prepaid, and addressed by the party
giving notice to the other party at the last address furnished by the
other party:
To the Adviser at: Trusco Capital Management, Inc. 00
Xxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx, III
To the Subadviser at: Xxxxxxxxxxx Capital Investments LLC
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxxx
00. Xxx-xxxx/xxx-xxxxxxxxxxxx. The Subadviser hereby agrees that so long as
the Subadviser provides services to the Adviser or the Trust and for a
period of one year following the date on which the Subadviser ceases to
provide services to the Adviser and the Trust, the Subadviser shall not
for any reason, directly or indirectly, on the Subadviser's own behalf or
on behalf of others, hire any person employed by the Adviser, whether or
not such person is a full-time employee or whether or not any person's
employment is pursuant to a written agreement or is at-will. The
Subadviser further agrees that, to the extent that the Subadviser breaches
the covenant described in this paragraph, the Adviser shall be entitled to
pursue all appropriate remedies in law or equity.
11. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
In the event the terms of this Agreement are applicable to more than one
Fund, the Adviser is entering into this Agreement with the Subadviser on
behalf of the respective Funds severally and not jointly, with the express
intention that the provisions contained in each numbered paragraph hereof
shall be understood as applying separately with respect to each Fund as if
contained in separate agreements between the Adviser and Subadviser for
each such Fund. In the event that this Agreement is made applicable to any
additional Funds by way of a schedule executed subsequent to the date
first indicated above, provisions of such schedule shall be deemed to be
incorporated into this Agreement as it relates to such Fund so that, for
example, the execution date for purposes of Paragraph 6 of this Agreement
with respect to such Fund shall be the execution date of the relevant
schedule.
12. Miscellaneous.
(a) A copy of the Declaration of Trust is on file with the Secretary of
State of the Commonwealth of Massachusetts and notice is hereby
given that the obligations of this instrument are not binding upon
any of the Trustees, officers or shareholders of the Fund or the
Trust.
(b) Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation, or
order of the SEC, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule,
regulation, or order.
4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
TRUSCO CAPITAL MANAGEMENT, INC XXXXXXXXXXX CAPITAL INVESTMENTS LLC
By: By:
------------------------------- ----------------------------------
Name: Name:
----------------------------- ---------------------------------
Title: Title:
---------------------------- --------------------------------
5
SCHEDULE A
TO THE
INVESTMENT SUBADVISORY AGREEMENT
BETWEEN
TRUSCO CAPITAL MANAGEMENT, INC.
AND
XXXXXXXXXXX CAPITAL INVESTMENTS LLC
AS OF NOVEMBER 19, 2004
STI CLASSIC FUNDS
AGGRESSIVE GROWTH STOCK FUND
EMERGING GROWTH STOCK FUND
6
SCHEDULE B
TO THE
INVESTMENT SUBADVISORY AGREEMENT
BETWEEN
TRUSCO CAPITAL MANAGEMENT, INC.
AND
XXXXXXXXXXX CAPITAL INVESTMENTS LLC
AS OF NOVEMBER 19, 2004
Pursuant to Paragraph 4, the Adviser shall pay the Subadviser compensation at an
annual rate as follows:
STI CLASSIC FUNDS
Aggressive Growth Stock Fund...... .625% of the average daily value of the
assets under the Subadviser's
management, except that for any
compensation period during which the
Adviser waives any portion of the
management fee that the Fund is required
to pay, the Adviser will pay to the
Subadviser 55% of the amount of
compensation the Adviser receives from
the Fund during that compensation
period.
Emerging Growth Stock Fund....... .625% of the average daily value of the
assets under the Subadviser's
management, except that for any
compensation period during which the
Adviser waives any portion of the
management fee that the Fund is required
to pay, the Adviser will pay to the
Subadviser 55% of the amount of
compensation the Adviser receives from
the Fund during that compensation
period.
The management fee will be paid to the Subadviser quarterly.
Agreed and Accepted:
TRUSCO CAPITAL MANAGEMENT, INC XXXXXXXXXXX CAPITAL INVESTMENTS LLC
By: By:
------------------------------- ------------------------------------
Name: Name:
----------------------------- ----------------------------------
Title: Title:
----------------------------- ---------------------------------
7
