INTERIM INVESTMENT ADVISORY AGREEMENT
INTERIM AGREEMENT made as of this 24/th/ day of January, 2006 between the
ICM Series Trust, an unincorporated business trust organized under the laws of
the Commonwealth of Massachusetts (hereinafter called the "Trust"), and
Ironwood Capital Management, LLC, a Massachusetts limited liability company,
(hereinafter called the "Adviser");
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and is authorized to issue shares ("Shares") in separate series and classes; and
WHEREAS, a series of the Trust having Institutional Class Shares and
Investment Class Shares, as well as separate assets and liabilities, has been
created under the name ICM/Isabelle Small-Cap Value Fund (the "Fund"); and
WHEREAS, the Adviser is registered as an Adviser under the Advisers Act of
1940, as amended (the "Advisers Act"); and
WHEREAS, the Trust has retained the Adviser to render advisory services to
the Fund pursuant to an Investment Advisory Agreement dated as of March 2, 1998
(the "Advisory Agreement"); and
WHEREAS, the Advisory Agreement, by its terms, and in accordance with
certain provisions of the 1940 Act, will terminate upon assignment;
WHEREAS, in connection with a change in control (an "assignment" under the
0000 Xxx) of the Adviser, an automatic termination of the Advisory Agreement
will occur;
WHEREAS, Rule 15a-4 under the 1940 Act provides a temporary exemption from
automatic termination of an advisory contract if the fund's board approves an
interim contract;
WHEREAS, at its October 17, 2005 meeting, the Board of Trustees of the
Trust, including a majority of the of the Board of Trustees who are not
"interested persons" (as defined in the 0000 Xxx) of any party to this Interim
Agreement, voted in person to approve this Interim Agreement so that the
Adviser may continue to render investment advisory services to the Trust upon
termination of the Advisory Agreement and until such time as a new investment
advisory agreement, approved by the Board at its October 17, 2005 meeting and
to be voted on by shareholders of the Trust (the "New Agreement"), becomes
effective; and
NOW THEREFORE, in consideration of the mutual promises and agreements herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is thereby acknowledged, it is hereby agreed between the
Trust and the Adviser, as follows:
1. The Trust hereby retains the Adviser, and the Adviser hereby agrees, to
act as investment adviser to the Trust and, subject to such limitations as the
Board of Trustees of the Trust may impose, to assume all investment duties and
have full discretionary power and
authority with respect to investment of the assets of the Fund. Without
limiting the generality of the foregoing, the Adviser shall (i) obtain and
evaluate such information and advice relating to the economy and securities
markets and securities as it deems necessary or useful to discharge its duties
hereunder; (ii) continuously invest the assets of the Fund in a manner
consistent with the investment objective and policies thereof as stated in the
Fund's Prospectuses and Statements of Additional Information on file with the
Securities and Exchange Commission, as the same may be amended from time to
time; (iii) determine the securities to be purchased, sold or otherwise
disposed of by the Fund and the timing of such purchases, sales and
dispositions; (iv) vote all proxies for securities held by the Fund and
exercise all other voting rights with respect to such securities in the manner
it deems appropriate; (v) issue settlement instructions to custodians
designated by the Trust; (vi) evaluate the credit worthiness of securities
dealers, banks and other entities with which the Fund may engage in repurchase
agreements and monitor the status of such agreements; and (vi) take such
further action, including the placing of purchase and sale orders and the
selection of broker-dealers to execute such orders on behalf of the Fund, as
the Adviser shall deem necessary or appropriate, in its sole discretion, to
carry out its duties under this Interim Agreement. The Adviser shall also
furnish to or place at the disposal of the Trust such information, evaluations,
analyses and opinions formulated or obtained by the Adviser in the discharge of
its duties, as the Trust may, from time to time, reasonably request.
The Adviser agrees, that in performing its duties hereunder, it will comply
with (i) the 1940 Act and the Advisers Act, and all rules and regulations
promulgated thereunder; (ii) all other applicable federal and state laws and
regulations, (iii) the provisions of the Declaration of Trust and By-Laws of
the Trust, as amended from time to time; and (iv) any applicable procedures
adopted by the Trust or the Adviser.
2. Adviser is responsible for broker-dealer selection in its sole
discretion, and is not obligated to deal with any broker or group of brokers in
executing portfolio transactions for the Fund. In selecting broker-dealers,
Adviser will generally seek the best combination of net price and execution and
may consider other factors, including: the broker's trading expertise, stature
in the industry, execution ability, facilities, clearing capabilities and
financial services offered, long-term relations with Adviser, reliability and
financial responsibility, timing and size of order and execution, difficulty of
execution, current market conditions and depth of the market. Transaction
charges, being a component of price, may also be considered as a factor in
making such determination. Accordingly, the price to the Fund in any
transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Board of
Trustees of the Trust may determine, the Adviser shall not be deemed to have
acted unlawfully or to have breached any duty created by this Interim Agreement
or otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides brokerage or research services to the Adviser an amount of
commission for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker and dealer, viewed in terms of either
that particular transaction or the Adviser's overall responsibilities with
respect to the Trust. The Adviser is further authorized to allocate the orders
placed by it on behalf of the Fund to such brokers or dealers who also provide
research or
statistical material, or other services, to the Trust, the Adviser, or any
affiliate of either. Such allocation shall be in such amounts and proportions
as the Adviser shall determine, and the Adviser shall report on such
allocations regularly to the Trust, indicating the broker-dealers to whom such
allocations have been made and the basis therefor.
3. The Adviser agrees to maintain and to preserve for the periods prescribed
under the 1940 Act any such records as are required to be maintained by the
Adviser with respect to the Funds by the 1940 Act. The Adviser further agrees
that all records which it maintains for the Funds are the property of the Funds
and it will promptly surrender any of such records upon request.
4. The Adviser shall bear the cost of rendering the advisory services to be
performed by it under this Interim Agreement, and shall, at its own expense,
pay the compensation of any Trustees, officers and employees, if any, of the
Trust who are affiliated persons of the Adviser. All other operating costs and
expenses relating the Fund shall be paid by the Trust from the assets of the
Fund, including without limitation: (i) the charges and expenses of any
registrar, any custodian or depository appointed by the Fund for the
safekeeping of its cash, portfolio securities and other property, and any stock
transfer or dividend agent or agents appointed by the Fund; (ii) brokers'
commissions chargeable to the Fund in connection with portfolio transactions to
which the Fund is a party; (iii) all taxes, including securities issuance and
transfer taxes, and fees payable by the Fund to federal, state or other
governmental agencies;(iv) the cost and expense of engraving or printing of
certificates representing shares of the Fund; (v) all costs and expenses in
connection with the registration and maintenance of registration of the Fund
and its shares with the Securities and Exchange Commission and various states
and other jurisdictions (including filing fees and legal fees and disbursements
of counsel and the costs and expenses of preparation, printing (including
typesetting) and distributing prospectuses for such purposes);(vi) all expenses
of shareholders' and Trustees' meetings and of preparing, printing and mailing
proxy statements and reports to shareholders; fees and travel expenses of
Trustees or members of any Advisory board or committee who are not employees of
the Adviser; (vii) all expenses which the Trust or the Fund agrees to bear
pursuant to any plan adopted by the Trust and/or the Fund pursuant to Rule
12b-1 of the 1940 Act or any other dividend or distribution program or
agreement; (viii) charges and expenses of any outside service used for pricing
of the Fund's shares; (ix) charges and expenses of legal counsel, including
counsel to the Trustees of the Trust who are not interested persons (as defined
in the 0000 Xxx) of the Fund or the Adviser, and of independent accountants, in
connection with any matter relating to the Fund; (x) membership dues of
industry associations; (xi) fees and expenses incident to the listing of the
Fund's shares on any stock exchange; (xii) interest payable on Fund borrowings;
(xiii) postage; insurance premiums on property or personnel (including officers
and Trustees) of the Fund which inure to its benefit; (xiv) extraordinary
expenses (including, but not limited to, legal claims and liabilities and
litigation costs and any indemnification related thereto); and xv) all other
charges and costs of the Fund's operation unless otherwise explicitly provided
herein.
Notwithstanding anything in the immediately preceding paragraph to the
contrary the Adviser hereby undertakes to limit total Fund expenses, including
the investment advisory fee set forth in Paragraph 6 below, to 1.95% of the
average daily net assets annually for Investment Class Shares and 1.70% of the
average daily net assets annually for Institutional Class Shares.
5. For the services to be rendered by the Adviser to the Fund, the Trust
shall pay to the Adviser monthly compensation, calculated from the day of
commencement of operations of the Fund, determined by applying the annual rate
of one percent (1%) of the Fund's average daily net assets. Except as
hereinafter set forth, compensation under this Interim Agreement shall be
calculated and accrued daily. If this Interim Agreement becomes effective
subsequent to the first day of a month or shall terminate before the last day
of a month, compensation for that part of the month this Interim Agreement is
in effect shall be prorated in a manner consistent with the calculation of the
fees as set forth above. Such compensation earned shall be maintained in an
interest-bearing escrow account with the Trust's custodian or a bank until such
time as the Trust's outstanding voting securities approve the New Agreement. At
such time, the escrowed amount (including interest earned) will be paid to the
Adviser. However, should the New Agreement with the Adviser not be approved by
the Trust's outstanding voting securities, the Adviser will be paid from the
escrow account the lesser of (i) any costs incurred in performing its duties
under the Interim Agreement (plus interest earned on that amount while in
escrow); or (ii) the total amount in the escrow account (plus interest earned).
In the event the expenses of the Fund (including the fees of the Adviser and
amortization of organization expenses, but excluding interest, taxes, brokerage
commissions, extraordinary expenses and sales charges, and expenses
attributable to investing outside the United States) for any fiscal year exceed
the limits set by applicable regulations of state securities commissions where
the Fund is registered or qualified for sale, the Adviser will reduce its fees
by the amount of such excess. Any such reductions are subject to readjustment
during the year. The payment of the advisory fee at the end of any month will
be reduced or postponed or, if necessary, a refund will be made to the Fund so
that at no time will there be any accrued but unpaid liability under this
expense limitation. The adviser may reduce any portion of the compensation or
reimbursement of expenses due to it under this Interim Agreement, or may agree
to make payments to limit the expenses which are the responsibility of the
Fund. Any such reduction or payment shall be applicable only to such specific
reduction or payment shall be applicable only to such specific reduction or
payment and shall not constitute an agreement to reduce any future compensation
or reimbursement due to the Adviser hereunder or to continue future payments.
Any fee withheld from the Adviser under this paragraph shall be reimbursed by
the Fund to the Adviser to the extent permitted by the applicable state law if
the aggregate expenses for the next succeeding fiscal year do not exceed the
applicable state limitation or any more restrictive limitation to which the
Adviser has agreed.
6. The Adviser will use its best judgment and effort in its investment of
the Fund's assets, but in the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties hereunder, the
Adviser shall not be liable to the Trust, the Fund or any of its shareholders
for any error of judgment or mistake of law or for any act or omission by the
Adviser or for any losses sustained by any of them. The Adviser shall be
indemnified by the Trust as an agent of the Trust in accordance with the terms
of Section 4.8 of the Trust's By-Laws. As used in this Section 7, the term
"Adviser" shall include any officers, managers, employees, or other affiliates
of the Adviser performing services with respect to the Fund.
7. Nothing contained in this Interim Agreement shall prevent the Adviser or
any affiliated person of the Adviser (as defined in the 0000 Xxx) from acting
as investment adviser or manager for any other investment companies and other
clients, whether or not the investment objectives or policies of any such other
clients are similar to those of the Fund, and shall not in any way bind or
restrict the Adviser or any such affiliated person from buying, selling or
trading any securities for their own accounts or for the account of others for
whom the Adviser or any such affiliated person may be acting. Nothing in this
Interim Agreement shall limit or restrict the right of the Adviser or any
manager, officer or employee of the Adviser to engage in any other business or
to devote time and attention in part to the management or other aspects of any
other business whether of a similar or dissimilar nature, so long as Advisers
services hereunder are not impaired thereby.
8. This Interim Agreement shall become effective as of the date hereof and
shall continue in effect, unless sooner terminated as herein provided, until
the earlier of (i) 150 days from such date or (ii) the date on which a
"majority" (as defined in the 0000 Xxx) of the Trust's outstanding voting
securities approves the New Agreement with the Adviser. This Interim Agreement
is terminable by the Trust, on behalf of the Fund, at any time on ten
(10) days' prior written notice to the Adviser, without payment of any penalty.
Such termination shall be effected as to the Fund by vote of the Trust's Board
of Trustees or by the vote of a majority of the outstanding voting securities
of the Fund. This Interim Agreement shall immediately terminate in the event of
its assignment (to the extent required by the 1940 Act and the rules
thereunder) unless such automatic terminations shall be prevented by an
exemptive order of the Securities and Exchange Commission. The Adviser may
terminate this Interim Agreement without payment of penalty on sixty (60) days
written notice to the Trust.
9. Any notice to be given by the Adviser to the Trust under this Interim
Agreement shall be given in writing, addressed and hand delivered or mailed
certified mail, to Two Xxxxxxxx Xxxxxx, Xxxxxxxx, XX 00000, or such other
address as shall be specified in writing to the Adviser. Any notice to be given
by the Trust or the Fund to the Adviser under this Interim Agreement shall be
given in writing, addressed and delivered or mailed certified mail, to 21
Xxxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxxxxx 00000, or such other
address as shall be specified in writing to the Trust.
10. No provision of this Interim Agreement may be changed, waived, discharge
or terminated orally, but only by any instrument in writing signed by both
parties hereto, and no amendment of this Interim Agreement shall be effective
with respect to the Fund until approved by an affirmative vote of (i) a
majority of the outstanding voting securities of the Fund, and (ii) a majority
of the Trustees of the Trust, including a majority of Trustees who are not
interested persons (as defined in the 0000 Xxx) of any party to this Interim
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, if such approval is required by applicable law. Notwithstanding
anything herein to the contrary, this Interim Agreement may be amended by the
parties without the vote or consent of the shareholders of the Fund to supply
any omission, to cure, correct or supplement any ambiguous, defective or
inconsistent provision hereof, or if they deem it necessary to conform this
Interim Agreement to the requirements of applicable federal laws or
regulations, but neither the Fund nor the Adviser shall be liable for failing
to do so.
11. It is understood that the name "Ironwood Capital Management" or any
derivative thereof or logo associated with that name, including without
limitation "ICM" or "Ironwood", is the valuable property of the Adviser and its
affiliates, and that the Fund has the right to use such name (or derivative
thereof or associated logo) only so long as this Interim Agreement or the New
Agreement shall continue with respect to the Fund. If the New Agreement is not
approved by the Trust's outstanding voting securities, then upon termination of
this Interim Agreement, the Fund shall forthwith cease to use such name (or
derivative thereof or associated logo) and the Trust shall promptly amend its
Declaration of Trust to change its name and the name of the Fund to comply
herewith.
12. This Interim Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts. To the extent the applicable law of the
Commonwealth of Massachusetts, or any of the provisions herein, conflict with
the applicable provisions of the 1940 Act, the Advisers Act or any rules,
regulations or orders of the Securities and Exchange Commission, the latter
shall control.
13. The Adviser understands that the obligations of this Interim Agreement
are not binding upon any shareholder of the Trust personally, but bind only the
Trust's property; the Adviser acknowledges that it has notice of the provisions
of the Trust's Declaration of Trust disclaiming shareholder liability for acts
or obligations of the Trust or any series of the Trust, including, without
limitation, the Fund. This Interim Agreement has been executed by or with
reference to any Trustee in such person's capacity as a Trustee, and the
Trustees shall not be personally liable hereon.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Interim Agreement on the day and year first above written in Boston,
Massachusetts.
THE ICM SERIES TRUST
By:
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Attest:
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IRONWOOD CAPITAL MANAGEMENT, LLC
By:
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Attest:
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