SUB-ADVISORY AGREEMENT
AGREEMENT made as of the ____ day of _______, 1998, by and
between IPS ADVISORY, INC., a ____________ corporation ("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 Fund"); and
WHEREAS, IPS and High Street are 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 and
advisory services to the DSR 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 Fund of the Trust in any way or otherwise be
deemed an agent of the Trust or the DSR Fund.
High Street hereby agrees to manage the investment
operations of the DSR 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 Fund:
(a) to manage the investment and reinvestment of all
the assets, now or hereafter acquired, by the DSR Fund;
(b) to maintain a continuous investment program for
the DSR Fund, consistent with (i) the DSR 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 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 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 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 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 Fund action
and any other rights pertaining to the DSR Fund's portfolio
securities shall be exercised.
With respect to execution of transactions for the Trust and
for the DSR Fund, High Street shall place all orders for the
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purchase or sale of portfolio securities with brokers or dealers
selected by High Street. In connection with the selection of
such brokers or dealers and the placing of such orders, High
Street is directed at all times to obtain for the DSR Fund the
most favorable execution and price; after fulfilling this primary
requirement of obtaining the most favorable execution or price,
High Street is hereby expressly authorized to consider as a
secondary factor in selecting brokers or dealers with which such
orders may be placed whether such firms furnish statistical,
research and other information or services to High Street.
Receipt by High Street of any such statistical or other
information and services should not be deemed to give rise to any
requirement for abatement of the advisory fee payable pursuant to
paragraph 3 hereof. High Street may follow a policy of
considering sales of shares of the Trust as a factor in the
selection of broker-dealers to execute portfolio transactions,
subject to the requirements of best execution discussed above.
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 Fund, as determined by
valuation made in accordance with the DSR 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 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 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 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.
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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
Fund in the United States as long as High Street continues to
serve as sub-adviser for IPS in connection with the DSR Fund.
If, for any reason, High Street no longer serves as sub-adviser
for IPS in connection with the DSR 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 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 Fund and shall take all steps necessary under applicable laws
to change the name of the DSR 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 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.
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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 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 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 __________, ____
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 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 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 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.
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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.
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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(TM) FINANCIAL INC.
By:______________________________
Xxxx X. Xxxxxxxxxx, President
