1
Exhibit 5
INVESTMENT ADVISORY AGREEMENT
BETWEEN
XxXXXXXX & COMPANY SECURITIES, INC. AND GRADISON CUSTODIAN TRUST
THIS AGREEMENT is made as of the 4th day of October, 1991, between XxXxxxxx &
Company Securities, Inc. an Ohio corporation (the "Adviser"), and Gradison
Custodian Trust, an Ohio business trust (the "Trust").
In consideration of the mutual covenants hereinafter contained, the parties
hereto agree as follows:
1.a. The Trust hereby employees the Adviser to manage the investment and
reinvestment of the assets of the Gradison Government Income Fund (the "Fund")
of the Trust in accordance with the Fund's investment objective and policies,
and to perform certain other services herein set forth and administer the
Trust's affairs to the extent requested subject to the supervision of the board
of trustees of the Trust, for the period and on the terms herein set forth.
b. The Adviser hereby accepts such employment, and agrees to render such
services and to assume the obligations herein set forth.
2. Should the Trust establish any additional series subsequent to the date
hereof and wish to retain the Adviser to serve as such series' investment
adviser under the terms of this Agreement, the Trust shall provide the Adviser
with a written notice to such effect which shall include the advisory fee
payable with respect to each such series. If the Adviser is willing to render
such services, it shall provide the Trust with a written notice to such effect,
whereupon each such series shall be included with Gradison Government Income
Fund in the term "Fund" hereunder.
3. The Adviser shall:
a. Manage the investment of the Fund's assets including the placing of orders
for purchases and sales and other investment transactions;
b. Report periodically to the Trust with respect to the Trust's investment
programs and with respect to the Adviser's activities in connection with the
administration of the Trust.
c. Provide shareholder services for the Trust (other than services to be
performed by any transfer agent, dividend disbursing agent, registrar,
distributor, custodian or depository appointed by the Trust). Such shareholder
services shall include, without limitation, responses to inquiries from
shareholders and processing of purchase orders and redemption requests; and
2
d. Provide persons satisfactory to the board of trustees of the Trust to act as
officers of the Trust.
4. Any investment program undertaken by the Adviser pursuant to this Agreement,
and any other activities undertaken by the Adviser on behalf of the Trust, shall
at all times be subject to any directives of the board of trustees of the Trust,
or of any duly constituted committee of the board, or of any officer of the
Trust acting pursuant to authority granted by the board or by any such
committee.
5. In addition to performing the obligations set forth in Paragraph 3 hereof,
the Adviser shall assume and bear expenses incurred with respect to the
following:
a. Trustees who are affiliated with the Adviser; and
b. Officers who are necessary for the management, operations, administration and
investments of the Trust.
6. All expenses not specifically assumed by the Adviser under this Agreement or
the distributor under the Master Distribution Agreement which may be incurred in
the operation of the Trust will be borne by the Trust. These include:
a. Expenses incurred by the Trust for office space, office facilities, business
equipment and utilities (including communications expenses);
b. Costs of preparing, printing and mailing, and expenses incurred in connection
with furnishing of information and administrative assistance with respect to the
preparation of; registration statements and prospectuses, including amendments
and revisions thereto, and annual, semi-annual and other periodic reports
furnished to shareholders of the Trust's Funds or to regulatory authorities; and
other documents required by regulatory authorities; and notices and proxy
solicitation materials furnished to shareholders of the Trust's Funds;
c. Such distribution expenses as may be contemplated by an effective plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940, provided,
however, that any such payment by the Trust of distribution expenses shall be in
the amounts, and in accordance with the procedures, set forth in such plan;
d. Registration, filing and other fees in connection with requirements of
regulatory authorities;
e. Expenses of issue, sale, redemption and repurchase of shares of the Trust's
Funds;
f. Expenses incurred by the Trust in connection with the provision of
shareholder services by the Adviser or others;
g. compensation of trustees of the Trust who are not affiliated with the
Adviser;
3
h. Compensation and expenses of any transfer agent, dividend disbursing agent,
registrar, custodian or depository appointed by the Trust;
i. Charges and expenses of independent accountants retained by the Trust;
j. Brokers' commissions and issue or transfer taxes chargeable to the Trust in
connection with securities transactions to which the Trust or a Fund of the
Trust is a party;
k. Taxes and other fees payable by the Trust to federal, state, or other
governmental agencies.
l. Costs of share certificates representing shares of the Trust's Funds;
m. Legal fees and expenses (including reimbursement to the Adviser for legal
services provided to the Trust, subject to review by the Trust's outside
counsel) in connection with the operations of the Trust, including the
registration or qualification of its shares with federal or state regulatory
authorities;
n. Expenses of the Trust, including expenses incurred in connection with
shareholders' or trustees' meetings; and
o. Fees and other expenses incurred by the Trust in connection with its
membership in any organization.
7. Expenses borne by the Trust pursuant to Paragraph 6 hereof and attributable
to a specific Fund of the Trust shall be allocated to that Fund. Expenses borne
by the Trust pursuant to Paragraph 6 hereof that are not attributable to a Fund
shall be allocated to each Fund in a manner and on a basis determined in good
faith by the Adviser to be fair and equitable, subject to review by the board of
trustees of the Trust.
8. The Trust shall reimburse the Adviser for all costs (direct and indirect)
which are fairly allocable to the shareholder services performed by the
Adviser's employees under this Agreement on behalf of the Trust, including,
without limitation, appropriate portions of employee salaries, benefits and
expenses. In the event of disagreement between the Trust and the Adviser as to a
fair basis for allocating such costs, such basis shall be fixed by the
independent public accountants for the Trust, and the parties shall be bound
thereby.
9. The services of the Adviser to the Trust are not to be deemed exclusive, and
the Adviser shall be free to render similar services to other persons so long as
the services to be rendered hereunder are not impaired thereby. Nothing in this
Agreement shall limit or restrict the right of any director, officer or employee
of the Adviser to engage in any other business or to devote his time and
attention in part to any other business.
4
10. The Adviser assumes no responsibility or obligation under this Agreement
other than to render in good faith the services provided for herein; provided
that nothing herein shall be deemed to protect or purport to protect the Adviser
against any liability to the Trust or its shareholders to which the Adviser
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder, or by reason of reckless
disregard of its obligations and duties hereunder. The Adviser shall not be
responsible or liable for any action or inaction of the board of trustees of the
Trust or any committee thereof.
11. In addition to all other charges and expenses to be paid hereunder, the
Trust shall pay to the Adviser compensation for its services and facilities
furnished hereunder, at an annual rate computed in accordance with the
appropriate portion of Schedule A attached hereto. The fee shall be computed and
accrued daily. The fee so computed and accrued during each calendar month shall
be paid to the Adviser on the first day of the next month.
12. The Adviser shall reimburse the Trust if and to the extent that expenses
(excluding brokerage commissions, taxes, interest and extraordinary items) borne
by the Trust in any fiscal year exceed any expense limitation applicable to a
Fund of the Trust imposed by any regulatory authority (as such limitations may
be established from time to time). During any fiscal year, the Adviser shall be
bound, in calculating the amount of any such excess, by the most stringent
applicable requirements of any state in which the shares of the Trust's Funds
are qualified for sale. Such excess expenses, if any, shall be determined and
paid on a monthly basis, subject to annual adjustment so that the aggregate of
reimbursements, if any, by the Adviser to the Trust for the fiscal year are in
the amount necessary to limit such expenses to the applicable expense
limitation.
13. Subject to compliance with the provisions of the 1940 Act, the Trust hereby
agrees that the Adviser may subcontract for the performance of any of the
services contemplated to be rendered by the Adviser hereunder.
14. It is mutually understood that trustees, officers, shareholders, employees
and agents of the Trust are or may be interested in the Adviser as directors,
officers, stockholders, employees, agents or in other capacities; that
directors, officers, stockholders, employees and agents of the Adviser are or
may be interested in the Trust as trustees, officers, shareholders, employees,
agents or in other capacities; that the Adviser may be interested in the Trust
as a shareholder or otherwise, and that the existence of any such dual interest
shall not affect the validity of this Agreement or of any transactions made
hereunder, except as may otherwise be provided in the Declaration of Trust of
the Trust or the Articles of Incorporation of the Adviser, or by any specific
provision of any applicable statute, rule or regulation.
5
15. This Agreement shall become effective as of the date first set forth above
and shall continue in effect until September 30, 1992. Thereafter, it shall
continue in effect from year to year, provided such continuance is specifically
approved at least annually, at meetings called for the purpose of voting upon
such approvals, by the vote of a majority of the outstanding voting securities
of that Fund or by the vote of a majority of the board of trustees of the Trust,
and in either event by the vote cast in person of a majority of the trustees of
the Trust who are not interested persons (as defined in the Investment Company
Act of 1940, as amended) of either party to this Agreement.
16. The Trust may at any time and without the payment of any penalty terminate
this Agreement as to a Fund upon 60 days' written notice to the Adviser, either
by action of the board of trustees of the Trust or by the vote of a majority of
the outstanding voting securities of that Fund, and the Adviser may at any time
and without the payment of any penalty terminate this Agreement upon 60 days'
written notice to the Trust. This Agreement shall automatically terminate in the
event of its assignment (within the meaning of the Investment Company Act of
1940, as amended) by the Adviser, unless such automatic termination shall be
prevented by an order of exemption from the Securities and Exchange Commission.
17. This Agreement may be amended at any time by the mutual consent of the
parties, provided that such consent on the part of the Trust shall have been
approved, at meetings called for the purpose of voting upon such consent, by the
vote of a majority of the outstanding voting securities of the affected Fund,
and by the vote of a majority of the board of trustees of the Trust, including
the vote cast in person by a majority of the trustees of the Trust who are not
interested persons (as defined in the Investment Company Act of 1940, as
amended)of either party to this Agreement.
18. The parties to this Agreement acknowledge that the Adviser has an exclusive
proprietary interest in the use of the names "Gradison" and "McDonald" and
further acknowledge that the Adviser has consented to the use of such names by
the Trust subject to withdrawal of such consent upon 30 days written notice to
the Trust. The Trust agrees that the names "Gradison" and "McDonald" will be
used by it only in connection with the business of an open-end diversified
management investment company; that such names will be used only in such forms,
styles and contexts as may be approved by the Adviser, and that the Trust will
not do or cause to be done any act or undertaking which has the effect of
contesting, challenging or in any way impairing the Adviser's right, title or
interest in or to such names. The Trust agrees that it will not represent that
it has any right, title or interest in such names, and that the Trust's use of
such names shall not create any right, title or interest in its favor therein.
Within 30 days after the termination of this Agreement for any reason, or after
the written withdrawal of such consent of the Adviser (with or without cause and
within the Adviser's sole discretion)the Trust (a) will cease and desist from
every use of the names "Gradison" and "McDonald" and will
6
deliver to the Adviser all prospectuses, sales literature and other advertising
materials bearing such names; (b) will cause its name to be changed so as to
eliminate the word "Gradison" or "McDonald" therefrom; and (c) will not at any
time thereafter adopt or use any name, xxxx or other trade designation which is
confusingly similar to the names "Gradison" or "McDonald" or likely to mislead
the public.
19. Any notice required by or permitted to be given in connection with this
Agreement shall be in writing, addressed and delivered in person, or mailed
postage prepaid, to addresses designated by the respective parties for the
receipt of such notice. Until further written notice, it is agreed that the
addresses of the Adviser and the Trust respectively shall be:
XxXxxxxx & Company Securities, Inc. Gradison Custodian Trust
Attention: Xxxxxx Xxxxx Attention: Xxxxxx X. Xxxxxxxx
0000 Xxxxxxx Xxxxxxxx Xxx 000 Xxxxxxxx
Xxxxxxxxx, Xxxx 00000 Xxxxxxxxxx, Xxxx 00000
Gradison Custodian Trust
Attention: Xxxxx X. Xxxxxxx
The 000 Xxxxxxxx
Xxxxxxxxxx, Xxxx 00000
20. The shareholders, trustees, officers, employees and agents of the Trust
shall not personally be bound by or liable under this Agreement, nor shall
resort be had to their private property for the satisfaction of any obligation
or claim hereunder, as more fully provided under the terms of the Declaration of
Trust.
IN WITNESS WHEREOF, the parties have executed this Investment Advisory Agreement
as of the date first written above.
XxXXXXXX & COMPANY SECURITIES, INC. GRADISON CUSTODIAN TRUST
BY: /s/ [Illegible] /s/Xxxxxx X. Xxxxxx
[Illegible] Chairman
Schedule A
Investment Advisory Fee
Series Fee
Gradison Government Income Fund .5 of 1% of the average
daily net assets of the series
