EXHIBIT (d)(5)
STI CLASSIC FUNDS
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the 20th day of February, 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 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.
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(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, 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.
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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.
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.
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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.
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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: /s/ Xxxx X. Xxxxxxxxx III By: /s/ Xxxxx X. Xxxxxxxxxxx
--------------------------- --------------------------------
Name: Xxxx X. Xxxxxxxxx III Name: Xxxxx X. Xxxxxxxxxxx
Title: Executive Vice President Title: President
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SCHEDULE A
TO THE
INVESTMENT SUBADVISORY AGREEMENT
BETWEEN
TRUSCO CAPITAL MANAGEMENT, INC.
AND
XXXXXXXXXXX CAPITAL INVESTMENTS LLC
AS OF FEBRUARY 20, 2004
STI CLASSIC FUNDS
Aggressive Growth Stock Fund
Emerging Growth Stock Fund
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SCHEDULE B
TO THE
INVESTMENT SUBADVISORY AGREEMENT
BETWEEN
TRUSCO CAPITAL MANAGEMENT, INC.
AND
XXXXXXXXXXX CAPITAL INVESTMENTS LLC
AS OF FEBRUARY 20, 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: /s/ Xxxx X. Xxxxxxxxx III By: /s/ Xxxxx X. Xxxxxxxxxxx
--------------------------- --------------------------------
Name: Xxxx X. Xxxxxxxxx III Name: Xxxxx X. Xxxxxxxxxxx
Title: Executive Vice President Title: President
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STI CLASSIC FUNDS
AGGRESSIVE GROWTH STOCK FUND
EMERGING GROWTH STOCK FUND
SUB ADVISORY PROCEDURES
Pursuant to Section 1.(a) of the STI Classic Funds Investment Subadvisory
Agreement between Trusco Capital Management, Inc. (the "Adviser") and
Xxxxxxxxxxx Capital Investments LLC (the "Subadviser") dated February 20, 2004,
the Subadviser will determine what portion of the Assets will be invested or
held uninvested in cash. The Adviser will invest cash with or through such
person, brokers or dealers to carry out the policy as set forth in each Fund's
Prospectus or as the Board of Trustees may direct. The Adviser shall maintain
all books and records with respect to investment of cash as required by Rule
31a-1 under the 1940 Act and will have responsibility for all other regulatory,
compliance and reporting requirements affecting investment of such Fund assets.
In addition, the Adviser shall provide the Funds' custodian on each business day
with information relating to investment of cash.
Upon 30 days written notice from the Adviser, the Subadviser shall assume
responsibility for investment of cash and related recordkeeping requirements of
Rule 31a-1 under the 1940 Act, all other regulatory, compliance and reporting
requirements affecting investment of such Fund assets, as well as providing the
Funds' custodian on each business day with information relating to investment of
cash. Such information shall also be provided to the Adviser upon request.
February 20, 2004
