<PAGE> 1
As filed with the Securities and Exchange
Commission on February 20, 1998
Registration Nos. 333-40819
811-8507
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. 1 |X|
Post-Effective Amendment No. _________ |_|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 1 |X|
(Check appropriate box or boxes)
ICM Series Trust
(Exact Name of Registrant as Specified in Charter)
4400 Computer Drive, Westborough, Massachusetts 01581
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: (617) 345-9800
Joseph Mazzella, Esq.
Lane Altman & Owens LLP
101 Federal Street
Boston, Massachusetts 02110
(Name and Address of Agent for Service)
Copies to:
Warren J. Isabelle, CFA Teresa M.R. Hamlin, Esq.
IronWood Capital Management, LLC First Data Investor Services Group, Inc.
One Financial Center One Exchange Place, 8th Floor
Boston, MA 02111 Boston, Massachusetts 02109
Pursuant to Section 24(f) and Rule 24f-2 under the Investment Company Act
of 1940, the Registrant has registered an indefinite number of shares of
beneficial interest under the Securities Act of 1933. The Registrant will file
the notice required by Rule 24f-2 within 90 days after the close of the
Registrant's fiscal year.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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ICM Series Trust
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus
(Investment Class Shares and Institutional Class Shares)
PART A
------------------------------------------
ITEM HEADING
1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; The Fund; Investment
Objective and Approach of the Fund;
Management of the Fund; The Trust
5. Management of Fund Investment Objective and Approach of
the Fund; Investment; Practices and
Risk Considerations; Management of
the Fund
6. Capital Stock and Other Securities Management of the Fund; How to
Purchase Fund Shares; How to Redeem
Fund Shares; Dividends,
Distributions and Taxation; The
Trust
7. Purchase of Securities Being Offered Management of the Fund; How to
Purchase Fund Shares; Distribution
Plan
8. Redemption of Repurchase How to Redeem Fund Shares
9. Pending Legal Proceedings Not Applicable
Statement of Additional Information
(Investment Class Shares and Institutional Class Shares)
PART B
------------------------------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
<PAGE> 3
12. General Information and History The Fund; Description of Shares; See
Prospectus -- "Management of the
Fund"
13. Investment Objectives and Policies Investment Policies and Practices;
Investment Restrictions; Portfolio
Transactions
14. Management of the Fund Management of the Fund; Investment
Adviser; See Prospectus --
"Management of the Fund"
15. Control Persons and Principal Management of the Fund; Investment
Holders of Securities Adviser; See Prospectus --
"Management of the Fund"
16. Investment Advisory and Other Management of the Fund; Investment
Services Adviser; Distribution Plan;
Administrator; Transfer Agent;
Distributor; Custodian; Independent
Public Accountants; See Prospectus
-- "Management of the Fund"
17. Brokerage Allocation and Other Portfolio Transactions
Practices
18. Capital Stock and Other Securities Description of Shares; Shareholder
and Trustee Liability; See
Prospectus -- "Management of the
Fund"
19. Purchase, Redemption and Pricing of Purchase of Fund Shares; Redemption
Securities Being Offered of Fund Shares; Determination of Net
Asset Value; Description of Shares
20. Tax Status Taxes and Dividends; See Prospectus
-- "Dividends, Distributions and
Taxes"
21. Underwriters Distributor
22. Calculation of Performance Data Investment Results
23. Financial Statements Not Applicable
<PAGE> 4
12. General Information and History The Fund; Description of Shares; See
Prospectus -- "Management of the
Fund"
13. Investment Objectives and Policies Investment Policies and Practices;
Investment Restrictions; Portfolio
Transactions
14. Management of the Fund Management of the Fund; Investment
Adviser; See Prospectus --
"Management of the Fund"
15. Control Persons and Principal Management of the Fund; Investment
Holders of Securities Adviser; See Prospectus --
"Management of the Fund"
16. Investment Advisory and Other Management of the Fund; Investment
Services Adviser; Distribution Plan;
Administrator; Transfer Agent;
Distributor; Custodian; Independent
Public Accountants; See Prospectus
-- "Management of the Fund"
17. Brokerage Allocation and Other Portfolio Transactions
Practices
18. Capital Stock and Other Securities Description of Shares; Shareholder
and Trustee Liability; See
Prospectus -- "Management of the
Fund"
19. Purchase, Redemption and Pricing of Purchase of Fund Shares; Redemption
Securities Being Offered of Fund Shares; Determination of Net
Asset Value; Description of Shares
20. Tax Status Taxes and Dividends; See Prospectus
-- "Dividends, Distributions and
Taxes"
21. Underwriters Distributor
22. Calculation of Performance Data Investment Results
23. Financial Statements Not Applicable
<PAGE> 5
PROSPECTUS February xx, 1998
ICM SERIES TRUST
ICM/ISABELLE SMALL-CAP VALUE FUND
Investment Class Shares
Institutional Class Shares
ICM Series Trust (the "Trust") is an open-end investment company known as a
mutual fund. This Prospectus offers Investment Class Shares ("Investment Class
Shares") and Institutional Class Shares ("Institutional Class Shares", together
with the Investment Class Shares, the "Shares") of the ICM/ISABELLE SMALL-CAP
VALUE FUND (the "Fund"). The Fund seeks capital appreciation by investing in a
diversified portfolio of securities consisting primarily of common stocks. Any
current income generated from these securities is incidental to the investment
objective of the Fund.
In order to achieve its investment objective, the Fund will invest at least
80% of its total assets in common stocks and common stock equivalents (such as
convertible bonds and preferred stock) of companies with a market capitalization
of less than $1 billion at time of purchase. Up to 20% of the Fund's total
assets may be invested in common stocks, common stock equivalents and debt
securities of companies not meeting the foregoing market capitalization
parameters. The Fund will not invest 25% or more of its assets in any one
industry group. See "Investment Objective and Approach of the Fund" in this
Prospectus. There is no assurance that the Fund will achieve its investment
objective.
Fund returns and share prices fluctuate and the value of your account upon
redemption may be more or less than your purchase price. Shares in the Fund are
not deposits or obligations of, or guaranteed or endorsed by, any bank or other
depository institution, and the shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other government
agency. Investments in the securities of small capitalization companies may
offer greater capital appreciation potential than investments in mid to
large-cap company securities, but may be subject to greater short-term price
fluctuations. This Fund is intended for investors who can accept the risks
associated with its investments and may not be suitable for all investors. See
"Investment Objective and Policies" for a discussion of these risks.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 6
Prospective investors should be aware that the Fund intends to close to new
investors once the Fund's total assets equal or exceed $500 million in total
assets. In such event, the Fund expects to continue to accept investments only
from existing shareholders. If the Fund closes, the right of existing
shareholders to redeem their shares will be not affected. See page 18 of this
Prospectus for more details.
IronWood Capital Management, LLC ("ICM" or the "Adviser") serves as the
Fund's investment adviser. First Data Investor Services Group, Inc. ("Investor
Services Group") serves as the Fund's administrator (the "Administrator") and
transfer agent (the "Transfer Agent"). First Data Distributors, Inc. ("FDDI")
serves as the Fund's distributor.
This Prospectus provides information about the Fund which you should know
before investing. Please read and retain it for your future reference. More
information about the Fund is included in the Statement of Additional
Information (the "SAI"), also dated February xx, 1998, which is incorporated
into this Prospectus by reference. A copy of the Statement of Additional
Information may be obtained free of charge by calling 1-800-472-6114 or by
written request to the Trust at P.O. Box 5182, Westborough, Massachusetts
01581-5182. Additional information about the Trust has been filed with the
Securities and Exchange Commission (the "SEC") and is available upon request and
without charge. In addition, the SEC maintains a web site (http://www.sec.gov)
that contains the SAI, information incorporated by reference in this Prospectus
and the SAI and other information regarding registrants who file electronically
with the SEC.
<PAGE> 7
TABLE OF CONTENTS PAGE
EXPENSE INFORMATION .................................... 3
THE FUND ............................................... 5
INVESTMENT OBJECTIVE AND APPROACH OF THE FUND .......... 5
INVESTMENT PRACTICES AND RISK CONSIDERATIONS ........... 6
MANAGEMENT OF THE FUND ................................. 12
HOW TO PURCHASE FUND SHARES ............................ 14
HOW TO REDEEM FUND SHARES .............................. 18
DISTRIBUTION PLAN ...................................... 21
DIVIDENDS, DISTRIBUTIONS AND TAXATION .................. 22
THE TRUST .............................................. 23
PERFORMANCE RESULTS .................................... 24
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION, OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, THE FUND'S SAI AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION AND REPRESENTATIONS MAY NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR THE DISTRIBUTOR. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON
TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
2
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EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses that
you, as a shareholder, will bear directly or indirectly when you invest in the
Fund. The amount of "Other Expenses" in the following table is based on
estimated expenses and projected assets for the current fiscal year.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES: INVESTMENT CLASS INSTITUTIONAL CLASS
---------------- -------------------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases None None
Maximum Sales Load Imposed on Reinvested Dividends None None
Deferred Sales Load None None
Redemption Fees* None None
Exchange Fee None None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES:
(As a Percentage of Average Net Assets)
<S> <C> <C>
Management fee 1.00% 1.00%
12b-1 fees .25%
Other Expenses (including administration, None
accounting and transfer agent fees,
custodian fees and printing expenses)
(after expense reimbursement) .70%** .70%**
---- ----
TOTAL FUND OPERATING EXPENSES
(after expense reimbursement) 1.95%** 1.70%**
</TABLE>
* Broker-dealers holding your Shares may charge a fee for redemptions. In
addition, if you want to redeem Shares by wire transfer, the Fund's
Transfer Agent charges a fee, currently $20 for each wire redemption.
** The Adviser has voluntarily agreed to limit "Other Expenses" to 0.70% and
"Total Fund Operating Expenses" to 1.95% and 1.70% of average net assets
annually for Investment Class Shares and Institutional Class Shares,
respectively. In the absence of expense limitations, it is estimated that
"Total Fund Operating Expenses" would be approximately 3.05% annually for
Investment Class Shares and approximately 2.80% annually for Institutional
Class Shares. The Adviser may discontinue such expense limitations at any
time in its sole discretion.
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EXAMPLE:
You would pay the following expenses on a $1,000 investment assuming a 5%
annual return, redemption at fee and of each time period and that the percentage
amounts listed under "Total Fund Operating Expenses" remain the same each year.
Amounts in the table could increase, if the Adviser's limitation of expenses
were to be terminated.
1 Year 3 Years
------ -------
Investment Class Shares $20 $61
Institutional Class Shares $17 $54
THE EXAMPLE IS DESIGNED FOR INFORMATIONAL PURPOSES ONLY, AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURN. ACTUAL FUND
EXPENSES AND RETURN WILL VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN
THOSE SHOWN.
You can purchase Shares without charge directly from FDDI; you may be
charged a fee if you effect transactions in Shares through a securities dealer,
bank or other financial institution.
For further information regarding management fees, 12b-1 fees and other expenses
of the Fund, see "Management of the Fund," "Distribution Plan" and "How To
Purchase Fund Shares" in this Prospectus and "Management of the Fund" and
"Distribution Plan" in the SAI. The Fund's payment of a 12b-1 fee for the
Investment Class may result in long-term shareholders indirectly paying more
than the economic equivalent of the maximum sales charge permitted under the
Conduct Rules of the National Association of Securities Dealers, Inc. ("NASD").
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THE FUND
The Fund is a diversified series of the Trust, an open-end management
investment company organized under the laws of the Commonwealth of Massachusetts
as a "Massachusetts Business Trust" on November 18, 1997.
INVESTMENT OBJECTIVE AND APPROACH OF THE FUND
The investment objective of the Fund is to seek capital appreciation by
investing in a diversified portfolio of securities consisting primarily of
common stocks. The Fund seeks to achieve its objective by investing primarily in
equity securities issued by companies whose equity market capitalization at the
time of purchase is $1 billion or less. Once a portfolio security's market
capitalization exceeds $1 billion, the Adviser will evaluate whether the
investment remains consistent with the Fund's investment objective and, does not
expect, as a matter of policy, to dispose of such security solely because its
market capitalization exceeds $1 billion. Under normal circumstances, the Fund
will invest at least 80% of its total assets in common stocks and common stock
equivalents, issued by such small-cap companies. Up to 20% of the Fund's total
assets may be invested in common stocks, common stock equivalents and debt
securities not meeting the foregoing small company equity market parameters. The
Fund will not invest 25% or more of its assets in any one industry group. The
Fund's investment objective is a fundamental policy of the Fund and may not be
changed without a vote of a majority of the outstanding voting securities of the
Fund. There is no assurance that the Fund's objective will be achieved. See
"Investment Practices and Risk Considerations" for a description of investment
practices of the Fund, including limited investments in foreign securities,
rights and warrants, hedging transactions, illiquid and restricted securities,
and Rule 144A private placements. Such investment practices described therein
are not Fundamental Policies and may be changed without shareholder approval.
ICM, the Fund's Adviser intends to pursue a value-oriented approach in
selecting securities for the Fund's portfolio. This approach seeks to identify
securities whose market value, in the Adviser's view, is less than their
economic value. As part of its value-oriented approach, ICM will seek to
identify companies with attributes which are not fairly valued in the market
place. These companies are often out of favor or not closely followed by
investors and, as a result, may offer the potential for substantial appreciation
over time. In selecting individual securities, ICM will perform in-depth
research and analysis of the issuer, including an analysis of cash flow
generating potential, and may conduct in-person visits or discussions with
management. ICM relies primarily on the knowledge, experience and
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judgment of its own staff, but also receives and uses information from a variety
of outside sources, including brokerage firms, electronic databases, specialized
research firms and technical journals.
As part of its investment approach, ICM looks to select securities for
investment by the Fund on the basis of its belief that the potential exists for
some catalyst to cause a stock's price to rise. Such a catalyst might include,
among other things, one or more of the following: increased investor attention,
asset sales, corporate restructuring or reorganizations, a cyclical turnaround
of a depressed business or industry, a new product/innovation, or significant
changes in management and shifts in the regulatory environment in which the
issuer operates.
The Fund's strategy of investing in small companies utilizing a
value-oriented approach will generally involve a long-term horizon of two to
three years. An investment in the Fund, therefore, should be considered a
long-term holding and not a complete investment program and may not be suitable
for all investors. For a discussion of the risks of investing in smaller
companies, see "Investment Practices and Risk Considerations" below.
There may be periods during which, in the opinion of ICM, market conditions
warrant a reduction of some or all of the Fund's securities holdings. During
such periods, the Fund may adopt a temporary "defensive" posture in which a
higher than usual portion of its total assets would be invested in short-term
liquid assets, cash or cash equivalents.
INVESTMENT PRACTICES AND RISK CONSIDERATIONS
The following is a description of certain investment techniques and the
risks associated therewith that the Fund may utilize. See the "Investment
Policies and Practices" section of the SAI for a description of additional
techniques which may be utilized and further discussion of certain techniques
discussed below.
The annual rate of portfolio turnover is anticipated not to exceed 50%. In
general, the Adviser will not consider the rate of portfolio turnover to be a
limiting factor in determining when or whether to purchase or sell securities in
order to achieve the Fund's objective.
The net asset value of the Fund's Shares will fluctuate with changes in the
market value of the Fund's portfolio securities. The market value of the Fund's
portfolio securities will increase or decrease due to a variety of economic,
market or political factors which cannot be predicted.
STOCKS OF SMALLER COMPANIES. The Fund's strategy of investing in small companies
carries more risk than investment in larger companies. In addition, the Fund may
invest in companies representing some of the
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smallest and least liquid equity securities in the U.S. markets. The low market
liquidity of the Fund's holdings may have an adverse impact on the Fund's
ability to sell certain portfolio securities at favorable prices and may also
make it difficult for the Fund to obtain market quotations based on actual
trades, for purposes of valuing the Fund's portfolio securities.
Investing in lesser-known, smaller capitalization companies involves
greater risk of volatility of the Fund's net asset value than is customarily
associated with larger, more established companies. Often smaller capitalization
companies and the industries in which they are focused are still evolving and,
while this may offer better growth potential than larger, more established
companies, it also may make them more sensitive to changing market conditions.
ICM will seek to minimize the risks described above by diversification of
the Fund's portfolio. However, there can be no assurance that such
diversification will prevent loss in value of certain portfolio securities or in
the Fund's net asset value.
CONVERTIBLE SECURITIES AND DEBT SECURITIES. Convertible securities are bonds,
notes, debentures, preferred stocks and other securities which may be converted
or exchanged at a stated or determinable exchange ratio into shares of common
stock. Convertible securities rank senior to common stock in an issuer's capital
structure and are consequently of higher quality and entail less risk than the
issuer's common stock. The Fund may also invest in nonconvertible preferred
stock consistent with the Fund's objective. As with all debt securities, the
market value of convertible securities tend to increase when interest rates
decline, and conversely, tend to decline when interest rates increase. In
addition, the prices of convertible securities often reflect changes in the
value of the underlying common stock. Although convertible securities purchased
by the Fund may frequently be investment grade, the Fund may also purchase
unrated securities or securities rated below investment grade (those rated lower
than BBB by Standard & Poor's Rating Service ("S&P"), a division of the
McGraw-Hill Companies, Inc., or lower than Baa by Moody's Investors Services,
Inc. ("Moody's")). The Fund reserves the right to invest up to 20% of its assets
in convertible securities and non-convertible debt securities, on an aggregated
basis, which may be unrated or rated below investment grade, provided that they
maintain a minimum investment grade of CCC by S&P or Caa by Moody's, or, if
unrated, are determined by ICM to be of comparable quality. With respect to
non-convertible debt securities, the Fund does not
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<PAGE> 13
intend to invest more than 20% of its assets in non-convertible debt securities
regardless of their rating. Lower rated debt securities are commonly referred
to as "junk bonds".
Lower-rated securities generally offer a higher current yield than that
available for higher grade issues. However, lower-rated securities involve
higher risks, in that they are especially subject to adverse changes in general
economic conditions and in the industries in which the issuers are engaged, to
changes in the financial condition of the issues and to price fluctuations in
response to changes in interest rates. During periods of economic downturn or
rising interest rates, highly leveraged issuers may experience financial stress
which could adversely affect their ability to make payments of interest and
principal and increase the possibility of default. In addition, the market for
lower-rated debt securities has expanded rapidly in recent years, and its growth
paralleled a long economic expansion. At times in recent years, the prices of
many lower-rated debt securities declined substantially, reflecting an
expectation that many issuers of such securities might experience financial
difficulties. As a result, the yields on lower-rated debt securities rose
dramatically. Such higher yields did not reflect the value of the income stream
that holders of such securities expected. The higher yields were instead
reflective of the risk that holders of such securities could lose a substantial
portion of their value as a result of issuers' financial restructuring or
default. There can be no assurance that such declines will not recur. The market
for lower-rated debt issues generally is smaller and less active than that for
higher quality securities, which may limit the Fund's ability to sell such
securities at fair value in response to changes in the economy or financial
markets. Adverse publicity and investor perceptions associated with below
investment grade securities, whether or not based on fundamental analysis, may
also decrease the value of such debt securities.
SHORT SALES AGAINST THE BOX. The Fund may from time to time make short sales of
securities it owns or has the right to acquire through conversion or exchange of
other securities it owns. A short sale is "against the box" to the extent that
the Fund contemporaneously owns or has the right to obtain, at no added cost,
securities identical to those sold short. In a short sale, the Fund does not
immediately deliver the securities sold or receive the proceeds from the sale.
The Fund may not make short sales or maintain a short position if it would cause
more than 25% of the Fund's total assets, taken at market value, to be held as
collateral for the sales.
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<PAGE> 14
The Fund may make a short sale in order to hedge against market risks when
it believes that the price of a security may decline, causing a decline in the
value of a security owned by the Fund or security convertible into, or
exchangeable for, the security, or when the Fund does not want to sell the
security it owns, because, among other reasons, it wishes to defer recognition
of gain or loss for U.S. federal income tax purposes.
FOREIGN SECURITIES. The Fund may invest up to 25% of its total assets in foreign
securities. Investments in foreign securities may involve potential benefits and
risks that are not typically associated with investments in securities of
domestic issuers. Foreign countries may have economic policies or business
cycles different from those of the U.S., and markets for foreign securities do
not necessarily move in a manner parallel to U.S. markets.
Foreign issuers are not generally subject to uniform accounting, auditing
and financial reporting standards comparable to those applicable to U.S.
issuers. There may be less publicly available information about a foreign issuer
than about a U.S. issuer. In addition, there is generally less government
regulation of foreign markets, companies and securities dealers than in the
United States. Foreign securities markets may have substantially less volume
than U.S. securities markets and securities of many foreign issuers are less
liquid and more volatile than securities of comparable domestic issuers.
Investing in the securities of foreign issuers may also be subject to a
decline in the exchange rate of the currency in which a portfolio security is
quoted or denominated relative to the U.S. dollar, thus reducing the value of
the portfolio security. In addition, if the currency in which the Fund receives
dividends, interest or other payments declines in value against the U.S. dollar,
before such income is distributed as dividends to shareholders or converted to
U.S. dollars, the Fund may have to sell portfolio securities to obtain
sufficient cash to pay such dividends. Commissions on transactions in foreign
securities may be higher than those for similar transactions on domestic stock
markets. In addition, clearance and settlement procedures may be different in
foreign countries and, in certain markets, such procedures have on occasion been
unable to keep pace with the volume of securities transactions, thus making it
difficult to conduct such transactions.
The Fund may purchase American Depositary Receipts ("ADRs") or U.S. dollar
denominated securities of foreign issuers. ADRs are receipts
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<PAGE> 15
issued by U.S. banks or trust companies with respect to securities of foreign
issuers held on deposit for use in the U.S. securities markets. While ADRs may
not be denominated in the same currency as the securities into which they may be
converted, many of the risks associated with foreign securities may also apply
to ADRs.
LENDING OF PORTFOLIO SECURITIES. The Fund may, in accordance with applicable
regulatory requirements, lend its portfolio securities to brokers, dealers, and
other financial institutions. Such loans may not exceed 25% of the Fund's total
assets, provided that the Fund may invest without limitation in short-term debt
obligations (including repurchase agreements) and publicly distributed debt
obligations. All loans must be secured by cash or cash equivalents in amounts at
least equal to the market value of the securities loaned. The advantage of such
loans is that the Fund continues to receive the income on the loaned securities
while at the same time earning interest on the cash amounts deposited as
collateral. The Fund may experience a loss or delay in the recovery of its
securities if the institution with which it has entered into a loan transaction
breaches its agreement with the Fund.
RIGHTS AND WARRANTS. The Fund may invest up to 5% of its net assets at the time
of purchase in warrants or rights. In addition, the Fund may acquire rights
and/or warrants which are attached to other securities in its portfolio, or
which are issued as a distribution by the issuer of a security held in its
portfolios. Rights and/or warrants are, in effect, options to purchase equity
securities at a specific price, generally valid for a specific period of time,
and have no voting rights, pay no dividends and have no rights with respect to
the corporation issuing them. The prices of warrants do not necessarily
correlate with the prices of underlying securities.
BORROWING. The Fund is authorized to borrow money for temporary purposes in
amounts not exceeding 5% of its total assets. Additionally, the Fund is
authorized to borrow money up to 33 1/3% of its assets, as permitted by
Investment Company Act of 1940, as amended, (the "1940 Act"), for the purpose of
meeting redemption requests. The Fund will not purchase securities when total
borrowings by the Fund are greater than 5% of its total assets.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements which
typically involve the acquisition by the Fund of debt secu-
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<PAGE> 16
rities from a selling financial institution or broker-dealer. These agreements
provide that the Fund will sell back to the institution, and that the
institution will repurchase, the underlying security at a specified price and at
a fixed time in the future, usually not more than seven days from the date of
purchase. While repurchase agreements involve certain risks not associated with
direct investments in debt securities, including the risks of default or
bankruptcy of the selling financial institution, the Fund will review and
monitor the creditworthiness of any institution which enters into a repurchase
agreement with the Fund, and require the maintenance of adequate collateral.
ILLIQUID AND RESTRICTED SECURITIES. The Fund may invest in securities which are
subject to restrictions on resale because they have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), or which are
otherwise not readily marketable. Limitations on the resale of such securities
may have an adverse effect on their marketability, and may prevent the Fund from
disposing of them promptly at reasonable prices. The Fund may have to bear the
expense of registering such securities for resale and the risk of substantial
delays in effecting such registration. The Fund may not invest more than 15% of
its net assets in illiquid and restricted securities. Securities freely salable
among qualified institutional investors pursuant to Rule 144A under the
Securities Act, may be treated as liquid if they satisfy liquidity standards
established by the Board of Trustees. The continued liquidity of such securities
is not as well assured as that of publicly traded securities and accordingly,
the Board of Trustees will monitor their liquidity.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. From time to time the Fund may
purchase securities on a when-issued or delayed delivery basis or may purchase
or sell securities on a forward commitment basis. When such transactions are
negotiated, the price is fixed at the time of the commitment, but delivery and
payment can take place a month or more after the date of commitment. The Fund
will make such commitments only with the intention of actually acquiring the
securities, but may sell the securities before settlement if the Adviser deems
it advisable. The securities so purchased or sold are subject to market
fluctuation and no interest or dividends accrue to the purchaser prior to the
settlement date. At the time the Fund makes the commitment to purchase or sell
securities on a when-issued or delated delivery basis, it will record the
transaction and thereafter reflect the value, each day, of such security
purchased, or, if a sale, the proceeds to be received, in deter-
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<PAGE> 17
mining its net asset value. At the time of delivery of the securities, their
value may be more or less than the purchase or sale price. The Fund will
establish a segregated account in which it will continually maintain cash or
cash equivalents or other liquid portfolio securities equal in value to the
securities purchased on a when-issued or delayed delivery basis.
WHEN, AS AND IF ISSUED SECURITIES. The Fund may purchase securities on a "when,
as and if issued" basis under which the issuance of the security depends upon
the occurrence of a subsequent event, such as approval of a merger, corporate
reorganization or debt restructuring. The commitment for the purchase of any
such security will not be recognized in the portfolio of the Fund until the
Adviser determines that issuance of the security is probable. At such time, the
Fund will record the transaction and, in determining its net asset value, will
reflect the value of the security daily. At such time, the Fund will also
establish a segregated account in which it will maintain cash or cash
equivalents or other liquid portfolio securities equal in value to recognized
commitments for such securities.
HEDGING TRANSACTIONS. The Fund may utilize techniques to manage risks associated
with exposure to the effects of possible changes in security prices, or other
factors that affect the value of its portfolio. These techniques such as buying
and selling derivative securities such as options, forward foreign currency
exchange contracts, futures contracts, or options on futures contracts, involve
significant risks and may increase the volatility of the Fund. Hedging
transactions may be utilized by the Fund solely for risk management purposes and
not for speculation. No more than 5% of the Fund's net assets will be placed at
risk in hedging transactions.
MANAGEMENT OF THE FUND
The Board of Trustees of the Trust has overall responsibility for
management and supervision of the Fund. ICM, a Massachusetts limited liability
company with its principal office at One International Place, Boston,
Massachusetts 02110, acts as the Fund's Adviser pursuant to an Advisory
Agreement between ICM and the Trust. ICM was formed in August 1997, and
therefore, ICM has no previous experience in advising a mutual fund. Mr. Warren
J. Isabelle, CFA and Mr. Richard L. Droster are the controlling principals of
ICM, and are officers and trustees of the Trust. Mr. Isabelle provided sixty
five percent and Mr. Droster provided thirty five percent, respectively of the
Trust's initial investment capital and, therefore, as of the date of this
Prospectus, own all of the initial outstanding shares of the Fund in such
proportionate amounts, and may be regarded to be control persons of the Fund.
Mr.
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Isabelle is the Fund's portfolio manager and primarily responsible for the
day-to-day and overall management of the Fund's portfolio. Until January 1997,
Mr. Isabelle was Senior Vice President and Head of Domestic Equity Management
for Pioneer Mutual Funds, and portfolio manager of Pioneer Capital Growth Fund
and Pioneer Small Company Fund. He managed Pioneer Capital Growth Fund since its
inception in July 1990 and Pioneer Small Company Fund since its inception in
November 1995 until January 1997. From February 1997 to May 1997, Mr. Isabelle
was Senior Vice President and Chief Investment Officer of Equities at Keystone
Investment Management Company.
Under the terms of its Advisory Agreement with the Trust, ICM is
responsible for supervising the investment activities of the Fund and is
authorized in its discretion to determine the securities to be purchased, sold
or otherwise disposed of by the Fund and the timing of such purchases, sales and
dispositions. ICM is responsible for all the expenses related to its services
for the Fund, with the exception of certain expenses which are to be paid by the
Fund, which include the charges and expenses of auditors; the charges and
expenses of any administrator, custodian, transfer agent, plan agent, dividend
disbursing agent and registrar appointed by the Trust with respect to the Fund;
fees and expenses involved in registering and maintaining registrations of the
Fund and/or its shares with regulatory agencies, individual states or blue sky
securities agencies, including the preparation of prospectuses and SAI for
filing with regulatory agencies; and distribution fees paid by the Fund with
respect to Investment Class Shares in accordance with Rule 12b-1 promulgated by
the SEC pursuant to the 1940 Act. See the SAI for a further description of the
Advisory Agreement.
As compensation for its management services and certain expenses which ICM
incurs, ICM is entitled to a management fee equal to 1.00% per annum of the
Fund's average daily net assets. This fee is computed daily and paid monthly.
See "Expense Information" in this Prospectus and "Investment Adviser" in the
SAI.
ADMINISTRATOR AND TRANSFER AND DIVIDEND DISBURSING AGENT. Investor Services
Group, a subsidiary of First Data Corporation, located at 4400 Computer Drive,
Westborough, Massachusetts 01581, serves as the Fund's Administrator pursuant to
an Administration Agreement with the Fund. Under the terms of the Administration
Agreement, Administrator is entitled to receive administration fees based on the
value of the aggregate average daily net
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<PAGE> 19
assets of the Fund and any other fund offered by the Trust to which the
Administrator provides administrative services, computed daily and payable
monthly at a rate of 0.12% of the first $150 million of net assets; 0.15% of net
assets between $150 million and $500 million of net assets; 0.12% of next $500
million to $750 million in net assets; 0.09% of next $750 million to $1.5
billion in net assets; 0.075% of next $1.5 billion to $2.5 billion in net
assets; 0.05% of next $2.5 billion to $5 billion in net assets and 0.025% of net
assets in excess of $5 billion, subject to a minimum annual charge $55,000 per
fund. A separate fee of $35,000 per annum per Fund and $5,000 per class above
one class per annum, will be charged for fund accounting services. Investor
Services Group, 4400 Computer Drive, Westborough, Massachusetts 01581 is also
the Fund's Transfer and Dividend Disbursing Agent.
CUSTODIAN. The Fifth Third Bank, located at 37 Fountain Square Plaza,
Cincinatti, Ohio 45263, is the Custodian of the Fund's investments.
DISTRIBUTOR. FDDI, 4400 Computer Drive, Westborough, Massachusetts 01581, serves
as the distributor of the Fund's Shares. FDDI is a subsidiary of Investor
Services Group. FDDI is not compensated for its services as Distributor.
YEAR 2000 COMPLIANCE. The Fund's operations depend on the seamless functioning
of computer systems in the financial services industry, including those of the
Adviser, the Custodian and the Transfer Agent. The failure of computer systems
to properly process date-related information after December 31, 1999 because of
the method by which dates are encoded could adversely affect the handling of
securities trades, pricing and account servicing for the Fund. The Adviser has
made Year 2000 Compliance a high priority and is taking steps that it believes
are reasonably designed to address Year 2000 issues with respect to its computer
systems. The Adviser also has been informed that comparable steps are being
taken by the Fund's other major service providers. The Adviser does not
currently anticipate that the Year 2000 issues will have a material impact on
its ability to fulfill its duties as investment adviser to the Fund.
HOW TO PURCHASE FUND SHARES
The Fund continuously offers two classes of Shares designated as Investment
Class Shares and Institutional Class Shares. Institutional Class Shares are
offered exclusively to institutional investors, such as employee benefit plans,
other tax-exempt institutions, corporations and other individual purchasers of
shares in amounts greater than or equal to $500,000 ("Institutional Buyers").
The Shares of the Fund are sold without a sales charge. You may be charged a
nominal fee, if you effect transactions in Shares through a securities dealer,
bank or other financial institution. No certificates are issued for shares. The
Fund reserves the right to reject any purchase order.
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<PAGE> 20
Minimum Investment and Minimum Balance Requirements:
- - INVESTMENT CLASS SHARES (individual investors)
TYPE OF ACCOUNT TO OPEN AN ACCOUNT MINIMUM ADDITION MINIMUM BALANCE*
- --------------- ----------------- ---------------- ----------------
Individual or joint $1,000 $100 $1,000
IRA $1,000 $100 $1,000
Automatic Investment $1,000 $100 $1,000
Plan (AIP)
- - INSTITUTIONAL CLASS SHARES (generally institutional investors)
TYPE OF ACCOUNT TO OPEN AN ACCOUNT MINIMUM ADDITION MINIMUM BALANCE**
- --------------- ------------------ ---------------- -----------------
Qualified Account $500,000 $50,000 $250,000
*To minimize expenses to all shareholders, the Trust reserves the right to close
any account which does not meet the minimum account size. If an account falls
below the minimum balance, the owner will be notified and given 45 days to meet
the minimum or establish automatic investments that total at least $1,200 per
year. If the 45 day deadline is not met, the Trust will redeem the Shares in the
account and send the proceeds to the address of record. See "Involuntary
Redemption" under "How to Redeem Fund Shares."
**The Trust may waive institutional account minimums if it is deemed
economically feasible and in the best interest of existing shareholders. This
may include agreeing to a letter of intent to meet the stated minimums in a
specified time period. Employees and Trustees of the Trust may purchase
institutional shares for their personal accounts. See "Involuntary Redemptions"
under "How to Redeem Fund Shares."
The initial investment must be accompanied or preceded by the Fund's Account
Application. The Fund reserves the right to vary the initial and subsequent
investment minimum requirements at any time.
You may purchase Shares by check or wire. Checks should be made payable to "ICM
Series Trust." For subsequent investments, your Fund account number should
appear on the check. Payments which are mailed should be sent to ICM Series
Trust, P.O. Box 5182, Westborough, Massachusetts 01581-5182, together with your
investment slip or, when opening a new account, your Account Application,
indicating the class of Shares being purchased. Neither initial nor subsequent
investments may be made by third party check.
Wire payments may be made if your bank account is in a commercial bank that is a
member of the Federal Reserve System. Immediately available funds may be
transmitted by wire to Boston Safe Deposit and Trust Company (ABA #011001234),
together with the name of the Fund and the Fund's DDA number, 145,718, for
purchase of Shares in your name.
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<PAGE> 21
The wire must include your Fund account number (for new accounts, your Taxpayer
Identification Number ("TIN") should be included instead), and account
registration and dealer number, if applicable. If your initial purchase of Fund
Shares is by wire, please call 1-800-472-6114 after completing your wire payment
to obtain your Fund account number. Please include your Fund account number on
your Account Application and promptly mail the Account Application to the Fund,
as no redemptions will be permitted until the Account Application is received.
You may obtain further information about remitting funds in this manner from
your bank. All payments should be made in U.S. dollars and, to avoid fees and
delays, should be drawn only on U.S. banks. A charge will be imposed if any
check used for investment in your account does not clear. The Fund makes
available to certain large institutions the ability to issue purchase
instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of funds from an
account maintained in a bank or other domestic financial institution that is an
Automated Clearing House member. You must direct the institution to transmit
immediately available funds through the Automated Clearing House to Boston Safe
and Trust Deposit Company with instructions to credit your Fund account. The
instructions must specify your Fund account registration and your Fund account
number preceded by the digits "001" for Investment Class Shares and "101" for
Institutional Class Shares.
ICM SERIES TRUST AUTOMATIC INVESTMENT PLAN ("AIP") (INVESTMENT CLASS SHARES
ONLY). ICM Series Trust permits you to purchase Investment Class Shares (minimum
of $100 per transaction at regular intervals selected by you). Shares are
purchased by transferring funds from the bank account designated by you. At your
option, the bank account will be debited in the specified amount, and Shares
will be purchased, once a month on either the first or fifteenth day, or twice a
month, on both days. Only an account maintained at a domestic financial
institution which is an Automated Clearing House member may be so designated. To
establish an AIP account, you must file an authorization form with the Transfer
Agent. You may obtain the necessary authorization form by calling
1-800-472-6114. You may cancel your participation in this privilege or change
the amount of purchase at any time by mailing written notification to ICM Series
Trust, P.O. Box 5182, Westborough, Massachusetts 01581-5182, and the
notification will be effective ten business days following receipt. The Trust
may modify or terminate this privilege at any time or charge a service fee. No
such fee currently is contemplated. As noted above, under
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<PAGE> 22
the AIP, the Trust requires that you establish automatic investments that total
$1,200 per year.
DETERMINATION OF NET ASSET VALUE. Shares of the Fund are sold on a continuous
basis at the net asset value per share next determined after an order in proper
form is received and accepted by the Transfer Agent. Net asset value per share
of each class of Shares of the Fund is determined by dividing the value of its
assets, less liabilities attributable to that class, by the number of
outstanding shares of that class. The net asset value is computed once daily, as
of the close of regular trading on the New York Stock Exchange ("NYSE")
(currently 4:00 p.m., New York time) each day the NYSE is open for business.
In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the NYSE or American Stock Exchange or other
stock exchange or quoted by NASDAQ is valued at its latest sale price on that
exchange or quotation service prior to the time assets are valued; if there were
no sales that day and for securities traded on the other over-the-counter
markets, the security is valued at the mean between the most recently quoted bid
and asked prices; (2) when market quotations are not readily available,
including circumstances under which it is determined by the Adviser that sale or
bid prices are not reflective of a security's market value, portfolio securities
are valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Trust's Trustees;
(3) the value of short-term debt securities which mature at a date less than
sixty days subsequent to valuation date will be determined on an amortized cost
basis; and (4) the value of other assets will be determined in good faith at
fair value under procedures established by and under the general supervision of
the Trust's Trustees. Dividends receivable are accrued as of the ex-dividend
date. Interest income is accrued daily.
The Fund does not accept purchase and redemption orders on days the NYSE
is closed. The NYSE is currently scheduled to be closed on the following
holidays; New Year's Day, Martin Luther King Day, Presidents' Day, Good Friday,
Memorial Day (observed), Independence Day, Labor Day, Thanksgiving and Christmas
day, and on the preceding Friday or subsequent Monday when one of these holidays
fall on a Saturday or Sunday, respectively.
Federal regulations require that you provide a certified TIN upon opening
or reopening an account. See the Fund's Account Application for further
information concerning this requirement. Failure to furnish a
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<PAGE> 23
certified TIN to the Fund could subject you to a $50 penalty imposed by the
Internal Revenue Service (the "IRS").
RETIREMENT PLANS. Shares of the Fund may be purchased in connection with
various types of tax deferred retirement plans, including but not limited to
individual retirement accounts ("IRAs"), Roth IRAs, educational IRAs and other
qualified plans. An individual or organization considering the establishment of
a retirement plan, should consult with an attorney and an accountant with regard
to the terms and tax aspects of the plan.
CLOSING THE FUND. The Fund intends to close to new investors when the
Fund's total assets equal or exceed $500 million. After the Fund closes to new
investors, the Fund expects to allow existing shareholders to make additional
investments in the Fund and at all times will permit shareholders to reinvest
dividends and capital gains distributions. The Trustees reserve the right to
close and re-open the Fund to new or existing shareholders at any time after the
Fund is closed.
The Fund intends to close when it reaches approximately $500 million in
total assets, not on a specific date. SHAREHOLDERS WILL NOT BE INFORMED IN
ADVANCE OF THE DATE ON WHICH THE FUND WILL CLOSE.
HOW TO REDEEM FUND SHARES
GENERAL. You may request redemption of your Shares at any time. Redemption
requests should be transmitted in accordance with the procedures described
below. When a request is received in proper form, the Fund will redeem the
Shares at the next determined net asset value.
Securities dealers, banks and other financial institutions may charge a
fee for affecting redemptions of Fund Shares. The value of the Shares
redeemed may be more or less than their original cost, depending upon the Fund's
then current net asset value.
The Fund ordinarily will make payment for all Shares redeemed within seven
days after receipt by the Transfer Agent of a redemption request in proper form,
except as provided by the rules of the SEC.
HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK OR THROUGH THE ICM
SERIES TRUST AIP AND SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE
TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON
BANK CLEARANCE OF YOUR PURCHASE CHECK OR AIP ORDER, WHICH MAY TAKE EIGHT (8)
BUSINESS DAYS OR MORE BUT WILL NOT EXCEED FIFTEEN (15) CALENDAR DAYS. IN
ADDITION, THE FUND WILL REJECT REQUESTS TO REDEEM
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<PAGE> 24
SHARES BY WIRE OR TELEPHONE FOR A PERIOD OF EIGHT (8) BUSINESS DAYS AFTER
RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK OR THE AIP ORDER AGAINST
WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR
SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT
COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE
TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE
PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL
OWNERSHIP.
Shares will not be redeemed until the Transfer Agent has received your
Account Application.
The Fund offers a systematical withdrawal option. For further information
please call the Transfer Agent at 1-800-472-6114.
PROCEDURES. You may redeem Shares by using the regular redemption procedure
through the Transfer Agent, or, if you have checked the appropriate box and
supplied the necessary information on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent, through the Wire Redemption
Privilege or the Telephone Redemption Privilege. The Trust reserves the right to
refuse any request made by wire or telephone, including requests made within
thirty (30) days after a change of address, and may limit the amount involved or
the number of such requests.
The Trust may modify or terminate any redemption privilege at any time or
charge a service fee upon notice to shareholders. No such fee is currently
contemplated. However, the Fund's Transfer Agent charges a $20 fee for each wire
redemption.
You may redeem Shares by telephone if you have checked the appropriate box
on the Account Application or have filed a Shareholder Services Form with the
Transfer Agent. If you select a Telephone Redemption Privilege (which is granted
automatically unless you refuse it), you authorize the Transfer Agent to act on
telephone instructions from any person representing himself or herself to be you
and reasonably believed by the Transfer Agent to be genuine. The Trust will
require the Transfer Agent to employ reasonable procedures, such as requiring a
form of personal identification, to confirm that instructions are genuine and,
if it does not follow such procedures, the Trust or the Transfer Agent may be
liable for any losses due to unauthorized or fraudulent instructions. Neither
the Trust nor the Transfer Agent will be liable for following telephone
instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you may experience
difficulty in contacting the Transfer Agent by telephone to request a redemption
of Fund Shares. In such cases, you should consider using the other redemption
procedures described herein. Use of these other redemption procedures may result
in your redemption request being processed at
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<PAGE> 25
a later time than it would have been if telephone redemption had been used.
During the delay, the Fund's net asset value may fluctuate.
REGULAR REDEMPTION. Under the regular redemption procedure, you may redeem
your Shares by written request mailed to ICM Series Trust., P.O. Box 5182,
Westborough, Massachusetts 01581-5182. Redemption requests must be signed by
each shareholder, including each owner of a joint account. You must provide a
signature guarantee if (1) you are redeeming shares worth more than $50,000; (2)
you are requesting that the proceeds check be made out to someone other than the
registered owners or be sent to an address other than the record address; (3)
the account registration has changed within the last 30 days; or (4) you are
instructing us to wire the proceeds to a bank account not designated on your
Account Application. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be accepted
from domestic banks, brokers, dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations, as well as from participants in the NYSE Medallion Signature
Program, the Securities Transfer Agents Medallion Program ("STAMP"), and the
Stock Exchanges Medallion Program. If you have any questions with respect to
signature-guarantees, please call 1-800-472-6114.
WIRE REDEMPTION PRIVILEGE. You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which is
a member of the Federal Reserve System, or a correspondent bank if your bank is
not a member. The Transfer Agent currently charges $20 for each wire redemption.
You also may direct that redemption proceeds be paid by check (maximum $150,000
per day) made out to the owners of record and mailed to your address. Redemption
proceeds of less than $1,000 will be paid automatically by check. Holders of
jointly registered Fund or bank accounts may have redemption proceeds of only up
to $250,000 wired within any 30-day period. You may make telephone redemption
requests by calling 1-800-472-6114. The SAI sets forth instructions for
transmitting redemption requests by wire. Shares held under retirement plans are
not eligible for this privilege.
TELEPHONE REDEMPTION PRIVILEGE. You may request by telephone that
redemption proceeds (maximum $50,000 per day) be paid by check and mailed to
your address. You may make telephone redemption instructions
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<PAGE> 26
by calling 1-800-472-6114. Shares held under retirement plans are not eligible
for this privilege.
Redemptions may be suspended or payment postponed during any period in
which any of the following conditions exist: the NYSE is closed or trading on
the NYSE is restricted; an emergency exists as a result of which disposal by the
Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund to fairly determine the value of the net
assets of its portfolio; or the SEC, by order, so permits.
INVOLUNTARY REDEMPTION. As noted above under "How to Purchase Fund Shares -
Minimum Investment and Minimum Balance Requirements", the Trust reserves the
right to redeem your account at its option upon not less than 45 days' written
notice if your account's minimum balance is $1,000 or less for Investment Class
Shares and $250,000 or less for Institutional Class Shares and remains so during
the notice period. In addition, automatic investments in the AIP must total at
least $1,200 annually.
Redemptions are taxable transactions to shareholders. The net asset value
per Share received upon redemption or repurchase may be more or less than the
cost of Shares to an investor, depending on the market value of the Fund's
portfolio at the time of redemption or repurchase.
DISTRIBUTION PLAN (INVESTMENT CLASS SHARES ONLY)
The Trustees of the Trust have adopted a distribution plan (the "Plan")
with respect to the Investment Class Shares pursuant to Section 12(b) of the
1940 Act and Rule 12b-1 thereunder. Under the Plan, the Fund compensates FDDI,
Distributor of the Fund, at a fee calculated at an annual rate of 0.25 of the
value of the average daily net assets attributable to the Investment Class
Shares for distribution expenses borne, or paid to others, by FDDI. The Plan
permits payment for distribution expenses borne, or paid to others, by FDDI for
the purpose of financing or assisting in the financing of any activity which is
primarily intended to result in the sale of the Investment Class Shares of the
Fund. The types of distribution expenses
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<PAGE> 27
covered include, but are not limited to, the costs and expenses of direct
marketing activities, the design, preparation, printing and distribution of
promotional materials, advertising and offering materials, and shareholder
materials; the compensation of securities dealers, and other financial
intermediaries for sales activities. Amounts payable under the Plan are charged
to Investment Class Shares of the Fund and therefore reduce income allocated to
the Investment Class Shares. Payments under the Plan are not tied exclusively to
the distribution expenses actually incurred by the Distributor and the payments
may exceed distribution expenses actually incurred.
DIVIDENDS, DISTRIBUTIONS AND TAXATION
The Fund has elected to be treated and intends to qualify each year as a
"regulated investment company" under Subchapter M of the Code, so that it will
not pay federal income tax on income and capital gains distributed to
shareholders as required under the Code.
Under the Code, the Fund will be subject to a nondeductible 4% excise tax
on a portion of its undistributed ordinary income and capital gains if it fails
to meet certain distribution requirements with respect to each calendar year.
The Fund intends to make distributions in a timely manner and accordingly does
not expect to be subject to the excise tax.
The Fund makes distributions to shareholders from its net long-term capital
gains and income dividends, if any, at least annually. Dividends from income
and/or capital gains may also be paid at such other times as may be necessary
for the Fund to avoid federal income or excise tax. Generally, dividends from
the Fund's net investment income, market discount income, net short-term capital
gains, and certain net foreign exchange gains are taxable under the Code as
ordinary income, and dividends from the Fund's net long-term capital gains are
taxable as long-term capital gains.
Unless shareholders specify otherwise, all distributions will be
automatically reinvested in additional full and fractional Shares of the Fund.
For federal income tax purposes, all dividends are taxable as described above
whether a shareholder takes them in cash or reinvests them in additional Shares
of the Fund. Information as to the federal tax status of dividends and
distributions will be provided to shareholders annually.
Distributions by the Fund of the dividend income it receives from U.S.
domestic corporations, if any, may qualify for the dividends-received
22
<PAGE> 28
deduction for corporate shareholders, subject to holding-period requirements and
debt-financing restrictions under the Code.
The Fund may be subject to foreign withholding taxes or other foreign taxes
on income (possibly including, in some cases, capital gains) on certain of its
foreign investments, which will reduce the yield on, or return from those
investments. If, as anticipated, the Fund does not qualify to pass such taxes
through to its shareholders, they will neither treat such taxes as additional
income nor be entitled to any associated foreign tax credits or deductions.
Dividends and other distributions and the proceeds of redemptions,
exchanges or repurchases of Fund Shares paid to individuals and other non-exempt
payees will be subject to 31% backup withholding of federal income tax if the
Fund is not provided with the shareholder's correct taxpayer identification
number and certification that the number is correct and that the shareholder is
not subject to backup withholding or the Fund receives notice from the IRS or a
broker that such withholding applies. Please refer to the Account Application
for additional information.
The description above relates only to U.S. federal income tax consequences
for shareholders who are U.S. persons, i.e., U.S. citizens or residents or U.S.
corporations, partnerships, trusts or estates, and who are subject to U.S.
federal income tax. Non-U.S. shareholders and tax-exempt shareholders may be
subject to tax treatment that is different than described above. Shareholders
should consult their own tax advisors regarding state, local and other
applicable tax laws.
THE TRUST
The Fund is a diversified series of the Trust, an open-end management
investment company (commonly referred to as a mutual fund) organized as a
Massachusetts business trust on November 18, 1997. The Trust has authorized an
unlimited number of shares of beneficial interest. As an open-end management
investment company, the Trust continuously offers its shares to the public and
under normal conditions must redeem its Shares upon the demand of any
shareholder at the then current net asset value per share. See "How to Redeem
Fund Shares." The Trust is not required, and does not intend, to hold annual
shareholder meetings although special meetings may be called for the purpose of
electing or removing Trustees, changing fundamental investment restrictions or
approving an advisory contract. The Fund is currently the only series of the
Trust. The Trustees have the authority, without further shareholder approval, to
classify shares of beneficial interests in separate series. Additional series
may be added in the future. The Trustees also have authority
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to classify and reclassify any series or portfolio into one or more classes. As
of the date of this Prospectus, the Trustees have authorized the issuance of two
classes of Shares, designated as Investment Class Shares and Institutional Class
Shares. The Shares of each class represent an interest in the same portfolio of
investments of the Fund. Each class has equal rights as to voting, redemption,
dividends and liquidation, except that each class bears different distribution
fees and may bear other expenses properly attributable to the particular class.
Investment Class shareholders have exclusive voting rights with respect to the
Rule 12b-1 distribution plan adopted by holders of those shares in connection
with the distribution of shares.
When issued and paid for in accordance with the terms of the Prospectus and
SAI, Shares of the Trust are fully-paid and non-assessable. The Trust does not
issue certificates representing Shares. Instead, the Transfer Agent maintains a
record of your ownership and sends confirmations and statements of account. In
the event of liquidation, shareholders are entitled to share pro rata in the net
assets of the Fund available for distribution to such shareholders. Shares have
no preemptive, subscription or conversion rights. Shareholders are entitled to
one vote per Share, provided that, at the option of the Trustees, shareholders
will be entitled to a number of votes based upon the net asset values
represented by their Shares.
Shareholder inquiries may be made by writing the Fund at P.O. Box 5182,
Westborough, Massachusetts 01581-5182, or by calling 1-800-472-6114.
The Trust does not intend to hold annual meetings of shareholders. However,
pursuant to the Trust's By-Laws, the recordholders of at least a majority of the
shares outstanding and entitled to vote at a special meeting may require the
Trust to hold such special meeting for any purpose.
PERFORMANCE RESULTS
The average annual total return (for a designated period of time) on an
investment in the Fund may be included in advertisements, and furnished to
existing or prospective shareholders. The average annual total return for each
class is computed in accordance with the SEC's standardized formula. The
calculation for each class assumes the reinvestment of all dividends and
distributions at net asset value and does not reflect the impact of federal or
state income taxes. The periods illustrated would normally include one, three,
five and ten years (or since the commencement of the public offering of the
shares of a class, if shorter) through the most recent calendar quarter.
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<PAGE> 30
One or more additional measures and assumptions, including but not limited
to historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share values;
or any graphic illustration of such data may also be used. These data may cover
any period of the Fund's existence and may or may not include the impact of
taxes or other factors.
Other investments or savings vehicles and/or unmanaged market indices,
indicators of economic activity or averages of mutual funds results may be cited
or compared with the investment results of the Fund. Rankings or listings by
magazines, newspapers or independent statistical or rating services, such as
Lipper Analytical Services, Inc., may also be referenced.
The Fund's investment results will vary from time to time depending on
market conditions, the composition of the Fund's portfolio and operating
expenses of the Fund. All quoted investment results are historical and should
not be considered representative of what an investment in the Fund may earn in
any future period. For further information about the calculation methods and
uses of the Fund's investment results, see the SAI.
25
<PAGE> 31
ICM SERIES TRUST
ICM/ISABELLE SMALL-CAP VALUE FUND
4400 Compute Drive
Westborough, Massachusetts 01581
Investment Class Shares
Institutional Class Shares
STATEMENT OF ADDITIONAL INFORMATION
February xx, 1998
ICM Series Trust (the "Trust") is an open-end management investment
company. Currently, the Trust offers one investment portfolio, ICM/Isabelle
Small-Cap Value Fund (the "Fund"). The Fund currently offers two classes of
Shares, Investment Class Shares ("Investment Class Shares") and Institutional
Class Shares ("Institutional Class Shares", together with Investment Class
Shares, the "Shares").
This Statement of Additional Information ("SAI") is not a prospectus, but
should be read in conjunction with the Prospectus for the Fund dated February
xx, 1998, A copy of the Prospectus can be obtained free of charge by calling
1-800-472-6114 or by written request to the Trust at P.O. Box 5182, Westborough,
Massachusetts 01581-5182.
IronWood Capital Management, LLC ("ICM" or the "Adviser") serves as the
Trust's investment adviser. First Data Investor Services Group, Inc. ("Investor
Services Group") serves as the Trust's administrator and transfer agent. First
Data Distributors, Inc. ("FDDI" or the "Distributor") serves as the Fund's
distributor.
<PAGE> 32
TABLE OF CONTENTS
Page
The Fund ........................................................ 3
Investment Policies and Practices................................ 3
Investment Restrictions.......................................... 7
Management of the Fund........................................... 8
Investment Adviser............................................... 9
Distribution Plan................................................ 10
Administrator.................................................... 11
Transfer Agent................................................... 11
Custodian........................................................ 11
Distributor...................................................... 12
Independent Public Accountants................................... 12
Purchase of Fund Shares.......................................... 12
Redemption of Fund Shares........................................ 12
Portfolio Transactions........................................... 13
Taxes............................................................ 14
Description of Shares............................................ 17
Shareholder and Trustee Liability................................ 18
Determination of Net Asset Value................................. 19
Investment Results............................................... 19
Registration Statement........................................... 20
Experts ......................................................... 21
Legal Counsel ................................................... 21
Independent Auditor's Report .................................... 22
Appendix......................................................... A-1
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS
AND IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
2
<PAGE> 33
THE FUND
The Fund is a series of the ICM Series Trust, an open-end management
investment company offering redeemable shares of beneficial interest. As of the
date of this SAI, the Fund is the only series of the Trust.
INVESTMENT POLICIES AND PRACTICES
The Fund's current prospectus (the "Prospectus") presents the investment
objective and principal investment policies of the Fund. Additional investment
policies and a further description of some of the policies described in the
Prospectus appear below.
CONVERTIBLE SECURITIES AND DEBT SECURITIES
The Fund may invest in convertible securities as described in the
Prospectus. The common stock underlying convertible securities may be issued by
a different entity than the issuer of the convertible securities. Convertible
securities entitle the holder to receive interest payments paid on corporate
debt securities or the dividend preference on a preferred stock until such time
as the convertible security matures or is redeemed or until the holder elects to
exercise the conversion privilege.
The value of convertible securities is influenced by both the yield of
non-convertible securities of comparable issuers and by the value of a
convertible security viewed without regard to its conversion feature (i.e.,
strictly on the basis of its yield), sometimes referred to as its "investment
value." The investment value of the convertible security will typically
fluctuate inversely with changes in prevailing interest rates. However, at the
same time, the convertible security will be influenced by its "conversion
value," which is the market value of the underlying common stock that would be
obtained if the convertible security were converted. Conversion value fluctuates
directly with the price of the underlying common stock.
By investing in convertible securities, the Fund obtains the right to
benefit from the capital appreciation potential in the underlying stock upon
exercise of the conversion right, while earning higher current income than would
be available if the stock were purchased directly. In determining whether to
purchase a convertible security, ICM will consider the same criteria that would
be considered in purchasing the underlying stock.
The Fund reserves the right to invest up to 20% of its assets in
convertible and non-convertible debt securities, on an aggregated basis, which
may be unrated or rated below investment grade, ratings lower than BBB by
Standard & Poor's Rating Service ("S&P"), a division of McGraw-Hill Companies,
Inc. or lower than Baa by Moody's Investors Services, Inc. ("Moody's"), provided
that they maintain a minimum investment grade of CCC by S&P or Caa by Moody's,
or, if unrated, are determined by ICM to be of comparable quality. With respect
to non-convertible debt securities, the Fund may not invest more than 20% of its
assets in non-convertible debt securities regardless of their rating.
Lower-rated securities generally offer a higher current yield than that
available for higher grade issues. However, lower-rated securities involve
higher risks, in that they are especially subject to adverse changes in general
economic conditions and in the industries in which the issuers are engaged, to
changes in the financial condition of the issues and to price fluctuations in
response to changes in interest rates. During periods of economic downturn or
rising interest rates, highly leveraged issuers may experience financial stress
which could adversely affect their ability to make payments of interest and
principal and increase the possibility of default. In addition, the market for
lower-rated debt securities has expanded rapidly in recent years, and its growth
paralleled a long economic expansion. At times in recent years, the prices of
many lower-rated debt securities declined substantially, reflecting an
expectation that many issuers of such securities might experience financial
difficulties. As a result, the yields on lower-rated debt securities rose
dramatically. Such higher yields did not reflect the value of the income stream
that holders of such securities expected. The higher yields reflected instead,
the risk that holders of such securities could lose a substantial portion of
their value as a result of issuers' financial restructuring or default. There
can be no assurance that such declines will not recur. The market for
lower-rated debt issues generally is smaller and less active than that for
higher quality securities, which may limit the Fund's ability to sell such
securities at fair value in response to changes in the economy or financial
markets. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may also decrease the values and prevailing levels of
interest rates
3
<PAGE> 34
which generally increase the value of debt securities, while an increase in
rates usually reduces the value of those securities.
RIGHTS AND WARRANTS
As stated in the Prospectus, the Fund may purchase rights or warrants,
which are privileges issued by corporations enabling owners to subscribe to and
purchase a specified number of shares of the corporation at a specified price
during a specified period of time. Subscription rights normally have a short
life span to expiration. The purchase of a warrant involves the risk that the
Fund could lose the purchase value of a warrant if the right to subscribe to
additional shares is not exercised prior to the warrants expiration. Also, the
purchase of warrants involves the risk that the effective price paid for the
warrant added to the subscription price of the related security may exceed the
value of the subscribed security's market price, such as when there is no
movement in the level of the underlying security.
LENDING OF PORTFOLIO SECURITIES
The Fund may lend its portfolio securities to registered brokers, dealers
and other financial institutions, provided that such loans are continuously
collateralized by cash or cash equivalents, which are maintained in an amount
that is at least the market value of the loaned securities. The advantage of
such loans is that the Fund continues to receive the income on the loaned
securities while at the same time earning interest on the cash amounts deposited
as collateral, which will be invested in short-term obligations. The Fund will
not lend more than 25% of the value of its total assets. As with any extensions
of credit, there are risks of delay in recovery and in some cases even loss of
rights in the collateral should the borrower of the securities fail financially.
However, these loans of portfolio securities will only be made to firms deemed
by the Fund's management to be creditworthy. The creditworthiness of firms to
which the Fund lends its portfolio securities will be monitored on an ongoing
basis by ICM pursuant to procedures adopted and reviewed, on an ongoing basis,
by the Board of Trustees.
When voting or consent rights which accompany loaned securities pass to
the borrower, the Fund will follow the policy of calling the loaned securities,
to be delivered within one day after notice, to permit the exercise of such
rights if the matters involved would have a material effect on the Fund's
investment in such loaned securities.
FOREIGN SECURITIES
The Fund may invest up to 25% of its total assets in foreign securities.
Foreign investments can involve significant risks in addition to the risks
inherent in U.S. investments. The value of securities denominated in or indexed
to foreign currencies, and of dividends and interest from such securities, can
change significantly when foreign currencies strengthen or weaken relative to
the U.S. dollar. Foreign securities markets generally have less trading volume
and less liquidity than U.S. markets, and prices on some foreign markets can be
highly volatile. Many foreign countries lack uniform accounting and disclosure
standards comparable to those applicable to U.S. companies, and it may be more
difficult to obtain reliable information regarding an issuer's financial
condition and operations. In addition, the costs of foreign investing, including
withholding taxes, brokerage commissions, and custodial costs, generally are
higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments adverse to
the interests of U.S. investors, including the possibility of expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility of
default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic or social instability, military action or unrest, or adverse diplomatic
developments. There can be no assurance that the Adviser will be able to
anticipate or counter these potential events and their impacts on the Fund's
share price.
4
<PAGE> 35
Subject to the 25% limitation on investments in foreign securities, the
Fund may invest in securities of foreign issuers held by the Fund in the form of
American Depositary Receipts ("ADRs"). ADRs are certificates evidencing
ownership of shares of a foreign-based issuer held in trust by a bank or similar
financial institution.
BORROWING
The Fund is authorized to borrow money in amounts up to 5% of the value of
its total assets at the time of such borrowing for temporary purposes, and is
authorized to borrow money in excess of the 5% limit as permitted by the
Investment Company Act of 1940, as amended (the "1940 Act"), to meet redemption
requests. The Fund will not purchase securities while its borrowings exceed 5%
of its total assets. The Fund has no intention of increasing its net income
through borrowing. Any borrowing will be done from a bank with the required
asset coverage of at least 300%. If the 300% asset coverage should decline as a
result of market fluctuations or other reasons, the Fund may be required to sell
some of its holdings within three days to reduce the debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell securities at the time. The Fund may also be required to
maintain average balances in connection with such borrowing or to pay a
commitment or other fees to maintain a line of credit; either of these
requirements would increase the cost of borrowing over the stated interest rate.
ILLIQUID AND RESTRICTED SECURITIES
The Fund may not invest more than 15% of its net assets in illiquid
securities, including (i) securities for which there is no readily available
market; (ii) securities the disposition of which would be subject to legal
restrictions (so-called "restricted securities"); and (iii) repurchase
agreements having more than seven days to maturity. A considerable period of
time may elapse between the Fund's decision to dispose of such securities and
the time when the Fund is able to dispose of them, during which time the value
of the securities could decline. Restricted securities do not include those
which meet the requirements of Rule 144A of the Securities Act of 1933, as
amended (the "Securities Act") and which the Trustees have determined to be
liquid based on the applicable trading markets.
RULE 144A SECURITIES
The Fund may purchase securities that have been privately placed but are
eligible for purchase and sale under Rule 144A under the Securities Act, which
permits the Fund to sell restricted securities to qualified institutional buyers
without limitation. ICM, pursuant to procedures adopted by the Trustees of
the Trust, will make a determination as to the liquidity of each restricted
security purchased by the Fund. In making this determination, ICM will consider
the trading markets for the specified security and the following factors:
(1) the frequency of trades and price quotes for the security; (2) the number
of dealers and other potential purchasers who have issued quotes on the
security; (3) any dealer undertakings to make a market in the security; and (4)
the nature of the security and the nature of the marketplace trades (the time
needed to dispose of the security, the method of soliciting offers, and the
mechanics of transfer). If a restricted security is determined to be "liquid,"
such security will not be included within the category "illiquid securities,"
which under current policy may not exceed 15% of the Fund's net assets.
SHORT SALES AGAINST THE BOX
The Fund may sell securities "short against the box." While a short sale is
the sale of a security that the Fund does not own, it is "against the box" if at
all times when the short position is open the Fund owns an equal amount of
securities or securities convertible into, or exchangeable without further
consideration for, securities of the same issue as the securities sold short.
To secure its obligations to deliver the securities sold short, the Fund
will deposit in escrow in a separate account with the Fund's custodian, an
amount at least equal to the securities sold short or securities convertible
into, or exchangeable for, the securities. The Fund may close out a short
position by purchasing and delivering an equal amount of securities sold short,
rather than by delivering securities already held by the Fund, because the Fund
may want to continue to receive interest and dividend payments on securities in
its portfolio that are convertible into the securities sold short.
5
<PAGE> 36
HEDGING TRANSACTIONS
The Fund may utilize techniques to manage risks associated with exposure to
the effects of possible changes in security prices, or other factors that affect
the value of its portfolio. These techniques such as buying and selling
derivative securities such as options, futures contracts, or options on futures
contracts, involve significant risks and may increase the volatility of the
Fund.
However hedging transactions may be utilized by the Fund solely for risk
management purposes and not for speculation. The Fund will not place more
than 5% of its net assets at risk in such transactions.
REPURCHASE AGREEMENTS
When cash may be available for only a few days, it may be invested by the
Fund in repurchase agreements until such time as it may otherwise be invested or
used for payments of obligations of the Fund. These agreements, which may be
viewed as a type of secured lending by the Fund, typically involve the
acquisition by the Fund of securities from a selling financial institution such
as a bank, savings and loan association or broker-dealer. The agreement provides
that the Fund will sell back to the institution, and that the institution will
repurchase, the underlying security ("collateral") at a specified price and at a
fixed time in the future, usually not more than seven days from the date of
purchase. The collateral will be maintained in a segregated account and will be
marked to market daily to determine that the value of the collateral, as
specified in the agreement, does not decrease below the purchase price plus
accrued interest. If such decrease occurs, additional collateral will be
requested and, when received, added to the account to maintain full
collateralization. The Fund will accrue interest from the institution until the
time when the repurchase is to occur. Although such date is deemed by the Fund
to be the maturity date of a repurchase agreement, the maturities of the
collateral are not subject to any limits.
While repurchase agreements involve certain risks not associated with
direct investments in debt securities, the Fund follows procedures designed to
minimize such risks. These procedures include effecting repurchase transactions
only with large, well-capitalized and well-established financial institutions
whose financial condition will be continually monitored by ICM subject to
procedures established by the Board of Trustees. In addition, as described
above, the value of the collateral underlying the repurchase agreement will be
at least equal to the repurchase price, including any accrued interest earned on
the repurchase agreement. In the event of a default or bankruptcy by a selling
financial institution, the Fund will seek to liquidate such collateral. However,
the exercising of the Fund's right to liquidate such collateral could involve
certain costs or delays and, to the extent that proceeds from any sale upon a
default of the obligation to repurchase were less than the repurchase price, the
Fund could suffer a loss. It is the current policy of the Fund not to invest in
repurchase agreements that do not mature within seven days of any such
investment, together with any other illiquid assets held by the Fund, which
amount to more than 15% of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
From time to time the Fund may purchase securities on a when-issued or
delayed delivery basis or may purchase or sell securities on a forward
commitment basis. When such transactions are negotiated, the price is fixed at
the time of the commitment, but delivery and payment can take place a month or
more after the date of commitment. The Fund will make such commitments only with
the intention of actually acquiring the securities, but may sell the securities
before settlement if the Advisor deems it advisable. The securities so purchased
or sold are subject to market fluctuation and no interest or dividends accrue to
the purchaser prior to the settlement date. At the time the Fund makes the
commitment to purchase or sell securities on a when-issued or delayed delivery
basis, it will record the transaction and thereafter reflect the value, each
day, of such security purchased, or, if a sale, the proceeds to be received, in
determining its net asset value. At the time of delivery of the securities,
their value may be more or less than the purchase or sale price. The Fund will
establish a segregated account in which it will continually maintain cash or
cash equivalents or other liquid portfolio securities equal in value to the
securities purchased on a when-issued or delayed delivery basis.
WHEN, AS AND IF ISSUED SECURITIES
The Fund may purchase securities on a "when, as and if issued" basis under
which the issuance of the security depends upon the occurrence of a subsequent
event, such as approval of a merger,
6
<PAGE> 37
corporate reorganization or debt restructuring. The commitment for the purchase
of any such security will not be recognized in the portfolio of the Fund until
the Adviser determines that issuance of the security is probable. At such time,
the Fund will record the transaction and, in determining its net asset value,
will reflect the value of the security daily. At such time, the Fund will also
establish a segregated account in which it will maintain cash or cash
equivalents or other liquid securities equal in value to recognized commitments
for such securities.
INVESTMENT RESTRICTIONS
FUNDAMENTAL RESTRICTIONS. The Fund has adopted the following fundamental
investment restrictions which may not be changed without the approval of holders
of a majority of the outstanding Shares of the Fund (which in the Prospectus and
SAI means the lesser of (i) 67% of the Shares of the Fund represented at a
meeting at which 50% of the outstanding Shares are represented or (ii) more than
50% of the outstanding Shares.
The Fund may not:
(1) Invest 25% or more of the total assets of the Fund in any one industry
(securities issued or guaranteed by the United States Government, its agencies
or instrumentalities are not considered to represent industries);
(2) With respect to 75% of the Fund's total assets, invest more than 5% of
the Fund's total assets (taken at market value at the time of purchase) in the
outstanding securities of any single issuer or own more than 10% of the
outstanding voting securities of any one issuer, in each case other than
securities issued or guaranteed by the United States Government, its agencies or
instrumentalities;
(3) Borrow money except that the Fund may (i) borrow money for temporary
purposes in amounts not exceeding 5% of its total assets and (ii) borrow money
for the purpose of meeting redemption requests, in amounts (when aggregated with
amounts borrowed under clause (i)) not exceeding 33 1/3% of its total assets;
(4) Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by restriction 3 above (collateral arrangements with
respect to margin requirements for options and futures transactions are not
deemed to be pledges or hypothecations for this purpose);
(5) Make loans of securities to other persons in excess of 25% of the
Fund's total assets, provided the Fund may invest without limitation in
short-term debt obligations (including repurchase agreements) and publicly
distributed debt obligations;
(6) Underwrite securities of other issuers, except insofar as the Fund may
be deemed an underwriter under the Securities Act of 1933, as amended, in
selling portfolio securities;
(7) Purchase or sell real estate or any interest therein, including
interests in real estate limited partnerships, except securities issued by
companies (including real estate investment trusts) that invest in real estate
or interests therein;
(8) Purchase securities on margin, except for the use of short-term credit
necessary for the clearance of purchases and sales of portfolio securities, but
the Fund may make the margin deposits in connection with transactions in
options, futures and options on futures;
(9) Invest in commodities or commodity futures contracts, provided that
this limitation shall not prohibit the purchase or sale by the Fund or forward
foreign currency exchange contracts, financial futures contracts and options
on financial futures contracts, and options on securities and on securities,
foreign currencies and on securities indices, as permitted by applicable law; or
(10) Issue any senior securities, except as permitted by the 1940 Act.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The following restrictions have been
designated as non-fundamental and may be changed by a vote of the Trust's Board
of Trustees without the approval of shareholders.
7
<PAGE> 38
The Fund may not:
(1) Sell securities short, except transactions involving selling
securities short "against the box";
(2) Make investments for the purpose of exercising control or management;
(3) Invest or maintain more than 15% of its net assets in illiquid
securities which cannot be readily resold because of legal or
contractual restrictions; or
(4) Invest in other investment companies except as permitted under the
1940 Act.
If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in the value of
the Fund's investments will not constitute a violation of such limitation,
except that any borrowing by the Fund that exceeds the fundamental investment
limitations stated above must be reduced to meet such limitations within the
period required by the 1940 Act (currently three days). Otherwise, the Fund may
continue to hold a security even though it causes the Fund to exceed a
percentage limitation because of fluctuation in the value of the Fund's assets.
MANAGEMENT OF THE FUND
The Fund is a series of the Trust, an open-end management investment
company offering redeemable shares of beneficial interest. The Trust's Board of
Trustees provides broad supervision over the affairs of the Fund and the Trust.
The officers of the Trust are responsible for the Fund's operations. The
Trustees and executive officers of the Trust are listed below, together with
their principal occupations during the past five years. An asterisk indicates
those Trustees who are interested persons of the Trust within the meaning of the
1940 Act.
NAME, AGE, POSITION WITH THE FUND
AND ADDRESS PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
Warren J. Isabelle, CFA* Portfolio Manager, Pioneer Capital Growth
Age 46 Fund, July 1990 to January 1997; Senior
Trustee, President and Chairman of Vice President and Head of Domestic Equity
the Board Management, Pioneer Mutual Funds, June 1994
One International Place to January 1997; Portfolio Manager, Pioneer
Boston, MA 02110 Small Company Fund; Senior Vice President
and Chief Investment Officer of Equities,
at Keystone Investment Management Company,
February 1997 through May 1997.
Richard L. Droster* Director of Institutional Marketing,
Age 36 Heartland Advisors, Inc. (Investment
Trustee and Vice-President Advisor) since 1992
One International Place
Boston, MA 02110
N. Stephen Ober Corporate Medical Director and Executive
Age 38 Vice President, Private Healthcare Systems,
Trustee Inc. (managed health care organization),
36 Washington Street, Suite 70 1990 through 1995; President and Chief
Wellesley Hills, MA 02181 Executive Officer, Synergy Health Care,
Inc. (health care information systems),
since 1995.
8
<PAGE> 39
Donald A. Nelson, C.P.A. Assistant Professor, Department of
Age 52 Accounting and Finance, Merrimack
Trustee College, since 1975; Certified Public
Merrimack College Accountant, since 1972.
Andover, MA 01810
John A Fiffy Acquisition Consultant, Digital
Age 47 Equipment Corporation, Since 1993.
Trustee
Digital Equipment Corporation
200 Forest Street
Marlboro, MA 01752
Gary S. Saks Client Service Representative and New
Age 29 Accounts Assistant Manager, Furman Selz
Vice President, Secretary and Prime Brokerage Department (brokerage), Vice
Treasurer President and Treasurer December 1993 to
One International Place July 1995; Consultant Air Travelers Service
Boston, MA 02110 Corporation, January 1997 to September
1997; Consultant, Dorchester Tire
Service January 1996 to December 1996.
The Trust pays no salaries or compensation to any of its officers. The Fund
will pay an annual trustee's fee of $2,000 to each Trustee who is not affiliated
with ICM or FDDI.
The following table estimates the amount of compensation to be paid by the
Trust during its fiscal year ending December 31, 1998 to the persons who are to
serve as Trustees during such period:
COMPENSATION TABLE
<TABLE>
<CAPTION>
Pension Total
Estimate Retirement Estimated Compensation
Name of Compensation Benefits Accrued Annual Benefits from the Trust and
Person from the as Part of upon Fund Complex
and Position Trust* Fund Expenses Retirement Paid to Trustee
- ------------ ------------- ----------------- --------------- ------------------
<S> <C> <C> <C> <C>
Warren J. Isbelle $ 0 None None $ 0
Chairman of the Board,
President and Trustee
Richard L. Broster $ 0 None None $ 0
Vice President and
Trustee
N. Stephen Ober $2,000 None None $2,000
Trustee
Donald A Nelson $2,000 None None $2,000
John A. Fiffy $2,000 None None $2,000
Trustee
</TABLE>
* The estimated compensation information is furnished for the Fiscal year
ended December 31, 1998.
** No Trustee receives any compensation from any mutual fund affiliated with
ICM other than the Trust.
As of the date of this SAI, Warren J. Isabelle owns sixty five percent and
Richard L. Droster owns thirty five percent, respectively of the initial
outstanding Shares of the Fund, and no other officer or Trustee of Trust owns
any Shares of The Fund.
INVESTMENT ADVISER
ICM, a Massachusetts limited liability company, whose address is One
International Place, Boston, Massachusetts 02110, is the Fund's investment
adviser. ICM was formed on August 15, 1997. Mr. Warren J.
9
<PAGE> 40
Isabelle, President and Chief Investment Officer of ICM and Mr. Richard L.
Droster, Vice-President and Director of Marketing of ICM, are the controlling
principals of ICM and are officers and trustees of the Trust.
The Trust, with respect to the Fund, has contracted with ICM, to act as its
investment adviser. A description of the services provided to the Fund under the
advisory contract (the "Advisory Agreement") and the expenses paid by the Fund
under such contract is set forth in the Prospectus under the caption "Management
of the Fund."
Under the terms of the Advisory Agreement, ICM is responsible for
supervising the investment activities of the Fund and is authorized in its
discretion to determine the securities to be purchased, sold or otherwise
disposed of by the Fund. ICM is responsible for all the expenses related to its
services for the Fund. Expenses not expressly assumed by ICM will be paid by the
Fund. The Adviser has undertaken to limit expenses 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. The expenses borne by the
Fund include, but are not limited to: expenses of the Plan of Distribution
pursuant to Rule 12b-1 for Investment Class Shares (see "Distribution Plan");
charges and expenses of any administrator, registrar, custodian, stock transfer
and dividend disbursing agent; brokerage commissions; taxes; registration costs
of the Fund and its shares under federal and state securities laws; the cost and
expense of printing, including typesetting, and distributing prospectuses and
SAI of the Fund and supplements thereto to the Fund's shareholders; all expenses
of shareholders' and Trustees' meetings and of preparing, printing and mailing
of 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
ICM or any corporate affiliate of ICM; all expenses incident to any dividend,
withdrawal or redemption options; charges and expenses of any outside service
used for pricing of the Fund's Shares; fees and expenses of legal counsel,
including counsel to the Trustees who are not interested persons of the Fund or
of ICM (not including compensation or expenses of attorneys who are employees of
the Adviser) and independent accountants; membership dues of industry
associations; interest on Fund borrowings; postage; insurance premiums on
property or personnel (including officers and Trustees) of the Fund which inure
to its benefit; extraordinary expenses (including, but not limited to, legal
claims and liabilities and litigation costs and any indemnification relating
thereto); and all other costs of the Fund's operation.
The Advisory Agreement will continue in effect for a period of two years
from its effective date and is renewable annually by the vote of a majority of
the Board of Trustees of the Trust (including a majority of the Board of
Trustees who are not parties to the contract or interested persons of any such
parties). The vote must be cast in person at a meeting called for the purpose of
voting on such renewal. The Advisory Agreement terminates if assigned and may be
terminated without penalty by either party upon sixty days' written notice, by
vote of the Board of Trustees or a majority of its outstanding voting
securities. Pursuant to the contract, ICM will not be liable for any error of
judgment or mistake of law or for any loss sustained by reason of the adoption
of any investment policy or the purchase, sale or retention of any securities on
the recommendation of ICM. ICM, however, is not protected against liability by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties under the Advisory Agreement.
As compensation for its management services and expenses incurred, ICM is
entitled to a management fee from the Fund at the rate of 1.00% per annum of the
Fund's average daily net assets. The fee is computed and accounted for daily and
paid monthly.
DISTRIBUTION PLAN
(Investment Class Shares Only)
The Trust, on behalf of the Fund, has adopted a plan of distribution
pursuant to Rule 12b-1 under the 1940 Act with respect to the Investment Class
Shares of the Fund (the "Plan"). Pursuant to the Plan, the Fund uses its assets
to finance activities relating to the distribution of Investment Class Shares to
investors and provision of certain shareholder services. Certain categories of
such expenditures have been approved by the Board of Trustees and are set forth
in the Prospectus. See "Distribution Plan" in the Prospectus. The expenses of
the Fund pursuant to the Plan are accrued on a fiscal year basis and may not
exceed the annual rate of .25% of the Fund's average annual net assets
attributable to Investment Class Shares.
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<PAGE> 41
GENERAL. In accordance with the terms of the Plan, FDDI provides to the
Trust for review by the Trustees a quarterly written report of the amounts
expended under the Plan and the purpose for which such expenditures were made.
No interested person of the Trust, nor any Trustee of the Trust who is not
an interested person of the Trust, has any direct or indirect financial interest
in the operation of the Plan.
The Plan was adopted by a majority vote of the Board of Trustees, including
all of the Trustees who are not, and were not at the time they voted, interested
persons of the Trust, as defined in the 1940 Act (none of whom had or have any
direct or indirect financial interest in the operation of the Plan), cast in
person at a meeting called for the purpose of voting on the Plan. In approving
the Plan, the Trustees identified and considered a number of potential benefits
which the Plan may provide. The Board of Trustees believes that there is a
reasonable likelihood that the Plan will benefit the Fund and its future
shareholders. Under its terms, the Plan remains in effect from year to year
provided such continuance is approved annually by vote of the Trustees in the
manner described above. The Plan may not be amended to increase materially the
annual percentage limitation of average net assets which may be spent for the
services described therein without approval of the shareholders of the Fund
affected thereby, and material amendments of the Plan must also be approved by
the Trustees in the manner described above. The Plan may be terminated at any
time, without payment of any penalty, by vote of the majority of the Trustees
who are not interested persons of the Trust and have no direct or indirect
financial interest in the operations of the Plan, or by a vote of a majority of
the outstanding voting securities of the Investment Class (as defined in the
1940 Act). The Plan will automatically terminate in the event of its assignment
(as defined in the 1940 Act).
ADMINISTRATOR
The Trust has entered into an administration agreement ("Administration
Agreement") with Investor Services Group, a subsidiary of First Data
Corporation, 4400 Computer Drive, Westborough, Massachusetts 01581. Investor
Services Group furnishes the Trust with clerical help and accounting, data
processing, internal auditing and legal services and certain other services
required by the Trust, prepares reports to the Fund's shareholders, tax returns,
reports to and filings with SEC and state Blue Sky authorities, and generally
assists in all aspects of the Trust's operations, other than providing
investment advice. As compensation for its services under the Administration
Agreement, Investor Services Group is entitled to receive administration fees
based on the value of the aggregate average daily net assets of the Fund and any
other Fund offered by the Trust to which the Administrator provides
administration services, computed daily and payable monthly at a rate of 0.12%
of the first $150 million of net assets; 0.15% of net assets between $150
million and $500 million of net assets; 0.12% of next $500 million to $750
million in net assets; 0.09% of next $750 million to $1.5 billion in net assets;
0.075% of next $1.5 billion to $2.5 billion in net assets; 0.05% of next $2.5
billion to $5 billion in net assets and 0.025% of net assets in excess of $5
billion, subject to a minimum annual charge of $55,000 per fund. A separate fee
of $35,000 per annum per fund and $5,000 per class above one class per annum,
will be charged for Fund Accounting services.
TRANSFER AGENT
The Trust, on behalf of the Fund, has also contracted with Investor
Services Group, to act as transfer and dividend disbursing agent for the Trust.
Pursuant to the transfer agency agreement (the "Transfer Agency Agreement")
Investor Services Group: (i) issues and redeems Shares of the Fund; (ii)
addresses and mails all communications by the Fund to its record owners,
including reports to shareholders, dividend and distribution notices and proxy
materials for its meetings of shareholders; (iii) maintains shareholder
accounts; (iv) responds to correspondence by shareholders of the Fund; and (v)
makes periodic reports to the Board of Trustees concerning the operations of the
Trust.
CUSTODIAN
The Fifth Third Bank (the "Custodian"), located at 37 Fountain Square
Plaza, Cincinnati, Ohio 45263, is the custodian of the Fund's assets. The
Custodian's responsibilities include safekeeping and controlling the Fund's cash
and securities, handling the receipt and
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<PAGE> 42
delivery of securities, and collecting interest and dividends on each Fund's
investments. The Custodian does not determine the investment policies of the
Fund or decide which securities the Fund will buy or sell. The Fund may,
however, invest in securities, including repurchase agreements, issued by the
Custodian and may deal with the Custodian as a principal in securities
transactions. Portfolio securities may be deposited into the Federal Reserve,
Treasury Department Book Entry System or the Depository Trust Company.
DISTRIBUTOR
FDDI, a subsidiary of Investor Services Group, serves as the distributor
for the Trust pursuant to a distribution agreement which is renewable annually.
Investment Class Shares and Institutional Class Shares are sold on a continuous
basis by FDDI as agent, although FDDI is not obligated to sell any particular
amount of shares. FDDI's principal offices are located at 4400 Computer Drive,
Westborough, Massachusetts 01581.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, located at 225 Franklin Street, Boston, Massachusetts
02110-2812, is the Trust's independent public accountant, providing audit
services, tax return review, and assistance and consultation with respect to the
preparation of filings with the SEC.
PURCHASE OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Purchase Fund
Shares."
TRANSACTIONS THROUGH SECURITIES DEALERS. Fund shares may be purchased and
redeemed through securities dealers which may charge a nominal transaction fee
for such services. Some dealers will place the Fund's Shares in an account with
their firm. Dealers also may require that the customer invest more than the
minimum investment, that the customer not request redemption checks to be issued
in the customer's name, fractional Shares not be purchased, or certain other
conditions.
There is no sales or service charge to individual investors by the Fund or
by FDDI, although investment dealers, banks and other institutions may make
reasonable charges to investors for their services. The services provided and
the applicable fees are established by each dealer or other institution acting
independently of the Fund. The Fund has been given to understand that these fees
may be charged for customer services including, but not limited to, same-day
investment of client funds; same-day access to client funds; advice to customers
about the status of their accounts, yield currently being paid or income earned
to date; provision of periodic account statements showing security and money
market positions; other services available from the dealer, bank or other
institution; and assistance with inquiries related to their investment. Any such
fees will be deducted from the investor's account monthly and on smaller
accounts could constitute a substantial portion of the distribution. Small,
inactive, long-term accounts involving monthly service charges may not be in the
best interest of investors. Investors should be aware that they may purchase
shares of the Fund directly from the Fund through FDDI without imposition of any
maintenance or service charges, other than those already described herein. In
some states, banks or other financial institutions effecting transactions in
Fund Shares may be required to register as dealers pursuant to state law.
RETIREMENT PLANS. Shares of the Fund may be purchased in connection with
various types of tax-deferred retirement plans, including, but not limited to,
individual retirement accounts ("IRAs"), Roth IRAs, Educational IRAs and other
qualified plans. An individual or organization considering the establishment of
a retirement plan should consult with an attorney and/or accountant with respect
to the terms and tax aspects of the plan.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem Fund Shares."
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<PAGE> 43
WIRE REDEMPTION PRIVILEGE. By using this privilege, the investor authorizes
Investor Services Group (the "Transfer Agent") to act on wire or telephone
redemption instructions from any person representing himself or herself to be
the investor, and reasonably believed by the Transfer Agent to be genuine.
Ordinarily, the Fund will initiate payment for shares redeemed pursuant to this
privilege on the next business day after receipt if the Transfer Agent receives
the redemption request in proper form. Redemption proceeds ($1,000 minimum) will
be transferred by Federal Reserve wire only to the commercial bank account
specified by the investor on the Account Application or Shareholder Services
Form, or to a correspondent bank if the investor's bank is not a member of the
Federal Reserve System. The Transfer Agent will deduct a wire redemption fee of
$20 from the principal in the investor's account. Immediate notification by the
correspondent bank to the investor's bank is necessary to avoid a delay in
crediting the funds to the investor's bank account.
SIGNATURES. Written redemption requests must be signed by each shareholder,
including each holder of a joint account. You must provide a signature guarantee
if: (1) you are redeeming shares worth more than $50,000, (2) you are requesting
that the proceeds check be made out to someone other than the registered owners
or be sent to an address other than the record address, (3) the account
registration has changed within the last 30 days or (4) you are instructing us
to wire the proceeds to a bank account not designated on the Account
Application. The Transfer Agent has adopted standards and procedures pursuant to
which signature guarantees in proper form generally will be accepted from
domestic banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations,
as well as from participants in the NYSE Medallion Signature Program, the
Securities Transfer Agents Medallion Program and the Stock Exchanges Medallion
Program. Guarantees must be signed by an authorized signatory of the guarantor
and "Signature Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular verification.
For more information with respect to signature guarantees, please call the
telephone number listed on the cover.
REDEMPTION COMMITMENT. Under ordinary circumstances, the Fund intends to
pay all redemption requests in cash. However, the Fund has committed itself to
pay in cash all redemption requests by any shareholder of record, limited in
amount during any 90-day period to the lesser of $250,000 or 1% of the value of
the Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the SEC. In the case of requests for
redemption in excess of such amount, the Board of Trustees reserve the right to
make payments in whole or in part in securities or other assets in case of an
emergency or any time a cash distribution would impair the liquidity of the Fund
to the detriment of the existing shareholders. In such event, the securities
would be readily marketable, to the extent available, and would be valued in the
same manner as the Fund's investment securities are valued. If the recipient
sold such securities, brokerage charges would be incurred.
SUSPENSION OF REDEMPTIONS. The right of redemption may be suspended or the
date of payment postponed (a) during any period when the NYSE is closed (other
than customary weekend and holiday closings), (b) when trading in the markets
the Fund ordinarily utilizes is restricted, or when an emergency exists as
determined by the SEC so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c) for
such other periods as the SEC by order may permit to protect the Fund's
shareholders.
PORTFOLIO TRANSACTIONS
As of the date of this SAI, the Adviser does not currently have any clients
other than the Fund, but anticipates privately managing investment portfolios
for individuals, partnerships, corporations, and other institutional investors.
All orders for the purchase or sale of portfolio securities are placed on
behalf of the Fund by ICM pursuant to authority contained in the Fund's Advisory
Agreement. In selecting brokers or dealers, ICM will consider various relevant
factors, including, but not limited to, the size and type of the transaction;
the nature and character of the markets for the security to be purchased or
sold; the execution efficiency, settlement capability, and financial condition
of the dealer; the dealer's execution services rendered on a continuing basis;
and the reasonableness of any dealer spreads.
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<PAGE> 44
In those instances where it is reasonably determined that more than one
broker-dealer can offer the most favorable price and execution available, ICM
may select broker-dealers which provide brokerage and/or research services to
the Fund. The research received from broker-dealers may be useful to ICM in
rendering investment management services to the Trust, although not all such
research may be useful to the Fund. The receipt of such research will not reduce
ICM's normal independent research activities; however, it may enable ICM to
avoid the additional expenses which might otherwise be incurred if it were to
attempt to develop comparable information through its own staff. If ICM
determines in good faith that the amount of commissions charged by a
broker-dealer is reasonable in relation to the value of the brokerage and
research services provided by such broker, the Fund may pay a higher commission
to such broker-dealer than would be the case if no weight were given to the
furnishing of these supplemental services. Such supplemental services may
include advice concerning the value of securities; the advisability of investing
in, purchasing or selling securities, the availability of securities or the
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement). ICM
maintains a listing of broker-dealers who provide such services on a regular
basis. However, because it is anticipated that many transactions on behalf of
the Fund will be placed with broker-dealers (including broker-dealers on the
listing) without regard to the furnishing of such services, it is not possible
to estimate the proportion of such transactions directed to such dealers solely
because such services were provided.
Portfolio transactions may be placed with broker-dealers who sell shares of
the Fund subject to rules adopted by the National Association of Securities
Dealers. This policy does not imply a commitment to execute all portfolio
transactions through all broker-dealers that sell Shares of the Fund.
The Trustees periodically review ICM's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
Trust.
Investment decisions for the Fund are made independently from those of
other client accounts which may be managed by the Adviser. It is possible that
at times identical securities will be held by more than one fund and/or account.
However, positions in the same issue may vary and the length of time that the
Adviser may choose to hold investments in the same issue may likewise vary. To
the extent that the Fund or a private account managed by ICM may not be able to
acquire as large a position in such security as it desires, it may have to pay a
higher price for the security. Similarly, a fund may not be able to obtain as
large an execution of an order to sell or as high a price for any particular
portfolio security if ICM decides to sell on behalf of another account the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one fund or account, the
resulting participation in volume transactions could produce better executions
for the fund or the account. In the event more than one account purchases or
sells the same security on a given date, each day's transactions in such
security will be allocated between the Fund and all such client accounts in a
manner deemed equitable by the Advisor, taking into account the respective sizes
of the accounts and the amount being purchased or sold.
TAXES
It is the Fund's policy to meet the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), for qualification as a
regulated investment company. These requirements relate to the sources of the
Fund's income, the diversification of its assets and the distribution of its
income to shareholders. If the Fund meets all such requirements and distributes
to its shareholders, in accordance with the Code's timing requirements, all
investment company taxable income and net capital gain, if any, which it earns,
the Fund will be relieved of the necessity of paying federal income tax.
In order to qualify as a regulated investment company under Subchapter M,
the Fund must, among other things, derive at least 90% of its annual gross
income from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stock, securities or foreign
currencies, or other income (including gains from options, futures and forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies (the "90% income test"); and satisfy certain annual
distribution and quarterly diversification requirements. Tax diversification may
limit the Fund's investment
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<PAGE> 45
composition so that at least 50% of the Fund's total assets consist of cash
and cash items, U.S. Government securities, securities of other regulated
investment companies, and other securities. Other securities are limited with
respect to any one issuer to an amount that does not exceed 5% of the value of
the Fund's total assets and 10% of the issuer's outstanding voting securities;
and, in addition, no more than 25% of the value on the Fund's total assets can
be invested in a single issuer (other than U.S. Government securities or
securities of other regulated investment companies). Changes to the Federal tax
law repealed the 30% limit on gains from securities held for less than 3 months
(the 30% test") for tax years beginning after August 5, 1997. The Fund may
however, continue to observe the restriction until such time as certain state
taxing authorities adopt the new federal provisions.
Dividends from investment company taxable income, which includes net
investment income, net short-term capital gain in excess of net long-term
capital loss, and certain net foreign exchange gains, are taxable as ordinary
income, whether received in cash or reinvested in additional Shares. Dividends
from net long-term capital gain in excess of net short-term capital loss, if
any, whether received in cash or reinvested in additional Shares, are taxable to
the Fund's shareholders as long-term capital gains for federal income tax
purposes without regard to the length of time Shares of the Fund have been held.
Recently enacted federal legislation provides for additional categories of net
capital gain to be reported to shareholders each year beginning in 1997.
Shareholders who receive annual 1099-DIV information from the Fund will also be
provided with information with respect to the amount of 28% and 20% capital gain
that is included in the capital gain divided paid to shareholders during the
year. The federal income tax status of all distributions will be reported to
shareholders annually.
A 4% excise tax will be imposed on the excess, if any, of the Fund's
"required distribution" over the amount distributed within the calendar year.
The "required distribution" is defined generally as 98% of the Fund's ordinary
income earned during the calendar year; and 98% of capital gain net income for
the one year period ending October 31 (or December 31 if an election is made).
The required distribution also includes 100% of any undistributed amount from
prior years. The Fund generally expects to make distributions sufficient to
avoid the imposition of any excise tax. Any dividend declared by the Fund in
October, November or December as of a record date in such a month and paid
during the following January will be treated for federal income tax purposes as
received by shareholders on December 31 of the calendar year in which it is
declared.
Foreign exchange gains and losses realized by the Fund in connection with
certain transactions involving foreign currency-denominated debt securities,
certain options and futures contracts relating to foreign currency, foreign
currency forward contracts, foreign currencies, or payables or receivables
denominated in a foreign currency are subject to Section 988 of the Code, which
generally causes such gains and losses to be treated as ordinary income and
losses and may affect the amount, timing and character of distributions to
shareholders. Any such transactions that are not directly related to the Fund's
investments in stocks or securities may need to be limited in order to enable
the Fund to satisfy certain tax qualification requirements. If the net foreign
exchange loss for a year were to exceed the Fund's investment company taxable
income (computed without regard to such loss), the resulting ordinary loss for
such year would not be deductible by the Fund or its shareholders in future
years.
If the Fund acquires any equity interest (under proposed regulations,
generally including not only stock but also an option to acquire stock) in
certain foreign corporations that receive at least 75% of their annual gross
income from passive sources (such as interest, dividends, rents, royalties or
capital gain) or hold at least 50% of their assets in investments producing such
passive income ("passive foreign investment companies"), the Fund could be
subject to federal income tax and additional interest charges on "excess
distributions" received from such companies or gain from the sale of stock in
such companies, even if all income or gain actually received by the Fund is
timely distributed to its shareholders. The Fund would not be able to pass
through to its shareholders any credit or deduction for such a tax. Certain
elections may, if available, ameliorate these adverse tax consequences, but any
such election would require the electing fund to recognize taxable income or
gain without the concurrent receipt of cash. The Fund may limit and/or manage
its holdings in passive foreign investment companies to minimize its tax
liability or maximize its return from these investments.
If the Fund invests in certain pay-in-kind securities ("PIKs"), zero coupon
securities, deferred interest securities or, in general, any other securities
with original issue discount (or with market discount if the Fund elects to
include market discount in income currently), the Fund must accrue income on
such investments for each taxable year, which generally will be prior to the
receipt of the corresponding cash payments. However,
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<PAGE> 46
the Fund must distribute, at least annually, all or substantially all of its net
income, including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and to avoid federal income and excise taxes.
Therefore, the Fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have to leverage itself
by borrowing the cash, to satisfy distribution requirements.
For federal income tax purposes, the Fund is permitted to carry forward a
net capital loss for any year to offset its own capital gains, if any, during
the eight years following the year of the loss. To the extent subsequent capital
gains are offset by such losses, they would not result in federal income tax
liability to the Fund and therefore are not expected to be distributed as such
to shareholders.
At the time of an investor's purchase of Fund shares, a portion of the
purchase price may be attributable to realized or unrealized appreciation in the
Fund's portfolio or undistributed taxable income of the Fund. Consequently,
subsequent distributions on these shares from such appreciation or income may be
taxable to such investor even if the net asset value of the investor's shares
is, as a result of the distributions, reduced below the investor's cost for such
Shares and the distributions economically represent a return of a portion of the
investment.
Redemptions and exchanges are taxable events. Any loss realized by a
shareholder upon the redemption, exchange or other disposition of Shares with a
tax holding period of six months or less will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term capital
gain with respect to such Shares.
Options written or purchased and futures contracts entered into by the Fund
on certain securities, indices and foreign currencies, as well as certain
foreign currency forward contracts, may cause the Fund to recognize gains or
losses from marking-to-market at the end of its taxable year even though such
options may not have lapsed, been closed out, or exercised or such futures or
forward contracts may not have been performed or closed out. The tax rules
applicable to these contracts may affect the characterization as long-term or
short-term of some capital gains and losses realized by the Fund. Certain
options, futures and forward contracts relating to foreign currency may be
subject to Section 988, as described above, and may accordingly produce ordinary
income or loss. Losses on certain options, futures or forward contracts and/or
offsetting positions (portfolio securities or other positions with respect to
which the Fund's risk of loss is substantially diminished by one or more
options, futures or forward contracts) may also be deferred under the tax
straddle rules of the Code, which may also affect the characterization of
capital gains or losses from straddle positions and certain successor positions
as long-term or short-term. Certain tax elections may be available that would
enable the Fund to ameliorate some adverse effects of the tax rules described in
this paragraph. The tax rules applicable to options, futures or forward
contracts and straddles may affect the amount, timing and character of the
Fund's income and losses and hence of its distributions to shareholders.
For purposes of the 70% dividends-received deduction generally available to
corporations under the Code, dividends received by the Fund from U.S. domestic
corporations in respect of any share of stock with a tax holding period of at
least 46 days (91 days in the case of certain preferred stock) held in an
unleveraged position and distributed and designated by the Fund may be treated
as qualifying dividends. Any corporate shareholder should consult its tax
adviser regarding the possibility that its tax basis in its Shares may be
reduced, for federal income tax purposes, by reason of "extraordinary dividends"
received with respect to the Shares. In order to qualify for the deduction,
corporate shareholders must meet the minimum holding period requirement stated
above with respect to their Fund Shares, taking into account any holding period
reductions from certain hedging or other transactions or positions that diminish
their risk of loss with respect to their Fund Shares, and, if they borrow to
acquire Fund Shares, they may be denied a portion of the dividends-received
deduction. The entire qualifying dividend, including the otherwise deductible
amount, will be included in determining the excess (if any) of a corporation's
adjusted current earnings over its alternative minimum taxable income, which may
increase a corporation's alternative minimum tax liability.
The Fund may be subject to withholding and other taxes imposed by foreign
countries, including taxes on interest, dividends and capital gains, with
respect to its investments, if any, in those countries. Tax conventions between
certain countries and the U.S. may reduce or eliminate such taxes in some cases.
The Fund does not expect to satisfy the requirements for passing through to its
shareholders their pro rata share of
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<PAGE> 47
qualified foreign taxes paid by the Fund, with the result that shareholders will
not include such taxes in their gross incomes and will not be entitled to a tax
deduction or credit for such taxes on their own tax returns.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions, and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.
Federal law requires that the Fund withhold (as "backup withholding") 31%
of reportable payments, including dividends, capital gain dividends and the
proceeds of redemptions (including exchanges) and repurchases to shareholders
who have not complied with IRS regulations. In order to avoid this withholding
requirement, shareholders must certify on their Account Applications, or on
separate IRS Forms W-9, that the Social Security Number or other Taxpayer
Identification Number they provide is their correct number and that they are not
currently subject to backup withholding, or that they are exempt from backup
withholding. A Fund may nevertheless be required to withhold if it receives
notice from the IRS or a broker that the number provided is incorrect or backup
withholding is applicable as a result of previous under reporting of interest or
dividend income.
If, as anticipated, the Fund qualifies as a regulated investment company
under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes.
The description of certain federal tax provisions above relates only to
U.S. federal income tax consequences for shareholders who are U.S. persons, i.e.
U.S. citizens or residents or U.S. corporations, partnerships, trusts or
estates, and who are subject to U.S. federal income tax. This description does
not address the special tax rules that may be applicable to particular types of
investors, such as financial institutions, insurance companies, securities
dealers, or tax-exempt or tax-deferred plans, accounts or entities. Investors
other than U.S. persons may be subject to different U.S. tax treatment,
including a possible 30% non-resident alien U.S. withholding tax (or
non-resident alien withholding tax at a lower treaty rate) on amounts treated as
ordinary dividends from the Fund and, unless an effective IRS Form W-8 or
authorized substitute for Form W-8 is on file, to 31% backup withholding on
certain other payments from the Fund. Shareholders should consult their own tax
advisers on these matters and on state, local and other applicable tax laws.
DESCRIPTION OF SHARES
The Trust's Declaration of Trust permits the Board of Trustees to authorize
the issuance of an unlimited number of full and fractional Shares of beneficial
interest which may be divided into such separate series as the Trustees may
establish. Currently, the Trust consists of only one series. The Trustees may,
however, establish additional series of shares, and may divide or combine the
shares into a greater or lesser number of shares without thereby changing the
proportionate beneficial interests in the Trust. The Declaration of Trust
further authorizes the Trustees to classify or reclassify any series of the
shares into one or more classes. Pursuant thereto, the Trustees have authorized
the issuance of two classes of Shares of the Fund designated as, Investment
Class Shares and Institutional Class Shares. Each Share of a class of the Fund
represents an equal proportionate interest in the assets of the Fund allocable
to that class. Upon liquidation of the Trust, shareholders of each class of a
series are entitled to share pro rata in the net assets allocable to such class
available for distribution to shareholders. The Trust reserves the right to
create and issue additional series or classes of shares, in which case the
shares of each class of a series would participate equally in the earnings,
dividends and assets allocable to that class of the particular series.
Rule 18f-2 under the Act provides that any matter required to be submitted
by the provisions of the Act or applicable state law, or otherwise, to the
holders of the outstanding voting securities of an investment company such as
the Trust shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each class or
series affected by such matter. Rule 18f-2 further provides that a class or
series shall be deemed to be affected by a matter unless the interests of each
class or series in the matter are substantially identical or the matter does not
affect any interest of such class or series. However, Rule 18f-2 exempts the
selection of independent public accountants, the approval of principal
distribution contracts and the election of trustees from the separate voting
requirements of Rule 18f-2.
The Trust is not required to hold annual meetings of shareholders and does
not intend to hold such meetings. In the event that a meeting of shareholders is
held, each share of the Trust will be entitled,
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<PAGE> 48
as determined by the Trustees, either to one vote for each share or to one vote
for each dollar of net asset value represented by such shares on all matters
presented to shareholders including the elections of Trustees (this method of
voting being referred to as "dollar based voting"). However, to the extent
required by the Act or otherwise determined by the Trustees, series and classes
of the Trust will vote separately from each other. Shareholders of the Trust do
not have cumulative voting rights in the election of Trustees. Meetings of
shareholders of the Trust, or any series or class thereof, may be called by the
Trustees, certain officers of the Trust or upon the written request of holders
of 10% or more of the Shares entitled to vote at such meetings. The shareholders
of the Trust will have voting rights only with respect to the limited number of
matters specified in the Declaration of Trust and such other matters as the
Trustees may determine or may be required by law.
The Declaration of Trust provides for indemnification of Trustees and
officers of the Trust unless the recipient is adjudicated (i) to be liable by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such person's office or (ii) not to
have acted in good faith in the reasonable belief that such person's actions
were in the best interest of the Trust. The Declaration of Trust provides that,
if any shareholder or former shareholder of any series is held personally liable
solely by reason of being or having been a shareholder and not because of the
shareholder's acts or omissions or for some other reason, the shareholder or
former shareholder (or heirs, executors, administrators, legal representatives
or general successors) shall be held harmless from and indemnified against all
loss and expense arising from such liability.
The Declaration of Trust permits the termination of the Trust or of any
series or class of the Trust (i) by a majority of the affected shareholders at a
meeting of shareholders of the Trust, series or class; or (ii) by a majority of
the Trustees without shareholder approval if the Trustees determine that such
action is in the best interest of the Trust or its shareholders.
The Declaration of Trust authorizes the Trustees, with shareholder
approval to cause the Trust, or any series thereof, to merge or consolidate with
any corporation, association, trust or other organization or sell or exchange
all or substantially all of the property belonging to the Trust or any series
thereof. In addition, the Trustees, without shareholder approval, may adopt a
master-feeder structure by investing all or a portion of the assets of a series
of the Trust in the securities of another open-end investment company.
The Declaration of Trust permits the Trustees to amend the Declaration of
Trust without a shareholder vote. However, shareholders of the Trust have the
right to vote on any amendment (i) that would affect the voting rights of
shareholders; (ii) that is required by law to be approved by shareholders; (iii)
that would amend the voting provisions of the Declaration of Trust; or (iv) that
the Trustees determine to submit to shareholders.
SHAREHOLDER AND TRUSTEE LIABILITY
As a Massachusetts business trust, the Trust's operations are governed by
its Declaration of Trust dated November 18, 1997, a copy of which is on file
with the office of the Secretary of State of The Commonwealth of Massachusetts.
Theoretically, shareholders of a Massachusetts business trust may, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust contains an express disclaimer of shareholder
liability for acts or obligations of the Trust or any series of the Trust and
provides that notice of such disclaimer may be given in each agreement,
obligation or instrument entered into or executed by the Trust or its Trustees.
Moreover, the Declaration of Trust provides for the indemnification out of Trust
property of any shareholders held personally liable for any obligations of the
Trust or any series of the Trust. The Declaration of Trust also provides that
the Trust shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Trust and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss beyond his or
her investment because of shareholder liability would be limited to
circumstances in which the Trust itself will be unable to meet its obligations.
In light of the nature of the Trust's business and the nature and amount of its
assets, the possibility of the Trust's liabilities exceeding its assets, and
therefore a shareholder's risk of personal liability, is remote.
The Declaration of Trust further provides that the Trust shall indemnify
each of its Trustees and officers against liabilities and expenses reasonably
incurred by them, in connection with, or arising out of, any action, suit or
proceeding, threatened against or otherwise involving such Trustee or officer,
directly or indirectly, by reason of being or having been a Trustee or officer
of the Trust. The Declaration of Trust does not
18
<PAGE> 49
authorize the Trust to indemnify any Trustee or officer against any liability to
which he or she would otherwise be subject by reason of or for willful
misfeasance, bad faith, gross negligence or reckless disregard of such person's
duties.
DETERMINATION OF NET ASSET VALUE
Shares of the Fund are sold on a continuous basis at the net asset value
per share next determined after an order in proper form is received and accepted
by the Transfer Agent. Net asset value per share of each Class of Shares of the
Fund is determined by dividing the value of its assets, less liabilities
attributable to that Class, by the number of Shares of that class outstanding.
The net asset value is computed once daily, on each day the NYSE is open, as of
the close of regular trading on the NYSE.
In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange or other
stock exchange or quoted by NASDAQ is valued at its latest sale price on that
exchange or quotation service prior to the time assets are valued; if there were
no sales that day and for securities traded on the other over-the-counter
markets, the security is valued at the mean between the most recently quoted bid
and asked prices; (2) when market quotations are not readily available,
including circumstances under which it is determined by the Advisor that sale or
bid prices are not reflective of a security's market value, portfolio securities
are valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Fund's Trustees; (3) the
value of short-term debt securities which mature at a date less than sixty days
subsequent to valuation date will be determined on an amortized cost basis; and
(4) the value of other assets will be determined in good faith at fair value
under procedures established by and under the general supervision of the Fund's
Trustees. Dividends receivable are accrued as of the ex-dividend date. Interest
income is accrued daily.
The Fund does not accept purchase and redemption orders on days the NYSE is
closed. The NYSE is currently scheduled to be closed on the following holidays:
New Year's Day, Martin Luther King Day, Presidents' Day, Good Friday, Memorial
Day (observed), Independence Day, Labor Day, Thanksgiving and Christmas Day, and
on the preceding Friday or subsequent Monday when one of these holidays falls on
a Saturday or Sunday, respectively.
INVESTMENT RESULTS
QUOTATIONS, COMPARISONS, AND GENERAL INFORMATION From time to time, in
advertisements, in sales literature, or in reports to shareholders, the past
performance of the Fund may be illustrated and/or compared with that of other
mutual funds with similar investment objectives, and to stock or other relevant
indices. For example, total return of the Fund's classes may be compared to
rankings prepared by Lipper Analytical Services, Inc., a widely recognized
independent service which monitors mutual fund performance; the Standard &
Poor's 500 Stock Index ("S&P 500"), an index of unmanaged groups of common
stock; the Dow Jones Industrial Average, a recognized unmanaged index of common
stocks of 30 industrial companies listed on the NYSE; or The Frank Russell
Indexes ("Russell 1000," "2000," "2500," "3000,") or the Wilshire Total Market
Value Index ("Wilshire 5000"), two recognized unmanaged indexes of broad based
common stocks.
Performance rankings and listings reported in newspapers or national
business and financial publications, such as Barron's, Business Week, Consumers
Digest, Consumer Reports, Financial World, Forbes, Fortune, Investors Business
Daily, Kiplinger's Personal Finance Magazine, Money Magazine, New York Times,
Smart Money, USA Today, U.S. News and World Report, The Wall Street Journal, and
Worth may also be cited (if the Fund is listed in any such publication) or used
for comparison, as well as performance listings and rankings from various other
sources including Bloomberg Financial Markets, CDA/Wiesenberger, Donoghue's
Mutual Fund Almanac, Investment Company Data, Inc., Johnson's Charts, Kanon
Bloch Carre and Co., Lipper Analytical Services, Inc., Micropal, Inc.,
Morningstar, Inc., Schabacker Investment Management and Towers Data Systems,
Inc.
In addition, from time to time quotations from articles from financial
publications such as those listed above may be used in advertisements in sales
literature, or in reports to shareholders of the Fund.
19
<PAGE> 50
The Fund may also present, from time to time, historical information
depicting the value of a hypothetical account in one or more classes of the Fund
since the Fund's inception.
In presenting investment results, the Fund may also include references to
certain financial planning concepts, including (a) the need to evaluate
financial assets and obligations to determine how much to invest; (b) the need
to analyze the objectives of various investments to determine where to invest;
and (c) the need to analyze the time frame for future capital needs to determine
how long to invest. The investor controls these three factors, all of which
affect the use of investments in building assets.
One of the primary methods used to measure the performance of a class of
the Fund is "total return." "Total return" will normally represent the
percentage change in value of an account, or of a hypothetical investment in a
class of the Fund, over any period up to the lifetime of that class of the Fund.
Total return calculations will usually assume the reinvestment of all dividends
and capital gains distributions and will be expressed as a percentage increase
or decrease from an initial value, for the entire period or for one or more
specified periods within the entire period. Total return percentages for periods
of less than one year will usually be annualized; total return percentages for
periods longer than one year will usually be accompanied by total return
percentages for each year within the period and/or by the average annual
compounded total return for the period. The income and capital components of a
given return may be separated and portrayed in a variety of ways in order to
illustrate their relative significance. Performance may also be portrayed in
terms of cash or investment values, without percentages. Past performance cannot
guarantee any particular future result.
The Fund's average annual total return quotations for each of its classes
as that information may appear in the Fund's Prospectus, this SAI or in
advertising are calculated by standard methods prescribed by the SEC.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS Average annual total
return quotations for a class of Shares are computed by finding the average
annual compounded rates of return that would cause a hypothetical investment in
that class made on the first day of a designated period (assuming all dividends
and distributions are reinvested) to equal the ending redeemable value of such
hypothetical investment on the last day of the designated period in accordance
with the following formula:
n
P(1+T) = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1000 initial payment
made at the beginning of the designated period (or fractional portion
thereof)
For purposes of the above computation, it is assumed that all dividends and
distributions made by the Fund are reinvested at net asset value during the
designated period. The average annual total return quotation is determined to
the nearest 1/100 of 1%.
In determining the average annual total return (calculated as provided
above), recurring fees, if any, that are charged to all shareholder accounts of
a particular class are taken into consideration. For any account fees that vary
with the size of the account, the account fee used for purposes of the above
computation is assumed to be the fee that would be charged to a class's mean
account size.
REGISTRATION STATEMENT
This SAI and the Trust's Prospectus do not contain all the information
included in the Trust's Registration Statement filed with the SEC under the 1933
Act with respect to the securities offered hereby, certain portions of which
have been omitted pursuant to the rules and regulations of the SEC. The
registration statement, including exhibits filed therewith, may be examined at
the offices of the SEC in Washington, D.C.
20
<PAGE> 51
Statements contained herein and in the Prospectus as to the contents of any
contract or other documents referred to are not necessarily complete, and, in
such instance, reference is made to the copy of such contract or other documents
filed as an exhibit to the Trust's Registration Statement, each such statement
being qualified in all respects by such reference.
EXPERTS
The statement of assets and liabilities of ICM Series Trust as of February
13, 1998 appearing in this SAI has been audited by Arthur Andersen, LLP,
independent auditors, as set forth in their report thereon, appearing elsewhere
herein, and are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.
LEGAL COUNSEL
Lane Altman & Owens LLP, 101 Federal street, Boston, Massachusetts, 02110
acts as legal counsel to the Trust.
21
<PAGE> 52
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Trustees of ICM/Isabelle Small-Cap Value Fund:
We have audited the accompanying balance sheet of ICM/Isabell Small-Cap Value
Fund (a Massachusetts business trust) (the Fund) as of February 13, 1998. This
balance sheet is the responsibility of the Fund's management. Our responsibility
is to express an opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of the ICM/Isabelle Small-Cap Value
Fund as of February 13, 1998, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 13, 1998
<PAGE> 53
ICM SERIES TRUST
ICM/ISABELLE SMALL-CAP VALUE FUND
<TABLE>
<CAPTION>
ICM/Isabelle Small-Cap Value Fund
Balance Sheet
As of February 13, 1998
<S> <C>
ASSETS:
Cash $100,000
Deferred organizational costs 72,000
--------
Total Assets $172,000
--------
LIABILITIES:
Accrued expenses $ 72,000
--------
NET ASSETS:
Total net assets (consisting of $100,000 paid in capital
for 10,000 Investment Class Shares outstanding) $100,000
========
NET ASSETS VALUE PER SHARE
(10,000 Investment Class Shares issued, an unlimited
number of Shares authorized, $10 par value) $ 10
========
</TABLE>
<PAGE> 54
ICM/ISABELLE SMALL-CAP VALUE FUND
NOTES TO THE BALANCE SHEET
FEBRUARY 13, 1998
1. ORGANIZATION
The ICM/Isabelle Small-Cap Value Fund (the "Fund") is a diversified series of
the ICM Series Trust (the "Trust"). The Trust was organized as a massachusetts
business trust on November 18, 1997, and is being registered with the Securities
and Exchange Commission under the Investment Company Act of 1940 (the "1940
Act") as a diversified, open-end management investment company. Since
November 18, 1997, the Fund's activities have been limited to organizational
matters with no operating activities. The Fund intends to qualify under
Subchapter M of the Internal Revenue Code of 1986, as amended. Of the 10,000
initial Investment Class Shares outstanding, 6,500 are owned by Warren J.
Isabell and 3,500 are owned by Richard L. Drosler. As of February 13, 1998,
there were no Institutional Class Shares issued or outstanding. The investment
objective of the Fund is to seek capital appreciation by investing in a
diversified portfolio of securities consisting primarily of common stocks.
2. ORGANIZATIONAL COSTS
As of February 13, 1998, the Fund deferred organization-related costs of 72,500
which will be amortized on a straight-line basis over a period of up to five
years. Included in Accrued Expenses are $72,500 of such costs payable to
IronWood Capital Management, LLC ("ICM"), the Fund's investment adviser.
If any of the original shares are redeemed by any holder thereof prior to the
end of the amortization period, the redemption proceeds will be decreased by the
pro rata share of the unamortized expenses as of the date of redemption. The pro
rata shares will be derived by dividing the number of original shares redeemed
by the total number of original shares outstanding at the time of redemption.
3. FUND SHARES
The Board of Trustees has authorized the issuance of two classes of shares
designated as Investment Class Shares and Institutional Class Shares.
Institutional Class Shares are offered exclusively to institutional investors,
such as employee benefit plans, other tax-exempt institutions, and other
individual purchasers of shares in amounts greater than or equal to $500,000.
The shares of each class represent an interest in the same portfolio of
investments of the Fund. Each class has equal rights as to voting, redemption,
dividends and liquidation, except that each class bears different distribution
fees and may bear other expenses properly attributable to the particular class.
Investment Class shareholders have exclusive voting rights with respect to the
Rule 12b-1 distribution plan adopted by holders of those shares in connection
with the distribution of shares.
4. MANAGEMENT AGREEMENT
The Board of Trustees of the Trust has overall responsibility for management and
supervision of the Fund. ICM, a Massachusetts limited liability company, acts as
the Fund's Adviser pursuant to an advisory Agreement between ICM and the Trust.
Under the terms of the Advisory Agreement with the Trust, ICM is responsible for
<PAGE> 55
supervising the investment activities of the Fund and is authorized in its
discretion to determine the securities to be purchased, sold or otherwise
disposed of by the Fund and the timing of such purchases, sales and
dispositions. ICM is responsible for all the expenses related to its services
for the Fund, with the exception of certain expenses which are to be paid by the
fund, including accounting, and regulatory fees.
As compensation for its management services and certain expenses which ICM
incurs, ICM is entitled to a management fee equal to 1.00% per annum of the
Fund's average daily net assets. This fee is computed daily and paid monthly.
5. TRANSFER AGENT AND ADMINISTRATOR
Investor Services Group, Inc., a subsidiary of First Data Corporation, serves as
the Fund's administrator pursuant to an Administration
Agreement with the Fund for clerical help and accounting, data processing,
internal auditing, legal services and certain other services. In addition,
Investor Services Group acts as transfer agent of the Fund. The Fund has agreed
to pay the administrator administration fees based on the value of the aggregate
average daily net assets of the Fund, computed daily and payable monthly at a
rate of .12% of the first $150 million of net assets; .15% of net assets between
$150 million and $500 million of net assets; .12% of the next $500 million to
$750 million in assets; .09% of the next $750 million to $1.5 billion in assets;
.075% of the next $1.5 billion to $2.5 billion in net assets; 0.05% of the next
$2.5 billion to $5 billion in net assets; and .025% of net assets in excess of
$5 billion, subject to a minimum annual charge of $55,000 per Fund. A separate
fee of $35,000 per annum per Fund and $5,000 per class above one class per
annum, will be charged for Fund accounting services, Transfer Agency fees are
$18 per open account per annum and $2 per closed account per annum, subject to
minimum, of $20,000 per Fund per annum and $6,000 per class above one class per
annum. In addition, the Fund will be charged for various print mail services on
an as performed basis. Such print mail fees are subject to daily/minimum charges
which the transfer agent has agreed to waive for the first six months.
6. DISTRIBUTION PLAN
The Trustees of the Fund have adopted a distribution plan (the Plan) with
respect to the Investment Class Shares pursuant to Section 12(b) of the 1940 Act
and Rule 12b-1 thereunder. Under the Plan, the Fund pays FDDI (a subsidiary of
Investor Services Group), distributor of the Fund, a fee at an annual rate of
.25 of 1% of the value of the average daily net assets attributable to the
Investment Class Shares for certain service and distribution expenses borne, or
paid to others, by FDDI.
<PAGE> 56
APPENDIX A
MOODY'S INVESTORS SERVICE, INC.
Aaa: Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other market
shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Unrated: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities that are not rated as
a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately based, in which case the rating is not published in
Moody's Investors Service, Inc.'s ("Moody's") publications.
A-1
<PAGE> 57
Suspension or withdrawal may occur if new and material circumstances arise,
the effects of which preclude satisfactory analysis; if there is no longer
available reasonable up-to-date data to permit a judgment to be formed; if a
bond is called for redemption; or for other reasons.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believe
possess the strongest investment attributes are designated by the symbols Aa-1,
A-1, Baa-1, and B-1.
STANDARD & POOR'S RATINGS SERVICE
AAA: Bonds rated AAA have the highest rating assigned by Standard & Poor's
Ratings Service ("S&P"). Capacity to pay interest and repay principal is
extremely strong.
AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A: Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in the highest rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. While they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than in higher rated categories.
BB, B, CCC, CC, C: Bonds rated BB, B, CCC, CC and C are regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of this obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, they are outweighed by large uncertainties of major risk
exposures to adverse conditions.
C1: The rating C1 is reserved for income bonds on which no interest is
being paid.
D: Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.
A-2
<PAGE> 58
PART C. -- OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements
Report of Independent Certified Public Accountants
Statement of Assets and Liabilities
(b) Exhibits:
(1) Declaration of Trust*
(2) By-Laws*
(3) Not Applicable
(4) Not Applicable
(5) Form of Investment Advisory Agreement
(6) Form of Distribution Agreement
(7) Not Applicable
(8) Form of Custody Agreement
(9) (a) Form of Transfer Agency and Services Agreement
(b) Form of Administration Agreement
(10) Opinion and Consent of Counsel
(11) Consent of Independent Public Accountants
(12) Not Applicable
(13) Form of Initial Capital Agreement
(14) Not Applicable
(15) Form of Distribution Plan for Investment Class
Shares
(16) Schedule for Computation of Performance Quotations**
(17) Not Applicable
(18) Form of Multi-Class Plan
(27) Financial Data Schedule
- ------------------------------
* Previously filed.
** To be filed by post-effective amendment
<PAGE> 59
Item 25. Persons Controlled by or Under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
As of February 13, 1998, the number of shareholders of record of each
Class of Shares of each Series of the Registrant was as follows:
Investment Class Institutional Class
---------------- -------------------
ICM/Isabelle Small-Cap Value Fund 2 None
Item 27. Indemnification
Reference is made to Article V of Registrant's Declaration of Trust filed
as an exhibit to this Registration Statement.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to Trustees, Officers and
controlling persons of the Registrant by the Registrant pursuant to the Trust's
Declaration of Trust, its By-Laws or otherwise, the Registrant is aware that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and, therefore, is unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by Trustees,
officers of controlling persons of the Registrant in connection with the
successful defense of any act, suit or proceeding) is asserted by such Trustees,
officers or controlling persons in connection with shares being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
Item 28. Business and Other Connections of Investment Advisor.
IronWood Capital Management
---------------------------
Position
Name With Advisor
---- ------------
Warren J. Isabelle, CFA President, Chief Investment Officer and Manager
Richard L. Droster Vice President and Director of Marketing
Gary S. Saks Vice President of Compliance
For more information relating to the Investment Advisor's officers, reference is
made to Form ADV filed under the Investment Advisers Act of 1940 by IronWood
Capital Management, LLC SEC File No. 801-55081.
Item 29. Principal Underwriters.
(a) First Data Distributors, Inc. ("FDDI") serves as Distributor of
shares of the Registrant. FDDI also serves as principal underwriter to the
following investment companies other than the Registrant:
-- BT Insurance Funds Trust -- Galaxy Fund II
-- CT&T Funds -- First Choice Funds Trust
<PAGE> 60
-- Panorama Trust -- LKCM Funds
-- The Galaxy Fund -- Potomac Funds
-- The Galaxy VIP Fund
FDDI is registered with the Securities and Exchange Commission ("SEC") as a
broker-dealer and is a member of the National Association of Securities Dealers.
FDDI, a wholly owned subsidiary of First Data Investor Services Group, Inc. is
located at 4400 Computer Drive, Westborough, Massachusetts 01581.
(b) The information required by this Item 29(b) with respect to each
director, officer or partner of FDDI is incorporated by reference to Schedule A
of Form BD filed by FDDI with the SEC pursuant to the Securities Act of 1934
(File No. 8-45467). No director, officer or partner of FDDI holds a position or
office with the Registrant.
(c) Not Applicable
Item 30. Location of Accounts and Records.
The Account books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder will be maintained at the offices of:
(1) IronWood Capital Management, LLC One Financial Center, Boston,
Massachusetts ( records relating to its function as investment
adviser)
(2) First Data Investor Services Group, Inc. 53 State Street,
Exchange Place, Boston, Massachusetts or 4400 Computer Drive,
Westborough, Massachusetts 01581 (records relating to its
functions as administrator and transfer agent)
(3) First Data Distributors, Inc., 4400 Computer Drive, Westborough,
Massachusetts 01581 (records relating to its function as
distributor)
(4) The Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio
45262 (records relating to its function as custodian)
Item 31. Management Services.
Not Applicable
Item 32. Undertakings.
(a) Not Applicable
(b) Registrant undertakes to file a post-effective amendment to the
Registration Statement on Form N-1A, using reasonably current
financial statements which need not be certified, within four to
six months from the effective date of this Registration
Statement.
(c) Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual
report to shareholders upon request and without charge.
(d) Registrant undertakes to call a meeting of Shareholders for the
purpose of voting upon the question of removal of a Trustee or
Trustees when requested to do so by the holders of at least 10%
of the Registrant's outstanding Shares of beneficial interest and
in connection with such meeting to comply with the shareholders
communications provisions of Section 16(c) of the Investment
Company Act of 1940.
<PAGE> 61
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston and the Commonwealth of Massachusetts on
this 20th day of February, 1998.
ICM SERIES TRUST
By: /s/ Warren J. Isabelle
-----------------------------
Warren J. Isabelle, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form N-1A has been signed below by the following
persons in the capacities and on the date indicated:
Signatures Title Date
---------- ----- ----
/s/ Warren J. Isabelle President, Trustee and February 20, 1998
- ------------------------- Chairman of the Board
Warren J. Isabelle
/s/ Richard L. Droster Vice President and
- ------------------------- Trustee February 20, 1998
Richard L. Droster
/s/ Gary S. Saks Vice President, Treasurer February 20, 1998
- ------------------------- and Secretary
Gary S. Saks
/s/ John A. Fiffy Trustee February 20, 1998
- -------------------------
John A. Fiffy
/s/ Donald A. Nelson Trustee February 20, 1998
- -------------------------
Donald A. Nelson
/s/ N. Stephen Ober Trustee February 20, 1998
- -------------------------
N. Stephen Ober
<PAGE> 62
EXHIBIT INDEX
Exhibit Description
- ------- -----------
1. Declaration of Trust*
2. By-Laws*
3. Not Applicable
4. Not Applicable
5. Form of Investment Advisory Agreement
6. Form of Distribution Agreement
7. Not Applicable
8. Form of Custody Agreement
9. (a) Form of Transfer Agency and Service Agreement
(b) Form of Administration Agreement
10. Opinion and Consent of Counsel
11. Consent of Independent Public Accountants
12. Not Applicable
13. Form of Initial Capital Purchase Agreement
14. Not Applicable
15. Form of Distribution Plan for Investment Class Shares
16. Schedule for Computation of Performance Quotations*
17. Not Applicable
18. Form of Multi-Class Plan
27. Financial Data Schedule
- ---------------
* Previously filed.
** To be filed by with the first post-effective amendment.
<PAGE> 1
Exhibit 5
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of this ____ day of February, 1998 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 Delaware 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 desires to retain the Adviser to render advisory
services to the Fund in the manner and on the terms and conditions hereinafter
set forth; and
WHEREAS, the Adviser is willing to perform such services on said terms
and conditions;
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
1
<PAGE> 2
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 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 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
2
<PAGE> 3
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. The Adviser is also authorized to
consider sales of shares as a factor in the selection of brokers or dealers to
execute portfolio transactions, subject to the requirements of best execution,
i.e., that such brokers or dealers are able to execute the order promptly and at
the best obtainable securities price.
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 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 1940 Act) 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.
3
<PAGE> 4
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 Agreement shall be calculated and
accrued daily and paid monthly. If this 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 Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above.
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 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.
4
<PAGE> 5
7. Nothing contained in this Agreement shall prevent the Adviser or
any affiliated person of the Adviser (as defined in the 1940 Act) 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
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 Agreement shall become effective on the date hereof and shall
continue in effect, unless sooner terminated as herein provided, for two (2)
years from such date, and from year to year thereafter provided such continuance
is approved at least annually by the vote of a majority of the Board of Trustees
of the Trust, including a majority of the Trustees of the Trust who are not
parties to this Agreement or "interested persons" (as defined in the 1940 Act)
of any such party, which vote must be cast in person at a meeting called for the
purpose of voting on such approval; PROVIDED, HOWEVER, that (a) the Fund may, at
any time and without the payment of any penalty, terminate this Agreement upon
sixty (60) days' written notice to the Adviser, either by majority vote of the
Trustees of the Trustee or by the vote of a majority of the outstanding voting
securities of the Fund; (b) this 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; and (c) the Adviser
may terminate this 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
Agreement shall be given in writing, addressed and hand delivered or mailed
certified mail, to 4400 Computer Drive, Westborough, Massachusetts 01581, 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 Agreement shall
be given in writing, addressed and delivered or mailed certified mail, to One
Financial Place, Suite 1600, Boston, Massachusetts 02109, or such other address
as shall be specified in writing to the Trust.
10. No provision of this 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 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 of any party to this 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 Agreement
may be amended by the parties without the vote or consent of the shareholders of
the
5
<PAGE> 6
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 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 Agreement shall continue with
respect to the Fund. Upon termination of this 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 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 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 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.
(Signatures on Following Page)
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the day and year first above written in Boston, Massachusetts.
THE ICM SERIES TRUST
By:_____________________________
Attest:
- -------------------------
IRONWOOD CAPITAL MANAGEMENT, LLC
By:_____________________________
Attest:
- -------------------------
7
<PAGE> 1
Exhibit 6
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this ____ day of February, 1998 (the
"Agreement") by and between ICM Series Trust, a Massachusetts business trust
(the "Company") and First Data Distributors, Inc. (the "Distributor"), a
Massachusetts corporation.
WHEREAS, the Company is registered as a diversified, open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and is currently offering units of beneficial interest (such units
of all series are hereinafter called the "Shares"), representing interests in
investment portfolios of the Company identified on Schedule A hereto (the
"Funds") which are registered with the Securities and Exchange Commission (the
"SEC") pursuant to the Company's Registration Statement on Form N-1A (the
"Registration Statement"); and
WHEREAS, the Company desires to retain the Distributor as distributor for
the Funds to provide for the sale and distribution of the Shares of the Funds
identified on Schedule A and for such additional classes or series as the
Company may issue, and the Distributor is prepared to provide such services
commencing on the date first written above.
NOW THEREFORE, in consideration of the premises and mutual covenants set
forth herein and intending to be legally bound hereby the parties hereto agree
as follows:
1. SERVICE AS DISTRIBUTOR
1.1 The Distributor will act on behalf of the Company for the distribution of
the Shares covered by the Registration Statement under the Securities Act
of 1933, as amended (the "1933 Act"). The Distributor will have no
liability for payment for the purchase of Shares sold pursuant to this
Agreement or with respect to redemptions or repurchases of Shares.
1.2 The Distributor agrees to use efforts deemed appropriate by the Distributor
to solicit orders for the sale of the Shares and will undertake such
advertising and promotion as it believes reasonable in connection with such
solicitation. To the extent that the Distributor receives shareholder
services fees under any shareholder services plan adopted by the Company,
the Distributor agrees to furnish, and/or enter into arrangements with
others for the furnishing of, personal and/or account maintenance services
with respect to the relevant shareholders of the Company as may be required
pursuant to such plan. It is contemplated that the Distributor will enter
into sales or servicing agreements with securities dealers, financial
institutions and other industry professionals, such as investment advisers,
accountants and estate planning firms.
1.3 The Company understands that the Distributor is now, and may in the future
be, the distributor of the shares of several investment companies or series
(collectively, the "Investment Entities"), including Investment Entities
having investment objectives similar to those of the Company. The Company
further understands that investors and potential investors in the Company
may invest in shares of such other Investment Entities. The Company agrees
that the Distributor's duties to such Investment Entities shall not be
deemed in conflict with its duties to the Company under this Section 1.3.
<PAGE> 2
1.4 The Distributor shall not utilize any materials in connection with the sale
or offering of Shares except the Company's prospectus and statement of
additional information and such other materials as the Company shall
provide or approve.
1.5 All activities by the Distributor and its employees, as distributor of the
Shares, shall comply with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or adopted by
the SEC or the National Association of Securities Dealers. All costs
associated with the registration of the Distributor or its employees as
brokers, dealers or sales personnel under state or Federal laws shall be
the sole responsibility of the Distributor.
1.6 The Distributor will transmit any orders received by it for purchase or
redemption of the Shares to the transfer agent for the Company.
1.7 Whenever in its judgment such action is warranted by unusual market,
economic or political conditions or abnormal circumstances of any kind, the
Company may decline to accept any orders for, or make any sales of, the
Shares until such time as the Company deems it advisable to accept such
orders and to make such sales, and the Company advises the Distributor
promptly of such determination.
1.8 The Company agrees to pay all costs and expenses in connection with the
registration of Shares under the Securities Act of 1933, as amended, and
all expenses in connection with maintaining facilities for the issue and
transfer of Shares and for supplying information, prices and other data to
be furnished by the Fund hereunder, and all expenses in connection with the
preparation and printing of the Fund's prospectuses and statements of
additional information for regulatory purposes and for distribution to
shareholders.
1.9 The Company agrees at its own expense to execute any and all documents and
to furnish any and all information and otherwise to take all actions that
may be reasonably necessary in connection with the qualification of the
Shares for sale in such states as the Distributor may designate. The
Company shall notify the Distributor in writing of the states in which the
Shares may be sold and shall notify the Distributor in writing of any
changes to the information contained in the previous notification.
1.10 The Company shall furnish from time to time, for use in connection with the
sale of the Shares, such information with respect to the Company and the
Shares as the Distributor may reasonably request; and the Company warrants
that the statements contained in any such information shall fairly show or
represent what they purport to show or represent. The Company shall also
furnish the Distributor upon request with: (a) audited annual statements
and unaudited semi-annual statements of a Fund's books and accounts
prepared by the Company, (b) quarterly earnings statements prepared by the
Company, (c) a monthly itemized list of the securities in the Funds, (d)
monthly balance sheets as soon as practicable after the end of each month,
and (e) from time to time such additional information regarding the
financial condition of the Company as the Distributor may reasonably
request.
2
<PAGE> 3
1.11 The Company represents to the Distributor that all Registration Statements
and prospectuses filed by the Company with the SEC under the 1933 Act with
respect to the Shares have been prepared in conformity with the
requirements of the 1933 Act and the rules and regulations of the SEC
thereunder as in effect at the time of such filings. As used in this
Agreement, the term "Registration Statement" shall mean any Registration
Statement and any prospectus and any statement of additional information
relating to the Company filed with the SEC and any amendments or
supplements thereto at any time filed with the SEC. Except as to
information included in the Registration Statement in reliance upon
information provided to the Company by the Distributor or any affiliate of
the Distributor expressly for use in the Registration Statement, the
Company represents and warrants to the Distributor that, to the best of its
knowledge, any Registration Statement, when such Registration Statement
becomes effective, will contain statements required to be stated therein in
conformity with the 1933 Act and the rules and regulations of the SEC; that
all statements of fact contained in any such Registration Statement will be
true and correct when such Registration Statement becomes effective; and
that no Registration Statement when such Registration Statement becomes
effective will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading to a purchaser of the Shares. The
Company may but shall not be obligated to propose from time to time such
amendment or amendments to any Registration Statement and such supplement
or supplements to any prospectus as, in the light of future developments,
may, in the opinion of the Company's counsel, be necessary or advisable.
The Company shall promptly notify the Distributor of any advice given to it
by its counsel regarding the necessity or advisability of amending or
supplementing such Registration Statement. If the Company shall not propose
such amendment or amendments and/or supplement or supplements within
fifteen days after receipt by the Company of a written request from the
Distributor to do so, the Distributor may, at its option, terminate this
Agreement. The Company shall not file any amendment to any Registration
Statement or supplement to any prospectus without giving the Distributor
reasonable notice thereof in advance; provided, however, that nothing
contained in this Agreement shall in any way limit the Company's right to
file at any time such amendments to any Registration Statements and/or
supplements to any prospectus, of whatever character, as the Company may
deem advisable, such right being in all respects absolute and
unconditional.
1.12 The Company authorizes the Distributor to use any prospectus or statement
of additional information in the form furnished from time to time in
connection with the sale of the Shares. The Company agrees to indemnify and
hold harmless the Distributor, its officers, directors, and employees, and
any person who controls the Distributor within the meaning of Section 15 of
the 1933 Act, free and harmless (a) from and against any and all claims,
costs, expenses (including reasonable attorneys' fees) losses, damages,
charges, payments and liabilities of any sort or kind which the
Distributor, its officers, directors, employees or any such controlling
person may incur under the 1933 Act, under any other statute, at common law
or otherwise, arising out of or based upon: (i) any untrue statement, or
alleged untrue statement, of a material fact contained in the Company's
Registration Statement, prospectus, statement of additional information, or
sales literature (including amendments and supplements thereto), or (ii)
any omission, or alleged omission, to state a material fact required to be
stated in the Company's Registration Statement, prospectus, statement of
additional information or sales literature (including amendments or
3
<PAGE> 4
supplements thereto), necessary to make the statements therein not
misleading; provided, however, that insofar as losses, claims, damages,
liabilities or expenses arise out of or are based upon any such untrue
statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information furnished to the Company by
the Distributor or its affiliated persons for use in the Company's
Registration Statement, prospectus, or statement of additional information
or sales literature (including amendments or supplements thereto), such
indemnification is not applicable. The Company acknowledges and agrees that
in the event that the Distributor, at the request of the Company, are
required to give indemnification comparable to that set forth in clause (a)
of this Section 1.12 to any broker-dealer selling Shares of the Company and
such broker-dealer shall make a claim for indemnification against the
Distributor, the Distributor shall make a similar claim for indemnification
against the Company.
1.13 The Distributor agrees to indemnify and hold harmless the Company, its
several officers and Trustees and each person, if any, who controls a Fund
within the meaning of Section 15 of the 1933 Act against any and all
claims, costs, expenses (including reasonable attorneys' fees), losses,
damages, charges, payments and liabilities of any sort or kind which the
Company, its officers, Trustees or any such controlling person may incur
under the 1933 Act, under any other statute, at common law or otherwise,
but only to the extent that such liability or expense incurred by the
Company, its officers or Trustees, or any controlling person resulting from
such claims or demands arose out of the acquisition of any Shares by any
person which may be based upon any untrue statement, or alleged untrue
statement, of a material fact contained in the Company's Registration
Statement, prospectus or statement of additional information (including
amendments and supplements thereto), or any omission, or alleged omission,
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, if such statement or omission was
made in reliance upon information furnished or confirmed in writing to the
Company by the Distributor or its affiliated persons (as defined in the
1940 Act). The Distributor shall indemnify and hold the Company harmless
from and against any and all claims, costs, expenses (including attorney's
fees), losses, damages, charges, payments and liabilities of any sort or
kind which may be asserted against the Company, or for which the Company
may be held liable in connection with this Agreement, or the Distributor's
performance hereunder (a "Claim"), provided that such Claim resulted from
willful misfeasance, bad faith or negligence by the Distributor in the
performance of it duties or obligations hereunder, or reckless disregard of
its duties and obligations hereunder.
1.14 In any case in which one party hereto (the "Indemnifying Party") may be
asked to indemnify or hold the other party hereto (the "Indemnified Party")
harmless, the Indemnified Party will notify the Indemnifying Party promptly
after identifying any situation which it believes presents or appears
likely to present a claim for indemnification (an "Indemnification Claim")
against the Indemnifying Party, although the failure to do so shall not
prevent recovery by the Indemnified Party, and shall keep the Indemnifying
Party advised with respect to all developments concerning such situation.
The Indemnifying Party shall have the option to defend the Indemnified
Party against any Indemnification Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects,
such defense shall be conducted by counsel chosen by the Indemnifying Party
and satisfactory to the Indemnified Party, and thereupon the Indemnifying
Party shall take over complete defense of the Indemnification Claim and the
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<PAGE> 5
Indemnified Party shall sustain no further legal or other expenses in
respect of such Indemnification Claim. The Indemnified Party will not
confess any Indemnification Claim or make any compromise in any case in
which the Indemnifying Party will be asked to provide indemnification,
except with the Indemnifying Party's prior written consent. The obligations
of the parties hereto under this Section 1.14 and Section 3.1 shall survive
the termination of this Agreement.
In the event that the Company is the Indemnifying Party and the
Indemnifying Party does not elect to assume the defense of any such suit,
or in case the Distributor reasonably does not approve of counsel chosen by
the Company, or in case there is a conflict of interest between the Company
or the Distributor, the Company will reimburse the Distributor, its
officers, directors and employees, or the controlling person or persons
named as defendant or defendants in such suit, for the fees and expenses of
any counsel retained by the Distributor or them. The Company's
indemnification agreement contained in this Section 1.14 and Section 3.1
and the Company's representations and warranties in this Agreement shall
remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Distributor, its officers,
directors and employees, or any controlling person, and shall survive the
delivery of any Shares. This agreement of indemnity will inure exclusively
to the Distributor's benefit, to the benefit of its several officers,
directors and employees, and their respective estates and to the benefit of
the controlling persons and their successors. The Company agrees promptly
to notify the Distributor of the commencement of any litigation or
proceedings against the Company or any of its officers or directors in
connection with the issue and sale of any Shares.
1.15 No Shares shall be offered by either the Distributor or the Company under
any of the provisions of this Agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Company if and so long as
effectiveness of the Registration Statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
1933 Act, or if and so long as a current prospectus as required by Section
5(b)(2) of the 1933 Act is not on file with the SEC; provided, however,
that nothing contained in this Section 1.15 shall in any way restrict or
have any application to or bearing upon the Company's obligation to redeem
Shares tendered for redemption by any shareholder in accordance with the
provisions of the Company's Registration Statement, Declaration of Company,
or bylaws.
1.16 The Company agrees to advise the Distributor as soon as reasonably
practical by a notice in writing delivered to the Distributor:
(a) of any request by the SEC for amendments to the Registration Statement,
prospectus or statement of additional information then in effect or for
additional information;
(b) in the event of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement, prospectus or statement of
additional information then in effect or the initiation by service of
process on the Company of any proceeding for that purpose;
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<PAGE> 6
(c) of the happening of any event that makes untrue any statement of a
material fact made in the Registration Statement, prospectus or statement
of additional information then in effect or that requires the making of a
change in such Registration Statement, prospectus or statement of
additional information in order to make the statements therein not
misleading; and
(d) of all actions of the SEC with respect to any amendments to any
Registration Statement, prospectus or statement of additional information
which may from time to time be filed with the SEC.
For purposes of this section, informal requests by or acts of the Staff of
the SEC shall not be deemed actions of or requests by the SEC.
2. TERM
2.1 This Agreement shall become effective on the date first written above and,
unless sooner terminated as provided herein, shall continue for an initial
two-year term and thereafter shall be renewed for successive one-year
terms, provided such continuance is specifically approved at least annually
by (i) the Company's Board of Trustees or (ii) by a vote of a majority (as
defined in the 1940 Act and Rule 18f-2 thereunder) of the outstanding
voting securities of the Company, provided that in either event the
continuance is also approved by a majority of the Trustees who are not
parties to this Agreement and who are not interested persons (as defined in
the 1940 Act) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval. This Agreement
is terminable without penalty, on at least sixty days' written notice, by
the Company's Board of Trustees, by vote of a majority (as defined in the
1940 Act and Rule 18f-2 thereunder) of the outstanding voting securities of
the Company, or by the Distributor. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act
and the rules thereunder).
2.2 In the event a termination notice is given by the Company, all expenses
associated with movement of records and materials and conversion thereof
will be borne by the Company.
3. LIMITATION OF LIABILITY
3.1 The Distributor shall not be liable to the Company for any error of
judgment or mistake of law or for any loss suffered by the Company in
connection with the performance of its obligations and duties under this
Agreement, except a loss resulting from the Distributor's willful
misfeasance, bad faith or negligence in the performance of such obligations
and duties, or by reason of its reckless disregard thereof. The Company
will indemnify the Distributor against and hold it harmless from any and
all claims, costs, expenses (including reasonable attorneys' fees), losses,
damages, charges, payments and liabilities of any sort or kind which may be
asserted against the Distributor for which the Distributor may be held to
be liable in connection with this Agreement or the Distributor's
performance hereunder (a "Section 3.1 Claim"), unless such Section 3.1
Claim resulted from a negligent act or omission to act, or bad faith,
willful misfeasance or reckless disregard by the Distributor in the
performance of its duties hereunder. The provisions of paragraph 1 of
Section 1.12 shall apply to any indemnification provided by the Company
pursuant to this
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Section 3.1. The obligations of the parties hereto under this Section 3.1
shall survive termination of this Agreement.
3.2 Each party shall have the duty to mitigate damages for which the other
party may become responsible.
3.3 NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL EITHER PARTY, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE UNDER ANY THEORY OF
TORT, CONTRACT, STRICT LIABILITY OF OTHER LEGAL OR EQUITABLE THEORY FOR
LOST PROFITS, EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR
CONSEQUENTIAL DAMAGES, EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE
PARTIES REGARDLESS OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER
EITHER PARTY OR ANY ENTITY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
4. EXCLUSION OF WARRANTIES
THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, THE DISTRIBUTOR DISCLAIMS ALL OTHER REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, MADE TO THE COMPANY, A FUND OR ANY OTHER
PERSON, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY,
SUITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE
(IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE) OF ANY
SERVICES OR ANY GOODS PROVIDED INCIDENTAL TO SERVICES PROVIDED UNDER THIS
AGREEMENT. THE DISTRIBUTOR DISCLAIMS ANY WARRANTY OF TITLE OR
NON-INFRINGEMENT EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT.
5. MODIFICATIONS AND WAIVERS
No change, termination, modification, or waiver of any term or condition of
the Agreement shall be valid unless in writing signed by each party. No
such writing shall be effective as against the Distributor unless said
writing is executed by a Senior Vice President, Executive Vice President or
President of the Distributor. A party's waiver of a breach of any term or
condition in the Agreement shall not be deemed a waiver of any subsequent
breach of the same or another term or condition.
6. NO PRESUMPTION AGAINST DRAFTER
The Distributor and the Company have jointly participated in the
negotiation and drafting of this Agreement. The Agreement shall be
construed as if drafted jointly by the Company and the Distributor, and no
presumptions arise favoring any party by virtue of the authorship of any
provision of this Agreement.
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7. PUBLICITY
Neither the Distributor nor the Company shall release or publish news
releases, public announcements, advertising or other publicity relating to
this Agreement or to the transactions contemplated by it without prior
review and written approval of the other party; provided, however, that
either party may make such disclosures as are required by legal, accounting
or regulatory requirements after making reasonable efforts in the
circumstances to consult in advance with the other party.
8. SEVERABILITY
The parties intend every provision of this Agreement to be severable. If a
court of competent jurisdiction determines that any term or provision is
illegal or invalid for any reason, the illegality or invalidity shall not
affect the validity of the remainder of this Agreement. In such case, the
parties shall in good faith modify or substitute such provision consistent
with the original intent of the parties. Without limiting the generality of
this paragraph, if a court determines that any remedy stated in this
Agreement has failed of its essential purpose, then all other provisions of
this Agreement, including the limitations on liability and exclusion of
damages, shall remain fully effective.
9. FORCE MAJEURE
No party shall be liable for any default or delay in the performance of its
obligations under this Agreement if and to the extent such default or delay
is caused, directly or indirectly, by (i) fire, flood, elements of nature
or other acts of God; (ii) any outbreak or escalation of hostilities, war,
riots or civil disorders in any country, (iii) any act or omission of the
other party or any governmental authority; (iv) any labor disputes (whether
or not the employees' demands are reasonable or within the party's power to
satisfy); or (v) nonperformance by a third party or any similar cause
beyond the reasonable control of such party, including without limitation,
failures or fluctuations in telecommunications or other equipment. In any
such event, the non-performing party shall be excused from any further
performance and observance of the obligations so affected only for so long
as such circumstances prevail and such party continues to use commercially
reasonable efforts to recommence performance or observance as soon as
practicable.
10. MISCELLANEOUS
10.1 Any notice or other instrument authorized or required by this Agreement to
be given in writing to the Company or the Distributor shall be sufficiently
given if addressed to the party and received by it at its office set forth
below or at such other place as it may from time to time designate in
writing.
To the Company:
ICM Series Trust
c/o IronWood Capital Management, LLC
One Exchange Place
Boston, Massachusetts 02109
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To the Distributor:
First Data Distributors, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581
Attention: President
with a copy to the Distributor's Chief Legal Officer
10.2 The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, and the applicable provisions of the 1940 Act shall
govern the interpretation, validity, and enforcement of this Agreement. To
the extent the provisions of Massachusetts law or the provisions hereof
conflict with the 1940 Act, the 1940 Act shall control. All actions arising
from or related to this Agreement shall be brought in the state and federal
courts sitting in the City of Boston, and the Distributor and the Company
hereby submit themselves to the exclusive jurisdiction of those courts
10.3 This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original and which collectively shall be deemed to
constitute only one instrument.
10.4 The captions of this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
10.5 This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and is not intended to
confer upon any other person any rights or remedies hereunder.
11. CONFIDENTIALITY
11.1 The parties agree that the Proprietary Information (defined below) and the
contents of this Agreement (collectively "Confidential Information") are
confidential information of the parties and their respective licensers. The
Company and the Distributor shall exercise reasonable care to safeguard the
confidentiality of the Confidential Information of the other. The Company
and the Distributor may each use the Confidential Information only to
exercise its rights or perform its duties under this Agreement. The Company
and the Distributor shall not duplicate, sell or disclose to others the
Confidential Information of the other, in whole or in part, without the
prior written permission of the other party. The Company and the
Distributor may, however, disclose Confidential Information to its
employees who have a need to know the Confidential Information to perform
work for the other, provided that each shall use reasonable efforts to
ensure that the Confidential Information is not duplicated or disclosed by
its employees in breach of this Agreement. The Company and the Distributor
may also disclose the Confidential Information to independent contractors,
auditors and professional advisors, provided they first agree in writing to
be bound by the confidentiality obligations substantially similar to this
Section 11. Notwithstanding the previous sentence, in no event shall either
the Company or the
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Distributor disclose the Confidential Information to any competitor of the
other without specific, prior written consent.
11.2 Proprietary Information means:
(a) any data or information that is completely sensitive material, and not
generally known to the public, including, but not limited to, information
about product plans, marketing strategies, finance, operations, customer
relationships, customer profiles, sales estimates, business plans, and
internal performance results relating to the past, present or future
business activities of the Company or the Distributor, their respective
subsidiaries and affiliated companies and the customers, clients and
suppliers of any of them;
(b) any scientific or technical information, design, process, procedure,
formula, or improvement that is commercially valuable and secret in the
sense that its confidentiality affords the Company or the Distributor a
competitive advantage over its competitors: and
(c) all confidential or proprietary concepts, documentation, reports, data,
specifications, computer software, source code, object code, flow charts,
databases, inventions, know-how, show-how and trade secrets, whether or not
patentable or copyrightable.
11.3 Confidential Information includes, without limitation, all documents,
inventions, substances, engineering and laboratory notebooks, drawings,
diagrams, specifications, bills of material, equipment, prototypes and
models, and any other tangible manifestation of the foregoing of either
party which now exist or come into the control or possession of the other.
11.4 The Company and the Distributor acknowledge that breach of the restrictions
on use, dissemination or disclosure of any Confidential Information would
result in immediate and irreparable harm, and money damages would be
inadequate to compensate for that harm. The Distributor or the Company, as
applicable, shall be entitled to equitable relief, in addition to all other
available remedies, to redress any such breach.
11.5 The obligations of confidentiality and restriction on use herein shall not
apply to any Confidential Information that a party proves:
(a) Was in the public domain prior to the date of this Agreement or
subsequently came into the public domain through no fault of such party; or
(b) Was lawfully received by the party from a third party free of any
obligation of confidence to such third party; or
(c) Was already in the possession of the party prior to receipt thereof,
directly or indirectly, from the other party; or
(d) Is required to be disclosed in a judicial or administrative proceeding
after all reasonable legal remedies for maintaining such information in
confidence have been exhausted including, but not limited to, giving the
other party as much advance notice of
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the possibility of such disclosure as practical so the other party may
attempt to stop such disclosure or obtain a protective order concerning
such disclosure; or
(e) Is subsequently and independently developed by employees, consultants
or agents of the party without reference to the Confidential Information
disclosed under this Agreement.
12. TRUSTEE LIABILITY
The Company and the Distributor agree that the obligations of the Company
under the Agreement shall not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Company individually, but are binding only upon
the assets and property of the Company, as provided in the Declaration of
Trust. The execution and delivery of this Agreement have been authorized by
the Directors of the Company, and signed by an authorized officer of the
Company, acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed to have
been made by any of them or any shareholder of the Company individually or
to impose any liability on any of them or any shareholder of the Company
personally, but shall bind only the assets and property of the Company as
provided in the Declaration of Trust.
13. ENTIRE AGREEMENT
This Agreement, including all Schedules hereto, constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous proposals, agreements, contracts,
representations, and understandings, whether written or oral, between the
parties with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ICM SERIES TRUST
By:_________________________
Name:_______________________
Title:________________________
FIRST DATA DISTRIBUTORS, INC.
By:_________________________
Name:_______________________
Title:________________________
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SCHEDULE A
to the Distribution Agreement
between ICM Series Trust and
First Data Distributors, Inc.
NAME OF FUNDS
ICM/Isabelle Small Cap Value Fund
A-1
<PAGE> 1
Exhibit 8
CUSTODY AGREEMENT
THIS AGREEMENT, is made as of ___________, 1998, by and between ICM
SERIES TRUST, a business trust organized under the laws of the Commonwealth of
Massachusetts (the "Trust"), and THE FIFTH THIRD BANK, a banking company
organized under the laws of the State of Ohio (the "Custodian").
WITNESSETH:
WHEREAS, the Trust desires that the Securities and cash of each of the
investment portfolios identified in Exhibit A hereto (such investment portfolios
and individually referred to herein as a "Fund" and collectively as the
"Funds"), be held and administered by the Custodian pursuant to this Agreement;
and
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Trust and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1.1 "AUTHORIZED PERSON" means any Officer or other person duly
authorized by resolution of the Board of Trustees to give Oral Instructions and
Written Instructions on behalf of the Trust and named in Exhibit B hereto or in
such resolutions of the Board of Trustees, certified by an Officer, as may be
received by the Custodian from time to time.
1.2 "BOARD OF TRUSTEES" shall mean the Trustees from time to time
serving under the Trust's Agreement and Declaration of Trust, dated November 18,
1997, as from time to time amended.
1.3 "BOOK-ENTRY SYSTEM" shall mean a federal book-entry system as
provided in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of
31 CFR Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "BUSINESS DAY" shall mean any day recognized as a settlement day
by The New York Stock Exchange, Inc. and any other day for which the Fund
computes the net asset value of the Fund.
1.5 "NASD" shall mean The National Association of Securities Dealers,
Inc.
1.6 "OFFICER" shall mean the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer, or any Assistant Treasurer of
the Trust.
1.7 "ORAL INSTRUCTIONS" shall mean instructions orally transmitted to
and accepted by the Custodian because such instructions are: (i) reasonably
believed by the Custodian to have been given by an Authorized Person, (ii)
recorded and kept among the records of the Custodian made in the ordinary course
of business and (iii) orally confirmed by the Custodian. The Trust shall cause
all Oral Instructions to be confirmed by Written Instructions. If such Written
Instructions confirming Oral Instructions are not received by the Custodian
prior to a transaction, it shall in no way affect the validity of the
transaction or the authorization thereof by the Trust. If Oral Instructions vary
from the Written Instructions which
<PAGE> 2
purport to confirm them, the Custodian shall notify the Trust of such variance
but such Oral Instructions will govern unless the Custodian has not yet acted.
1.8 "CUSTODY ACCOUNT" shall mean any account in the name of the Trust,
which is provided for in Section 3.2 below.
1.9 "PROPER INSTRUCTIONS" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.10 "SECURITIES DEPOSITORY" shall mean The Participants Trust Company
or The Depository Trust Company and (provided that Custodian shall have received
a copy of a resolution of the Board of Trustees, certified by an Officer,
specifically approving the use of such clearing agency as a depository for the
Trust) any other clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities and Exchange Act of 1934 (the
"1934 Act"), which acts as a system for the central handling of Securities where
all Securities of any particular class or series of an issuer deposited within
the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of the Securities.
1.11 "SECURITIES" shall include, without limitation, common and
preferred stocks, bonds, call options, put options, debentures, notes, bank
certificates of deposit, bankers' acceptances, mortgage-backed securities, other
money market instruments or other obligations, and any certificates, receipts,
warrants or other instruments or documents representing rights to receive,
purchase or subscribe for the same, or evidencing or representing any other
rights or interests therein, or any similar property or assets that the
Custodian has the facilities to clear and to service.
1.12 "SHARES" shall mean the units of beneficial interest issued by
the Trust.
1.13 "WRITTEN INSTRUCTIONS" shall mean (i) written communications
actually received by the Custodian and signed by one or more persons as the
Board of Trustees shall have from time to time authorized, or (ii)
communications by telex or any other such system from a person or persons
reasonably believed by the Custodian to be Authorized, or (iii) communications
transmitted electronically through the Institutional Delivery System (IDS), or
any other similar electronic instruction system acceptable to Custodian and
approved by resolutions of the Board of Trustees, a copy of which, certified by
an Officer, shall have been delivered to the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 APPOINTMENT. The Trust hereby constitutes and appoints the
Custodian as custodian of all Securities and cash owned by or in the possession
of the Trust at any time during the period of this Agreement, provided that such
Securities or cash at all times shall be and remain the property of the Trust.
2.2 ACCEPTANCE. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter set forth and
in accordance with the 1940 Act as amended. Except as specifically set forth
herein, the Custodian shall have no liability and assumes no responsibly for any
non-compliance by the Trust or a Fund of any laws, rules or regulations.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 SEGREGATION. All Securities and non-cash property held by the
Custodian for the account of the Fund, except Securities maintained in a
Securities Depository or Book-Entry System, shall be physically segregated from
other Securities and non-cash property in the possession of the Custodian and
shall be identified as subject to this Agreement.
3.2 CUSTODY ACCOUNT. The Custodian shall open and maintain in its
trust department a custody account in the name of each Fund, subject only to
draft or order of the Custodian, in which the Custodian shall enter and carry
all Securities, cash and other assets of the Fund which are delivered to it.
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<PAGE> 3
3.3 APPOINTMENT OF AGENTS. In its discretion, the Custodian may
appoint, and at any time remove, any domestic bank or trust company, which has
been approved by the Board of Trustees and is qualified to act as a custodian
under the 1940 Act, as sub-custodian to hold Securities and cash of the Funds
and to carry out such other provisions of this Agreement as it may determine,
and may also open and maintain one or more banking accounts with such a bank or
trust company (any such accounts to be in the name of the Custodian and subject
only to its draft or order), provided, however, that the appointment of any such
agent shall not relieve the Custodian of any of its obligations or liabilities
under this Agreement.
3.4 DELIVERY OF ASSETS TO CUSTODIAN. The Fund shall deliver, or cause
to be delivered, to the Custodian all of the Fund's Securities, cash and other
assets, including (a) all payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by the Fund at any time during the period of this Agreement,
and (b) all cash received by the Fund for the issuance, at any time during such
period, of Shares. The Custodian shall not be responsible for such Securities,
cash or other assets until actually received by it.
3.5 SECURITIES DEPOSITORIES AND BOOK-ENTRY SYSTEMS. The Custodian may
deposit and/or maintain Securities of the Funds in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Funds in any Securities
Depository or Book-Entry System, the Fund shall deliver to the
Custodian a resolution of the Board of Trustees, certified by an
Officer, authorizing and instructing the Custodian on an on-going
basis to deposit in such Securities Depository or Book-Entry
System all Securities eligible for deposit therein and to make
use of such Securities Depository or Book-Entry System to the
extent possible and practical in connection with its performance
hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of collateral consisting
of Securities. So long as such Securities Depository or
Book-Entry System shall continue to be employed for the deposit
of Securities of the Funds, the Trust shall annually re-adopt
such resolution and deliver a copy thereof, certified by an
Officer, to the Custodian.
(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of
the Custodian in such Book-Entry System or Securities Depository
which includes only assets held by the Custodian as a fiduciary,
custodian or otherwise for customers.
(c) The records of the Custodian and the Custodian's account on the
books of the Book-Entry System and Securities Depository as the
case may be, with respect to Securities of a Fund maintained in a
Book-Entry System or Securities Depository shall, by book-entry,
or otherwise identify such Securities as belonging to the Fund.
(d) If Securities purchases by the Fund are to be held in a
Book-Entry System or Securities Depository, the Custodian shall
pay for such Securities upon (i) receipt of advice from the
Book-Entry System or Securities Depository that such Securities
have been transferred to the Depository Account, and (ii) the
making of an entry on the records of the Custodian to reflect
such payment and transfer for the account of the Fund. If
Securities sold by the Fund are held in a Book-Entry System or
Securities Depository, the Custodian shall transfer such
Securities upon (i) receipt of advice from the Book-Entry System
or Securities depository that payment for such Securities has
been transferred to the Depository Account, and (ii) the making
of an entry on the records of the Custodian to reflect such
transfer and payment for the account of the Fund.
(e) Upon request, the Custodian shall provide the Fund with copies of
any report (obtained by the Custodian from a Book-Entry System or
Securities Depository in which Securities of the Fund is kept) on
the internal accounting controls and procedures for safeguarding
Securities deposited in such Book-Entry System or Securities
Depository.
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(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable, and shall indemnify and hold harmless
the Trust for any loss or damage to the Trust resulting (i) from
the use of a Book-Entry System or Securities Depository by reason
of any negligence or willful misconduct on the part of Custodian
or any sub-custodian appointed pursuant to Section 3.3 above or
any of its or their employees, or (ii) from failure of Custodian
or any such sub-custodian to enforce effectively such rights as
it may have against a Book-Entry System or Securities Depository.
At its election, the Trust shall be subrogated to the rights of
the Custodian with respect to any claim against a Book-Entry
System or Securities Depository or any other person for any loss
or damage to the Funds arising from the use of such Book-Entry
System or Securities Depository, if and to the extent that the
Trust has been made whole for any such loss or damage.
3.6 DISBURSEMENT OF MONEYS FROM CUSTODY ACCOUNTS. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from a Fund Custody
Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only upon
compliance with Section 4.1 of this Agreement and only (i) in the
case of Securities (other than options on Securities, futures
contracts and options on futures contracts), against the delivery
to the Custodian (or any sub-custodian appointed pursuant to
Section 3.3 above) of such Securities registered as provided in
Section 3.9 below in proper form for transfer, or if the purchase
of such Securities is effected through a Book-Entry System or
Securities Depository, in accordance with the conditions set
forth in Section 3.5 above; (ii) in the case of options on
Securities, against delivery to the Custodian (or such
sub-custodian) of such receipts as are required by the customs
prevailing among dealers in such options; (iii) in the case of
futures contracts and options on futures contracts, against
delivery to the Custodian (or such sub-custodian) of evidence of
title thereto in favor of the Trust or any nominee referred to in
Section 3.9 below; and (iv) in the case of repurchase or reverse
repurchase agreements entered into between the Trust and a bank
which is a member of the Federal Reserve System or between the
Trust and a primary dealer in U.S. Government securities, against
delivery of the purchased Securities either in certificate form
or through an entry crediting the Custodian's account at a
Book-Entry System or Securities Depository for the account of the
Fund with such Securities;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in
Section 5.1 below;
(e) For the payment of any expense or liability incurred by the
Trust, including but not limited to the following payments for
the account of a Fund: interest; taxes; administration,
investment management, investment advisory, accounting, auditing,
transfer agent, custodian, trustee and legal fees; and other
operating expenses of a Fund; in all cases, whether or not such
expenses are to be in whole or in part capitalized or treated as
deferred expenses;
(f) For transfer in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD, relating to
compliance with rules of The Options Clearing Corporation and of
any registered national securities exchange (or of any similar
organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Trust;
(g) For transfer in accordance with the provisions of any agreement
among the Trust, the Custodian, and a futures commission merchant
registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in
connection with transactions by the Trust;
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(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including
the Custodian), which deposit or account has a term of one year
or less; and
(i) For any other proper purposes, but only upon receipt, in addition
to Proper Instructions, of a copy of a resolution of the Board of
Trustees, certified by an Officer, specifying the amount and
purpose of such payment, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such
payment is to be made.
3.7 DELIVERY OF SECURITIES FROM FUND CUSTODY ACCOUNTS. Upon receipt
of Proper Instructions, the Custodian shall release and deliver Securities from
a Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of a Fund but only
against receipt of payment therefor in cash, by certified or
cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of
Section 3.5 above;
(c) To an Offeror's depository agent in connection with tender or
other similar offers for Securities of a Fund; provided that, in
any such case, the cash or other consideration is to be delivered
to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name
of the Trust, the Custodian or any sub-custodian appointed
pursuant to Section 3.3 above, or of any nominee or nominees of
any of the foregoing, or (ii) for exchange for a different number
of certificates or other evidence representing the same aggregate
face amount or number of units; provided that, in any such case,
the new Securities are to be delivered to the Custodian;
(e) To the broker selling Securities, for examination in accordance
with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the issuer of such Securities, or pursuant to provisions for
conversion contained in such Securities, or pursuant to any
deposit agreement, including surrender or receipt of underlying
Securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by a Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(i) For delivery in connection with any loans of Securities of a
Fund, but only against receipt of such collateral as the Trust
shall have specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by the
Trust on behalf of a Fund requiring a pledge of assets by such
Fund, but only against receipt by the Custodian of the amounts
borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Trust or a Fund;
(l) For delivery in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD, relating to
compliance with the rules of The Options Clearing Corporation and
of any registered national securities exchange (or of any similar
organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Trust on
behalf of a Fund;
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(m) For delivery in accordance with the provisions of any agreement
among the Trust on behalf of a Fund, the Custodian, and a futures
commission merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in
connection with transactions by the Trust on behalf of a Fund; or
(n) For any other proper corporate purposes, but only upon receipt,
in addition to Proper Instructions, of a copy of a resolution of
the Board of Trustees, certified by an Officer, specifying the
Securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to
whom delivery of such Securities shall be made.
3.8 ACTIONS NOT REQUIRING PROPER INSTRUCTIONS. Unless otherwise
instructed by the Trust, the Custodian shall with respect to all Securities held
for a Fund;
(a) Subject to Section 7.4 below, collect on a timely basis all
income and other payments to which the Trust is entitled either
by law or pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on
a timely basis the amount payable upon all Securities which may
mature or be called, redeemed, or retired, or otherwise become
payable;
(c) Endorse for collection, in the name of the Trust, checks, drafts
and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect, and prepare and submit reports to the Internal Revenue
Service ("IRS") and to the Trust at such time, in such manner and
containing such information as is prescribed by the IRS;
(f) Hold for a Fund, either directly or, with respect to Securities
held therein, through a Book-Entry System or Securities
Depository, all rights and similar securities issued with respect
to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with sale, exchange, substitution, purchase, transfer
and other dealings with Securities and assets of the Fund.
3.9 REGISTRATION AND TRANSFER OF SECURITIES. All Securities held for a
Fund that are issued or issuable only in bearer form shall be held by the
Custodian in that form, provided that any such Securities shall be held in a
Book-Entry System for the account of the Trust on behalf of a Fund, if eligible
therefor. All other Securities held for a Fund may be registered in the name of
the Trust on behalf of such Fund, the Custodian, or any sub-custodian appointed
pursuant to Section 3.3 above, or in the name of any nominee of any of them, or
in the name of a Book-Entry System, Securities Depository or any nominee of
either thereof; provided, however, that such Securities are held specifically
for the account of the Trust on behalf of a Fund. The Trust shall furnish to the
Custodian appropriate instruments to enable the Custodian to hold or deliver in
proper form for transfer, or to register in the name of any of the nominees
hereinabove referred to or in the name of a Book-Entry System or Securities
Depository, any Securities registered in the name of a Fund.
3.10 RECORDS. (a) The Custodian shall maintain, by Fund, complete and
accurate records with respect to Securities, cash or other property held for the
Trust, including (i) journals or other records of original entry containing an
itemized daily record in detail of all receipts and deliveries of Securities and
all receipts and disbursements of cash; (ii) ledgers (or other records)
reflecting (A) Securities in transfer, (B) Securities in physical possession,
(C) monies and Securities borrowed and monies and Securities loaned (together
with a record of the collateral therefor and substitutions of such collateral),
(D) dividends and interest received, and (E) dividends receivable and interest
accrued; and (iii) canceled checks and bank records related thereto. The
Custodian shall keep such other books and records of the Trust as the Trust
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shall reasonably request, or as may be required by the 1940 Act, including, but
not limited to Section 3.1 and Rule 31a-1 and Rule 31a-2 promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i)
be maintained in a form acceptable to the Trust and in compliance with rules and
regulations of the Securities and Exchange Commission, (ii) be the property of
the Trust and at all times during the regular business hours of the Custodian be
made available upon request for inspection by duly authorized officers,
employees or agents of the Trust and employees or agents of the Securities and
Exchange Commission, and (iii) if required to be maintained by Rule 31a-1 under
the 1940 Act, be preserved for the periods prescribed in Rule 31a-2 under the
1940 Act.
3.11 FUND REPORTS BY CUSTODIAN. The Custodian shall furnish the Trust
with a daily activity statement by Fund and a summary of all transfers to or
from the Custody Account on the day following such transfers. At least monthly
and from time to time, the Custodian shall furnish the Trust with a detailed
statement, by Fund, of the Securities and moneys held for the Trust under this
Agreement.
3.12 OTHER REPORTS BY CUSTODIAN. The Custodian shall provide the Trust
with such reports, as the Trust may reasonably request from time to time, on the
internal accounting controls and procedures for safeguarding Securities, which
are employed by the Custodian or any sub-custodian appointed pursuant to Section
3.3 above.
3.13 PROXIES AND OTHER MATERIALS. The Custodian shall cause all
proxies if any, relating to Securities which are not registered in the name of a
Fund, to be promptly executed by the registered holder of such Securities,
without indication of the manner in which such proxies are to be voted, and
shall include all other proxy materials, if any, promptly deliver to the Trust
such proxies, all proxy soliciting materials, which should include all other
proxy materials, if any, and all notices to such Securities.
3.14 INFORMATION ON CORPORATE ACTIONS. Custodian will promptly notify
the Trust of corporate actions, limited to those Securities registered in
nominee name and to those Securities held at a Depository or sub-Custodian
acting as agent for Custodian. Custodian will be responsible only if the notice
of such corporate actions is published by the Financial Daily Card Service, J.J.
Kenny Called Bond Service, DTC, or received by first class mail. For market
announcements not yet received and distributed by Custodian's services, Trust
will inform its custody representative with appropriate instructions. Custodian
will, upon receipt of Trust's response within the required deadline, affect such
action for receipt or payment for the Trust. For those responses received after
the deadline, Custodian will affect such action for receipt or payment, subject
to the limitations of the agent(s) affecting such actions. Custodian will
promptly notify Trust for put options only if the notice is received by first
class mail from the agent. The Trust will provide or cause to be provided to
Custodian with all relevant information contained in the prospectus for any
security which has unique put/option provisions and provide Custodian with
specific tender instructions at least five business days prior to the end of the
tender period.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 PURCHASE OF SECURITIES. Promptly upon each purchase of Securities
for the Trust, Written Instructions shall be delivered to the Custodian by the
end of the trading day, specifying (a) the name of the issuer or writer of such
Securities, and the title or other description thereof, (b) the number of
shares, principal amount (and accrued interest, if any) or other units
purchased, (c) the date of purchase and settlement, (d) the purchase price per
unit, (e) the total amount payable upon such purchase, and (f) the name of the
person to whom such amount is payable. The Custodian shall upon receipt of such
Securities purchased by a Fund pay out of the moneys held for the account of
such Fund the total amount specified in such Written Instructions to the person
named therein. The Custodian shall not be under any obligation to pay out moneys
to cover the cost of a purchase of Securities for a Fund, if in the relevant
Custody Account there is insufficient cash available to the Fund for which such
purchase was made.
4.2 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES
PURCHASED. In any and every case where payment for the purchase of Securities
for a Fund is made by the Custodian in advance of receipt for the account of the
Fund of the Securities purchased but in the absence of specific Written or Oral
Instructions to so pay in advance, the Custodian shall be liable to the Fund for
such Securities to the same extent as if the Securities had been received by the
Custodian.
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4.3 SALE OF SECURITIES. Promptly upon each sale of Securities by a
Fund, Written Instructions shall be delivered to the Custodian by the end of the
day, specifying (a) the name of the issuer or writer of such Securities, and the
title or other description thereof, (b) the number of shares, principal amount
(and accrued interest, if any), or other units sold, (c) the date of sale and
settlement (d) the sale price per unit, (e) the total amount payable upon such
sale, and (f) the person to whom such Securities are to be delivered. Upon
receipt of the total amount payable to the Trust as specified in such Written
Instructions, the Custodian shall deliver such Securities to the person
specified in such Written Instructions. Subject to the foregoing, the Custodian
may accept payment in such form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs prevailing
among dealers in Securities.
4.4 DELIVERY OF SECURITIES SOLD. Notwithstanding Section 4.3 above or
any other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Trust shall bear the risk that
final payment for such Securities may not be made or that such Securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and the Custodian shall have no liability for any of the
foregoing.
4.5 PAYMENT FOR SECURITIES SOLD, ETC. In its sole discretion and from
time to time, the Custodian may credit the relevant Custody Account, prior to
actual receipt of final payment thereof, with (i) proceeds from the sale of
Securities which it has been instructed to deliver against payment, (ii)
proceeds from the redemption of Securities or other assets of the Trust, and
(iii) income from cash, Securities or other assets of the Trust. Any such credit
shall be conditional upon actual receipt by Custodian of final payment and may
be reversed if final payment is not actually received in full. The Custodian
may, in its sole discretion and from time to time, permit the Trust to use funds
so credited to its Custody Account in anticipation of actual receipt of final
payment. Any such funds shall be repayable immediately upon demand made by the
Custodian at any time prior to the actual receipt of all final payments in
anticipation of which funds were credited to the Custody Account.
4.6 ADVANCES BY CUSTODIAN FOR SETTLEMENT. The Custodian may, in its
sole discretion and from time to time, advance funds to the Trust to facilitate
the settlement of a Trust transactions on behalf of a Fund in its Custody
Account. Any such advance shall be repayable immediately upon demand made by
Custodian.
ARTICLE V
REDEMPTION OF TRUST SHARES
TRANSFER OF FUNDS. From such funds as may be available for the purpose
in the relevant Custody Account, and upon receipt of Proper Instructions
specifying that the funds are required to redeem Shares of a Fund, the Custodian
shall wire each amount specified in such Proper Instructions to or through such
bank as the Trust may designate with respect to such amount in such Proper
Instructions. Upon effecting payment or distribution in accordance with proper
Instruction, the Custodian shall not be under any obligation or have any
responsibility thereafter with respect to any such paying bank.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of each Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the
Trust, the Custodian and a broker-dealer registered under the
1934 Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating
to compliance with the rules of The Options Clearing Corporation
and of any registered national securities exchange (or the
Commodity Futures Trading commission or any registered contract
market), or of any similar organization or organizations,
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regarding escrow or other arrangements in connection with
transactions by the Trust,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by a Fund or in
connection with financial futures contracts (or options thereon)
purchased or sold by a Fund,
(c) which constitute collateral for loans of Securities made by a
Fund,
(d) for purposes of compliance by the Trust with requirements under
the 1940 Act for the maintenance of segregated accounts by
registered investment companies in connection with reverse
repurchase agreements and when-issued, delayed delivery and firm
commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Trustees, certified by an Officer, setting forth
the purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 STANDARD OF CARE. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Trust for any loss, damage, cost, expense (including
attorneys' fees and disbursements), liability or claim unless such loss,
damages, cost, expense, liability or claim arises from negligence, bad faith,
willful misconduct, or failure to exercise reasonable care on its part or on the
part of any sub-custodian appointed pursuant to Section 3.3 above. The
Custodian's cumulative liability within a calendar year shall be limited with
respect to the Trust or any party claiming by, through or on behalf of the Trust
for the initial and all subsequent renewal terms of this Agreement, to the
amount of the actual damages sustained by the Trust, (actual damages for
uninvested funds shall be the overnight Feds fund rate). However, Custodian will
not be liable for special incidental or punitive damages. The Custodian shall be
entitled to rely on and may act upon advice of counsel on all matters, and shall
be without liability for any action reasonably taken or omitted pursuant to such
advice. The Custodian shall promptly notify the Trust of any action taken or
omitted by the Custodian pursuant to advice of counsel. The Custodian shall not
be under any obligation at any time to ascertain whether the Trust is in
compliance with the 1940 Act, the regulations thereunder, the provisions of the
Trust's charter documents or by-laws, or its investment objectives and policies
as then in effect.
7.2 ACTUAL COLLECTION REQUIRED. The Custodian shall not be liable for,
or considered to be the custodian of, any cash belonging to the Trust or any
money represented by a check, draft or other instrument for the payment of
money, until the Custodian or its agents actually receive such cash or collect
on such instrument.
7.3 NO RESPONSIBILITY FOR TITLE, ETC. So long as and to the extent
that it is in the exercise of reasonable care, the Custodian shall not be
responsible for the title, validity or genuineness of any property or evidence
of title thereto received or delivered by it pursuant to this Agreement.
7.4 LIMITATION ON DUTY TO COLLECT. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securities held for the Trust if such Securities are
in default or payment is not made after due demand or presentation.
7.5 RELIANCE UPON DOCUMENTS AND INSTRUCTIONS. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and/or any Written Instructions
actually received by it pursuant to this Agreement.
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7.6 EXPRESS DUTIES ONLY. The Custodian shall have no duties or
obligations whatsoever except such duties and obligations as are specifically
set forth in this Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
7.7 COOPERATION. The Custodian shall cooperate with and supply
necessary information, by the Trust, to the entity or entities appointed by the
Trust to keep the books of account of the Trust and/or compute the value of the
assets of the Trust. The Custodian shall take all such reasonable actions as the
Trust may from time to time request to enable the Trust to obtain, from year to
year, favorable opinions from the Trust's independent accountants with respect
to the Custodian's activities hereunder in connection with (a) the preparation
of the Trust's report on Form N-1A and Form N-SAR and any other reports required
by the Securities and Exchange Commission, and (b) the fulfillment by the Trust
of any other requirements of the Securities and Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION. The Trust shall indemnify and hold harmless the
Custodian and any sub-custodian appointed pursuant to Section 3.3 above, and any
nominee of the Custodian or of such sub-custodian from and against any loss,
damage, cost, expense (including attorneys' fees and disbursements), liability
(including, without limitation, liability arising under the Securities Act of
1933, the 1934 Act, the 1940 Act, and any state or foreign securities and/or
banking laws) or claim arising directly or indirectly (a) from the fact that
Securities are registered in the name of any such nominee, or (b) from any
action or inaction by the Custodian or such sub-custodian (i) at the request or
direction of or in reliance on the advice of the Trust, or (ii) upon Proper
Instructions, or (c) generally, from the performance of its obligations under
this Agreement or any sub-custody agreement with a sub-custodian appointed
pursuant to Section 3.3 above or, in the case of any such sub-custodian, from
the performance of its obligations under such custody agreement, provided that
neither the Custodian nor any such sub-custodian shall be indemnified and held
harmless from and against any such loss, damage, cost, expense, liability or
claim arising from the Custodian's or such sub-custodian's negligence, bad faith
or willful misconduct.
8.2 INDEMNITY TO BE PROVIDED. If the Trust requests the Custodian to
take any action with respect to Securities, which may, in the opinion of the
Custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Trust shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory to the
Custodian.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes, acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay shall use its best efforts to ameliorate the effects of any such
failure or delay. Notwithstanding the foregoing, the Custodian shall maintain
sufficient disaster recovery procedures to minimize interruptions.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 EFFECTIVE PERIOD. This Agreement shall become effective as of the
date first set forth above and shall continue in full force and effect until
terminated as hereinafter provided.
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10.2 TERMINATION. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than ninety (90) days after the date of the
giving of such notice. If a successor custodian shall have been appointed by the
Board of Trustees, the Custodian shall, upon receipt of a notice of acceptance
by the successor custodian, on such specified date of termination (a) deliver
directly to the successor custodian all Securities (other than Securities held
in a Book-Entry System or Securities Depository) and cash then owned by the
Trust and held by the Custodian as custodian, and (b) transfer any Securities
held in a Book-Entry System or Securities Depository to an account of or for the
benefit of the Trust at the successor custodian, provided that the Trust shall
have paid to the Custodian all fees, expenses and other amounts to the payment
or reimbursement of which it shall then be entitled. Upon such delivery and
transfer, the Custodian shall be relieved of all obligations under this
Agreement; provided, however, that both parties' indemnification obligations for
claims or losses that arise prior to termination of this Agreement shall survive
for ninety (90) days following such termination. Thereafter, neither party shall
have the right to claim indemnification under this Agreement. The Trust may at
any time immediately terminate this Agreement in the event of the appointment of
a conservator or receiver for the Custodian by regulatory authorities in the
State of Ohio or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
10.3 FAILURE TO APPOINT SUCCESSOR CUSTODIAN. If a successor custodian
is not designated by the Trust on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or trust company of its own selection, which (a) is a "Bank"
as defined in the 1940 Act, (b) has aggregate capital, surplus and undivided
profits as shown on its then most recent published report of not less than $25
million, and (c) is doing business in New York, New York. All Securities, cash
and other property held by Custodian under this Agreement and to transfer to an
account of or for the Trust at such bank or trust company all Securities of the
Trust held in a Book-Entry System or Securities Depository. Upon such delivery
and transfer, such bank or trust company shall be the successor custodian under
this Agreement and the Custodian shall be relieved of all obligations under this
Agreement. If, after reasonable inquiry, Custodian cannot find a successor
custodian as contemplated in this Section 10.3, then Custodian shall have the
right to deliver to the Trust all Securities and cash then owned by the Trust
and to transfer any Securities held in a Book-Entry System or Securities
Depository to an account of or for the Trust. Thereafter, the Trust shall be
deemed to be its own custodian with respect to the Trust and the Custodian shall
be relieved of all obligations under this Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from
time to time by the Trust and the Custodian. The fees and other charges in
effect on the date hereof and applicable to the Funds are set forth in Exhibit B
attached hereto.
ARTICLE XII
LIMITATION OF LIABILITY
The Trust is a business trust organized under the laws of the
Commonwealth of Massachusetts and under a Declaration of Trust, to which
reference is hereby made a copy of which is on file at the office of the
Secretary of State of Massachusetts as required by law, and to any and all
amendments thereto so filed or hereafter filed. The obligations of the Trust
entered into in the name of the Trust or on behalf thereof by any of the
Trustees, officers, employees or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, officers, employees,
agents or shareholders of the Trust or the Funds personally, but bind only the
assets of the Trust, and all persons dealing with any of the Funds of the Trust
must look solely to the assets of the Trust belonging to such Fund for the
enforcement of any claims against the Trust.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices, instructions,
and other communications to be given hereunder shall be in writing and shall be
sent or delivered to The receipt at the address set forth after its name herein
below:
11
<PAGE> 12
TO THE TRUST:
ICM Series Trust
4400 Computer Drive
Westboro, MA 05181
Attn: Warren J. Isabelle
Telephone: ( )____________________
Facsimile: ( )____________________
TO THE CUSTODIAN:
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attn: Area Manager - Trust Operations
Telephone: (513) 579-5300
Facsimile: (513) 579-4312
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmission by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio.
14.2 REFERENCES TO CUSTODIAN. The Trust shall not circulate any
printed matter which contains any reference to Custodian without the prior
written approval of Custodian, excepting printed matter contained in the
prospectus or statement of additional information or its registration statement
for the Trust and such other printed matter as merely identifies Custodian as
custodian for the Trust. The Trust shall submit printed matter requiring
approval to Custodian in draft form, allowing sufficient time for review by
Custodian and its counsel prior to any deadline for printing.
14.3 NO WAIVER. No failure by either party hereto to exercise and no
delay by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
14.4 AMENDMENTS. This Agreement cannot be changed orally and no
amendment to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
14.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
14.6 SEVERABILITY. If any provision of this Agreement shall be
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions shall not be
affected or impaired thereby.
14.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
12
<PAGE> 13
14.8 HEADINGS. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered in its name and on its behalf by its
representatives thereunto duly authorized, all as of the day and year first
above written.
ATTEST: ICM SERIES TRUST
_________________________ BY:_______________________________
Its:______________________________
ATTEST: THE FIFTH THIRD BANK
_________________________ By:_______________________________
Its:______________________________
13
<PAGE> 14
Dated: _____________ , 19
EXHIBIT A
TO THE CUSTODY AGREEMENT BETWEEN
ICM SERIES TRUST AND THE FIFTH THIRD BANK
_______________ , 19
NAME OF FUND DATE
ICM/Isabelle Small Cap Growth Fund
ICM SERIES TRUST
By: ______________________________
Its:______________________________
THE FIFTH THIRD BANK
By: ______________________________
Its: _____________________________
14
<PAGE> 15
Dated: _____________ , 19
EXHIBIT B
TO THE CUSTODY AGREEMENT BETWEEN
ICM SERIES TRUST AND THE FIFTH THIRD BANK
_______________ , 19
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to Administer each Custody Account.
NAME SIGNATURE
------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
15
<PAGE> 16
SIGNATURE RESOLUTION
RESOLVED, That all of the following officers of ICM Series Trust, any of them,
namely the Chairman, President, Vice President, Secretary and Treasurer, are
hereby authorized as signers for the conduct of business for and on behalf of
the Funds with THE FIFTH THIRD BANK:
______________________ CHAIRMAN ______________________________
______________________ PRESIDENT ______________________________
______________________ VICE PRESIDENT ______________________________
______________________ VICE PRESIDENT ______________________________
______________________ VICE PRESIDENT ______________________________
______________________ VICE PRESIDENT ______________________________
______________________ TREASURER ______________________________
______________________ SECRETARY ______________________________
In addition, the following Assistant Treasurer is authorized to sign on behalf
of the Trust for the purpose of effecting securities transactions:
______________________ ASSISTANT TREASURER ______________________________
The undersigned officers _____________ of hereby certify that the foregoing is
within the parameters of a Resolution adopted by Trustees of the Trust in a
meeting held __________, 19__ , directing and authorizing preparation of
documents and to do everything necessary to effect the Custody Agreement between
ICM SERIES TRUST and THE FIFTH THIRD BANK.
By:_________________________________
Its:________________________________
By:_________________________________
Its:________________________________
16
<PAGE> 17
- -------------------------------------------------------------------------------
FIFTH THIRD BANK
MUTUAL FUND CUSTODY FEE SCHEDULE
--------
PER UNIT
FEE
--------
<TABLE>
<CAPTION>
I BASIC PER ACCOUNT CHARGE
<S> <C>
Annual Asset Based Fees
------------------------------------------------------------------
Under $25 Million 1 bp
------------------------------------------------------------------
$25- $100 Million .75 bp
------------------------------------------------------------------
$100- $200 Million .5 bp
------------------------------------------------------------------
Over $200 Million .25 bp
------------------------------------------------------------------
Minimum $2,400.00
------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
II SECURITY TRANSACTION FEES
------------------------------------------------------------------
<S> <C>
DTC/FED Eligible $ 9.00
------------------------------------------------------------------
Physical 25.00
------------------------------------------------------------------
Amortized Securities 25.00
------------------------------------------------------------------
Options 25.00
------------------------------------------------------------------
Mutual Funds 15.00
------------------------------------------------------------------
Foreign - Euroclear & Cedal 50.00
------------------------------------------------------------------
Foreign - Other TBD
------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
III SYSTEMS
------------------------------------------------------------------
<S> <C>
Automated Securities Workstation $150.00
$200.00 Initial Setup
------------------------------------------------------------------
Mainframe-To-Mainframe 150.00
$200.00 Initial Setup
------------------------------------------------------------------
ACCESS Single Account 50.00
Multiple Accounts 100.00
------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
V MISCELLANEOUS FEES
------------------------------------------------------------------
<S> <C>
Principal & Interest Collection (on amortized securities) $5.00
------------------------------------------------------------------
Per additional issue for repo collateral 5.00
------------------------------------------------------------------
Voluntary Corporate Actions 25.00
------------------------------------------------------------------
Wire transfers (In/Out) 7.00
------------------------------------------------------------------
Check Requests 6.00
------------------------------------------------------------------
Automated Asset Reconciliation 25.00
------------------------------------------------------------------
Escrow Receipt 5.00
------------------------------------------------------------------
Special Services - per hr. fee 75.00
------------------------------------------------------------------
Overnight Packages 8.00
------------------------------------------------------------------
Other TBD
------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 1
Exhibit 9(a)
TRANSFER AGENCY AND SERVICES AGREEMENT
THIS AGREEMENT, dated as of this day of February, 1998 between ICM SERIES TRUST
(the "Fund"), a Massachusetts business trust having its principal place of
business at 4400 Computer Drive, Westboro, Massachusetts 01581 and FIRST DATA
INVESTOR SERVICES GROUP, INC. ("Investor Services Group"), a Massachusetts
corporation with principal offices at 4400 Computer Drive, Westboro,
Massachusetts 01581.
WITNESSETH
WHEREAS, the Fund is authorized to issue Shares in separate series,
with each such series representing interests in a separate portfolio of
securities or other assets.
WHEREAS, the Fund initially intends to offer Shares in those
Portfolios identified in the attached Schedule A, each such Portfolio, together
with all other Portfolios subsequently established by the Fund shall be subject
to this Agreement in accordance with Article 14;
WHEREAS, the Fund on behalf of the Portfolios, desires to appoint
Investor Services Group as its transfer agent, dividend disbursing agent and
agent in connection with certain other activities and Investor Services Group
desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and Investor Services Group agree as follows:
Article 1 DEFINITIONS.
1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar organizational
document as the case may be, of the Fund as the same may be amended
from time to time.
(b) "Authorized Person" shall be deemed to include (i) any
authorized officer of the Fund; or (ii) any person, whether or not
such person is an officer or employee of the Fund, duly authorized to
give Oral Instructions or Written Instructions on behalf of the Fund
as indicated in writing to Investor Services Group from time to time.
(c) "Board Members" shall mean the Directors or Trustees of the
governing body of the Fund, as the case may be.
(d) "Board of Directors" shall mean the Board of Directors or
Board of Trustees of the Fund, as the case may be.
-1-
<PAGE> 2
(e) "Commission" shall mean the Securities and Exchange
Commission.
(f) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time
deposit, or cause to be deposited or held under the name or account of
such a custodian pursuant to a Custodian Agreement.
(g) "1934 Act" shall mean the Securities Exchange Act of 1934 and
the rules and regulations promulgated thereunder, all as amended from
time to time.
(h) "1940 Act" shall mean the Investment Company Act of 1940 and
the rules and regulations promulgated thereunder, all as amended from
time to time.
(i) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by Investor Services Group
from a person reasonably believed by Investor Services Group to be an
Authorized Person;
(j) "Portfolio" shall mean each separate series of shares offered
by the Fund representing interests in a separate portfolio of
securities and other assets;
(k) "Prospectus" shall mean the most recently dated Fund
Prospectus and Statement of Additional Information, including any
supplements thereto if any, which has become effective under the
Securities Act of 1933 and the 1940 Act.
(l) "Shares" refers collectively to such shares of capital stock
or beneficial interest, as the case may be, or class thereof, of each
respective Portfolio of the Fund as may be issued from time to time.
(m) "Shareholder" shall mean a record owner of Shares of each
respective Portfolio of the Fund.
(n) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by Investor Services Group to
be an Authorized Person and actually received by Investor Services
Group. Written Instructions shall include manually executed originals
and authorized electronic transmissions, including telefacsimile of a
manually executed original or other process.
Article 2 APPOINTMENT OF INVESTOR SERVICES GROUP.
The Fund, on behalf of the Portfolios, hereby appoints and constitutes
Investor Services Group as its sole and exclusive transfer agent and dividend
disbursing agent for Shares of each respective Portfolio of the Fund and as
shareholder servicing agent for the Fund and Investor Services Group hereby
accepts such appointments and agrees to perform the duties hereinafter set
forth.
-2-
<PAGE> 3
Article 3 DUTIES OF INVESTOR SERVICES GROUP.
3.1 Investor Services Group shall be responsible for:
(a) Administering and/or performing the customary services of a
transfer agent; acting as service agent in connection with dividend
and distribution functions; and for performing shareholder account and
administrative agent functions in connection with the issuance,
transfer and redemption or repurchase (including coordination with the
Custodian) of Shares of each Portfolio, as more fully described in the
written schedule of Duties of Investor Services Group annexed hereto
as Schedule B and incorporated herein, and in accordance with the
terms of the Prospectus of the Fund on behalf of the applicable
Portfolio, applicable law and the procedures established from time to
time between Investor Services Group and the Fund.
(b) Recording the issuance of Shares and maintaining pursuant to
Rule 17Ad-10(e) of the 1934 Act a record of the total number of Shares
of each Portfolio which are authorized, based upon data provided to it
by the Fund, and issued and outstanding. Investor Services Group shall
provide the Fund on a regular basis with the total number of Shares of
each Portfolio which are authorized and issued and outstanding and
shall have no obligation, when recording the issuance of Shares, to
monitor the issuance of such Shares or to take cognizance of any laws
relating to the issue or sale of such Shares, which functions shall be
the sole responsibility of the Fund.
(c) In addition to providing the foregoing services, the Fund
hereby engages Investor Services Group as its service provider with
respect to the Print/Mail Services as set forth in Schedule C for the
fees also identified in Schedule C. Investor Services Group agrees to
perform the services and its obligations subject to the terms and
conditions of this Agreement.
(d) Notwithstanding any of the foregoing provisions of this
Agreement, except where Investor Services Group shall take actions not
authorized by the Fund in writing or where Investor Services Group
shall fail to follow such instructions, Investor Services Group shall
be under no duty or obligation to inquire into, and shall not be
liable for: (i) the legality of the issuance or sale of any Shares or
the sufficiency of the amount to be received therefor; (ii) the
legality of the redemption of any Shares, or the propriety of the
amount to be paid therefor; (iii) the legality of the declaration of
any dividend by the Board of Directors, or the legality of the
issuance of any Shares in payment of any dividend; or (iv) the
legality of any recapitalization or readjustment of the Shares.
3.2 In addition, the Fund shall (i) identify to Investor Services
Group in writing those transactions and assets to be treated as exempt from blue
sky reporting for each State and (ii) verify the establishment of transactions
for each State on the system prior to activation and thereafter monitor the
daily activity for each State. The responsibility of Investor Services Group for
the Fund's blue sky State registration status is solely limited to the initial
establishment of
-3-
<PAGE> 4
transactions subject to blue sky compliance by the Fund and the
reporting of such transactions to the Fund as provided above.
3.3 Investor Services Group agrees to provide the services set forth
herein in accordance with the Performance Standards annexed hereto as Exhibit 1
of Schedule B and incorporated herein (the "Performance Standards"). Such
Performance Standards may be amended from time to time by the parties.
3.4 In addition to the duties set forth herein, Investor Services
Group shall perform such other duties and functions, and shall be paid such
amounts therefor, as may from time to time be agreed upon in writing between the
Fund and Investor Services Group.
Article 4 RECORDKEEPING AND OTHER INFORMATION.
4.1 Investor Services Group shall create and maintain all records
required of it pursuant to its duties hereunder and as set forth in Schedule A
in accordance with all applicable laws, rules and regulations, including records
required by Section 31(a) of the 1940 Act. Where applicable, such records shall
be maintained by Investor Services Group for the periods and in the places
required by Rule 31a-2 under the 1940 Act.
4.2 To the extent required by Section 31 of the 1940 Act, Investor
Services Group agrees that all such records prepared or maintained by Investor
Services Group relating to the services to be performed by Investor Services
Group hereunder are the property of the Fund and will be preserved, maintained
and made available in accordance with such section, and will be surrendered
promptly to the Fund on and in accordance with the Fund's request.
4.3 In case of any requests or demands for the inspection of
Shareholder records of the Fund, Investor Services Group will endeavor to notify
the Fund of such request and secure Written Instructions as to the handling of
such request. Investor Services Group reserves the right, however, upon written
notice to the Fund, to exhibit the Shareholder records to any person whenever it
is advised by its counsel that it may be held liable for the failure to comply
with such request.
Article 5 FUND INSTRUCTIONS.
5.1 Investor Services Group will have no liability when acting upon
Written or Oral Instructions believed to have been executed or orally
communicated by an Authorized Person and will not be held to have any notice of
any change of authority of any person until receipt of a Written Instruction
thereof from the Fund. Investor Services Group will also have no liability when
processing Share certificates which it reasonably believes to bear the proper
manual or facsimile signatures of the officers of the Fund and the proper
countersignature of Investor Services Group.
5.2 At any time, Investor Services Group may request Written
Instructions from the Fund and may seek advice from legal counsel for the Fund,
or its own legal counsel, with respect
-4-
<PAGE> 5
to any matter arising in connection with this Agreement, and it shall not be
liable for any action taken or not taken or suffered by it in good faith in
accordance with such Written Instructions or in accordance with the opinion of
counsel for the Fund or for Investor Services Group. Written Instructions
requested by Investor Services Group will be provided by the Fund within a
reasonable period of time.
5.3 Investor Services Group, its officers, agents or employees, shall
accept Oral Instructions or Written Instructions given to them by any person
representing or acting on behalf of the Fund only if said representative is an
Authorized Person. The Fund agrees that all Oral Instructions shall be followed
within one business day by confirming Written Instructions, and that the Fund's
failure to so confirm shall not impair in any respect Investor Services Group's
right to rely on Oral Instructions.
Article 6 COMPENSATION.
6.1 The Fund on behalf of each of the Portfolios will compensate
Investor Services Group for the performance of its obligations hereunder in
accordance with the fees set forth in the written Fee Schedule annexed hereto as
Schedule C and incorporated herein.
6.2 In the event that Investor Services Group has failed to meet a
specific Performance Standard category for a specified length of time, as set
forth on Exhibit 1 of Schedule B, the fees to be paid by the Fund to Investor
Services Group shall be subject to reduction as set forth in Exhibit 1 to
Schedule B. Notwithstanding the foregoing, the Fund's rights under this Section
6.2, shall not become effective until 90 days following the date Investor
Services Group commences providing services to the Fund under this Agreement.
For purposes of the fee reduction set forth above, Investor Services Group's
obligation to meet the Performance Standards shall be measured with respect to
each of the Portfolios individually.
6.3 In addition to those fees set forth in Section 6.1 above, the Fund
on behalf of each of the Portfolios agrees to pay, and will be billed separately
for, out-of-pocket expenses incurred by Investor Services Group in the
performance of its duties hereunder. Out-of-pocket expenses shall include the
items specified in the written schedule of out-of-pocket charges annexed hereto
as Schedule D and incorporated herein. Schedule D may be modified by written
agreement between the parties. All out-of-pocket expenses shall be limited to
those out-of-pocket expenses reasonably incurred by Investor Services Group in
the performance of its obligations hereunder.
6.4 The Fund on behalf of each of the Portfolios agrees to pay all
fees and out-of-pocket expenses to Investor Services Group by Federal Funds Wire
within thirty (30) business days following the receipt of the respective
invoice. In addition, with respect to all fees under this Agreement, Investor
Services Group may charge a service fee equal to the lesser of (i) one and one
half percent (1 1/2%) per month or (ii) the highest interest rate legally
permitted on any past due invoiced amounts.
6.5 Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedule C, a revised Fee Schedule executed and dated by
the parties hereto.
-5-
<PAGE> 6
6.6 The Fund acknowledges that the fees that Investor Services Group
charges the Fund under this Agreement reflect the allocation of risk between the
parties, including the disclaimer of warranties in Section 9.3 and the
limitations on liability and exclusion of remedies in Section 11.2 and Article
12. Modifying the allocation of risk from what is stated here would affect the
fees that Investor Services Group charges, and in consideration of those fees,
the Fund agrees to the stated allocation of risk.
Article 7 DOCUMENTS.
In connection with the appointment of Investor Services Group, the
Fund shall, on or before the date this Agreement goes into effect, but in any
case within a reasonable period of time for Investor Services Group to prepare
to perform its duties hereunder, deliver or caused to be delivered to Investor
Services Group the documents set forth in the written schedule of Fund Documents
annexed hereto as Schedule E.
Article 8 TRANSFER AGENT SYSTEM.
8.1 Investor Services Group shall retain title to and ownership of any
and all data bases, computer programs, screen formats, report formats,
interactive design techniques, derivative works, inventions, discoveries,
patentable or copyrightable matters, concepts, expertise, patents, copyrights,
trade secrets, and other related legal rights utilized by Investor Services
Group in connection with the services provided by Investor Services Group to the
Fund herein (the "Investor Services Group System"); provided, however, that all
data, account information or other information content shall remain the property
of the Fund.
8.2 Investor Services Group hereby grants to the Fund a limited
license to the Investor Services Group System for the sole and limited purpose
of having Investor Services Group provide the services contemplated hereunder
and nothing contained in this Agreement shall be construed or interpreted
otherwise and such license shall immediately terminate with the termination of
this Agreement.
8.3 In the event that the Fund, including any affiliate or agent of
the Fund or any third party acting on behalf of the Fund is provided with direct
access to the Investor Services Group System for either account inquiry or to
transmit transaction information, including but not limited to maintenance,
exchanges, purchases and redemptions, such direct access capability shall be
limited to direct entry to the Investor Services Group System by means of
on-line mainframe terminal entry or PC emulation of such mainframe terminal
entry and any other non-conforming method of transmission of information to the
Investor Services Group System is strictly prohibited without the prior written
consent of Investor Services Group.
Article 9 REPRESENTATIONS AND WARRANTIES.
9.1 Investor Services Group represents and warrants to the Fund that:
-6-
<PAGE> 7
(a) it is a corporation duly organized, existing and in good
standing under the laws of the Commonwealth of Massachusetts;
(b) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(c) all requisite corporate proceedings have been taken to
authorize it to enter into this Agreement;
(d) it is duly registered with its appropriate regulatory agency
as a transfer agent and such registration will remain in effect for
the duration of this Agreement; and
(e) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
9.2 The Fund represents and warrants to Investor Services Group that:
(a) it is duly organized, existing and in good standing under the
laws of the jurisdiction in which it is organized;
(b) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into this Agreement;
(c) all corporate proceedings required by said Articles of
Incorporation, By-Laws and applicable laws have been taken to
authorize it to enter into this Agreement;
(d) a registration statement under the Securities Act of 1933, as
amended, and the 1940 Act on behalf of each of the Portfolios will
remain effective, and all appropriate state securities law filings
have been made and will continue to be made, with respect to all
Shares of the Fund being offered for sale; and
(e) all outstanding Shares are validly issued, fully paid and
non-assessable and when Shares are hereafter issued in accordance with
the terms of the Fund's Articles of Incorporation and its Prospectus
with respect to each Portfolio, such Shares shall be validly issued,
fully paid and non-assessable.
9.3 THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, INVESTOR SERVICES GROUP DISCLAIMS ALL OTHER REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, MADE TO THE FUND OR ANY OTHER PERSON, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY, SUITABILITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE (IRRESPECTIVE OF
ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE) OF ANY SERVICES OR ANY GOODS
PROVIDED INCIDENTAL TO SERVICES PROVIDED UNDER THIS AGREEMENT.
-7-
<PAGE> 8
INVESTOR SERVICES GROUP DISCLAIMS ANY WARRANTY OF TITLE OR NON-INFRINGEMENT
EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT.
Article 10 INDEMNIFICATION.
10.1 Investor Services Group shall not be responsible for and the Fund
on behalf of each Portfolio shall indemnify and hold Investor Services Group
harmless from and against any and all claims, costs, expenses (including
reasonable attorneys' fees), losses, damages, charges, payments and liabilities
of any sort or kind which may be asserted against Investor Services Group or for
which Investor Services Group may be held to be liable (a "Claim") arising out
of or attributable to any of the following:
(a) any actions of Investor Services Group required to be
taken pursuant to this Agreement unless such Claim resulted from a
negligent act or omission to act or bad faith by Investor Services
Group in the performance of its duties hereunder;
(b) Investor Services Group's reasonable reliance on, or
reasonable use pursuant to its obligations hereunder of information,
data, records and documents (including but not limited to magnetic
tapes, computer printouts, hard copies and microfilm copies) received
by Investor Services Group from the Fund, or any authorized third party
acting on behalf of the Fund, including but not limited to the prior
transfer agent for the Fund, in the performance of Investor Services
Group's duties and obligations hereunder;
(c) the reliance on, or the implementation of, any Written or
Oral Instructions or any other instructions or requests of the Fund on
behalf of the applicable Portfolio;
(d) the offer or sales of shares in violation of any
requirement under the securities laws or regulations of any state that
such shares be registered in such state or in violation of any stop
order or other determination or ruling by any state with respect to the
offer or sale of such shares in such state; and
(e) the Fund's refusal or failure to comply with the terms of
this Agreement, or any Claim which arises out of the Fund's negligence
or misconduct or the breach of any representation or warranty of the
Fund made herein.
10.2 Investor Services Group shall indemnify and hold the Fund harmless
from and against any and all claims, costs, expenses, (including reasonable
attorneys' fees), losses, damages, charges, payments and liabilities of any sort
or kind which may be asserted against the Fund or its affiliates, or for which
the Fund or its affiliates may be held liable in connection with this Agreement
or Investor Services Group's performance hereunder (a "Claim"), provided that
such Claim resulted from willful misfeasance, bad faith or negligent act or
omission by Investor Services Group in performance of its duties and obligations
hereunder, or reckless disregard of its duties and obligations hereunder.
-8-
<PAGE> 9
10.3 In any case in which one party (the "Indemnifying Party") may be
asked to indemnify or hold the other party (the "Indemnified Party") harmless,
the Indemnified Party will notify the Indemnifying Party promptly after
identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Indemnifying Party although the
failure to do so shall not prevent recovery by the Indemnified Party and shall
keep the Indemnifying Party advised with respect to all developments concerning
such situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects, such
defense shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party, and thereupon the Indemnifying Party
shall take over complete defense of the Claim and the Indemnified Party shall
sustain no further legal or other expenses in respect of such Claim. The
Indemnified Party will not confess any Claim or make any compromise in any case
in which the Indemnifying Party will be asked to provide indemnification, except
with the Indemnifying Party's prior written consent. The obligations of the
parties hereto under this Article 10 shall survive the termination of this
Agreement.
10.4 Any claim for indemnification under this Agreement must be made
prior to the earlier of:
(a) one year after the Indemnified Party becomes aware of the
event for which indemnification is claimed; or
(b) one year after the earlier of the termination of this
Agreement or the expiration of the term of this Agreement.
10.5 Except for remedies that cannot be waived as a matter of law (and
injunctive or provisional relief), the provisions of this Article 10 shall be
the sole and exclusive remedy for claims or other actions or proceedings to
which a party' indemnification obligations pursuant to this Article 10 may
apply.
Article 11 STANDARD OF CARE.
11.1 Investor Services Group shall at all times act in good faith and
agrees to use its best efforts within commercially reasonable limits to ensure
the accuracy of all services performed under this Agreement, but assumes no
responsibility for loss or damage to the Fund unless said errors are caused by
Investor Services Group's own negligence, bad faith, willful misconduct or
reckless disregard of its duties hereunder or that of its employees.
11.2 Each party shall have the duty to mitigate damages for which the
other party may become responsible.
Article 12 CONSEQUENTIAL DAMAGES.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO
EVENT SHALL INVESTOR SERVICES GROUP, ITS AFFILIATES OR ANY OF ITS
-9-
<PAGE> 10
OR THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE
UNDER ANY THEORY OF TORT, CONTRACT, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE
THEORY FOR LOST PROFITS, EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR
CONSEQUENTIAL DAMAGES, EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE
PARTIES REGARDLESS OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER EITHER
PARTY OR ANY ENTITY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Article 13 TERM AND TERMINATION.
13.1 This Agreement shall be effective on the date first written above
and shall continue for a period of five (5) years (the "Initial Term").
13.2 Upon the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of three (3) years ("Renewal Terms")
each, unless the Fund or Investor Services Group provides written notice to the
other of its intent not to renew. Such notice must be received not less than
ninety (90) days and not more than one-hundred eighty (180) days prior to the
expiration of the Initial Term or the then current Renewal Term.
13.3 In the event a termination notice is given by the Fund, all
expenses associated with movement of records and materials and conversion
thereof to a successor transfer agent will be borne by the Fund.
13.4 If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting Party,
and if such material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such termination to
the Defaulting Party. If Investor Services Group is the Non-Defaulting Party,
its termination of this Agreement shall not constitute a waiver of any other
rights or remedies of Investor Services Group with respect to services performed
prior to such termination of rights of Investor Services Group to be reimbursed
for out-of-pocket expenses. In all cases, termination by the Non-Defaulting
Party shall not constitute a waiver by the Non-Defaulting Party of any other
rights it might have under this Agreement or otherwise against the Defaulting
Party.
13.5 Notwithstanding anything contained in this Agreement to the
contrary, in the event that a merger, acquisition or change in control of the
Fund or an affiliate (as defined under the 1940 Act) of the Fund results, either
directly or indirectly, in the termination of this Agreement, the Fund shall pay
to Investor Services Group within 30 days of the notice of termination the fee
set forth in Schedule C (the "Early Termination Fee"). Such Early Termination
Fee shall not be payable if Investor Services Group provides to a successor in
interest of the Fund services substantially similar to those services provided
to the Fund hereunder.
-10-
<PAGE> 11
13.6 Notwithstanding anything contained in this Agreement to the contrary,
in the event that the Board of Trustees (including a majority of the
disinterested Trustees) determines to do so, the Fund shall have the right to
terminate this Agreement without cause upon six (6) months prior written notice
to Investor Services Group, provided that prior to the effective date of such
termination, the Fund shall pay to Investor Services Group a penalty equal to
$26,000. Notwithstanding the foregoing, the Fund's rights under this Section
13.6 shall not result in an effective date of termination that occurs prior to
two (2) years following the date Investor Services Group commences providing
services to the Fund under this Agreement.
Article 14 ADDITIONAL PORTFOLIOS
14.1 In the event that the Fund establishes one or more Portfolios in
addition to those identified in Schedule A, with respect to which the Fund
desires to have Investor Services Group render services as transfer agent under
the terms hereof, the Fund shall so notify Investor Services Group in writing,
and if Investor Services Group agrees in writing to provide such services,
Exhibit 1 shall be amended to include such additional Portfolios.
Article 15 CONFIDENTIALITY.
15.1 The parties agree that the Proprietary Information (defined
below) and the contents of this Agreement (collectively "Confidential
Information") are confidential information of the parties and their respective
licensors. The Fund and Investor Services Group shall exercise at least the same
degree of care, but not less than reasonable care, to safeguard the
confidentiality of the Confidential Information of the other as it would
exercise to protect its own confidential information of a similar nature. The
Fund and Investor Services Group shall not duplicate, sell or disclose to others
the Confidential Information of the other, in whole or in part, without the
prior written permission of the other party. The Fund and Investor Services
Group may, however, disclose Confidential Information to their respective parent
corporation, their respective affiliates, their subsidiaries and affiliated
companies and employees, provided that each shall use reasonable efforts to
ensure that the Confidential Information is not duplicated or disclosed in
breach of this Agreement. The Fund and Investor Services Group may also disclose
the Confidential Information to independent contractors, auditors, and
professional advisors, provided they first agree in writing to be bound by the
confidentiality obligations substantially similar to this Section 15.1.
Notwithstanding the previous sentence, in no event shall either the Fund or
Investor Services Group disclose the Confidential Information to any competitor
of the other without specific, prior written consent.
15.2 Proprietary Information means:
(a) any data or information that is competitively sensitive
material, and not generally known to the public, including, but not
limited to, information about product plans, marketing strategies,
finance, operations, customer relationships, customer profiles, sales
estimates, business plans, and internal performance results relating
to the past, present or future business activities of the Fund or
Investor Services Group, their
-11-
<PAGE> 12
respective subsidiaries and affiliated companies and the customers,
clients and suppliers of any of them;
(b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Fund or
Investor Services Group a competitive advantage over its competitors;
and
(c) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object
code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable.
15.3 Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment, prototypes and
models, and any other tangible manifestation of the foregoing of either party
which now exist or come into the control or possession of the other.
15.4 The obligations of confidentiality and restriction on use herein
shall not apply to any Confidential Information that a party proves:
(a) Was in the public domain prior to the date of this Agreement
or subsequently came into the public domain through no fault of such
party; or
(b) Was lawfully received by the party from a third party free of
any obligation of confidence to such third party; or
(c) Was already in the possession of the party prior to receipt
thereof, directly or indirectly, from the other party; or
(d) Is required to be disclosed in a judicial or administrative
proceeding after all reasonable legal remedies for maintaining such
information in confidence have been exhausted including, but not
limited to, giving the other party as much advance notice of the
possibility of such disclosure as practical so the other party may
attempt to stop such disclosure or obtain a protective order
concerning such disclosure; or
(f) Is subsequently and independently developed by employees,
consultants or agents of the party without reference to the
Confidential Information disclosed under this Agreement.
Article 16 FORCE MAJEURE.
No party shall be liable for any default or delay in the performance
of its obligations under this Agreement if and to the extent such default or
delay is caused, directly or indirectly, by (i) fire, flood, elements of nature
or other acts of God; (ii) any outbreak or escalation of hostilities,
-12-
<PAGE> 13
war, riots or civil disorders in any country, (iii) any act or omission of the
other party or any governmental authority; (iv) any labor disputes (whether or
not the employees' demands are reasonable or within the party's power to
satisfy); or (v) nonperformance by a third party or any similar cause beyond the
reasonable control of such party, including without limitation, failures or
fluctuations in telecommunications or other equipment. In any such event, the
non-performing party shall be excused from any further performance and
observance of the obligations so affected only for as long as such circumstances
prevail and such party continues to use commercially reasonable efforts to
recommence performance or observance as soon as practicable.
Article 17 ASSIGNMENT AND SUBCONTRACTING.
This Agreement, its benefits and obligations shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned or otherwise transferred
by either party hereto, without the prior written consent of the other party,
which consent shall not be unreasonably withheld; provided, however, that
Investor Services Group may, in its sole discretion, assign all its right, title
and interest in this Agreement to an affiliate, parent or subsidiary. Investor
Services Group may, in its sole discretion, engage subcontractors to perform any
of the obligations contained in this Agreement to be performed by Investor
Services Group; provided, however that Investor Services Group may not engage
subcontractors to perform a substantial part of the services to be performed by
Investor Services Group without the prior written consent of the Fund, which
consent may not be unreasonably withheld.
Article 18 ARBITRATION.
18.1 Any claim or controversy arising out of or relating to this
Agreement, or breach hereof, shall be settled by arbitration administered by the
American Arbitration Association in Boston, Massachusetts in accordance with its
applicable rules, except that the Federal Rules of Evidence and the Federal
Rules of Civil Procedure with respect to the discovery process shall apply.
18.2 The parties hereby agree that judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction.
18.3 The parties acknowledge and agree that the performance of the
obligations under this Agreement necessitates the use of instrumentalities of
interstate commerce and, notwithstanding other general choice of law provisions
in this Agreement, the parties agree that the Federal Arbitration Act shall
govern and control with respect to the provisions of this Article 18.
Article 19 NOTICE.
Any notice or other instrument authorized or required by this Agreement
to be given in writing to the Fund or Investor Services Group, shall be
sufficiently given if addressed to that
-13-
<PAGE> 14
party and received by it at its office set forth below or at such other place as
it may from time to time designate in writing.
To the Fund:
ICM Series Trust
c/o IronWood Capital Management, LLC
One Exchange Place
Boston, Massachusetts 02109
Attention: Warren J. Isabelle
To Investor Services Group:
First Data Investor Services Group, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581
Attention: President
with a copy to Investor Services Group's General Counsel
Article 20 GOVERNING LAW/VENUE.
The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, shall govern the interpretation, validity, and enforcement of
this agreement. All actions arising from or related to this Agreement shall be
brought in the state and federal courts sitting in the City of Boston, and
Investor Services Group and Client hereby submit themselves to the exclusive
jurisdiction of those courts.
Article 21 COUNTERPARTS.
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.
Article 22 CAPTIONS.
The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Article 23 PUBLICITY.
Neither Investor Services Group nor the Fund shall release or publish
news releases, public announcements, advertising or other publicity relating to
this Agreement or to the transactions contemplated by it without the prior
review and written approval of the other party; provided, however, that either
party may make such disclosures as are required by legal,
-14-
<PAGE> 15
accounting or regulatory requirements after making reasonable efforts in the
circumstances to consult in advance with the other party.
Article 24 RELATIONSHIP OF PARTIES.
24.1 The parties agree that they are independent contractors and not
partners or co-venturers and nothing contained herein shall be interpreted or
construed otherwise.
Article 25 ENTIRE AGREEMENT; SEVERABILITY.
25.1 This Agreement, including Schedules, Addenda, and Exhibits
hereto, constitutes the entire Agreement between the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof. No change,
termination, modification, or waiver of any term or condition of the Agreement
shall be valid unless in writing signed by each party. No such writing shall be
effective as against Investor Services Group unless said writing is executed by
a Senior Vice President, Executive Vice President, or President of Investor
Services Group. A party's waiver of a breach of any term or condition in the
Agreement shall not be deemed a waiver of any subsequent breach of the same or
another term or condition.
25.2 The parties intend every provision of this Agreement to be
severable. If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or invalidity
shall not affect the validity of the remainder of this Agreement. In such case,
the parties shall in good faith modify or substitute such provision consistent
with the original intent of the parties. Without limiting the generality of this
paragraph, if a court determines that any remedy stated in this Agreement has
failed of its essential purpose, then all other provisions of this Agreement,
including the limitations on liability and exclusion of damages, shall remain
fully effective.
-15-
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers, as of the day and year first
above written.
ICM SERIES TRUST
By:
________________________
Title:
_____________________
FIRST DATA INVESTOR SERVICES GROUP, INC.
By:
________________________
Title:
_____________________
-16-
<PAGE> 17
SCHEDULE A
LIST OF PORTFOLIOS
ICM/Isabelle Small Cap Value Fund
-17-
<PAGE> 18
SCHEDULE B
DUTIES OF INVESTOR SERVICES GROUP
1. SHAREHOLDER INFORMATION. Investor Services Group shall maintain
a record of the number of Shares held by each Shareholder of record which shall
include name, address, taxpayer identification and which shall indicate whether
such Shares are held in certificates or uncertificated form.
2. SHAREHOLDER SERVICES. Investor Services Group shall respond as
appropriate to all inquiries and communications from Shareholders relating to
Shareholder accounts with respect to its duties hereunder and as may be from
time to time mutually agreed upon between Investor Services Group and the Fund.
3. SHARE CERTIFICATES.
(a) At the expense of the Fund, the Fund shall supply Investor
Services Group with an adequate supply of blank share certificates to meet
Investor Services Group requirements therefor. Such Share certificates shall be
properly signed by facsimile. The Fund agrees that, notwithstanding the death,
resignation, or removal of any officer of the Fund whose signature appears on
such certificates, Investor Services Group or its agent may continue to
countersign certificates which bear such signatures until otherwise directed by
Written Instructions.
(b) Investor Services Group shall issue replacement Share
certificates in lieu of certificates which have been lost, stolen or destroyed,
upon receipt by Investor Services Group of properly executed affidavits and lost
certificate bonds, in form satisfactory to Investor Services Group, with the
Fund and Investor Services Group as obligees under the bond.
(c) Investor Services Group shall also maintain a record of each
certificate issued, the number of Shares represented thereby and the Shareholder
of record. With respect to Shares held in open accounts or uncertificated form
(i.e., no certificate being issued with respect thereto) Investor Services Group
shall maintain comparable records of the Shareholders thereof, including their
names, addresses and taxpayer identification. Investor Services Group shall
further maintain a stop transfer record on lost and/or replaced certificates.
4. MAILING COMMUNICATIONS TO SHAREHOLDERS; PROXY MATERIALS.
Investor Services Group will address and mail to Shareholders of the Fund, all
reports to Shareholders, dividend and distribution notices and proxy material
for the Fund's meetings of Shareholders. In connection with meetings of
Shareholders, Investor Services Group will prepare Shareholder lists, mail and
certify as to the mailing of proxy materials, process and tabulate returned
proxy cards, report on proxies voted prior to meetings, act as inspector of
election at meetings and certify Shares voted at meetings.
-18-
<PAGE> 19
5. SALES OF SHARES.
(a) Investor Services Group shall not be required to issue any
Shares of the Fund where it has received a Written Instruction from the Fund or
official notice from any appropriate authority that the sale of the Shares of
the Fund has been suspended or discontinued. The existence of such Written
Instructions or such official notice shall be conclusive evidence of the right
of Investor Services Group to rely on such Written Instructions or official
notice.
(b) In the event that any check or other order for the payment of
money is returned unpaid for any reason, Investor Services Group will endeavor
to: (i) give prompt notice of such return to the Fund or its designee; (ii)
place a stop transfer order against all Shares issued as a result of such check
or order; and (iii) take such actions as Investor Services Group may from time
to time deem appropriate.
6. TRANSFER AND REPURCHASE.
(a) Investor Services Group shall process all requests to
transfer or redeem Shares in accordance with the transfer or repurchase
procedures set forth in the Fund's Prospectus.
(b) Investor Services Group will transfer or repurchase Shares
upon receipt of Oral or Written Instructions or otherwise pursuant to the
Prospectus and Share certificates, if any, properly endorsed for transfer or
redemption, accompanied by such documents as Investor Services Group reasonably
may deem necessary.
(c) Investor Services Group reserves the right to refuse to
transfer or repurchase Shares until it is satisfied that the endorsement on the
instructions is valid and genuine. Investor Services Group also reserves the
right to refuse to transfer or repurchase Shares until it is satisfied that the
requested transfer or repurchase is legally authorized, and it shall incur no
liability for the refusal, in good faith, to make transfers or repurchases which
Investor Services Group, in its good judgment, deems improper or unauthorized,
or until it is reasonably satisfied that there is no basis to any claims adverse
to such transfer or repurchase.
(d) When Shares are redeemed, Investor Services Group shall, upon
receipt of the instructions and documents in proper form, deliver to the
Custodian and the Fund or its designee a notification setting forth the number
of Shares to be repurchased. Such repurchased shares shall be reflected on
appropriate accounts maintained by Investor Services Group reflecting
outstanding Shares of the Fund and Shares attributed to individual accounts.
(e) Investor Services Group shall upon receipt of the monies
provided to it by the Custodian for the repurchase of Shares, pay such monies as
are received from the Custodian, all in accordance with the procedures described
in the written instruction received by Investor Services Group from the Fund.
(f) Investor Services Group shall not process or effect any
repurchase with respect to Shares of the Fund after receipt by Investor Services
Group or its agent of notification of the suspension of the determination of the
net asset value of the Fund.
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<PAGE> 20
7. DIVIDENDS.
(a) Upon the declaration of each dividend and each capital gains
distribution by the Board of Directors of the Fund with respect to Shares of the
Fund, the Fund shall furnish or cause to be furnished to Investor Services Group
Written Instructions setting forth the date of the declaration of such dividend
or distribution, the ex-dividend date, the date of payment thereof, the record
date as of which Shareholders entitled to payment shall be determined, the
amount payable per Share to the Shareholders of record as of that date, the
total amount payable on the payment date and whether such dividend or
distribution is to be paid in Shares at net asset value.
(b) On or before the payment date specified in such resolution of
the Board of Directors, the Fund will provide Investor Services Group with
sufficient cash to make payment to the Shareholders of record as of such payment
date.
(c) If Investor Services Group does not receive sufficient cash
from the Fund to make total dividend and/or distribution payments to all
Shareholders of the Fund as of the record date, Investor Services Group will,
upon notifying the Fund, withhold payment to all Shareholders of record as of
the record date until sufficient cash is provided to Investor Services Group.
8. In addition to and neither in lieu nor in contravention of the
services set forth above, Investor Services Group shall: (i) perform all the
customary services of a transfer agent, registrar, dividend disbursing agent and
agent of the dividend reinvestment and cash purchase plan as described herein
consistent with those requirements in effect as at the date of this Agreement.
The detailed definition, frequency, limitations and associated costs (if any)
set out in the attached fee schedule, include but are not limited to:
maintaining all Shareholder accounts, preparing Shareholder meeting lists,
mailing proxies, tabulating proxies, mailing Shareholder reports to current
Shareholders, withholding taxes on U.S. resident and non-resident alien accounts
where applicable, preparing and filing U.S. Treasury Department Forms 1099 and
other appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders.
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<PAGE> 21
EXHIBIT 1 TO SCHEDULE B
PERFORMANCE STANDARDS
STANDARDS:
TELESERVICING:
To be measured on a quarterly basis, minimum of 750 calls offered.
* The average speed of answering calls will be twenty (20) seconds or less
* The abandonment rate for teleservicing calls will be five (5) percent or
less (calculation: calls abandoned over 20 seconds/calls offered)
* The service level will be eighty-five (85) percent or higher
PROCESSING:
The following standards will be met 90% of the time measured on a quarterly
basis, minimum of 50 items per standard measured.
* New accounts in good order will be established on the Transfer Agent
System on the same day received
* Shareholder transactions in good order will be processed on the
Transfer Agent System on the same day received
* Correspondence will be completed within five (5) business days of
receipt
* Fulfillment requests will be mailed within 48 hours of receipt.
* Maintenance items will be completed within five (5) business days of
receipt
PRINT/MAIL:
The following standards will be met 90% of the time measured on a quarterly
basis, minimum of 50 items per standard measured.
* Daily confirmations will be mailed to shareholders on Trade Date plus
two (2) business days
* Check requests will be mailed to shareholders on Trade Date plus two
(2) business days
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<PAGE> 22
* Quarterly Statements will be mailed to shareholders within five (5)
business days from quarter end
MEASUREMENT:
Measurement of the Performance Standards shall not become effective until 90
days following the date Investor Services Group commences providing services to
the Fund under this Agreement.
PENALTIES:
* The penalty for missing the same Performance Standard in one (1)
quarter is written notice.
* The penalty for missing the same Performance Standard two (2) quarters
in succession is a 10% reduction in the quarterly fee for such service
for the second quarter.
* The penalty for missing the same Performance Standard three (3)
quarters in a rolling six (6) quarter period is a 20% reduction in the
quarterly fee for such service for the third quarter.
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<PAGE> 23
SCHEDULE C
FEE SCHEDULE
1. Standard Fees
MINIMUMS:
$20,000 per Portfolio per annum
$6,000 per class above one class per annum
ACCOUNT FEES:
$18 per open account per annum
$2 per closed account per annum
After the one year anniversary of the effective date of this Agreement, Investor
Services Group may adjust the above fees once per calendar year, upon thirty
(30) days prior written notice in an amount not to exceed the cumulative
percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U)
U.S. City Average, All items (unadjusted) - (1982-84=100), published by the U.S.
Department of Labor since the last such adjustment in the Client's monthly fees
(or the Effective Date absent a prior such adjustment).
2. Programming Costs
<TABLE>
<CAPTION>
(a) Dedicated Team:
<S> <C>
Programmer $100,000 per annum
BSA $ 85,000 per annum
Tester $ 65,000 per annum
(b) System Enhancements (Non Dedicated Team):
Programmer $ 135.00 per hour
</TABLE>
3. Early Termination Fee. The Early Termination Penalty referred to in
Section 13.5 shall be an amount equal to $50,000 and any fees which may have
been waived by Investor Services Group prior to such termination.
4. Print/Mail Fees. (Any minimums associated with Print/Mail Fees shall be
waived for a
-1-
<PAGE> 24
six (6 month period commencing on the date Investor Services Group begins
providing services under this Agreement.)
<TABLE>
<CAPTION>
Daily Work (Confirms)
<S> <C>
Hand $71/M with $50.00 minimum
$0.07/each insert (up to 3 inserts at no
charge)
Machine $42/M with $50.00 minimum
$0.01/each insert (up to 3 inserts at no
charge)
Daily Checks
Hand $91/M with $50.00 minimum daily
$0.08/each insert (up to 3 inserts at no
charge)
Machine $52/M with $50.00 minimum daily
$0.01/each insert (up to 3 inserts at no
charge)
Statements
Hand $78/M with $50.00 minimum
$0.08/each insert (up to 3 inserts at no
charge)
$125/M for intelligent inserting
Machine $52/M with $50.00 minimum
$0.01/each insert (up to 3 inserts at no
charge)
$58/M for intelligent inserting
Periodic Checks
Hand $91/M with $50.00 minimum
$0.08/each insert (up to 3 inserts at no
charge)
Machine $52/M with $50.00 minimum
$0.01/each insert (up to 3 inserts at no
charge)
12b-1/Dealer Commission
Checks/Statements $0.78/each envelope with $50.00 minimum
</TABLE>
-2-
<PAGE> 25
<TABLE>
<S> <C>
Printing Charges $0.08/confirm/statement/page
$0.10/check
Folding (Machine) $18/M
Folding (Hand) $12 each
Presort Charge $0.277 postage rate
$0.035/piece
Courier Charge $15.00 for each on call courier trip/
or actual cost for on demand
Overnight Charge $3.50/package service charge plus
Federal Express/Airborne charge
Inventory Charge $20.00 for each inventory location as of
the 15th of the month
Hourly Work: Special Projects,
Opening Envelopes, etc. $24.00/hour
Special Pulls $2.50 per account pull
Boxes/Envelopes
Shipping Boxes $0.85 each
Oversized Envelopes $0.45 each
Forms Development/Programming Fee $100.00/hour
Cutting Charges $10.00/M
Ink Jet $44.00/M
includes ink jetting envelope, one
insert info
</TABLE>
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<PAGE> 26
SCHEDULE D
OUT-OF-POCKET EXPENSES
The Fund shall reimburse Investor Services Group monthly for applicable
out-of-pocket expenses:
* Microfiche/microfilm production
* Magnetic media tapes and freight
* Printing costs, including certificates, envelopes, checks and stationery
* Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct pass through
to the Fund
* Due diligence mailings
* Telephone and telecommunication costs, including all lease, maintenance and
line costs Proxy solicitations, mailings and tabulations
* Shipping, Certified and Overnight mail and insurance
* Year-end form production and mailings
* Courier services Incoming and outgoing wire charges
* Federal Reserve charges for check clearance
* Travel and entertainment, as approved by the Fund
* Record retention, retrieval and destruction costs, including, but not
limited to exit fees charged by third party record keeping vendors
* Third party audit reviews
* Fund Insurance
* Such other miscellaneous expenses reasonably incurred by Investor Services
Group in performing its duties and responsibilities under this Agreement.
The Fund agrees that postage and mailing expenses will be paid on the day
of or prior to mailing as agreed with Investor Services Group. In addition, the
Fund will promptly reimburse Investor Services Group for any other unscheduled
expenses incurred by Investor Services Group whenever the Fund and Investor
Services Group mutually agree that such expenses are not otherwise properly
borne by Investor Services Group as part of its duties and obligations under the
Agreement.
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<PAGE> 27
ICM SERIES TRUST FUNDS
OUT-OF-POCKET EXPENSE SUMMARY
- -------------------------------------------------------------------------------
Microfiche/microfilm Charges are $0.006 per image, $0.30 per fiche
production page. Based on information available at start up,
estimate monthly charges to be $250-$400 per
month.
- -------------------------------------------------------------------------------
Magnetic media tapes and Magnetic tapes can be used for various reasons.
freight For instance, tapes are created with shareholder
names and addresses to be used for shareholder
mailings. Also, tapes can be created from the
shareholder data base for marketing projects.
First Data does not charge for the actual tapes,
only programming involved with creating the tapes
(as detailed in fee schedule) and shipping cost.
The costs of these will vary by project.
- --------------------------------------------------------------------------------
Printing costs, including Costs incurred from outside vendor for printing
certificates, envelopes, stock. Actual costs of printing depend upon your
checks and stationary needs. Any expense will be pre-approved by client.
- -------------------------------------------------------------------------------
Postage US Postal Service fees to mail statements,
confirms, checks etc. to shareholders.
- -------------------------------------------------------------------------------
Due diligence mailings Include the cost of printing, inserting and
postage for required IRS shareholder mailings: W9,
B-notice, W8, Date of Birth, and TEFRA. Costs vary
by project. Estimates: printing 0.08/page,
inserting 0.10/page (minimums of approximately $50
- $100 per job apply). Postage is usually 1 ounce
/ $0.32 rate.
- -------------------------------------------------------------------------------
Telephone and communication Two categories: 1.) Pass through expenses from
costs, including all lease, MCI: line charges associated with 800 number.
maintenance and line costs These costs range from $0.07 to $0.09 per minute.
2.) Only applicable if client needs remote access
to First Data's systems. Line charges associated
with remote access to our systems. Costs are
dependent upon method of access to First Data's
system(s).
- -------------------------------------------------------------------------------
Proxy solicitations, Costs vary by project, and are bid as such.
mailings and tabulations
- -------------------------------------------------------------------------------
Courier services If at your request, we need to courier, or
overnight, mail, we will pass along the charges
from the overnight service.
- -------------------------------------------------------------------------------
Incoming and outgoing wire $6 per incoming wire. $8 per outgoing wire.
charges
- -------------------------------------------------------------------------------
Charges for check clearance Charged through bank services (Boston Safe Deposit
and Trust). Currently estimated at $0.12 each.
- -------------------------------------------------------------------------------
Record retention, retrieval Costs dependent upon arrangement with archive
and destruction costs, vendor. Typical cost estimated at $0.13 per
including, but not limited to archive carton per month, for retention, and $50
exit fees charged by third retrieval charge. Most information is on image,
party record keeping vendors. and we do not need to retrieve from archives.
However, we are required to retain hard copy
records.
- -------------------------------------------------------------------------------
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<PAGE> 28
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Third party audit reviews. Clients share pro-rata in the cost of preparing
a SAS-70 (transfer agent). The cost is $0.10 per
account. Which is more than off-set the reduced
audit fees charged to the fund.
- -------------------------------------------------------------------------------
Fund Insurance Cost for retaining Fidelity Bond and Errors and
Omission policy on behalf of the fund. Costs
dependent upon number and size of portfolios.
For a fund complex with 8 portfolios, the budgeted
insurance expense is $42,877.
- -------------------------------------------------------------------------------
Such other miscellaneous Costs will vary and will be discussed with you.
expenses reasonably
incurred by Investor
Services Group
in performing its duties
and responsibilities under
this Agreement.
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<PAGE> 29
SCHEDULE E
FUND DOCUMENTS
* Certified copy of the Articles of Incorporation of the Fund, as
amended
* Certified copy of the By-laws of the Fund, as amended,
* Copy of the resolution of the Board of Directors authorizing the
execution and delivery of this Agreement
* Specimens of the certificates for Shares of the Fund, if applicable,
in the form approved by the Board of Directors of the Fund, with a
certificate of the Secretary of the Fund as to such approval
* All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service offered by the
Fund
* Certified list of Shareholders of the Fund with the name, address and
taxpayer identification number of each Shareholder, and the number of
Shares of the Fund held by each, certificate numbers and denominations
(if any certificates have been issued), lists of any accounts against
which stop transfer orders have been placed, together with the reasons
therefore, and the number of Shares redeemed by the Fund
* All notices issued by the Fund with respect to the Shares in
accordance with and pursuant to the Articles of Incorporation or
By-laws of the Fund or as required by law and shall perform such other
specific duties as are set forth in the Articles of Incorporation
including the giving of notice of any special or annual meetings of
shareholders and any other notices required thereby.
<PAGE> 1
Exhibit 9(b)
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT, dated as of this day of February, 1998, the
"Agreement"), between FIRST DATA INVESTOR SERVICES GROUP, INC., a Massachusetts
corporation ("Investor Services Group"), and ICM SERIES TRUST, a Massachusetts
business trust (the "Fund").
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund desires to retain Investor Services Group to render
certain administrative services with respect to each investment portfolio listed
in Schedule A hereto, as the same may be amended from time to time by the
parties hereto (collectively, the "Portfolios"), and Investor Services Group is
willing to render such services;
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
Article 1 DEFINITIONS.
1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar organizational
document as the case may be, of the Fund as the same may be amended
from time to time.
(b) "Authorized Person" shall be deemed to include (i) any
officer of the Fund; or (ii) any person, whether or not such person is
an officer or employee of the Fund, duly authorized to give Oral
Instructions or Written Instructions on behalf of the Fund as
indicated in writing to Investor Services Group from time to time.
(c) "Board Members" shall mean the Directors or Trustees of
the governing body of the Fund, as the case may be.
(d) "Board of Directors" shall mean the Board of Directors
or Board of Trustees of the Fund, as the case may be.
(e) "Commission" shall mean the Securities and Exchange
Commission.
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<PAGE> 2
(f) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time
deposit, or cause to be deposited or held under the name or account of
such a custodian pursuant to a Custody Agreement.
(g) "1933 Act" shall mean the Securities Act of 1933 and the
rules and regulations promulgated thereunder, all as amended from time
to time.
(h) "1940 Act" shall mean the Investment Company Act of 1940
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(i) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by Investor Services Group
from a person reasonably believed by Investor Services Group to be an
Authorized Person.
(j) "Portfolio" shall mean each separate series of shares
offered by the Fund representing interests in a separate portfolio of
securities and other assets.
(k) "Prospectus" shall mean the most recently dated Fund
Prospectus and Statement of Additional Information, including any
supplements thereto if any, which has become effective under the 1933
Act and the 1940 Act.
(l) "Shares" refers collectively to such shares of capital
stock or beneficial interest, as the case may be, or class thereof, of
each respective Portfolio of the Fund as may be issued from time to
time.
(m) "Shareholder" shall mean a record owner of Shares of
each respective Portfolio of the Fund.
(n) "Written Instructions" shall mean a written
communication signed by a person reasonably believed by Investor
Services Group to be an Authorized Person and actually received by
Investor Services Group. Written Instructions shall include manually
executed originals and authorized electronic transmissions, including
telefacsimile of a manually executed original or other process.
Article 2 APPOINTMENT OF INVESTOR SERVICES GROUP.
The Fund hereby appoints Investor Services Group to act as Administrator of
the Fund on the terms set forth in this Agreement. Investor Services Group
accepts such appointment and agrees to render the services herein set forth for
the compensation herein provided.
Article 3 DUTIES OF INVESTOR SERVICES GROUP.
3.1 Investor Services Group shall be responsible for the following:
performing the customary services of an administrator, including corporate
secretarial, treasury and blue sky services, and fund accounting agent for the
Fund, as more fully described in the written schedule
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<PAGE> 3
of Duties of Investor Services Group annexed hereto as Schedule B and
incorporated herein, and subject to the supervision and direction of the Board
of Directors of the Fund.
3.2 In performing its duties under this Agreement, Investor Services Group:
(a) will act in accordance with the Articles of Incorporation, By-Laws,
Prospectuses and with the Oral Instructions and Written Instructions of the Fund
and will conform to and comply with the requirements of the 1940 Act and all
other applicable federal or state laws and regulations; and (b) will consult
with legal counsel to the Fund, as necessary and appropriate. Furthermore,
Investor Services Group shall not have or be required to have any authority to
supervise the investment or reinvestment of the securities or other properties
which comprise the assets of the Fund or any of its Portfolios and shall not
provide any investment advisory services to the Fund or any of its Portfolios.
3.3 Investor Services Group agrees to provide the services set forth herein
in accordance with the Performance Standards annexed hereto as Exhibit 1 of
Schedule B and incorporated herein (the "Performance Standards"). Such
Performance Standards may be amended from time to time by the parties.
3.4 In addition to the duties set forth herein, Investor Services Group
shall perform such other duties and functions, and shall be paid such amounts
therefor, as may from time to time be agreed upon in writing between the Fund
and Investor Services Group.
Article 4 RECORDKEEPING AND OTHER INFORMATION.
4.1 Investor Services Group shall create and maintain all records required
of it pursuant to its duties hereunder and as set forth in Schedule B in
accordance with all applicable laws, rules and regulations, including records
required by Section 31(a) of the 1940 Act. Where applicable, such records shall
be maintained by Investor Services Group for the periods and in the places
required by Rule 31a-2 under the 1940 Act.
4.2 To the extent required by Section 31 of the 1940 Act, Investor Services
Group agrees that all such records prepared or maintained by Investor Services
Group relating to the services to be performed by Investor Services Group
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such section, and will be surrendered promptly
to the Fund on and in accordance with the Fund's request.
Article 5 FUND INSTRUCTIONS.
5.1 Investor Services Group will have no liability when acting upon Written
or Oral Instructions believed to have been executed or orally communicated by an
Authorized Person and will not be held to have any notice of any change of
authority of any person until receipt of a Written Instruction thereof from the
Fund.
5.2 At any time, Investor Services Group may request Written Instructions
from the Fund and may seek advice from legal counsel for the Fund, or its own
legal counsel, with respect
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<PAGE> 4
to any matter arising in connection with this Agreement, and it shall not be
liable for any action taken or not taken or suffered by it in good faith in
accordance with such Written Instructions or in accordance with the opinion of
counsel for the Fund or for Investor Services Group. Written Instructions
requested by Investor Services Group will be provided by the Fund within a
reasonable period of time.
5.3 Investor Services Group, its officers, agents or employees, shall
accept Oral Instructions or Written Instructions given to them by any person
representing or acting on behalf of the Fund only if said representative is an
Authorized Person. The Fund agrees that all Oral Instructions shall be followed
within one business day by confirming Written Instructions, and that the Fund's
failure to so confirm shall not impair in any respect Investor Services Group's
right to rely on Oral Instructions.
Article 6 COMPENSATION.
6.1 Investor Services Group will from time to time employ or associate with
itself such person or persons as Investor Services Group may believe to be
particularly suited to assist it in performing services under this Agreement.
Such person or persons may be officers and employees who are employed by both
Investor Services Group and the Fund. The compensation of such person or persons
shall be paid by Investor Services Group and no obligation shall be incurred on
behalf of the Fund in such respect.
6.2 Investor Services Group shall not be required to pay any of the
following expenses incurred by the Fund: membership dues in the Investment
Company Institute or any similar organization; investment advisory expenses;
costs of printing and mailing stock certificates, prospectuses, reports and
notices; interest on borrowed money; brokerage commissions; stock exchange
listing fees; taxes and fees payable to Federal, state and other governmental
agencies; fees of Board Members of the Fund who are not affiliated with Investor
Services Group; outside auditing expenses; outside legal expenses; Blue Sky
registration or filing fees; or other expenses not specified in this Section 6.2
which may be properly payable by the Fund. Investor Services Group shall not be
required to pay any Blue Sky registration or filing fees unless and until it has
received the amount of such fees from the Fund.
6.3 The Fund on behalf of each of the Portfolios will compensate Investor
Services Group for the performance of its obligations hereunder in accordance
with the fees set forth in the written Fee Schedule annexed hereto as Schedule C
and incorporated herein.
6.4 In the event that Investor Services Group has failed to meet a specific
Performance Standard category for a specified length of time, as set forth on
Exhibit 1 of Schedule B, the fees to be paid by the Fund to Investor Services
Group shall be subject to reduction as set forth in Exhibit 1 to Schedule B.
Notwithstanding the foregoing, the Fund's rights under this Section 6.4, shall
not become effective until 90 days following the date Investor Services Group
commences providing services to the Fund under this Agreement. For purposes of
the fee reduction set forth above, Investor Services Group's obligation to meet
the Performance Standards shall be measured with respect to each of the
Portfolios individually.
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<PAGE> 5
6.5 In addition to those fees set forth in Section 6.3 above, the Fund on
behalf of each of the Portfolios agrees to pay, and will be billed separately
for, out-of-pocket expenses incurred by Investor Services Group in the
performance of its duties hereunder. Out-of-pocket expenses shall include the
items specified in the written schedule of out-of-pocket charges annexed hereto
as Schedule D and incorporated herein. Schedule D may be modified by written
agreement between the parties. All out-of-pocket expenses shall be limited to
those out-of-pocket expenses reasonably incurred by Investor Services Group in
the performance of its obligations hereunder.
6.6 Investor Services Group will bill the Fund as soon as practicable after
the end of each calendar month, and said billings will be detailed in accordance
with the out-of-pocket schedule. The Fund will pay to Investor Services Group
the amount of such billing by Federal Funds Wire within thirty (30) business
days after the Fund's receipt of said bill. In addition, Investor Services Group
may charge a service fee equal to the lesser of (a) one and one half percent
(1-1/2%) per month or (b) the highest interest rate legally permitted on any
past due billed amount.
6.7 Any compensation agreed to hereunder may be adjusted from time to time
by attaching to Schedule C a revised Fee Schedule executed and dated by the
parties hereto.
6.8 The Fund acknowledges that the fees that Investor Services Group
charges the Fund under this Agreement reflect the allocation of risk between the
parties, including the disclaimer of warranties in Section 9.3 and the
limitations on liability and exclusion of remedies in Section 11.2 and Article
12. Modifying the allocation of risk from what is stated here would affect the
fees that Investor Services Group charges, and in consideration of those fees,
the Fund agrees to the stated allocation of risk.
Article 7 DOCUMENTS.
In connection with the appointment of Investor Services Group, the Fund
shall, on or before the date this Agreement goes into effect, but in any case
within a reasonable period of time for Investor Services Group to prepare to
perform its duties hereunder, deliver or caused to be delivered to Investor
Services Group the documents set forth in the written schedule of Fund Documents
annexed hereto as Schedule E.
Article 8 FUND ACCOUNTING SYSTEM.
8.1 Investor Services Group shall retain title to and ownership of any and
all data bases, computer programs, screen formats, report formats, interactive
design techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade secrets,
and other related legal rights utilized by Investor Services Group in connection
with the services provided by Investor Services Group to the Fund herein (the
"Investor Services Group System"); provided, however, that all data, account
information or other information content shall remain the property of the Fund.
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<PAGE> 6
8.2 Investor Services Group hereby grants to the Fund a limited license to
the Investor Services Group System for the sole and limited purpose of having
Investor Services Group provide the services contemplated hereunder and nothing
contained in this Agreement shall be construed or interpreted otherwise and such
license shall immediately terminate with the termination of this Agreement.
8.3 In the event that the Fund, including any affiliate or agent of the
Fund or any third party acting on behalf of the Fund is provided with direct
access to the Investor Services Group System, such direct access capability
shall be limited to direct entry to the Investor Services Group System by means
of on-line mainframe terminal entry or PC emulation of such mainframe terminal
entry and any other non-conforming method of transmission of information to the
Investor Services Group System is strictly prohibited without the prior written
consent of Investor Services Group.
Article 9 REPRESENTATIONS AND WARRANTIES.
9.1 Investor Services Group represents and warrants to the Fund that:
(a) it is a corporation duly organized, existing and in good standing
under the laws of the Commonwealth of Massachusetts;
(b) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(c) all requisite corporate proceedings have been taken to authorize
it to enter into this Agreement; and
(d) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
9.2 The Fund represents and warrants to Investor Services Group that:
(a) it is duly organized, existing and in good standing under the laws
of the jurisdiction in which it is organized;
(b) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into this Agreement;
(c) all corporate proceedings required by said Articles of
Incorporation, By-Laws and applicable laws have been taken to authorize it to
enter into this Agreement; and
(d) a registration statement under the 1933 Act and the 1940 Act on
behalf of each of the Portfolios is currently effective and will remain
effective.
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<PAGE> 7
9.3 THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, INVESTOR SERVICES GROUP DISCLAIMS ALL OTHER REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, MADE TO THE COMPANY OR ANY OTHER PERSON,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY, SUITABILITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE (IRRESPECTIVE OF
ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE) OF ANY SERVICES OR ANY GOODS
PROVIDED INCIDENTAL TO SERVICES PROVIDED UNDER THIS AGREEMENT. INVESTOR SERVICES
GROUP DISCLAIMS ANY WARRANTY OF TITLE OR NON-INFRINGEMENT EXCEPT AS OTHERWISE
SET FORTH IN THIS AGREEMENT.
Article 10 INDEMNIFICATION.
10.1 The Fund shall indemnify and hold Investor Services Group harmless
from and against any and all claims, costs, expenses (including reasonable
attorneys' fees), losses, damages, charges, payments and liabilities of any sort
or kind which may be asserted against Investor Services Group or for which
Investor Services Group may be held to be liable in connection with this
Agreement or Investor Services Group's performance hereunder (a "Claim"), unless
such Claim resulted from a negligent act or omission to act or bad faith by
Investor Services Group in the performance of its duties hereunder.
10.2 Investor Services Group shall indemnify and hold the Fund harmless
from and against any and all claims, costs, expenses, (including reasonable
attorneys' fees), losses, damages, charges, payments and liabilities of any sort
or kind which may be asserted against the Fund or its affiliates, or for which
the Fund or its affiliates may be held liable in connection with this Agreement
or Investor Services Group's performance hereunder (a "Claim"), provided that
such Claim resulted from willful misfeasance, bad faith or negligent act or
omission by Investor Services Group in performance of its duties and obligations
hereunder, or reckless disregard of its duties and obligations hereunder.
10.3 In any case in which one party (the "Indemnifying Party") may be asked
to indemnify or hold the other party (the "Indemnified Party") harmless, the
Indemnified Party will notify the Indemnifying Party promptly after identifying
any situation which it believes presents or appears likely to present a claim
for indemnification against the Indemnifying Party although the failure to do so
shall not prevent recovery by the Indemnified Party and shall keep the
Indemnifying Party advised with respect to all developments concerning such
situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects, such
defense shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party, and thereupon the Indemnifying Party
shall take over complete defense of the Claim and the Indemnified Party shall
sustain no further legal or other expenses in respect of such Claim. The
Indemnified Party will not confess any Claim or make any compromise in any case
in which the Indemnifying Party will be asked to provide indemnification, except
with the Indemnifying Party's prior written consent. The obligations of the
parties hereto under this Article 10 shall survive the termination of this
Agreement.
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<PAGE> 8
10.4 Any claim for indemnification under this Agreement must be made prior
to the earlier of:
(a) one year after the Indemnified Party becomes aware of
the event for which indemnification is claimed; or
(b) one year after the earlier of the termination of this
Agreement or the expiration of the term of this Agreement.
10.5 Except for remedies that cannot be waived as a matter of law (and
injunctive or provisional relief), the provisions of this Article 10 shall be
the sole and exclusive remedy for claims or other actions or proceedings to
which a party's indemnification obligations pursuant to this Article 10 may
apply.
Article 11 STANDARD OF CARE.
11.1 Investor Services Group shall at all times act in good faith and
agrees to use its best efforts within commercially reasonable limits to ensure
the accuracy of all services performed under this Agreement, but assumes no
responsibility for loss or damage to the Fund unless said errors are caused by
Investor Services Group's own negligence, bad faith, willful misconduct or
reckless disregarad of its duties hereunder or that of its employees.
11.2 Each party shall have the duty to mitigate damages for which the other
party may become responsible.
11.3 Without in any way limiting the foregoing, in the event Investor
Services Group shall provide Blue Sky services to the Fund, Investor Services
Group shall have no liability for failing to file on a timely basis any material
to be provided by the Fund or its designee that it has not received on a timely
basis from the Fund or its designee, nor shall Investor Services Group have any
responsibility to review the accuracy or adequacy of materials it receives from
the Fund or its designee for filing or bear any liability arising out of the
timely filing of such materials; nor shall Investor Services Group have any
liability for monetary damages for the sale of securities in jurisdictions where
Shares are not properly registered, or in jurisdictions where Shares are sold in
excess of the lawfully registered amount unless such failure of proper
registration or excess sales is due to the willful misfeasance, bad faith,
reckless disregard or negligence of Investor Services Group. Investor Services
Group shall not be liable for any errors which result from inaccurate or
inadequate information reported to Investor Services Group directly or
indirectly from the Fund's transfer agent. Investor Services Group shall be
under no obligation to investigate or confirm the accuracy or adequacy of any
information provided to Investor Services Group by the Fund's transfer agent.
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<PAGE> 9
Article 12 CONSEQUENTIAL DAMAGES.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL EITHER PARTY, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE UNDER ANY THEORY OF TORT,
CONTRACT, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR LOST PROFITS,
EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES,
EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS OF
WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER EITHER PARTY OR ANY ENTITY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Article 13 TERM AND TERMINATION.
13.1 This Agreement shall be effective on the date first written above and
shall continue for a period of five (5) years (the "Initial Term").
13.2 Upon the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of three (3) years ("Renewal Terms")
each, unless the Fund or Investor Services Group provides written notice to the
other of its intent not to renew. Such notice must be received not less than
ninety (90) days and not more than one-hundred eighty (180) days prior to the
expiration of the Initial Term or the then current Renewal Term.
13.3 In the event a termination notice is given by the Fund, all expenses
associated with movement of records and materials and conversion thereof to a
successor administrator will be borne by the Fund.
13.4 If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting Party,
and if such material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such termination to
the Defaulting Party. If Investor Services Group is the Non-Defaulting Party,
its termination of this Agreement shall not constitute a waiver of any other
rights or remedies of Investor Services Group with respect to services performed
prior to such termination of rights of Investor Services Group to be reimbursed
for out-of-pocket expenses. In all cases, termination by the Non-Defaulting
Party shall not constitute a waiver by the Non-Defaulting Party of any other
rights it might have under this Agreement or otherwise against the Defaulting
Party.
13.5 Notwithstanding anything contained in this Agreement to the contrary,
in the event that a merger, acquisition or change in control of the Fund or an
affiliate (as defined under the 1940 Act) of the Fund results, either directly
or indirectly, in the termination of this Agreement, the Fund shall pay to
Investor Services Group within 30 days of the notice of termination the fee set
forth in Schedule C (the "Early Termination Fee"). Such Early Termination Fee
shall not be
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<PAGE> 10
payable if Investor Services Group provides to a successor in interest of the
Fund services substantially similar to those services provided to the Fund
hereunder.
13.6 Notwithstanding anything contained in this Agreement to the contrary,
in the event that the Board of Trustees (including a majority of the
disinterested Trustees) determines to do so, the Fund shall have the right to
terminate this Agreement without cause upon six (6) months prior written notice
to Investor Services Group, provided that prior to the effective date of such
termination, the Fund shall pay to Investor Services Group a penalty equal to
$95,000. Notwithstanding the foregoing, the Fund's rights under this Section
13.6 shall not result in an effective date of termination that occurs prior to
two (2) years following the date Investor Services Group commences providing
services to the Fund under this Agreement.
Article 14 ADDITIONAL PORTFOLIOS
14.1 In the event that the Fund establishes one or more Portfolios in
addition to those identified in Schedule A, with respect to which the Fund
desires to have Investor Services Group render services as administrator under
the terms hereof, the Fund shall so notify Investor Services Group in writing,
and if Investor Services Group agrees in writing to provide such services,
Schedule A shall be amended to include such additional Portfolios.
Article 15 CONFIDENTIALITY.
15.1 The parties agree that the Proprietary Information (defined below) and
the contents of this Agreement (collectively "Confidential Information") are
confidential information of the parties and their respective licensors. The Fund
and Investor Services Group shall exercise at least the same degree of care, but
not less than reasonable care, to safeguard the confidentiality of the
Confidential Information of the other as it would exercise to protect its own
confidential information of a similar nature. The Fund and Investor Services
Group shall not duplicate, sell or disclose to others the Confidential
Information of the other, in whole or in part, without the prior written
permission of the other party. The Fund and Investor Services Group may,
however, disclose Confidential Information to their respective parent
corporation, their respective affiliates, their subsidiaries and affiliated
companies and employees, provided that each shall use reasonable efforts to
ensure that the Confidential Information is not duplicated or disclosed in
breach of this Agreement. The Fund and Investor Services Group may also disclose
the Confidential Information to independent contractors, auditors, and
professional advisors, provided they first agree in writing to be bound by the
confidentiality obligations substantially similar to this Section 15.1.
Notwithstanding the previous sentence, in no event shall either the Fund or
Investor Services Group disclose the Confidential Information to any competitor
of the other without specific, prior written consent.
15.2 Proprietary Information means:
(a) any data or information that is competitively sensitive
material, and not generally known to the public, including, but not
limited to, information about product
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<PAGE> 11
plans, marketing strategies, finance, operations, customer
relationships, customer profiles, sales estimates, business plans, and
internal performance results relating to the past, present or future
business activities of the Fund or Investor Services Group, their
respective subsidiaries and affiliated companies and the customers,
clients and suppliers of any of them;
(b) any scientific or technical information, design,
process, procedure, formula, or improvement that is commercially
valuable and secret in the sense that its confidentiality affords the
Fund or Investor Services Group a competitive advantage over its
competitors; and
(c) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object
code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable.
15.3 Confidential Information includes, without limitation, all documents,
inventions, substances, engineering and laboratory notebooks, drawings,
diagrams, specifications, bills of material, equipment, prototypes and models,
and any other tangible manifestation of the foregoing of either party which now
exist or come into the control or possession of the other.
15.4 The obligations of confidentiality and restriction on use herein shall
not apply to any Confidential Information that a party proves:
(a) Was in the public domain prior to the date of this Agreement or
subsequently came into the public domain through no fault of such party; or
(b) Was lawfully received by the party from a third party free of any
obligation of confidence to such third party; or
(c) Was already in the possession of the party prior to receipt
thereof, directly or indirectly, from the other party; or
(d) Is required to be disclosed in a judicial or administrative
proceeding after all reasonable legal remedies for maintaining such information
in confidence have been exhausted including, but not limited to, giving the
other party as much advance notice of the possibility of such disclosure as
practical so the other party may attempt to stop such disclosure or obtain a
protective order concerning such disclosure; or
(e) Is subsequently and independently developed by employees,
consultants or agents of the party without reference to the Confidential
Information disclosed under this Agreement.
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Article 16 FORCE MAJEURE.
No party shall be liable for any default or delay in the performance of its
obligations under this Agreement if and to the extent such default or delay is
caused, directly or indirectly, by (i) fire, flood, elements of nature or other
acts of God; (ii) any outbreak or escalation of hostilities, war, riots or civil
disorders in any country, (iii) any act or omission of the other party or any
governmental authority; (iv) any labor disputes (whether or not the employees'
demands are reasonable or within the party's power to satisfy); or (v)
nonperformance by a third party or any similar cause beyond the reasonable
control of such party, including without limitation, failures or fluctuations in
telecommunications or other equipment. In any such event, the non-performing
party shall be excused from any further performance and observance of the
obligations so affected only for as long as such circumstances prevail and such
party continues to use commercially reasonable efforts to recommence performance
or observance as soon as practicable.
Article 17 ASSIGNMENT AND SUBCONTRACTING.
This Agreement, its benefits and obligations shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned or otherwise transferred
by either party hereto, without the prior written consent of the other party,
which consent shall not be unreasonably withheld; provided, however, that
Investor Services Group may, in its sole discretion, assign all its right, title
and interest in this Agreement to an affiliate, parent or subsidiary. Investor
Services Group may, in its sole discretion, engage subcontractors to perform any
of the obligations contained in this Agreement to be performed by Investor
Services Group; provided, however that Investor Services Group may not engage
subcontractors to perform a substantial part of the services to be performed by
Investor Services Group without the prior written consent of the Fund, which
consent may not be unreasonably withheld.
Article 18 ARBITRATION.
18.1 Any claim or controversy arising out of or relating to this Agreement,
or breach hereof, shall be settled by arbitration administered by the American
Arbitration Association in Boston, Massachusetts in accordance with its
applicable rules, except that the Federal Rules of Evidence and the Federal
Rules of Civil Procedure with respect to the discovery process shall apply.
18.2 The parties hereby agree that judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction.
18.3 The parties acknowledge and agree that the performance of the
obligations under this Agreement necessitates the use of instrumentalities of
interstate commerce and, notwithstanding other general choice of law provisions
in this Agreement, the parties agree that the Federal Arbitration Act shall
govern and control with respect to the provisions of this Article 18.
-12-
<PAGE> 13
Article 19 NOTICE.
Any notice or other instrument authorized or required by this Agreement to
be given in writing to the Fund or Investor Services Group, shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.
To the Fund:
ICM Series Trust
c/o IronWood Capital Management, LLC
One Exchange Place
Boston, Massachusetts 02109
Attention: Warren J. Isabelle
To Investor Services Group:
First Data Investor Services Group, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581
Attention: President
with a copy to Investor Services Group's General Counsel
Article 20 GOVERNING LAW/VENUE.
The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, shall govern the interpretation, validity, and enforcement of
this agreement. All actions arising from or related to this Agreement shall be
brought in the state and federal courts sitting in the City of Boston, and
Investor Services Group and the Fund hereby submit themselves to the exclusive
jurisdiction of those courts.
Article 21 COUNTERPARTS.
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.
Article 22 CAPTIONS.
The captions of this Agreement are included for convenience of reference
only and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect.
-13-
<PAGE> 14
Article 23 PUBLICITY.
Neither Investor Services Group nor the Fund shall release or publish news
releases, public announcements, advertising or other publicity relating to this
Agreement or to the transactions contemplated by it without the prior review and
written approval of the other party; provided, however, that either party may
make such disclosures as are required by legal, accounting or regulatory
requirements after making reasonable efforts in the circumstances to consult in
advance with the other party.
Article 24 RELATIONSHIP OF PARTIES.
24.1 The parties agree that they are independent contractors and not
partners or co-venturers and nothing contained herein shall be interpreted or
construed otherwise.
Article 25 ENTIRE AGREEMENT; SEVERABILITY.
25.1 This Agreement, including Schedules, Addenda, and Exhibits hereto,
constitutes the entire Agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof. No change,
termination, modification, or waiver of any term or condition of the Agreement
shall be valid unless in writing signed by each party. No such writing shall be
effective as against Investor Services Group unless said writing is executed by
a Senior Vice President, Executive Vice President, or President of Investor
Services Group. A party's waiver of a breach of any term or condition in the
Agreement shall not be deemed a waiver of any subsequent breach of the same or
another term or condition.
25.2 The parties intend every provision of this Agreement to be severable.
If a court of competent jurisdiction determines that any term or provision is
illegal or invalid for any reason, the illegality or invalidity shall not affect
the validity of the remainder of this Agreement. In such case, the parties shall
in good faith modify or substitute such provision consistent with the original
intent of the parties. Without limiting the generality of this paragraph, if a
court determines that any remedy stated in this Agreement has failed of its
essential purpose, then all other provisions of this Agreement, including the
limitations on liability and exclusion of damages, shall remain fully effective.
Article 26 MISCELLANEOUS.
The Fund and Investor Services Group agree that the obligations of the Fund
under the Agreement shall not be binding upon any of the Board Members,
shareholders, nominees, officers, employees or agents, whether past, present or
future, of the Fund individually, but are binding only upon the assets and
property of the Fund, as provided in the Articles of Incorporation. The
execution and delivery of this Agreement have been authorized by the Board
Members of the Fund, and signed by an authorized officer of the Fund, acting as
such, and neither such authorization by such Board Members nor such execution
and delivery by such officer shall be deemed to have been made by any of them or
any shareholder of the Fund individually or to
-14-
<PAGE> 15
impose any liability on any of them or any shareholder of the Fund personally,
but shall bind only the assets and property of the Fund as provided in the
Articles of Incorporation.
-15-
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed and delivered by their duly authorized officers as of the date
first written above.
ICM SERIES TRUST
By:
___________________________
Name:
_________________________
Title:
________________________
FIRST DATA INVESTOR SERVICES GROUP, INC.
By:
___________________________
Name:
_________________________
Title:
________________________
-16-
<PAGE> 17
SCHEDULE A
LIST OF PORTFOLIOS
ICM/Isabelle Small Cap Value Fund
-17-
<PAGE> 18
SCHEDULE B
DUTIES OF INVESTOR SERVICES GROUP
(a) Maintaining office facilities (which may be in the offices of
Investor Services Group or a corporate affiliate) and furnishing corporate
officers for the Fund;
(b) Furnishing data processing services, clerical services, and
executive and administrative services and standard stationery and office
supplies;
(c) Performing fund accounting and bookkeeping services (including the
maintenance of such accounts, books and records of the Fund as may be required
by Section 31(a) of the 1940 Act) as follows:
* Daily, Weekly, and Monthly Reporting
* Portfolio and General Ledger Accounting
* Daily Valuation of all Portfolio Securities
* Daily Valuation and NAV Calculation
* Comparison of NAV to market movement
* Review research of price tolerance/fluctuation report to market
movements and events
* Research of items appearing on the price exception report
* Weekly cost monitoring along with market-to-market valuations in
accordance with Rule 2a-7
* Security trade processing
* Daily cash and position reconciliation with the custodian bank
* Daily updating of price and distribution rate information to the
Transfer Agent/Insurance Agent
* Daily support and report delivery to Portfolio Management
* Daily calculation of Portfolio adviser fees and waivers
* Daily calculation of distribution rates
-18-
<PAGE> 19
* Daily investable cash call
* Monitor and research aged receivables
* Collect aged income items and perform reclaims
* Update NASDAQ reporting
* Daily maintenance of each Portfolio's general ledger including
expense accruals
* Daily NAV per share notification to other vendors as required
* Calculation of 30-day SEC yields and total returns
* Preparation of month-end reconciliation package
* Monthly reconciliation of Portfolio expense records
* Application of monthly pay down gain/loss
* Preparation of all annual and semi-annual audit work papers
(d) Performing all functions ordinarily performed by the office of a
corporate treasurer, and furnishing the services and facilities ordinarily
incident thereto, as follows:
* Expense Accrual Monitoring
* Determination of Dividends
* Preparation materials for review by the Board, e.g., Rules 2a-7,
10f-3, 17a-7, 17e-1 and 144A
* Tax and Financial Counsel
* Creation of expense pro formas for new Portfolios/classes
* Reporting to investment company reporting agencies (i.e., Lipper)
* Compliance Testing including Section 817(h) (daily, weekly or
monthly)
(e) Preparing reports to the Fund's Shareholders and the SEC including, but
not necessarily limited to, Annual Reports and Semi-Annual Reports on Form
N-SAR;
(f) Preparing and filing the Fund's tax returns and providing shareholder
tax information to the Fund's transfer agent;
-19-
<PAGE> 20
(g) Assisting the Adviser, at the Adviser's request, in monitoring and
developing compliance procedures for the Fund which will include, among other
matters, procedures to assist the Adviser in monitoring compliance with each
Portfolio's investment objective, policies, restrictions, tax matters and
applicable laws and regulations;
(h) Performing "Blue Sky" compliance functions, as follows:
* Effecting and maintaining, as the case may be, the registration of
Shares of the Fund for sale under the securities laws of the
jurisdictions listed in the Written Instructions of the Fund,
which instructions will include the amount of Shares to be
registered as well as the warning threshold to be maintained. Any
Written Instructions not received at least 45 days prior to the
date the Fund intends to offer or sell its Shares cannot be
guaranteed a timely notification to the states. In addition,
Investor Services Group shall not be responsible for providing to
any other service provider of the Fund a list of the states in
which the Fund may offer and sell its Shares.
* Filing with each appropriate jurisdiction the appropriate
materials relating to the Fund. The Fund shall be responsible
for providing such materials to Investor Services Group, and
Investor Services Group shall make such filings promptly after
receiving such materials.
* Providing to the Fund quarterly reports of sales activity in
each jurisdiction in accordance with the Written Instructions
of the Fund. Sales will be reported by shareholder residence.
NSCC trades and order clearance will be reported by the state
provided by the dealer at the point of sale. Trades by omnibus
accounts will be reported by trustee state of residence in
accordance with the Written Instructions of the Fund outlining
the entities which are permitted to maintain omnibus positions
with the Fund.
* In the event sales of Shares in a particular jurisdiction
reach or exceed the warning levels provided in the Written
Instructions of the Fund, Investor Services Group will
promptly notify the Fund with a recommendation of the amount
of Shares to be registered in such jurisdiction and the fee
for such registration. Investor Services Group will not
register additional Shares in such jurisdiction unless and
until Investor Services Group shall have received written
instructions from the Fund to do so.
(i) Performing corporate secretarial services including the following:
* Assist in maintaining corporate records and good standing status
of Fund in its state of organization
-20-
<PAGE> 21
* Develop and maintain calendar of annual and quarterly board
approvals and regulatory filings
* Prepare notice, agenda, memoranda, resolutions and background
materials for legal approvals at quarterly board meetings and
committee meetings; attend meetings; make presentations where
appropriate; prepare minutes; follow up on issues
* Provide support for one special in person board meeting per year
and written consent votes where needed
(j) Performing the following legal services:
* Prepare and file annual Post-Effective Amendment
* Prepare and file Rule 24f-2 Notice
* Review and file Form N-SAR
* Review, Edgarize and file Annual and Semi-Annual Financial Reports
* Communicate significant regulatory or legislative developments to
Fund management and directors and provide related planning
assistance where needed
* Consult with Fund management regarding portfolio compliance and
Fund corporate and regulatory issues as needed
* Maintain effective communication with outside counsel and review
legal bills of outside counsel
* Coordinate the printing and mailing process with outside printers
for all shareholder publications
* Arrange D&O/E&O insurance and fidelity bond coverage for Fund
* Assist in monitoring Fund Code of Ethics reporting and provide
such reports to the person designated under the Fund's Code
(k) Performing, in accordance with the Written Instructions of the Fund,
the following Special Legal Services in accordance with the pricing structure
listed on the Fee Schedule attached to this Agreement as Schedule C:
* Assist in managing SEC audit of the Fund at the Adviser's
principal place of business
* Review sales material and advertising for Fund Prospectus
compliance
-21-
<PAGE> 22
* Assist in new Portfolio start-up (to the extent requested)
Coordinate time and responsibility schedules
Prepare Fund corporate documents (MTA/by-laws)
Draft/file registration statement (including investment
objectives/policies and prospectuses)
Respond to and negotiate SEC comments
Draft notice, agenda and resolutions for organizational meeting;
attend board meeting; make presentations where appropriate;
prepare minutes and follow up on issues
* Assist in developing compliance guidelines and procedures to
improve overall compliance by Fund and service providers
* Prepare notice, agenda, memoranda and background materials for
special board meetings, make presentations where appropriate,
prepare minutes and follow up on issues
* Prepare proxy material for special meetings (including fund merger
documents)
* Prepare Post-Effective Amendments for special purposes (e.g., new
funds or classes, changes in advisory relationships, mergers,
restructurings)
* Prepare special Prospectus supplements where needed
* Assist in extraordinary non-recurring projects, including
providing consultative legal services, e.g.,
Arrange CDSC financial programs
Prospectus simplification
Profile prospectuses
Exemptive order applications
-22-
<PAGE> 23
EXHIBIT 1 TO SCHEDULE B
PERFORMANCE STANDARDS
STANDARDS:
FUND ACCOUNTING/CUSTODY LIAISON
The following standards will be met 90% of the time.
* NAV's calculated accurately, provided all information from
external vendors or fund manager is correct*
* Information to NASDAQ is reported within timeframes
* Daily bulletin is released by 7:00 p.m., EST, provided all
information from external vendors or fund managers is received in
a timely basis
FUND ADMINISTRATION/TAX AND COMPLIANCE
The following standard will be met 100% of the time.
* All SEC and IRS regulatory requirements will be met
MEASUREMENT:
Measurement of the Performance Standards shall not become effective until 90
days following the date Investor Services Group commences providing services to
the Fund under this Agreement.
PENALTIES:
-23-
<PAGE> 24
* The penalty for missing the same Performance Standard in one (1)
quarter is written notice.
* The penalty for missing the same Performance Standard two (2)
quarters in succession is a 10% reduction in the quarterly fee for
such service for the second quarter.
* The penalty for missing the same Performance Standard three (3)
quarters in a rolling six (6) quarter period is a 20% reduction in
the quarterly fee for the third quarter.
-24-
<PAGE> 25
SCHEDULE C
FEE SCHEDULE
For the services to be rendered, the facilities to be furnished and the
payments to be made by Investor Services Group, as provided for in this
Agreement, the Fund, on behalf of each Portfolio, will pay Investor Services
Group on the first business day of each month a fee for the previous month at
the rates listed below.
* Fund Administration:
<TABLE>
<S> <C>
$150 million in aggregate net assets 0.12%
$150 million to $500 million in aggregate net assets 0.15%
Next $500 million to $750 million in aggregate net assets 0.12%
Next $750 million to $1.5 billion in aggregate net assets 0.09%
Next $1.5 billion to $2.5 billion in aggregate net assets 0.075%
Next $2.5 billion to $5 billion in aggregate net assets 0.05%
Greater than $5 billion in aggregate net assets 0.025%
Minimum charge per Portfolio $55,000
</TABLE>
* Fund Accounting:
$35,000 per Portfolio per annum
$5,000 per class above one class per annum
* Legal Administration: 0.01% of aggregate net assets; provided,
however, that such fee shall no longer be due and payable by the
Fund to Investor Services Group once Investor Services Group
has received an aggregate of $20,000 in Legal Administration
Fees from the Fund.
* The Early Termination Penalty referred to in Section 13.5 shall be
an amount equal to $50,000 and any fees which may have been waived
by Investor Services Group prior to such termination.
* Investor Services Group shall be entitled to the following fee for
the performance of any Special Legal Services as described in
Schedule B in accordance with the Written Instructions of the
Fund: $185 per hour subject to certain project caps as may be
agreed to by Investor Services Group and the Fund.
* Investor Services Group shall be entitled to collect all
out-of-pocket fees described in Schedule D.
-25-
<PAGE> 26
SCHEDULE D
OUT-OF-POCKET EXPENSES
Out-of-pocket expenses:
* Courier services
* Duplicating charges with respect to filings with Federal and
state authorities and Board meeting materials
* Travel to and from Board meetings and other meetings with Fund
management
* Pricing services (or services used to determine Fund NAV)
* Customized programming requests
* Blue Sky filing or registration fees
* SAS 70
* Cold Storage
* Document Retrieval
* Such other expenses as are agreed to by Investor Services Group
and the Fund
-26-
<PAGE> 27
ICM SERIES TRUST FUNDS
OUT-OF-POCKET EXPENSE SUMMARY
- -------------------------------------------------------------------------------
Courier services If at your request, we need to courier, or
overnight, mail, we will pass along the
charges from the overnight service.
- -------------------------------------------------------------------------------
Duplicating charges with If volumes are large enough that we have to
respect to filings with use an outside service, costs will be passed
and board meeting materials back to the Fund. (For example, cost of
copying N1A federal and state authorities
filings for each state)
- -------------------------------------------------------------------------------
Travel to and from board Applicable only when Board Meeting is not in
meeting and other meetings Boston. Expenses for our attorney, who is
management the fund. required to attend board meetings will be
billed back to with Fund Expenses for other
employees of First Data will not be.
- --------------------------------------------------------------------------------
Pricing services We use a variety of outside vendors. Cost of
vendor pricing currently charged to funds at
$0.10 per equity, $0.50 per bond, $0.50 per
money instrument and $1.00 other (REIT). ICM
Funds estimate $1,800 - $2,000 per year.
- -------------------------------------------------------------------------------
Customized programming requests Usually for custom reports. Billed at
$135/hour
- --------------------------------------------------------------------------------
Blue sky filing or Fees charged by states will be passed back to
registration fees fund. Estimates above. Assuming 7 portfolios,
one class of shares, one prospectus, and
registrations for all 50 states, blue sky
costs range from $110,790 to $209, 400
depending on registration amounts.
- --------------------------------------------------------------------------------
Costs of SAS-70 Clients share pro-rata in the cost of
preparing a First Data SAS-70 (fund
accounting). Currently estimated at $300 per
fund, which is more than off-set by the
reduced audit fees charged to the fund.
- --------------------------------------------------------------------------------
COLD storage costs Digital storage of shareholder documentation
and systems reports. Alternative to
microfilm/microfiche. Costs are $0.008 per
page.
- --------------------------------------------------------------------------------
Document retrieval costs Charged by storage vendor (ex. Pierce Leahy)
for retrieval of archived shareholder
material.
- --------------------------------------------------------------------------------
Such other expenses as are Costs will vary and will be discussed with
agreed to by Investor Services you.
Group and the fund.
- --------------------------------------------------------------------------------
-27-
<PAGE> 28
SCHEDULE E
FUND DOCUMENTS
* Certified copy of the Articles of Incorporation of the Fund, as
amended
* Certified copy of the By-laws of the Fund, as amended,
* Copy of the resolution of the Board of Directors authorizing the
execution and delivery of this Agreement
* Copies of all agreements between the Fund and its service
providers.
* All notices issued by the Fund with respect to the Shares in
accordance with and pursuant to the Articles of Incorporation or
By-laws of the Fund or as required by law and shall perform such
other specific duties as are set forth in the Articles of
Incorporation including the giving of notice of any special or
annual meetings of shareholders and any other notices required
thereby.
-28-
<PAGE> 1
Exhibit 10
February 20, 1998
ICM Series Trust
4400 Computer Drive
Westborough, MA 01581
Dear Sirs:
With respect to the Registration Statement on Form N-1A (File No.
333-40819) the ("Registration Statement") filed by the ICM Series Trust (the
"Trust") with the Securities and Exchange Commission for the purpose of
registering under the Securities Act of 1933, as amended, an indefinite number
of shares of Beneficial Interest of $0.01 par value of the Trust (the "Shares"),
we have examined such Trust records and other documents and reviewed such
questions of law as we have considered necessary or appropriate for the purposes
of this opinion, and on the basis of such examination and review, we advise you
that, in our opinion, proper trust proceedings have been taken by the Trust so
that the Shares have been validly authorized, and when the Shares have been
issued and sold in accordance with the terms contained in the Registration
Statement, the Shares will be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Counsel" in the Statement of Additional Information forming a part of the
Registration Statement. In giving this consent, we do not thereby admit that we
are within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Lane Altman & Owens LLP
Lane Altman & Owens LLP
<PAGE> 1
Exhibit 11
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of the
ICM/Isabelle Small-Cap Value Fund:
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made as part of this
registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 13, 1998
<PAGE> 1
Exhibit 13
ICM SERIES TRUST
ICM/ISABELLE SMALL-CAP VALUE FUND
PURCHASE AGREEMENT
ICM Series Trust (the "Trust"), a Massachusetts business Trust, on behalf
of the ICM/Isabelle Small-Cap Value Fund (the "Fund"), and Warren J. Isabelle
and Richard L. Droster (collectively, the "Purchasers") hereby agree as follows:
1. The Trust hereby offers to the Purchasers and the Purchasers
hereby agree to purchase that number of Investment Class shares
set forth next to each Purchaser's name on Addendum A to this
Purchase Agreement at $10.00 per share (hereafter "Shares"). The
Shares are the "initial shares" of the Fund. Fifth Third Bank
hereby acknowledges receipt of a purchase confirmation reflecting
the purchase of the Shares, and the Trust hereby acknowledges
receipt from the Purchasers of funds in the aggregate amount of
$100,000 in full payment for the Shares.
2. Each of the Purchasers represent and warrant to the Trust that
the Shares are being acquired for investment purposes and not for
the purpose of distribution.
3. Each of the Purchasers agree that if either of them or any direct
or indirect transferee of the Shares held by them redeems the
Shares prior to the fifth anniversary of the date that the Fund
begins its investment activities, the redemption proceeds payable
to such Purchaser or such transferee will be reduced by an amount
equal to the number resulting from multiplying the Fund's total
unamortized costs by a fraction, the numerator of which is equal
to the number of Shares redeemed by such Purchaser or such
transferee and the denominator of which is equal to the number of
Shares of the Fund outstanding as of the date of such redemption,
as long as the administrative position of the staff of the
Securities and Exchange Commission requires such reimbursement.
4. The Trust represents that a copy of its Declaration of Trust is
on file at the Secretary of State's office.
5. This Agreement has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of
the Trust. The obligations of this Agreement shall be binding
only upon the assets and property of the Fund and shall
<PAGE> 2
not be binding upon any individual Trustee, officer or
shareholder of the Fund or the Trust.
6. This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the ______ day of February, 1998.
Attest: ICM SERIES TRUST
_________________________ By:______________________________
Name:____________________________
Title:_____________________________
Attest: Warren J. Isabelle,
IRA Account, U.S. Clearing Custodian
_________________________ By:___________________________
Warren J. Isabelle
Attest:
_________________________ _________________________________
Richard L. Droster
2
<PAGE> 3
ADDENDUM A TO PURCHASE AGREEMENT
<TABLE>
<CAPTION>
PURCHASER NUMBER OF SHARES TOTAL PURCHASE PRICE
<S> <C> <C>
Warren J. Isabelle 6,500 65,000
Richard L. Droster 3,500 35,000
</TABLE>
3
<PAGE> 1
Exhibit 15
PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1
FOR INVESTMENT CLASS SHARES
OF
ICM SERIES TRUST
ICM/ISABELLE SMALL-CAP VALUE FUND
WHEREAS, ICM Series Trust (the "Trust") is an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Act"); and
WHEREAS, the ICM/Isabelle Small-Cap Fund (the "Fund"), a fund of the Trust,
desires to adopt a Plan of Distribution pursuant to Rule 12b-1 under the Act
with respect to Investment Class Shares of the Fund ("Shares"), and the Board of
Trustees has determined that there is a reasonable likelihood that adoption of
the Plan of Distribution will benefit the Fund and its shareholders; and
WHEREAS, the Fund and First Data Distributors, Inc. (the "Distributor")
have entered into a separate Distribution Agreement pursuant to which the Fund
has employed the Distributor in such capacity during the continuous offering of
Shares of the Fund.
NOW, THEREFORE, the Fund hereby adopts the terms of this Plan of
Distribution (the "Plan") in accordance with Rule 12b-1 under the Act with
respect to the Shares:
1. In consideration of the services to be provided, and the expenses to be
incurred, by the Distributor pursuant to the Distribution Agreement, the Fund
will pay to the Distributor as distribution payments (the "Payments") in
connection with the distribution of the Shares an aggregate amount at a rate of
up to 0.25% per year of the average daily net assets of the Fund. Such payments
shall be accrued daily and paid monthly in arrears or shall be accrued and paid
at such other intervals as the Board shall determine. The Trust's obligation
hereunder shall be limited to the assets of the Fund and shall not constitute an
obligation of the Trust except out of such assets and shall not constitute an
obligation of any shareholder of the Trust.
2. It is understood that the Payments made by the Trust under this Plan
will be used by the Distributor for the purpose of financing or assisting in the
financing of any activity which is primarily intended to result in the sale of
Shares. The scope of the foregoing shall be interpreted by the Board, whose
decision shall be conclusive except to the extent it contravenes
<PAGE> 2
established legal authority. Without in any way limiting the discretion of the
Board, and subject to any differing determination that may subsequently be made
by the Board after reviewing relevant facts and applicable regulations, the
following activities are hereby declared to be primarily intended to result in
the sale of Shares: advertising or promoting the Fund or the Fund's investment
adviser's mutual fund activities; compensating underwriters, dealers, brokers,
banks and other selling entities (including the Distributor) and sales and
marketing personnel of any of them for sales of Shares, whether in a lump sum or
on a continuous, periodic, contingent, deferred or other basis; compensating
underwriters, dealers, brokers, banks and other servicing entities and servicing
personnel (including the Fund's investment adviser and its personnel and its
transfer agent and its personnel) or any of them for providing services to
holders of Shares relating to their investment in the Fund, including assistance
in connection with inquiries relating to such shareholders' accounts; the
production and dissemination of prospectuses (including statements of additional
information) of the Fund, and the preparation, production and dissemination of
sales, marketing and shareholder servicing materials; and the financing of any
activity for which Payment is authorized by the Board. Notwithstanding the
foregoing, this Plan does not require the Distributor to perform any specific
type or level of expenses for activities covered by this Section 2. In addition,
Payments made in a particular year shall not be refundable whether or not such
Payments exceed the expenses incurred for that year pursuant to this Section 2.
3. The Fund is hereby authorized and directed to enter into appropriate
written agreements with the Distributor and each other person to whom the Fund
intends to make any Payment, and the Distributor is hereby authorized and
directed to enter into appropriate written agreements with each person to whom
the Distributor intends to make any payments in the nature of a Payment. The
foregoing requirement is not intended to apply to any agreement or arrangement
with respect to which the party to whom Payment is to be made does not have the
purpose set forth in Section 2 above (such as the printer in the case of the
printing of a prospectus or a newspaper in the case of an advertisement) unless
the Board determines that such an agreement or arrangement should be treated as
a "related" agreement for purposes of Rule 12b-1 under the Act.
4. Each agreement required to be in writing by Section 3 must contain the
provisions required by Rule 12b-1 under the Act and must be approved by a
majority of the Board ("Board Approval") and by a majority of the Trustees
("Disinterested Trustee Approval") who are not interested persons of the Fund
and have no direct or indirect financial interest in the operation of the Plan
or any such agreement, by vote cast in person at a meeting called for the
purposes of voting on such agreement. All determinations or authorizations of
the Board hereunder shall be made by Board Approval and Disinterested Trustee
Approval.
2
<PAGE> 3
5. The officers, investment adviser or Distributor of the Fund, as
appropriate, shall provide to the Board and the Board shall review, at least
quarterly, a written report of the amounts expended pursuant to this Plan and
the purposes for which such Payments were made.
6. To the extent any activity is covered by Section 2 and is also an
activity which the Fund may pay for on behalf of the Fund without regard to the
existence or terms and conditions of a plan of distribution under Rule 12b-1 of
the Act, this Plan shall not be construed to prevent or restrict the Fund from
paying such amounts outside of this Plan and without limitation hereby and
without such payments being included in calculation of Payments subject to the
limitation set forth in Section 1.
7. This Plan may not be amended in any material respect without Board
Approval and Disinterested Trustee Approval and may not be amended to increase
the maximum level of Payments permitted hereunder without such approvals and
further approval by a vote of at least a majority of the outstanding Shares of
the Fund. This Plan may continue in effect for longer than one year after its
approval only as such continuance is specifically approved at least annually by
Board Approval and by Disinterested Trustee Approval, cast in person at a
meeting called for the purpose of voting on this Plan.
8. This Plan may be terminated at any time by a vote of the Trustees who
are not interested persons of the Fund and have no direct or indirect financial
interest in the operation of the Plan or any agreement hereunder, cast in person
at a meeting called for the purposes of voting on such termination, or by a vote
of at least a majority of the outstanding Shares of the Fund.
9. While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons of the Fund shall be committed to the discretion
of the Trustees who are not such interested persons.
10. As used in this Plan, the terms "interested person" and "related
agreement" shall have the meanings ascribed to them in the Act and the rules
adopted by the Securities and Exchange Commission ("SEC") thereunder and the
term "vote of a majority of the outstanding Shares" of the Fund shall mean the
lesser of 67% or the 50% voting requirements specified in clauses (A) and (B),
respectively, of the third sentence of Section 2(a)(42) of the Act, all subject
to exemptions as may be granted by the SEC.
3
<PAGE> 1
Exhibit 18
ICM SERIES TRUST
ICM/ISABELLE SMALL-CAP VALUE FUND
PLAN PURSUANT TO RULE 18F-3(d)
UNDER THE INVESTMENT COMPANY ACT OF 1940
WHEREAS, the Board of Trustees of the ICM Series Trust (the "Trust") have
considered the following multi-class plan (the "Plan") under which the
ICM/Isabelle Small-Cap Value Fund (the "Fund") may offer multiple classes of
shares of its now existing and hereafter created classes pursuant to Rule 18f-3
under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, a majority of the Trustees of the Trust and a majority of the
Trustees who are not interested persons of the Trust have found the Plan, as
proposed, to be in the best interests of each class of the Fund individually and
the Fund as a whole;
NOW, THEREFORE, the Trust hereby approves and adopts the following Plan
pursuant to Rule 18f-3(d) of the 1940 Act.
THE PLAN
The Fund may from time to time issue one or more of the following classes
of shares: INVESTMENT CLASS shares and INSTITUTIONAL CLASS shares. Each class is
subject to such investment minimums and other conditions of eligibility as are
set forth in the Fund's prospectus as from time to time in effect with respect
to such class (the "Prospectus"). The differences in expenses among these
classes of shares are set forth below in this Plan, which is subject to change,
to the extent permitted by law and by the Declaration of Trust and By-Laws of
the Trust by action of the Board of Trustees of the Trust.
INITIAL SALES CHARGE
INVESTMENT CLASS and INSTITUTIONAL CLASS shares of the Portfolios are
offered at their per share net asset value, without an initial sales charge.
REDEMPTION FEE
No redemption fee will be imposed by the Fund upon redemptions of shares of
either Class.
1
<PAGE> 2
SEPARATE ARRANGEMENTS AND EXPENSE ALLOCATIONS OF EACH CLASS
INVESTMENT CLASS and INSTITUTIONAL CLASS shares will pay the expenses
associated with their different distribution and shareholder servicing
arrangements. The Investment Class will reimburse its distributor for payments
for the purpose of financing or assisting in the financing of any activity which
is primarily intended to result in the sale of Investment Class shares of the
Fund and for servicing accounts of holders of Investment Class shares
("Distribution Fees"). Distribution Fees are paid pursuant to a plan adopted for
the Investment Class pursuant to Rule 12b-1 under the 1940 Act (the "12b-1
Plan"). INVESTMENT CLASS Shares pay, pursuant to the 12b-1 Plan, a Distribution
Fee of 0.25% per annum of the average daily net assets of the Fund attributable
to such class, as described in the Prospectus for that class. The Institutional
Class has not adopted a 12b-1 Plan.
Each class may, at the Trustees' discretion, also pay a different share of
other expenses, not including advisory or custodial fees or other expenses
related to the management of the Fund's assets, if these expenses are actually
incurred in a different amount by that class, or if the class receives services
of a different kind or to a different degree than the other class. All other
expenses will be allocated to each class on the basis of the net asset value of
that class in relation to the net asset value of the Fund.
DIVIDENDS/DISTRIBUTIONS
The Fund makes distributions to shareholders from its net long-term capital
gains and income dividends, if any, at least annually. Dividends from income
and/or capital gains may also be paid at such other times as may be necessary
for the Fund to avoid federal income or excise tax. Unless shareholders specify
otherwise, all distributions will be automatically reinvested.
ICM SERIES TRUST
-----------------------------------
President
February __, 1998.
2
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> ICM/ISABELLE SMALL CAP VALUE FUND Investment Class
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> FEB-13-1998
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 172,500
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 172,500
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 72,500
<TOTAL-LIABILITIES> 72,500
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100,000
<SHARES-COMMON-STOCK> 10,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 72,500
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 100,000
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 72,500
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
