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Home My WebLink AboutAgreement_Pension_03/31/2005~- [ INVESTMENT MANAGER AGREEMENT THIS AGREEMENT is entered into this 3/ day of /Y~l~it~~/ , 205 by and between the BOARD OF TRUSTEES OF THE TEQUESTA PUBLIC SAFETY OFFICERS' PENSION FUND ("Trustees")and ROCKWOOD CAPITAL ADVISORS, LLC ("Manager"). WITNESSETH: WHEREAS, the Village Council of Tequesta has enacted a pension plan, providing for the creation and operation of the Tequesta Public Safety Officers' Pension Fund ("the Fund"); and WHEREAS, the Pension Plan provides that the Trustees are solely responsible for administering for the Fund; and WHEREAS, the Pension Plan provides thatthe Trustees are required to engage the services of professional investment counsel to assist and advise the Trustees in the performance of their duties; and WHEREAS, the Trustees desire that the Manager serve as investment manager/ professiona#~'-money manager with respect td certain of the assets held by the Fund, and the Managehis witfirlg to sd serve. NOW, THEREFORE, in consideration of the mutual agreements herein contained, it.is covenanted and agreed'as follows: 1. Appointment gf Investment Manager. The Trustees appoint the Manager as Investment Manager with respect to those assets of the Fund assigned to the Manager by the Trustee; Including income and earnings attributable to such assets (collectively Page 1 of 11 •• referred to as "Investment Assets"). The Trustees and the Manager acknowledge that Manager shall provide the equity investment services through asub-advisory relationship with Contravisory Research & Management Corporation. Any changes to sub-advisor requires 30 days written notice to the Trustees. There shall be no additional fees to the Trustees for this sub-advisory relationship. The equity investments however shall at all times be considered part of the Investment Assets under management with the Manager. 2. Fee Schedule. For services under this Agreement, the Manager shall be entitled to receive from the Trustees a fee as set forth in the fee schedule attached as Exhibit A. Such fee shall be payable quarterly in arrears on the last day of such quarter, at one fourth (1/4th) the annual fee and shall be computed upon the fair market value of the Investment Assets as of the last day of the quarter. If the services to be rendered under this Agreement shall commence on a day other than the first day of a quarter, or end on a day other than the end of a calendar quarter, the fee shall be prorated based on the number of days in the quarter. 3. Investment Adviser. The Manager hereby represents and warrants that it is duly registered as an investment adviser under the InvestmentAdvisers Act of 1940. The Manager agrees to immediately notify the Trustees, in writing, in the event of any change in its investment adviser registration. Attached as Exhibit B is a copy of the Manager's Certificate of Authority to transact business in the State of Florida. Page 2 of 11 4. Fiduciary ResponsibilitX. The Manager holds itself out to be an expert in the field of investment counseling, and has sought the position of investment manager for the Investment Assets which are the subject of this Agreement. The Manager represents that it has the skill and learning commonly possessed by prudent members of the investment counseling profession in good standing. The Manager hereby acknowledges that it is a fiduciary with respect to the Trustees and the Fund. The fiduciary relationship covers all of the Investment Assets, even those managed under asub-advisory relationship with Contravisory Research & Management Corp. Attached hereto as Exhibit C is a copy of the Manager's current SEC form ADV. The Manager agrees to immediately provide the Trustees with all material changes to its Form ADV. 5. Investment Guidelines. Attached hereto and made a part hereof as Exhibit D is a copy of the investment provisions of the Pension Plan and the Board's Investment Policy Guidelines. The Manager shall provide continuous supervision and management to the Investment Assets in accordance with the investment guidelines set forth therewith. If the Manager determines, at any time, that any of the investment guidelines in the attached Exhibit is inappropriate, the Manager shall promptly notify the Trustees in writing. Except as otherwise provided in Exhibit D, the Manager shall manage the investment of the Investment Assets under its control in its complete discretion. The Trustees shall notify the Manager in writing of any changes in its investment guidelines. The Managershall have a reasonable time to bring the investment assets into compliance after receiving such written notification. Page 3 of 11 6. Discretionary Authority. Except as otherwise provided in Section 5 hereof (Investment Guidelines), the Trustees hereby expressly grant to the Manager full and complete discretion and authority with respect to managing the investment of the Investment Assets, including, without limitation, authority to purchase, sell, exchange, convert, trade, and generally to deal in securities and other property comprising the Investment Assets. 7. Brokers. (a) The Manager shall have the absolute authority and discretion to place orders on behalf of the Fund with such brokers or dealers whom the Manager may select, provided that the Manager shall place an order with a broker or dealer only if, in the Manager's judgment, and subject to the Manager's fiduciary responsibility to the Trustees and the Fund, best execution forthe Fund may thereby be obtained within the meaning of ERISA Technical Release No. 86-1 (i.e., competitive commission cost, as well as the quality and reliability of the execution) a copy of which is attached hereto as Exhibit E. Rockwood shall effect all purchases and sales of securities in a manner consistent with the principals of best execution taking into account net price (including commissions) and execution capability. (b) The Trustees may express their preference, in writing, that the Manager utilize the services of certain brokers or dealers so as to use the commission to pay for performance evaluation or other services to the Trustees. However, the Manager shall not follow such an expression of preference unless the designated broker(s) or dealer(s) can provide best execution in respect of securities transactions within the Page 4 of 11 meaning of ERISA Technical Release No. 86-1. In determining whether a designated broker or dealer can provide best execution for the Fund, the Manager shall consider only the quality and reliability of executions by such broker or dealer, its financial responsibility, its responsiveness to the Manager, the commission rate offered in connection with securities transactions on behalf of the Fund and similar factors. In no instance shall the Managerfollow such an expression of preference if it conflicts with the Manager's fiduciary responsibility to act prudently with respect to the decision concerning who will execute the transaction. (c) The Manager shall not be liable for any acts or omissions by any broker dealer selected by the Trustees or by the Manager, provided that the Manager has not acted negligently, or imprudently, in its selection or continuance of dealing with any broker or dealer. 8. Custodianship of Securities. The Board will provide for the custody of the Investment Assets. 9. Proxies. The Manager shall have the exclusive authority and responsibility with regard to the voting of proxies and monitoring those other items requiring action by the Trustees with respect to the Investment Assets, including, but not limited to, stock dividends, rights offerings, calls or redemption of bonds. The Manager shall not be directed by any other person or entity with regard to the voting of proxies or taking action with regard to the other items mentioned herein, unless such direction is given to the Manager in writing by the Trustees. The Manager hereby represents and warrants that it has Page 5 of 11 established a procedure for reconciling proxies withholdings and that reasonable steps will be undertaken to insure that proxies are received and voted. Proxy voting by the Manager shall be consistent with the proxy voting policy which is attached hereto as a part of Exhibit C, Part II. 10. Reports. The Manager shall provide the Trustees with a monthly investment report on the Investment Assets. This report shall be provided to the Trustees, the administrative manager and the performance monitor. The report shall be presented to the Trustees by a representative of the Manager on a semi annual basis. The quarterly reports shall include, but shall not be limited to the following matters, which shall be specifically presented in writing in the investment report: (a) A schedule setting forth the present marketvalues in comparison with cost values, thereby showing the gains and losses of each investment; (b) A detailed list of the transactions effected between each quarterly report; (c) A detailed listing of the commissions paid on each transaction in total, and on a per trade basis, indicating the name of the broker or dealer; (d) A report listing the vote on all proxies showing the date each proxy was voted, the issue as to which each proxy was voted, and how each proxy was voted. In addition, if a proxy was not voted, the Manager shall provide a written statement indicating the reason that a particular proxy was not voted; (e) Such other reports and analysis as the Manager deems appropriate, or as the Trustees request. Page 6 of 11 11. Confidential Information. The Manager shall maintain and protect in strictest confidence any and all data, information, or documents of, and concerning the finances, business, and affairs of, the Fund which it acquires in its performance of this Agreement. The Manager and the Fund agree that none of the aforesaid data, information or documents, and none of the reports and analyses prepared by the Manager as provided in Section 10 hereof (Reports), shall be disclosed to anyone except the Trustees, legal counsel to the Trustees and the Trustees' selected performance monitor, except as otherwise agreed upon in writing or as required bylaw. 12. Fidelity Bond. The Manager agrees to obtain and maintain at least a Five Million Dollar ($5,000,000.00) fidelity bond. Attached hereto as Exhibit F is a copy of the Manager's current fidelity bond and binder. The Manager agrees to immediately notify the Trustees, in writing, in the event any substantive change in coverage of said bond or if said bond is terminated, canceled or discontinued, in whole or in part. 13. Errors and Omissions Insurance. The Manager agrees to obtain and maintain at least Five Million Dollars ($5,000,000.00) of errors and omissions insurance. Attached hereto as Exhibit G is a copy of the Manager's current errors and omissions insurance policy. The Manager agrees to immediately notify the Trustees, in writing, in the event any substantive change in coverage of said insurance or if said insurance is terminated, canceled or discontinued, in whole or in part. Page 7 of 11 ~ 1 ~ 14. Liability. The Trustees, jointly and severally, shall not be liable for any acts or omissions of the Manager, and shall be under no obligation or duty to invest, reinvest, manage, control, or dispose of the Investment Assets. The Manager specifically acknowledge fiduciary responsibility to the Fund and its participants and beneficiaries. The Manager shall not be liable for any act or omission of any other fiduciary with respect to the Fund. The fiduciary responsibility of the Manager includes the supervision, counseling, management and control of the Investment Assets within the meaning of applicable law and providing investment advice to the Trustees. The Manager shall be liable for any negligence, malfeasance, or bad faith in the performance of its duties, and for any losses or damage caused or suffered by its failure to perform its duties in accordance with fiduciary standards, or by its failure to comply with. the provisions of the Investment Advisors Act of 1940, or by its failure to comply with the provisions of this Agreement. 15. Notices. All written communications from the Manager to Trustees shall be addressed to: Board of Trustees Village of Tequesta Public Safety Officers' Pension Fund Post Office Box 3273 250 Tequesta Drive, Suite 300 Tequesta, Florida 33469-0273 Copies of such notices shall also be sent to Fund Counsel: Bonni S. Jensen, Esquire Hanson, Perry & Jensen, P.A. 400 Executive Center Drive, Suite 207 West Palm Beach, Florida 33401-2922 Page 8 of 11 ~+ ~ ). ~ All written communications from the Trustees to the Manager shall be addressed to: D. Andrew Holtgrieve Director of Client Services Rockwood Capital Advisors, LLC 1401 South Brentwood Boulevard Suite 400 St. Louis, Missouri 63144 16. Assignability. This Agreement may not be assigned without the prior written consent of the Trustees. 17. Entire Agreement. This Agreement, with attached Exhibits, constitutes the entire agreement between the parties hereto. 18. Modification. This Agreement may be modified or revised only by vote of the Board and a written amendment signed by the Trustees' Chairman and Secretary and the Manager. 1 g. Prior Agreements. This Agreement supersedes all prior agreements with the Manager, oral or written. 20. Applicable law. This Agreement shall be interpreted in accordance with the laws of the State of Florida and the Securities and Exchange Commission. Page 9 of 11 x ` '~ r 21. Venue. In any action to enforce the provisions of this agreement, venue shall be in Palm Beach County, Florida. 22. Termination. This Agreement may be terminated by either party hereto upon thirty (30) days written notice to the other party. 23. Attorney Fees. If the Trustees engage an attorney, accountant, or other advisor to enforce the terms of this Agreement, whether by administrative action, legal action, litigation, or otherwise, and should the Pension Plan prevail or obtain any relief or remedy as a result of such action, then the Manager shall pay to the Pension Plan its reasonable attorney's fees, accountants' fees, advisors' fees, and costs. Page 10 of 11 ~ r IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their respective authorized representatives on the dates indicated below. BOARD OF TRUSTEES OF THE VILLAGE OF TEQUESTA PUBLIC SAFETY OFFICERS' P~N51O1~4-FUND By: mes M. Weinand By: ~ Date: WITNESS: .lll.(.~-G71 ~ ~~ As to Trustees ROCKWOOD CAPITAL ADVISORS, LLC INVESTMENT MANAGERS By: Title: -~~'•/~e,~ ~..~,~~.~fz Date: .rt~~ 1.?, .2~ WI ESS: C- ,~ As to Manager H:\Tequesta PS 1011\Vendors\InvMgr\RockwoodWgmnt.wpd BSJ/ka-March 21, 2005 Page 11 of 11 EXHIBIT LIST -INVESTMENT MANAGER AGREEMENT TEQUESTA PUBLIC SAFETY OFFICERS' PENSION FUND ROCKWOOD CAPITAL ADVISORS, LLC EXHIBIT DESCRIPTION PROVIDED BY A Fee Schedule Attached B Manager's Certificate to do business in Florida Manager C Manager's current SEC form ADV Manager D Investment Policy Guidelines Fund E ERISA Technical Release No. 86-1 Fund F Manager's Fidelity Bond & Binder Manager G Manager's current errors and omissions insurance policy Manager EXHIBIT A VILLAGE OF TEQUESTA PUBLIC SAFETY OFFICERS' PENSION FUND ROCKWOOD CAPITAL ADVISORS, LLC Annual Investment Management Fees First $1 million of market value 60 basis points (.60%) Next $9 million of market value 50 basis points (.50%) Next $15 million of market value 45 basis points (.45%) Next $25 million of market value 40 basis points (.40%) Fees are calculated and payable quarterly ~~%~~ ~ ~ T o z = ISM p o _ w Z ~ ~ p U~ - O"-~'w ~ -.~ ~ OW - w ~ ~ o pF- u i m u-, - .~ -p in w ~ :~_'.z Z~~ ~ oD. y ° ~ _ . 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Q LL-`- _ H .. w w OMB APPROVAL- OMB Number 3235-0490 Expires: September 30, 2005 Estimated average burden hours per response 9.402 FORM ADV Uniform Application for Investment Adviser Registration Part II -Page 1 Name of Investment Adviser: ROCICWOOD CAPITAL ADVISORS, L.L.C. Address: (Number and Street) (City) (State) (Zip Code) Area Code: Telephone Number: 1401 S. BRENTWOOD BLVD., SUITE 400 ST. LOUIS MO G3144 (314) 962-8336 This part of Form ADV gives information about the investment adviser and its business for the use of clients. The information has not been approved or veriTied by any governmental authority. Table of Contents Item Number Item Page 1 Advisory Services and Fees ...................................................................................... ....................... 2 2 TYPes of Clients ....................................................................................................... ........................ 2 3 Types of Investments ............................................................................................... ........................ ~ 4 Methods of Analysis, Sources of Information and Investment Strategies ................ ........................ 3 5 Education and Business Standards ........................................................................... ......................... 4 Education and Business Background ....................................................................... ........................ 4 '7 Other Business Activities ......................................................................................... ........................ 4 g Other Financial Industry Activities or A~liations ................................................. ......................... 4 9 Participation or Interest in Client Transactions ....................................................... ......................... 5 10 Conditions for Managing Accounts ........................................................................ ......................... 5 11 Review of Accounts ................................................................................................ ......................... 5 12 Investment or Brokerage Discretion ....................................................................... ......................... 6 . 6 13 Additional Compensation ....................................................................................... ........................ ... 6 14 ........... Balance Sheet .............................................................................................. ....................... Continuation Sheet ................................................................................................. .......................... Schedule F Balance Sheet, if required ....:................................................................................. .......................... Schedule G (Schedules A, B, C, D, and E are included with Part 1 of this Form, for the use of regulatory bodies, and are not distributed to clients.) Potential persons Fvho are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. FORM ADV Applicant SECFileNumber: Date: Part II - Pa E 2 ROCk'WOOD CAPITAL ADVISORS, L.L.C. 80]-541 G3 January 22, 2004 ~ Definitions Ior Part ll Related person - P.~ry officer, director or partner of applicant or any person directly or indirectly controlling, controlled by, or under common control - with the applicant, including any non-clerical, non-ministerial employee. Investnent Supervisory Services -Giving continuous investment advice to a client (or malting investments for the client) based on the individual needs of the client Individual needs include, for example, the nature of other client assets and the client's personal and family obligations. 1. A. Advisor}' Services and Fees. (check the applicable boxes) Applicant: For each type of service provided, state the approximate of total advisory billings from that service. (See instruction below.) ..................... 0% ^ (1) Provides investment supervisory services ................._.................................... ^x (2) Manages investment advisory accounts not involving investment supervisory services ....................................................................... 100% ^ (3) Fumishes investment advice through consultations not included in either service described above ...................................................... 0% I, ^ (4) Issues periodicals about securities by subscription ................................................................................................................................ o i Ooo ^ (5) Issues special reports about securities not included in any service described above .............................................................................. 0 /° ^ (G) Issues, not as part of any service described above, any charts, graphs, formulas, or other devices which clients may ................................. ° use to evaluate secunties ..................................................................................................................................... ^ (7) On more than an occasional basis, furnishes advice to clients on matters not involving securities ....................................................... 0% ................... 0% ^ (S) Provides a timing service .................................. .................................................................................................. ............... ~ ^ (9) Fumishes advice about securities in any manner not described above .................................................................................................. I 0% (Percentages should be based on applicant's last fiscal year. If applicant has not completed its first fiscal year, provide estimates of advisory billings for that year and state that the percentages are estimates.) - -- B. Does applicant call any of the services it checked above financial planning or some similar term? .............................................................. ^ ~ C. Applicant offers investment advisory services for: (check all that apply) ^x {1) A percentage of assets under management ^ (4) Subscription fees ^ (2) Hourly charges ^ (5) Commissions ~ (3) Fixed fees (not including subscription fees) ^ (G) Other D. For each checked box in A above, describe on Schedule F: • the services provided, including the name of any publication or report issued by the adviser on a subscription basis or for a fee • applicant's basic fee schedule, how fees are charged and whether its fees are negotiable when compensation is payable, and if compensation is payable before service is provided, how a client may get a refund or may terminate an investment advisory contract before its expiration date 2. Types of Clients -Applicant generally provides investment advice to: (check those that apply) ^ A. Individuals 0 E. Trusts, estates, or charitable organizations ^ B. Banks or thrifr instihnions ^D F. Corporations or business entities other than those listed above ^ C. Investment compa~~ies ^ G. Other (describe on Schedule F) O D. Pension and profit sharing plans Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1). I~ FORM ADV Applicant SECFileNumber: Pali II -Pegg 3 ROCh'WOOD CAPITAL ADVISORS, L.L.C. 801-54163 3. Types of Investments. Applicant offers advice on the following: (check those that apply) A. Equity Securities ~ H. United States government secunties ^ (I) exchange-listed securities I. Options contracts on: ^ (2) securities traded over-the-counter ^ (3) foreign issuers ^ ^ (1) securities (2) commodities ^ B. Warrants 7. Futures contracts on: ^p C. Corporate debt securities ^ (1) ta~rgibles (other than commercial paper) ^ (2) intangibles O D. Commercial paper K. Interests in partnerships investing in: O E. Certificates of deposit ^ (1) real estate ^ F. Municipal securities ^ ^ (2) oil and gas interests (3) other (explain on Schedule F) G. lnvestment company securities: ^ L. Other (explain on Schedule F) ^ (l) variable life insurance ^ (2) variable annuities ^ (3) mutual fund shares 4. Methods of Analysis, Sources of Information, and Investment Strategies. A. Applicant's security analysis methods include: (check those that apply) (1) ^ Charting (4) ^ Cyclical (2) (] Fundamental (~) ^ Other (explain on Schedule F) (3) D Technical Date: January 22,2004 B. The main sources of information applicant uses include: (check those that apply) (I) ~ Financial newspapers and magazines (5) ^ Timing services (2) ^ Inspections of corporate activities (6) ~ Annual reports, prospectuses, filings with the i on Securities and Exchange Commiss (3) ~ Research materials prepared by others (7) ~ Company press releases (4) ~ Corporate rating services (g) ^ Other (explain on Schedule F) C. The investment strategies used to implement any investment advice given to clients include: (check those that apply) (1) D Long term purchases (5) ^ Margin transactions (securities held at least a year) (6) ^ Option writing, including covered options, uncovered (2) (] Short term purchases options or spreading strategies (securities sold within a year) (7) ^ Other (explain on Schedule F) (3) ~ Trading (securities sold within 30 days) (4) ^ Short sales Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1). FORM ADV I Applicant: P81't II - P8g@ 4 ROCKwOOD CAPITAL ADVISORS, L.L.C. SEC File Number: 801-14163 } Date: January 22, ?004 5. Education and Business Standards. Are there any general standards of education or business experience that applicant requires of those involved in Os determining or giving investment advice to clients? ...................................................................................................................................... (If yes, describe these standards on Schedule F.) i. Education and Business Background. For: • each member of the investment committee or group that determines general investment advice to be given to clients, or • if the applicant has no investment committee or group, each individual who determines general investment advice given to clients (if more than five, respond only for their supervisors) • each principal executive officer of applicant or each person with similar status or performing similar functions. On Schedule F, give the: • name • formal education after high school • year of birth • business background for the preceding five years ~. Other Business Activities. (check those that apply) ^ A. Applicant is actively engaged in a business other than giving investment advice. ^ B. Applicant sells products or services other than investment advice to clients. ^ C. The principal business of applicant or its principal executive officers involves something other titan providing investment advice. (For each checked box describe the other activities, including the time spent on them, on Schedule F.) 8. Other Financial Industry Activities or Affiliations. (check those that apply) ^ A. Applicant is registered (or has an application pending) as a securities broker-dealer. ^ B. Applicant is registered (or has an application pending) as a futures commission merchant, commodity pool operator or commodity trading adviser. C. Applicant has arrangements that are material to its advisory business or its clients with a related person who is a: ^ (1) broker-dealer ^ (7) accounting firm ^ (2) investment company ^ (8) law firm ~ (3) other investment adviser ^ (9) insurance company or agency ^ (4) financial planning firm ^ (10) pension consultant ^ (5) commodity pool operator, commodity trading ^ (1 ]) real estate broker or dealer adviser or futures commission merchant ^ (6) banking or tltrifi institution ^ (12) entity that creates or packages limited partnerships (For each checked box in C, on Schedule F identify the related person and describe the relationship and the arrangements.) Yes No .....--.......... D D. is applicant or a related person a general partner m any partnership m which clients are solicited to invest? .................. ^ (lf yes; describe on Schedule F the partnerships and what they invest in.) Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1). ~I FORM ADV Part II -Page 5 Applicant ROCh'WOOD CAPITAL ADVISORS, L.L.C. 9. Participation or Interest in Client Transactions. Applicant or a related person: (check those that apply) ^ A. As principal, buys securities for itself from or sells securities it owns to any client. SEC File Number: SO1-54163 Date: January ??,?004 ^ B. As broker or agent effects securities transactions for compensation for any client. ^ C. As broker or agent for any person other than a client effects transactions in which client securities are sold to or bought from a brokerage customer. ^ D. Recommends to clients that they buy or sell securities or investment products in which the applicant or a related person has some financial interest. ^ E. Buys or sells for itself securities that it also recommends to clients. (For each box checked, describe on Schedule F when the applicant or a related person engages in these transactions and what restrictions, internal procedures, or disclosures are used for conflicts of interest in those transactions.) 10. Conditions for Managing Accounts. Does the applicant provide investment supervisory services, manage investment advisory accounts or hold itself out as providing financial planning or some similarly termed services and impose a minimum dollar value of Y^es N^o assets or other conditions for starting or maintaining an account? .................................................................................................. . (If yes, describe on Schedule F.) 11. Review of Accounts. If applicant provides investment supervisory services, manages investment advisory accounts, or holds itself out as providing financial planning or some similarly termed services: A. Describe below the reviews and reviewers of the accounts. For reviews, include their frequency, different levels, and triggering factors. For reviewers, include the number of reviewers, their titles and functions, instructions they receive from applicant on performing reviews, and number of accounts assigned each. Accounts will be reviewed on a monthly basis by a committee appointed by the Board of Directors of the Applicant. Accounts will be reviewed to insure their conformity with both client and internal policy guidelines. Systems using pretrade compliance technology, for adherence to both client and internal guidelines, also will be used. B. Describe below the nature and frequency of regular reports to clients on their accounts. Reports to clients on their accounts will be provided monthly. Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1). FORM ADV Applicant: SECFileNumber: Date: Part II -Page 6 ROCI'WOOD CAPITAL ADVISORS, L.L.C. 80]-54163 January 22, 2004 ~i~ . 12. Investment or Brokerage Discretion. A. Does applicant or any related person have authority to determine, without obtaining specific client consent, the: Yes No (1) securities to be boughs or sold? ..................................................................................................................................... ............. ..... ~ ^ Yes No (2) amount of the securities to be bought or sold? ................................................................................................................................. ..... ~ ^ Yes No (3) broker or dealer to be used? ............................................................................................................................................................. ..... ~ ^ Yes No (4) commission rates paid? .................................................................................................................................................................... ..... ~ ^ Yes No B. Does applicant or a related person suggest brokers to clients? ............................................................................................................... ...... ^ ~ X For each yes answer to A describe on Schedule F any limitations on the authority. For each yes to A(3), A(4) or B, describe on Schedule F the factors considered in selecting brokers and determining the reasonableness of their commissions. If the value of products, research and services given to the applicant or a related person is a factor, describe: • the products, research and services • whether clients may pay commissions higher than those obtainable from other brokers in return for those products and services • whether research is used to service al] of applicant's accounts or just those accounts paying for it; and • any procedures the applicant used during the last fiscal year to direct client transactions to a particular broker in retum for products and research services received. 13. Additional Compensation. Does the applicant or a related person have any arrangements, oral or in writing, where it: Yes A. is paid cash by or receives some economic benefit (including commissions, equipment ornon-research services) No from anon-client in connection with giving advice to clients? ...................................................................................................................... ^ ~ Yes No B. directly or indirectly compensates any person for client referrals? .........:...................................................................................................... ~ ^ (For each yes, describe the arrangements on Schedule F.) 14. Balance Sheet. Applicant must provide a balance sheet for the most recent fiscal year on Schedule G if applicant: • Itas custody of client funds or securities (unless applicant is registered or registering only with the Securities and Exchange Commission); or • requires prepayment of more than $500 in fees per client and 6 or more months in advance Yes No Has applicant provided a Schedule G balance sheet? .................................................................................................................. Answer all items. Complete amended pages in full, circle amended items and file with esecu6on page (page 1). Schedule F of Applicant: SECFileNumber: Date: Form ADV ROCL'WOOD CAPITAL 80]-,4163 January 22, 2004 Continuation Sheet for Form ADV Part II .ADVISORS, L.L.C. ~. (Do not use this Schedule as a continuation sheet for Form ADV Part 1 or any other schedules.) IRS Empl. ldent. No.: ']. Full name of applicant exactly as stated in ]tern lA ofPart l of Fonn ADV: ROCKWOOD CAPITAL ADVISORS, L.L.C. 43-17758I5 ]tern of Fonn Answer (identify) Item 1(D) The applicant provides invesnnent management services with respect to corporate debt, commercial paper, certificates of depos[t and U.S- government securities. The applicant's basic fee schedule is as follows: 0.40:0 on the Crst SS million; 030%on the next 810 million; 020 % on the next $35 million; 0.15 % on the next SSU million; and 0.10°iu on all assets thereafter- The applicant's basic fee schedule is negotiable. Compensation ~s payable in arrears and is calculated using fair market values at the close of business on the last day of the billing period, adjusted proportionately for additions and withdrawals. Charges for periods of less than a year, quarter or month will be prorated. Each client will receive a statement detailing the services rendered during sttclt billing period. In addition the applicant has entered into an investment suhadvisory agreement with Contravisory Research & Management Corp ("Contravisory") under which the applicant may appoint Contravisory as a subadvisor providing investment supervisory servces, subject to supervision of the applicant, for certain of the applicant's accounts relating [o the management of equity securmes. Contravisory will receive from applicant a portron of the fees received by applicant with respect to the client assets managed by Contravisory. The applicant's basic fee schedule for equity investment management is as follows: 0.70 % on the first $] 0 million; 0.65 % on the next $ I S million; D.60°/ on the next 825 million; 0.50 % on [lre next $25 million; 0.4D % on the next 825 million; and 0.30 % above 5100 million. The applicant's basic fee schedule is negotiable. Compensation is payable in arrears and is calculated using fair market values at the close of business on the last day of the billing period, adjusted proporttonately for additions and withdrawals. Chazges for periods of less than a year, quarter or month will be prorated. Each client will receive a statement detailing the services rendered during such billing period. The applicant also provides balanced investment management services with the basic fee schedule as follow: 0.60 % on the first $1 million; 0.50% on the next $9 million; 045 % on the nest $1 S million; and 0.4D% on the next $35 million. Fees on accounts over 850 million will be quoted upon request. The applicant's basic fee schedule is negotiable. Compensation is payable in arrears and is calculated using fair market values at the close of business on the last day of the billing period, adjusted proportionately for additions and withdrawals. Charges for periods of less than a year, quarter or month will be prorated. Eaclt client will receive a statement detailing the services rendered during such billing period. No separate administrative charges, load fees or termination penalties apply. Fee schedule includes monthly portfolio accounting, custodian reconciliaticn and performance measurement services, as well as compreltenstve quarterly reports and investment newsletters. Proxy Voting 1. Proxies are voted in accordance with instructions and guidelines provided by the client. - In the event the client provides voting instructions or guidance as part of the investment policies provided to us, we vote in accordance with such instructions or guidance. - If the proposals are not covered by the client's instructicns or guidelines or if we believe we need clarification regarding voting on a proposal, we contact the client or the person designated by the client for instructions or guidance if the client's instructions or guidelines provide that we do so. - In the event a client ]tas not provided voting instructions or guidance to us, generally or with respect to specific types of proposals, and the investment policies provided to us do not specify that we should contact the client regarding voting of proxies, we vote based upon our judgment of what is in the best economic tnteres[ of the client. Alternatively, we may contact the client or [he person designated by the client to obtain voting instructions or guidance. 2 We will disclose conflicts of interest. In the event we believe we have a conflict of interest due to, for example, a relationship we ]rave with a company or an affiliate of a company, and we have no predetermined voting instructions from the client, we contact the client and advise the client of [lre proposals and our conflict of interest, and either obtain the client's consent to vote or vote as directed by the client or person designated by the client. - Our Compliance Officer will review quarterly all proxies and other requests for votes and votes cast by us for compliance with our voting policies and procedures. 3. We will supply documentation relating to voting to the client upon request. - For a record of each vote cast on your behalf, please send a written request to: Lisa L. Wildeisen Rocktivood Capital Advisor, LLC 1401 S. Brentwood Blvd., Suite 400 St. Louis, MO 63144 ltem 5 I Persons providing investment advice will have five years of investment management or equivalent experience. Item 6 I Education and Business Background Year of Name Birth Formal Education After High School Business Background for Proceeding Five Years Frank ]ay Aten 1914 David Wesley Brooks 19G2 BBA, Finance, Texas Tech University (1976) BBAe, Finance, University of Oklahoma (1985) MBA, Business, Southern Methodist University, Texas (1993) Managing Director, Rockwood Capital Advisors, L.L.C. (March 1997 -present); Chief Investment Officer and Senior Vice President, Boatmen's Trust Company (1989 -March 1997) Executive Vice President, Rockwood Capital Advisors, L.L.C. (March 1997 -present); Portfolio Management, Boaunen's Tnist Company (1994 - Marcl[ 1997) Complete Schedule I in full, circle amended items; and file ~~~ith execution pace (page ] of Form ADV) and any other amended pages of Form ADV. SEC 2442 (I-99) Page 2 of Schedule F of Applicant: SEC File Number: Date: Form ADV ROCKWOOD CAPITAL 8 01-141 63 January 22, 2004 Continuation Sheet for Form ADV Part II ADVISORS, L.L.C. (Do not use this Schedule as a continuation sheet for Form ADV Part 1 or any other schedules.) 1. Full name of applicant exactly as stated in Item lA of Part I of Fonn ADV: ROCKWOOD CAPITAL ADVISORS, L.L.C. Item of Form (identify) hem 6 continued Education and Business BackcROUnd -continued Year of Name Birth Anthony Kenneth Brown ] 9~4 Richard Flynn Ford 1936 Donald Andrew Holtgrieve 1959 Daniel William Lane 1962 Paul David Rapponotti ]959 Roger Byron Wilson 1948 Lisa Longo Wildeisen 1962 Formal Education After Hieh School N/A Answer BA -Economics, Princeton University (1959) BS -Business Admin., University Of Missouri (1981) BSBA -Finance, University of Missouri; (1985) MBA, Washington University (1989) BS -Electrical Engineer, University of Illinois; (] 981) MBA - Finance, Nor[hwestem University (1986) BA -Speech, University of Missouri (1971) MS -Education, University of Missouri (1986) BSBA -Accounting, John Carroll University (1984) . IRS Empl. Ident. No.: 43-1775815 Business Background for Proceedint: Five Years ~. Executive Vice President & Secretary, Rockwood Capital Advisors, L.L.C- (March 1997 -present); Vice President, Boatmen's Trust Company (1988 -March 1997) Director, Rockwood Capital Advisors, LLC Gen. Partner, Gateway Associates; (December 1984 to Present) Executive Vice President & Director, Rockwood Capital Advisors, LLC., (March 1997 [o Present) Portfolio Manager, Boatmen's Tmst Company (June 1984 to March 1997) Executive Vice President, Rockwood Capital Advisors, LLC. (March 1997 to Present) Portfolio Manager, Boatmen's Tntst Company it (July 1995 to March 1997) Executive Vice President, Rockwood Capital Advisors, LLC (March 1997 to Present) Iii Portfolio Manager, Boatmen's Trust Company (]ttly 1991 to Marclt 1997) Executive Vice President, Rockwood Capital Advisors, LLC (January 2001 to Present) Govemor, Govemor of the State of Missouri (October 2000 to January 2001) Chief Financial Officer, Rockwood Capital Advisors, LLC (May 200] to Present) Portfolio Manager, AG Edwards Trust Company (November 1999 to May 2001) i Item 1 D Generally, Hie applicant imposes a $5 million minimum value of assets for starting or maintaining an account. I ', Item 12 No limitations on authority exist with respect to the matters described in Item 12(A). The factors considered in selecting brokers and determining the reasonableness of their commissions includes cost, price of execution and timeliness- Item 13.B The applicant has entered into an agreement with Alternative Stategies, LLC., a "third party marketing" firm located in Crownsville, MD, who acts as a marketer for several investment advisory firms, also markets our firm to various clients and consultants. The applicant pays Altemative Shategies, LLC., ', 10% ofthe annual fee for each client [hat is successfully referred and remains a client. The applicant does not charge additional fees or expenses, nor is there a differential in fees changed as a result of these referral agreements. Transactions for each client account managed by Investment Manager generally will be effected independently unless Investment Manager decides to purchase or sell the same securities for several clients at approximately the same time. Inveshnent Manager may (but is not obligated to) combine or "batch' such orders with the objective of obtaining best execution or to allocate equitably among Inveshnent Manager's clients differences in pnces and commrsstons or other transaction costs that might have resuhed had such orders been placed independently. Under this procedure, transactions in the same security will be ', averaged as to price and transaction costs and will be allocated among Investment Manager clients m proportion to the purchase and sale orders placed for each client account on any given day. ]f Inveshnent Manager cannot obtain execution of all the combined orders at pnces or for transactions costs that Advisor believes are desirable, Inveshnent Manager will allocate the securities bough) or sold as pan of the combined orders pursuant to Investment Manager's order allocation procedures. ` Schedule I Schedule for Declaring Eligibility for SEC Registration Applicant: I SEC FileNo. 801-54163 ROCI~'WOOD CAPITAL ADVISORS, L.L.C. OMB APPROVAL OMB Number 3235-0490 Expires: September 30, 2005 Estimated average burden hours per response ........... 9.402 Date: MM/DD/YY January 22, 2004 Part I Eligibility for SEC Registration Section 203(h) of the Investment Advisers Act of 1940 ("Advisers Act") authorizes the Commission to cancel or deny the registration ,.r ....,, :,,.,v~+.,,P„+ a,~.,;~P~ that rinPC not meet the criteria for SEC registration set forth in section 203A of the Advisers Act. This Part I requires applicant to declare whether it is eligible or continues to be elig~ e or ommtss~on regis a ion. Check either (a) or (b): (a) ~ Applicant is eligible (or will remain eligible) for SEC registration. For an applicant to be eligible (or remain eligible) for SEC registration, applicant must respond affirmatively (by checking the appropriate box or boxes) to at least one of the items (i) through (ix) below: Applicant: (i) ~ has assets under management of $25 million (in U.S. dollars) or more; Report assets under management in Part II if "assets under management" is the sole basis of applicant's eligibility for SEC registration (i. e., this item (i) is checked, and none of items (ii) throa~gh (ix) belo+~~ are checked). (ii) ^ has its principal office and place of business in Ohio, U.S. Virgin Islands, or Wyoming (See Instruction 3); (iii) ^ has its principal office and place of business outside the United States (See Instruction 3); (iv) ^ is an investment adviser to an investment company registered under the Investment Company Act of 1940 (See Insn•uction 4); (v) ^ is a nationally recognized statistical rating organization; (vi) ^ is a pension consultant that qualified for the exemption in rule 203A-2(b) (See Instruction 5(a)); (vii) ^ is an investment adviser that controls, is controlled by, or is under common control with, an investment adviser eligible to maintain its registration with the Commission, and whose principal office and place of business is the same as the eligible adviser (See Insb•uction 5(b)); (viii) ^ is a newly formed adviser relying on rule 203A-2(d) (See Instruction 5(c)); (ix) ^ has received an order of the Commission exempting applicant from the prohibition on registration with the Commission. Application number: 803-_ Date of Commission's order: (x) ^ is a multi-state investment adviser relying on rule 203A-2(e) (See Instruction 5(d)). (b) ^ Registrant is no longer eligible for SEC registration. (See Insh•uction 6) Applicant: SECFileNumberS01-54163 Date: MM/DD/5'Y ,. ROCh'WOOD CAPITAL ADVISORS, L.L.C. January 22, 2004 Part II Assets Under Management Report assets under management if required by Part I (i. e., if item I(a)(i) is chec-ced yes "(x)" and is the sole basis for i, ~I applicant's eligibility for SEC registration). State the amount of applicant's assets under management (in U.S. dollars): (See Instruction 7) $ 1 026,082,960.]0 _ (in U.S. dollars) Applicants are reminded that it is a violation of Section 207 of the Advisers Act to make any untrue statement of material fact in any report filed with the Commission or willfully to omit to state in any such report any material fact that is required to be stated therein. ADV All Pages ~ X h ~ b ~ ~- G rage 1 0~ Ly '' ~ " ~ FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primar Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/ 2003 ADV -Amendment, Page 1 10/ 18/2004 4:45:17 PM WARNING: Complete this form truthfully. False statements or omissions may result in denial of your application, revocation of your registration, or criminal prosecution. You must keep this form updated by filing periodic amendments. See Form ADV General Instruction 3. Item 1 -Identifying Information Responses to this item tell us who you are, where you are doing business, and how we can contact you. A. Your full legal name (if you are a sole proprietor, your last, first, and middle names): ROCKWOOD CAPITAL ADVISORS LLC B. Name under which you primarily conduct your advisory business, if different from Item 1.A. ROCKWOOD CAPITAL ADVISORS LLC List on Section 1.8 of Schedule D any additional names under which you conduct your advisory business. C. If this filing is reporting a change in your legal name (Item 1.A) or Primary Business Name (Item 1.B), enter the new name and specify whether the name change is of ~i your legal name or ~ your primary business name: D. If you are registered with the SEC as an investment adviser, your SEC file number: 801- 54163 E. If you have a number ("CRD Number") assigned by the NASD's CRD system or by the IARD system, your CRD number: 108644 If your firm does not have a CRD number, skip this Item Y.F. Do not provide the CRD number of one of your officers, employees, or affiliates. FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primar Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/ 2003 ADV -Amendment, Page 2 10/18/2004 4:45:17 PM Item 1 -Identifying Information (Continued) F. Principal Office and Place of Business: (1) Address (do not use a P.O. Box) Number and Street 1: 1401 S BRENTWOOD BLVD, SUITE 400 City: State: ST. LOUIS MO Number and Street 2: Country: ZIP: USA 63144 If this address is a private residence, check this box: List on Section 1.F. of Schedule D any office, other than your principal office and place of httns://crd.nasd. com/Iad/Content/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21 /2004 ADV All Pages ,- ,~ Page Z of ZN business, at which you conduct investment advisory business. If you are applying for registration, or are registered, with one or more state securities authorities, you must list all of your offices in the state or states to which you are applying for registration or with whom you are registered. If you are applying for registration, or are registered only, with the SEC, list the largest five offices in terms of numbers of employees. (2) Days of week that you normally conduct business at your principal office and place of business: ~' Monday-Friday ~' Other Normal business hours at this location: 8:00 AM TO 5:00 PM (3) Telephone Number at this location: 314-962-8336 (4) Facsimile number at this location: 314-962-1254 G. Mailing address, if different from your principal office and place of business address: Number and Street 1: Number and Street 2: City: State: Country: ZIP: If this address is a private residence, check this box: H. If you are a sole proprietor, state your full residence address, if different from your principal office and place of business address in Item 1.F. Number and Street 1: Number and Street 2: City: State: Country: ZIP: FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name• ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/ 2003 ADV -Amendment, Page 3 10/18/2004 4:45:17 PM Item 1 -Identifying Information (Continued) I YES NO I. Do you have World Wide Web site addresses? If "yes", list all addresses on Section I.I. of Schedule D. If a web address serves as a portal through which to access other information you have published on the World Wide Web, you may list the portal without listing addresses for all of the other information. Some advisers may need to list more than one portal address. Do not provide individual electronic mail addresses in response to this Item. J. Contact Employee: Name: Title: NANCY M. INNES INVESTMENT ASSISTANT Telephone Number: Facsimile Number: 314-962-8336 314-962-1254 Number and Street 1: Number and Street 2: 1401 S. BRENTWOOD BLVD. SUITE 400 City: State: Country: ZIP: ST. LOUIS MO USA 63144 ~~ httns: //crd.nasd.com/Iad/Content/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21 /2004 ADV All Pages ~- Yage ~ of 1.y Electronic mail (e-mail) address, if contact employee has one: INNESN@ROCKWOODCAPITAL.COM The contact employee should be an employee whom you have authorized to receive information and respond to questions about this Form ADV. YES NO K. Do you maintain some or all of the books and records you are required to keep under ~'° #"-" Section 204 of the Advisers Act, or similar state law, somewhere other than your principal office and place of business? If "yes", complete Section 1.K of Schedule D. YES NO L. Are you registered with a foreign financial regulatory authority? ~`"~ ~` Answer "no" if you are not registered with a foreign financial regulatory authority, even if you have an affiliate that is registered with a foreign financial regulatory authority. If "yes", complete Section 1.L of Schedu/e D. FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/2003 ADV -Amendment, Page 4 10/18/2004 4:45:17 PM Item 2 -SEC Registration Responses to this item help us (and you) determine whether you should be registered with the SEC. Complete this Item 2 only if you are applying for SEC registration or submitting an annual updating amendment to your SEC registration. A. To register (or remain registered) with the SEC, you must check at least one of the items 2.A(1) through 2.A(10), below. If you are submitting an annual updating amendment to your registration and you are no longer eligible to register with the SEC, check item 2.A(11). You: ~; (1)have assets under management of $25 million (in U.S. dollars) or more; See Part 1A Instruction 2. a. to determine whether you should check this box. ~ (2)have your principal office and place of business in the U.S. Virgin Islands or Wyoming; ~" (3)have your principal office and place of business outside the United States; (fl)are an investment adviser (or sub-adviser) to an investment company registered under the Investment Company Act of 1940; See Part lA Instruction 2. b. to determine whether you should check this box. ~" (S)have been designated as a nationally recognized statistical rating organization; See Part lA Instruction 2. c. to determine whether you should check this box. ~°' (6)are a pension consultant that qualifies for the exemption in Rule 203A-2(b); See Part lA Instruction 2. d. to determine whether you should check this box. (7)are relying on rule 203A-2(c) because you are an investment adviser that controls, is hrrn ~ ~ //crti . nand. com/Iad/Content/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asg?RefNu... 10/21 /2004 AD~1 All Pages Page 4 of 29 controlled by, or is under common control with, an investment adviser that is registered with the SEC, and your principal office and place of business is the same as the registered adviser; See Part 1A Instruction 2. e. to determine whether you should check this box. If you check this box, complete Section 2A(7) of Schedule D. ~ (8)are a newly formed adviser relying on Rule 203A-2(d) because you expect to be eligible for SEC registration within 120 days; See Part 1A Instruction z. f. to determine whether you should check this box. If you check this box, complete Section 2A(8) of Schedule D. FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/ 2003 ADV -Amendment, Page 5 10/18/2004 4:45:17 PM ~~tem 2 -SEC Registration (Continued) it ~'°` (9) are amulti-state adviser relying on rule 203A-2(e); See Part 1A Instruction 2. g. to determine whether you should check this box. If you check this box, complete Section 2A(9) of Schedule D (10)have received an SEC order exempting you from the prohibition against registration with the SEC; If you check this box, complete Section ~A(10) of Schedule D ~' (11)are no longer eligible to remain registered with the SEC. See Part 1A Instruction Z.h. to determine whether you should check this box. B. Under state laws, SEC-registered advisers may be required to provide to state securities authorities a copy of the Form ADV and any amendments they file with the SEC. These are called notice filings. If this is an initial application, check the box(es) next to the state(s) that you would like to receive notice of this and all subsequent filings you submit to the SEC. If this is an amendment to direct your notice filings to additional state(s), check the box(es) next to the state(s) that you would like to receive notice of this and all subsequent filings you submit to the SEC. If this is an amendment to your registration to stop your notice filings from going to state(s) that currently receive them, uncheck the box(es) next ~~_ _,-_r-,.i,.~ ~V LI IVJI. Ak ~ ID ~ MS PA ~" AK ~ I~ ~ MT ~ PR I-- AR ~' IN ~ NE ~ RI AZ ~ IA ~ NV ~ SC r CA ~ KS ~ NH ~ SD _ ,. . ~~ , m_]-_1TTS..~/A ,7../Dn..or~/n,-,~ ;~~ A~„Al1PaaP..c ~~„?RefNu... 10/21/2004 -ADV All Pages CO KY NJ ~' TN CT ~' LA - ~~ N M TX ~~ DE ME NY UT ~ pC ~'' MD - 1 NC VT ~`-'-` FL MA ~ ND ~ VA ~: GA MI ~ OH WA GU - MN ~ OK WV F.II MO ~ OR WI Page S of 29 If you are amending your registration to stop your notice filings from going to a state that currently receives them and you do not want to pay that state's notice filing fee for the coming year, your amendment must filed before the end of the year (December 31). 3 -Form Of Organization A. How are you organized? ~". Corporation t":~ Sole Proprietorship ~°'' Limited Liability Partnership (LLP) ~;~ Partnership {. Limited Liability Company (LLC) I"'~ Other (specify): If you are changing your response to this Item, see Part 1A Instruction 4. FORM ADV UNIFORM APPLFCATION FOR INVESTi NiENT ADVISER REGISTRATION Primary Business Name• ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/200 ADV -Amendment, Page 6 10 / 18/ 2004 4:45:17 PM Item 3 -Form Of Organization (Continued B. In what month does your fiscal year end each year? December C. Under the laws of what state or country are you organized? MISSOURI, USA If you are a partnership, provide the name of the state or country under whose laws your partnership was formed. If you are a sole proprietor, provide the name of the state or country where you reside. If you are changing your response to this Item, see Part IA Instruction 4. Item 4 -Successions YES NO A. Are you, at the time of this filing, succeeding to the business of a registered ~""~ ~'` investment adviser? If "Yes," complete Item 4, 8. and Section 4 of Schedule D. B. Date of Succession (MM/DD/YYYY) _ ,_ ,,,, .__~,,,_____,.TS:,,,/n,a.,/ponac/rrrl ;arl Ar1vAllPa~es.asu?RefNu... 10/21/2004 ADV All Pages Page 6 of 29 ,- ~ ,~ A If you have already reported this succession on a previous Form ADV filing, do not report the succession again. Instead, check "No". See Part IA Instruction 4. It~- Information About Your Advisory Business S.Responses to this item help us understand your business, assist us in preparing for on-site examinations, and provide us with data we use when making regulatory policy. Part 1A Instruction 5.a. provides additional guidance to newly-formed advisers for completing this Item 5. Employees A. Approximately how many employees do you have? Include full and part-time employees but do not include any clerical workers. 1- 5 6-10 11-50 51-250 251-500 501-1,000 ~' More than If more than 1,000, how many? 1,000. (round to the nearest 1,000) B (1) Approximately how many of these employees perform investment advisory functions (including research)? ~' p ~~ 1-5 ~ 6-10 ~' 11-50 ~ 51-250 ~-' 251-500 '~` 501-1,000 ~ More than If more than 1,000,how many? 1,000. (round to the nearest 1,000) (2) Approximately how many of these employees are registered representatives of a broker-dealer? ~` 0 ~' 1-5 ~ 6-10 ~` 11-50 ~' S1-250 ~-., ~_ ~: If more than 1,000,how many? 251-500 501-1,000 -More than 1,000. (round to the nearest 1,000) If you are organized as a sole proprietorship, include yourself as an employee in your responses to Items 5.A(1) and 5.8(2). If an employee performs more than one function, you should count that employee in each of your responses to Item S.B(1) and 5.8(2). FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name• ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/ 2003 m 5 -Information About Your Advisory Business (Continued (3) Approximately how many firms or other persons solicit advisory clients on your behalf? f"' 0 ~' 1-5 ~ 6-10 ~ 11-50 ~ 51-250 If more than 1,000,how many? ~' 251-500 ~' 501-1,000 ~ More than ,_u__.~~,._,-~ r,,,,a rnm~~~~r~„tP„t/PrintHist/Adv/Pages/crd iad_AdvAllPages.asp?RefNu... 10/21/2004 DV -Amendment, Page 7 I 0/18/2004 4:45:17 PM ADV All Pages In your response to Item 5.8(3), do not count any of your employees and count a firm only once -- do not count each of the firm`s employees that solicit on your behalf. 1,000. (round to the nearest 1,000) Clients C. To approximately how many clients did you provide investment advisory services during your most-recently completed fiscal year? 0 ~ 1-10 ~ 11-25 ~ 26-100 ~ 101-250 251-500 ~' More than If more than 500, How many? 500. (round to the nearest 500) ~• What types of clients do you have? Indicate the None Up il- 26- 51- More approximate percentage that each type of client to 25% 50% 75% Than comprises of your total number of clients. 10% 75% (1) Individuals (other than high net worth t%= ~" I" x='` ~' ~-'~` individuals) (2) High net worth individuals ~' ~` ~-% ~-'` ~'-' (3) Banking or thrift institutions ~*'' ~"'' ~" ~ ~' ~` (4) Investment companies (including mutual ~_ ~~ ~"° ~"' t"t ~' funds) (5) Pension and profit sharing plans (other than ~"~ ~'" ~° ~ ~'' plan participants) (6) Other pooled investment vehicles (e.g., hedge ~; ~"' f"` ~` ~' ~` funds) (7) Charitable organizations '_ ~' ~` ~ ~-` (8) Corporations or other businesses not listed ~'{ ~ ~'` ~'` ~~ ~` above (9) State or municipal government entities ~"~ ~" ~"' ~' ~-'~' ~` (10) Other: ~' ~' ~ ~ ~~ ~'_ The category "individuals" includes trusts, estates, 401 (k) plans and IRAs of individuals and their family members, but does not include businesses organized as sole proprietorships. Unless you provide advisory services pursuant to an investment advisory contract to an investment company registered under the Investment Company Act of 1940, check "None" in response to Item 5. D(4). FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 ADV -Amendment, Page 8 10/18/2004 4:45:17 PM Item 5 -Information About Your Advisory Business (Continued Page 7 of 2y Rev. 05 / 2003 Compensation Arrangements E. You are compensated for your investment advisory services by (check all that apply): u___.~~.._a ~,,..a ,.,,,,,iT.,,~ir',,,,tP„tlpr;ntT~;~t/Adv/Pages/crd iad AdvAllPages.asp?RefNu... 10/21/2004 ADV All Pages - , ~! (1) A percentage of assets under your management (2) Hourly charges (3) Subscription Fees (for a newsletter or periodical) ~ (4) Fixed fees (other than subscription fees) ~! (5) Commissions ~' (6) Performance-based fees (7) Other (specify): Assets Under Management Yage ~ of 1.y YES NO F. (1) Do you provide continuous and regular supervisory or management services to t*;~ ~"` securities portfolios? (2) If yes, what is the amount of your assets under management and total number of accounts? U.S. Dollar Amount Total Number of Accounts Discretionary: (a) $ 755258070 .OD (d) 36 Non-Discretionary: (b) $ 202234924 .00 (e) 2 Total (c) $ 957492994 .00 (f) 38 Part 1A Instruction 5.b. explains how to calculate your assets under management. You must follow these instructions carefully when completing this Item. Advisory Activities G. What type(s) of advisory services do you provide? Check all that apply. ~ (1) Financial planning services (2) Portfolio management for individuals and/or small businesses j`; (3) Portfolio management for investment companies ~. (4) Portfolio management for business or institutional clients (other than invest~i~ent companies) ~"` (5) Pension consulting services ~" (6) Selection of other advisers (7) Publication of periodicals or newsletters ~"' (8) Security ratings or pricing services ~""' (9) Market timing services ~"! (10) Other (specify): Do not check Item 5.G(3) unless you provide advisory services pursuant to an investment advisory contract to an investment company registered under the Investment Company Act of 1940. FORM ADV UNIFORM APPLICATION FOR INVESTMENT Af3VISER REC9ISTRATION Primary Business Name• ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05 / 200 ,~,+„~•ii~,-,t „~~~ ~.n,,,/Tail/C'entent/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu,.. 10/21/2004 ADV All Pages . ADV -Amendment, Page 9 110/18/2004 4:45:17 PM Item 5 -Information About Your Advisory Business (Continued) ~ H. If you provide financial planning services, to how many clients did you provide these services during your last fiscal year? ~' p ~ 1-10 ~ 11-25 ~ 26-50 ~' S1-100 101-250 ~ 251-500 ~ More than 500. If more than 500, how many? (round to the nearest 500) I. If you participate in a wrap fee program, do you (check all that apply): (1) sponsor the wrap fee program? (2) act as portfolio manager for the wrap fee program? If you are a portfolio manager for a wrap fee program, list the names of the programs and their sponsors in Section S.I(2) of Schedule D. If your involvement in a wrap fee program is limited to recommending wrap fee programs to your clients, or you advise a mutual fund that is offered through a wrap fee program, do not check either item 5.1(1) or 5.1(2). [tem 6 -Other Business Activities In this Item, we request information about your other business activities. A. You are actively engaged in business as a (check alf that apply): ~ (1) Broker-dealer ~ (2) Registered representative of abroker-dealer l-' (3) Futures commission merchant, commodity pool operator, or commodity trading advisor ~ (4) Real estate broker, dealer, or agent ~ (5) Insurance broker or agent (6) Bank (including a separately identifiable department or division of a bank) ~' (7) Other financial product salesperson (specify): YES NO B• (1) Are you actively engaged in any other business not listed in Item 6A (other ~'~ ~` than giving investment advice)? (2) If yes, is this other business your primary business? ~°' '~' If "yes", describe this other business on Section 6.8. of Schedule D. YES NO (3) Do you sell products or provide services other than investment advice to your 4";~ ~` advisory clients? FUKM AUV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/ 200 DV -Amendment, Page 10 I 0/18/2004 4:45:17 PM rage y or Ly i-.++„~•ii~,•,~ „a~~ r.nm/Iarl/Content/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21/2004 _ ADV All Pages Yage 1 U of 'Ly (Item 7 -Financial Industry Affiliations 1 In this item, we request information about your financial industry affiliations and activities. This information identifies areas in which conflicts of interest may occur between you and your clients. Item 7 requires you to provide information about you and your related persons. Your related persons are all of your advisory affiliates and any person that is under common control with you. A. You have a related person that is a (check all that apply): ~"" (1) broker-dealer, municipal securities dealer, or government securities broker or dealer ~' (2) investment company (including mutual funds) ~"` (3) other investment adviser (including financial planners) (4) futures commission merchant, commodity pool operator, or commodity trading advisor (5) banking or thrift institution ~'" (6) accountant or accounting firm ~°` (7) lawyer or law firm ~"_ (8) insurance company or agency (9) pension consultant ~' (10) real estate broker or dealer (11) sponsor or syndicator of limited partnerships If you checked Item 7.A(3), list on Section 7.A. of Schedule D all your related persons that are investment advisers. YES NO B. Are you or any related person a general partner in an investment-related limited ~'° ~' partnership or manager of an investment-related limited liability company? If "yes", for each limited partnership or limited liability company, comp/ete Section 7, 8. of Schedule D. Form ADV, Item 8 -Participation or Interest in Client Transactions In this item, we request information about your participation and interest in your c/ients' transactions. Like Item 7, this information identifies areas in which conflicts of interest may occur between you and your clients. II Like Item 7, Item 8 requires you to provide information about you and your related persons. II FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGFSTRATION Primary Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/ 2003 ADV -Amendment, Page 11 10/18/2004 4:45:17 PM Form ADV, Item 8 -Participation or Interest in Client Transaction I Proprietary Interest in Client Transactions A. Do you or any related person: Yes No (1) buy securities for yourself from advisory clients, or sell securities you own to >:"" t% advisory clients (principal transactions)? (2) buy or sell for yourself securities (other than shares of mutual funds) that you t" ~' ,,~+„~~u,.,-,~ „a~,~ ~~,,,/Tarp/C'nntent/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21/2004 ADV All Pages Yage 1 1 of ly also recommend to advisory clients? (3) recommend securities (or other investment products) to advisory clients in which t"` C` you or any related person has some other proprietary (ownership) interest (other than those mentioned in Items 8A(1) or (2))? Sales Interest in Client Transactions B. Do you or any related person: Yes No (1) as abroker-dealer or registered representative of abroker-dealer, execute ~'° ~' securities trades for brokerage customers in which advisory client securities are sold to or bought from the brokerage customer (agency cross transactions)? (2) recommend purchase of securities to advisory clients for which you or any related ~"' ~` person serves as underwriter, general or managing partner, or purchaser representative? (3) recommend purchase or sale of securities to advisory clients for which you or any ~`" C• related person has any other sales interest (other than the receipt of sales commissions as a broker or registered representative of abroker-dealer)? Investment or Brokerage Discretion C. Do you or any related person have discretionary authority to determine the: Yes No (1) securities to be bought or sold for a client's account? ~` ~"'° (2) amount of securities to be bought or sold for a client's account? ~=-t f`° (3) broker or dealer to be used for a purchase or sale of securities for a client's ~=.- ~" account? (4) commission rates to be paid to a broker or dealer for a client's securities ~`~ ~"" transactions? FORM A®V UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 ReV. ~i5/2vv~ ADV -Amendment, Page 12 10/ 18/ 2004 4:45:17 PM Form ADV, Item 8 -Participation or Interest in Client Transactions D. Do you or any related person recommend brokers or dealers to clients? ~'"' ~-' E. Do you or any related person receive research or other products or services other ~'" ~° than execution from abroker-dealer or a third party in connection with client securities transactions? F. Do you or any related person, directly or indirectly, compensate any person for client ~" ~"` referrals? In responding to this Item 8. F., consider in your response all cash and non-cash compensation that you or a related person gave any person in exchange for client referrals, including any bonus that is based, at least in part, on the number or amount of client referrals. Form ADV, Item 9 - In this item, we ask you whether you or a related person has custody of client assets. A. Do you have custody of any advisory clients': Yes No (1) cash or bank accounts? i,++„~~i~~,~~ „acrl ~.~,~,/Tail/(-'rn~tent/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21/2004 ADV All Pages (Z) securities? B. Do any of your related persons have custody of any of your advisory clients': (1) cash or bank accounts? (2) securities? C. If you answered "yes" to either 9B(1) or 9B(2), is that related person abroker- dealer registered under Section 15 of the Securities Exchange Act of 1934? orm ADV, Item 10 -Control Persons rage i ~ of ~y fi C° ~' ~"• ~". In this item, we ask you to identify every person that, directly or indirectly, controls you. If you are submitting an initial application, you must complete Schedule A and Schedule B. Schedule A asks for information about your direct owners and executive offices. Schedule B asks for information about your indirect owners. If this is an amendment and you are updating information you reported on either Schedule A or Schedule B (or both) that you filed with your initial application, you must complete Schedule C. YES NO Does any person not named in Item 1A or Schedules A, B, or C, directly or ~"" C+.~ indirectly, control your management or policies? If "yes", complete Section YO of Schedule D. FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name• ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/ 2003 ADV -Amendment, Page 13 10/18/2004 4:45:17 PM Item 11 -Disclosure Information ~ 11. In this Item, we ask for information about your disciplinary history and the disciplinary history of all your advisory affiliates. We use this information to determine whether to grant your application for registration, to decide whether to revoke your registration or to place limitations on your activities as an investment adviser, and to identify potential problem areas to focus on during our on-site examinations. One event may result in "yes" answers to more than- one of the questions below. Your advisory affiliates are: (1) all of your current employees (other than employees performing only clerical, administrative, support or similar functions); (2) all of your officers, partners, or directors (or any person performing similar functions); and (3) all persons directly or indirectly controlling you or controlled by you. If you area "separately identifiable department or division" (SID) of a bank, see the Glossary of Terms to determine who your advisory affiliates are. If you are registered or registering with the SEC, you may limit your disclosure of any event listed in Item 11 to ten years following the date of the event. If you are registered or registering with a state, you must respond to the questions as posed; you may, therefore, limit your disclosure to ten years following the date of an event only in responding to Items 11.A(1), 11.A(2), 11.8(1), 11.8(2), 11.D(4), and 11.H(1)(a). For purposes of calculating this ten-year period, the date of an event is the date the final order, judgment, or decree was entered, or the date any rights of appeal from preliminary orders, judgments,. or decrees lapsed. You must complete the appropriate Disclosure Reporting Page ("DRP") for "yes" answers to hrr„~~//crrl nasd.com/Iad/Content/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21/2004 ADV All Pages .- r the questions in this Item 11. For "yes" answers to the following questions, complete a Criminal Action DRP A. In the past ten years, have you or any advisory affiliate: (1) been convicted of or plead guilty or nolo contendere ("no contest") in a domestic, foreign or military court to any felony? (2) been charged with any felony? If you are registered or registering with the SEC, you may limit your response to Item 11.A(2) to charges that are currently pending. rage 1~ of ~y B. In the past ten years have you or any advisory affiliate: (1) been convicted of or plead guilty or nolo contendere ("no contest") in a domestic, foreign, or military court to a misdemeanor involving: investments or an investment-related business, or any fraud, false statements, or omissions, wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or a conspiracy to commit any of these offenses? (2) been charged with a misdemeanor specified in 116(1)? If you are registered or registering with the SEC, you may limit your response to Item 11.8(2) to charges that are currently pending. YES NO ~' t'• ~'- ~- l".~ ~«°, FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name• ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/2003 ADV -Amendment, Page 14 10/18/2004 4:45:17 PM m 11 -Disclosure Information (Continued) ~ For "yes" answers to the following questions complete a Regulatory Action DRP C. Has the SEC or the Commodity Futures Trading Commission (CFTC) ever: YES NO (1) found you or any advisory affiliate to have made a false statement or ~' omission? (2) found you or any advisory affiliate to have been involved in a violation of SEC i`? ~` or CFTC regulations or statutes? (3) found you or any advisory affiliate to have been a cause of an investment- ~" ~` related business having its authorization to do business denied, suspended, revoked, or restricted? (4) entered an order against you or any advisory affiliate in connection with f" ~: investment-related activity? (5) imposed a civil money penalty on you or any advisory affiliate, or ordered you or #"' any advisory affiliate to cease and desist from any activity? D. Has any other federal regulatory agency, any state regulatory agency, or any foreign financial regulatory authority: (1) ever found you or any advisory affiliate to have made a false statement or f` ~' httnc~//rrrl .nasd.con~/Iad/Content/PrintHist/Adv/Pages/crd_iad_AdvAIlPages.asp?RefNu... 10/21 /2004 ADV All Pages rage i4 oz ~y omission, or been dishonest, unfair, or unethical? (2) ever found you or any advisory affiliate to have been involved in a violation of ~'" 1~" investment-related regulations or statutes? (3) ever found you or any advisory affiliate to have been a cause of an investment- ~"'~ ~' related business having its authorization to do business denied, suspended, revoked, or restricted? (4) in the past ten years, entered an order against you or any advisory affiliate in ~` t connection with investment-related activity? (5) ever denied, suspended, or revoked your or any advisory affiliate's registration ~` or license or otherwise prevented you or any advisory affiliate, by order, from associating with an investment-related business or restricted your or any advisory affiliate's activity? E. Has any self-regulatory organization or commodities exchange ever: (1) found you or any advisory affiliate to have made a false statement or omission? ~"'~ ~': (2) found you or any advisory affiliate to have been involved in a violation of its C" ~' rules (other than a violation designated as a "minor rule violation" under a plan approved by the SEC)? (3) found you or any advisory affiliate to have been the cause of an investment- t": t:~ related business having its authorization to do business denied, suspended, revoked, or restricted? (4) disciplined you or any advisory affiliate by expelling or suspending you or the I'"'t advisory affiliate from membership, barring or suspending you or the advisory affiliate from association with other members, or otherwise restricting your or the advisory affiliate's activities? FORM A®V UNIFORM APPLICATYON FOR INVESTMENT ADVISER REGISTRATYON Primary Business Name• ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/ 2003 ADV -Amendment, Page 15 10/18/2004 4:45:17 PM Item 11 Disclosure Information (Continued) F. Has an authorization to act as an attorney, accountant, or federal contractor ~"°~ ~=" granted to you or any advisory affiliate ever been revoked or suspended? G. Are you or any advisory affiliate now the subject of any regulatory proceeding that ~"": ~' could result in a "yes" answer to any part of 11C, 11D, or 11E? For "yes" answers to the following questions, complete a Civil Judicial Action DRP H. (1) Has any domestic or foreign court: Yes No (a) in the past ten years, enjoined you or any advisory affiliate in connection ~'° with any investment-related activity? (b) ever found that you or any advisory affiliate were involved in a violation of c`. C' investment-related statutes or regulations? (c) ever dismissed, pursuant to a settlement agreement, an investment-related c'" f~ civil action brought against you or any advisory affiliate by a state or foreign financial regulatory authority? httns://crd.nasd.com/Iad/Content/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asg?RefNu... 10/21 /2004 ADV All Pages -~ rage i~ ui ~y (2) Are you or any advisory affiliate now the subject of any civil proceeding that t"? C•'. could result in a "yes" answer to any part of Item 11.H(1)? Item 12 -Small Businesses The SEC is required by the Regulatory Flexibility Act to consider the effect of its regulations on small entities. In order to do this, we need to determine whether you meet the definition of "small business" or "small organization" under rule 0-7. . Answer this Item 12 only if you are registered or registering with the SEC and you indicated in response to Item 5.F(2)(c) that you have assets under management of less than $25 million. You are not required to answer this Item 12 if you are filing for initial registration as a state adviser, amending a current state registration, or switching from SEC to state registration. FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name• ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/2003 ADV -Amendment, Page 16 10/18/2004 4:45:17 PM ~~em 12 -Small Businesses (Continued) i~ For purposes of this Item 12 only: . Total Assets refers to the total assets of a firm, rather than the assets managed on behalf of clients. In determining your or another person's total assets, you may use the total assets shown on a current balance sheet (but use total assets reported on a consolidated balance sheet with subsidiaries included, if that amount is larger). . Control means the power to direct or cause the direction of the management or policies of a person, whether through ownership of securities, by contract, or otherwise. Any person that directly or indirectly has the right to vote 25 percent or more of the voting securities, or is entitled to 25 percent or more of the profits, of another person is presumed to control the other person. YES NO A. Did you have total assets of $5 million or more on the last day of your most recent ~"'; ~°• fiscal year? If "yes", you do not need to answer Items 12.8 and 12. C. B. Do you: (1) control another investment adviser that had assets under management of $25 ~"' fi million or more on the last day of its most recent fiscal year? (2) control another person (other than a natural person) that had total assets of $5 ~"' million or more on the last day of its most recent fiscal year? C. Are you: (1) controlled by or under common control with another investment adviser that ~"' ~"%: had assets under management of $25 million or more on the last day of its most recent fiscal year? (2) controlled by or under common control with another person (other than a ~" ~` natural person) that had total assets of $5 million or more on the last day of its most recent fiscal year? I-UKM AV V UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primar Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 horn://crd.nasd.com/Iad/Content/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21 /2004 ADV All Pages r- ~ , r arc i v vi L~ Rev. 05/ 2003 ADV -Amendment, Part 1B, Page 1 10/18/2004 4:45:17 PM You must complete this Part 1B only if you are applying for registration, or are registered, as an investment adviser with any of the state securities authorities. ~~Part iB Item 1 -State Registration Complete this Item 1 if you are submitting an initial application for state registration or requesting additional state registration(s). Check the boxes next to the states to which you are submitting this application. If you are already registered with at least one state and are applying for registration with an additional state or states, check the boxes next to the states in which you are applying for registration. Do not check the boxes next to the states in which you are currently registered or where you have an application for registration pending. AL ~ ID ~--~ MS ~' PA ~ qK ~ IL ~ MT ~ PR ['° AR ~' IN ~ NE ~` RI AZ ~ IA ~E NV ~ SC ~` CA ~' KS ~ N H ~` S D CO ~ KY ~ NJ ~' TN ~-' CT ~ LA ~-` N M TX pE ~ ME ~ NY ~ UT ~ DC MD ~ NC ~= VT 1_ FL ~ MA ~` ND r VA GA ~ MI ~` OH ~` WA ~' GU MN ~ OK ~ WV FiI ~ MO ~ i OR ~ WI Part 1B Item 2 -Additional Information ~I A. Person responsible for supervision and compliance: Name: Title: Telephone: Fax: Number and Street 1: Number and Street Z: City: State: Country: ZIP/Postal Code: Email address, if available: If this address is a private residence, check this box: httns://crd.nasd.com/Iad/Content/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21 /2004 ADV All Pages ra~~ i i "1 " ~i B. Bond/Capital Information, if required by your home state. (1) Name of Issuing Insurance Company: (2) Amount of Bond: $ .00 (3) Bond Policy Number: Yes No (4) If required by your home state, are you in compliance with your home state's ~"; ~"' minimum capital requirements? FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primar Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/ 2003 ADV -Amendment, Part 1B, Page 2 10/18/2004 4:45:17 PM Part 1B Item 2 -Additional Information (Continued) II Yes No For "yes" answers to the following question, complete a Bond DRP. C. Has a bonding company ever denied, paid out on, or revoked a bond for you? For "yes" answers to the following question, complete aJudgment/Lien DRP: D. Do you have any unsatisfied judgements or liens against you? For "yes" answers to the following questions, complete an Arbitration DRP: E. Are you, any advisory affiliate, or any management person currently the subject of, or have ;you ,any advisory affiliate, or any management person been the subject of, an arbitration claim alleging damages in excess of $2,500, involving any of the following: (1) any investment or an investment-related business of activity? (2) fraud, false statement, or omission? (3) theft, embezzlement, or other wrongful taking of property? (4) bribery, forgery, counterfeiting, or extortion? (5) dishonest, unfair, or unethical practices? For "yes" answers to the following questions, complete a Civil Judicial Action -DRP: F. Are you, any advisory affiliate, or any management person currently subject to, or have you, any advisory affiliate, or any management person been found liable in, a civil, self-regulatory organization, or administrative proceeding involving any of the following: (1) an investment or investment-related business or activity? (2) fraud, false statement, or omission? (3) theft, embezzlement, or other wrongful taking of property? (4) bribery, forgery, counterfeiting, or extortion? (5) dishonest, unfair, or unethical practices? G. Other Business Activities ~" ~ ~; ~ f` ~'• ~. ~'°, ~'°: ~". ~° ~" ~„` C,' t" ~' ~" ~"'. ~" ~' I"' httns://crd.nasd.com/Iad/Content/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21 /?004 ADV All Pages (1) You are actively engaged in business as a(n) (check all that apply): Attorney Certified Public Accountant Tax Preparer Yage 1 a of ly FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/ 200. 4DV -Amendment, Part 1B, Page 3 10/18/2004 4:45:17 PM Part iB Item 2 -Additional Information (Continued) I (2) If you are actively engaged in any business other than those listed in Item 6.A of Part 1A or Item 2.G(1) of Part 1B, describe the business and the approximate amount of time spent on that business: H. If you provide financial planning services, the investments made based on those services at the end of your last fiscal year totaled: Securities Non-Securities Investments Investments Under $100,000 ~-'' ~' $100,001 to $500,000 ~~ $500,001 to $1,000,000 ~-" $1,000,001 to $2,500,000 ~' ~' $2,500,001 to $5,000,000 ~' ~~ More than $5,000,000 ~~ If securities investments are over $5,000,000, how much? (round to the nearest $1,000,000) If non-securities investments are over $5,000,000, how much? (round to the nearest $1,000,000) Yes No I. Custody (1) Do you withdraw advisory fees directly from your clients' accounts? ~": (Z) Do you act as a general partner for any partnership or trustee for any trust in ~°~ ~" which your advisory clients are either partners of the partnership or beneficiaries of the trust? FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION rimarV Business Name• ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/2003 ADV -Amendment, Part 1B, Page 4 ~ ~..,~~.~i,.,-,a „a~,~ ~,-,,»~Ta~/rrn,tent/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21/2004 ADV All Pages Yage ly of Ly 10/18/2004 4.45.17 PM Part 1B Item 2 -Additional Information (Continued) ~ (3) If you answered "yes" to Item 2.I(i) or 2.I(2), respond to the following: (a) Do you send a copy of your invoice to the custodian or trustee at the same time that you send a copy to the client? (b) Do you send quarterly statements to your clients showing all disbursements for the custodian account, including the amount of the advisory fees? (c) Do your clients provide written authorization permitting you to be paid directly for their accounts held by the custodian or trustee? (d) If you are the general partner of a partnership, have you engaged an attorney or an independent certified public accountant to provide authority permitting each direct payment or any transfer of funds or securities from the partnership account? (4) Do you require the prepayment of fees of more than $500 per client and for six months or more in advance? J. If you are organized as a sole proprietorship, please answer the following: (1) (a) Have you passed, on or after January 1, 2000, the Series 65 examination? (b) Have you passed, on or after January 1, 2000, the Series 66 examination and also passed, at any time, the Series 7 examination? (2) (a) Do you have any investment advisory professional designations? If "no'; you do not need to answer Item 2.J(2)(b). (b) I have earned and I am in good standing with the organization that issued the following credential: Certified Financial Planner ("CFP") Chartered Financial Analyst ("CFA") Chartered Financial Consultant ("ChFC") Chartered Investment Counselor ("CIC") Personal Financial Specialist ("PFS") None of the above (3) Your Social Security Number: ~ ~" ~"', ~' ~" t"° ~'• ~' ~`, C` Yes No C ~'":_ ~" I"", ~'. FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRAT: rimarv Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD NumbE DV -Amendment, SCHEDULE A 0/18/2004 4:45:17 PM Form ADV, Schedule A 1. Complete Schedule A only if you are submitting an initial application. Schedule A asks for inforr your direct owners and executive officers. Use Schedule C to amend this information. 2. Direct Owners and Executive Officers. List below the names of: (a) each Chief Executive Officer, Chief Financial Officer, Chief Operations Officer, Chief Legal Of Compliance Officer, director, and individuals with similar status or functions; u____~~,._a .,,.,,,~ ,,,,,,,iT~,air,,,,tP„t/P,-;ntHist/Adv/Pages/crd iad AdvAllPages.asp?RefNu... 10/21/2004 ADV All Pages r ~. Yage 'LU of 1y (b) if you are organized as a corporation, each shareholder that is a direct owner of 5% or more your voting securities, unless you are a public reporting company (a company subject to Se (d) of the Exchange Act); Direct owners include any person that owns, beneficially owns, has the right to vote, or has sell or direct the sale of, 5% or more of a class of your voting securities. For purposes of thi person beneficially owns any securities: (i) owned by his/her child, stepchild, grandchild, pa stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughte brother-in-law, or sister-in-law, sharing the same residence; or (ii) that he/she has the righ within 60 days, through the exercise of any option, warrant, or right to purchase the securii (c) if you are organized as a partnership, all general partners and those limited and special par the right to receive upon dissolution, or have contributed, 5% or more of your capital; (d) in the case of a trust that directly owns 5% or more of a class of your voting securities, or t right to receive upon dissolution, or has contributed, 5% or more of your capital, the trust e trustee; and (e) if you are organized as a limited liability company ("LLC"), (i) those members that have the upon dissolution, or have contributed, 5% or more of your capital, and (ii) if managed by el managers, all elected managers. 3' Do you have any indirect owners to be reported on Schedule B? ~ Yes ~' No 4. In the DE/FE/I column below, enter "DE" if the owner is a domestic entity, "FE" if the owner is incorporated or domiciled in a foreign country, or "I" if the owner or executive officer is an indi~ 5. Complete the Title or Status column by entering board/management titles; status as partner, ti proprietor, elected manager, shareholder, or member; and for shareholders or members, the cl securities owned (if more than one is issued). 6. Ownership codes are: NA -less than 5% B - 10% but less than 25% D - 50% bu A - 5% but less than 10% C - 25% but less than 50% E - 75% or 7. (a) In the Control Person column, enter Yes if the person has control as defined in the Glossa Form ADV, and enter "No" if the person does not have control. Note that under this definitic executive officers and all 25% owners, general partners, elected managers, and trustees ar persons. (b) In the PR column, enter "PR" if the owner is a public reporting company under Sections 12 ~ Exchange Act. (c) Complete each column. Full Legal Name ATEN, FRANK DE/FE/I I Title or Status Date Title or Status Acquired MANAGING 03/1997 DIRECTOR Own. Code ^ Control Person ~ PR ~ CRD # ~ Date of #, Emp 208644 BROOKS, DAVID, I WESLEY ~ BROWN, I ANTHONY, KENNETH EXECUTIVE VICE 03/1997 PRESIDENT EXECUTIVE VICE 03/1997 PRESIDENT AND SECRETARY ~ A ~ Y ~ N 181590 436044 FORD, RICHARD, I DIRECTOR 03/1997 NA ~ ~ 130449 FLYNN HOLTGRIEVE, DONALD, ANDREW I DIRECTOR & EXECUTIVE VICE PRESIDENT 03/1997 A Y N 105043 LANE, DANIEL, WILLIAM RAPPONOTTI, I ~ I EXECUTIVE VICE PRESIDENT I EXECUTIVE VICE 03/1997 03/1997 ~ I ~ I~~ ~ 214636 I 1160930 i,++n~.~ii~,-,t „a~~ ~.~-,,,,/Iarl/C'entent/PrintHisUAdv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21/2004 ADV All Pages rage ~ i oz ~y PAUL, DAVID ~~~~ PRESIDENT ~ ~~~~~~ WILSON, ROGER, I ~ EXECUTIVE VICE 01/2001 ~~~ 436046 g PRESIDENT WILDEISEN, LISA, I ~ CHIEF COMPLIANCE 10/2004 NA ~~ 407722 LONGO OFFICER FORM ADS/. UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primar Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05 / 2003 .ADV -Amendment, SCHEDULE B 110/18/2004 4.45.17 PM Form ADV, Schedule B 1. Complete Schedule B only if you are submitting an initial application. Schedule B asks for information about your indirect owners; you must first complete Schedule A, which asks for information about your direct owners. Use Schedule C to amend this information. 2. Indirect Owners. With respect to each owner listed on Schedule A (except individual owners), list below: (a) in the case of an owner that is a corporation, each of its shareholders that beneficially owns, has the right to vote, or has the power to sell or direct the sale of, 25% or more of a class of a voting security of that corporation; For purposes of this Schedule, a person beneficially owns any securities: (i) owned by his/her child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in- law, sharing the same residence; or (ii) that he/she has the right to acquire, within 60 days, through the exercise of any option, warrant, or right to purchase the security. (b) in the case of an owner that is a partnership, ail general partners and those limited and special partners that have the right to receive upon dissolution, or have contributed, 25% or more of the partnership's capital; (c) in the case of an owner that is a trust, the trust and each trustee; and (d) in the case of an owner that is a limited liability company ("LLC"), (i) those members that have the right to receive upon dissolution, or have contributed, 25% or more of the LLC's capital, and (ii) if managed by elected managers, all elected managers. 3. Continue up the chain of ownership listing all 25% owners at each level. Once a public reporting company (a company subject to Sections 12 or 15(d) of the Exchange Act) is reached, no further ownership information need be given. 4. In the DE/FE/I column below, enter "DE" if the owner is a domestic entity, "FE" if the owner is an entity incorporated or domiciled in a foreign country, or "I" if the owner is an individual. 5. Complete the Status column by entering the owner's status as partner, trustee, elected manager, shareholder, or member; and for shareholders or members, the class of securities owned (if more than one is issued). 6. Ownership codes are: C - 25% but less than 50% E - 75% or more D - 50% but less than 75% F -Other (general partner, trustee, or elected manager) 7. (a) In the Control Person column, enter "Yes" if the person has contro/ as defined in the Glossary of Terms to Form ADV, and enter "No" if the person does not have control. Note that under this definition, most executive officers and all 25% owners, general partners, ~,++„~~ii~,~~ „a~~1 ~.~,,,/Tad/Content/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21/2004 .ADV All Pages ,- rage ~~ or ~y elected managers, and trustees are control persons. (b) In the PR column, enter "PR" if the owner is a public reporting company under Sections 12 or 15(d) of the Exchange Act. (c) Complete each column. No Indirect Owner Information Filed FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/2003 ADV -Amendment, SCHEDULE C 10/18/2004 4:45:17 PM Form ADV, Schedule C 1. Use Schedule C only to amend information requested on either Schedule A or Schedule B. Refer to Schedule A and Schedule B for specific instructions for completing this Schedule C. Complete each column. 2. In the Type of Amendment column, indicate "A" (addition), "D" (deletion), or "C" (change in information about the same person). 3. Ownership NA -less than 5% C - 25% but less than 50% F -Other (general codes are: A - 5% but less than 10% D - 50% but less than 75% partner, trustee, or elected manager) B - 10% but less than 25% E - 75% or more 4. List below all changes to Schedule A (Direct Owners and Executive Officers): No Changes to Direct Owner /Executive Officer Information Filed ~~ 5. List below all changes to Schedule B (Indirect Owners): No Changes to Indirect Owner Information Filed FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION mare Business Name• ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 ADV -Amendment, SCHEDULE D 10/18/2004 4:45:17 PM Rev. 05/ 200 Form ADV, Schedule D Page 1 Certain items in Part 1A of Form ADV require additional information on Schedule D. Use this Schedule D Page 1 to report details for items listed below. Report only new information or changes/updates to previously submitted information. Do not repeat previously submitted information. Form ADV, Schedule D Section 1.B. -Other Business Names List your other business names and the jurisdictions in which you use them. You must complete a separate Schedule D for each business name. No Information Filed i,,t„~~//~,-~1 „a~rtcc~m/Iad/Content/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21/2004 ,ADV ~ll Pages rage ~.~ oz ~7 Form ADV, Schedule D Section 1.F. -Other Offices Complete the following information for each office, other than your pr~nc~pal office and place of Business, at which you conduct investment advisory business. You must complete a separate Schedule D Page 1 for each location. If you are applying for registration, or are registered, only with the SEC, list only the largest five (in terms of numbers of employees). No Information Filed Form ADV, Schedule D Section 1 I -World Wide Web Site Addresses List your World Wide Web site addresses. You must complete a separate Schedule D for each World Wide Web site address. World Wide Web Site Address: ROCKWOODCAPITAL.COM Form ADV, Schedule D Section 1.K. -Locations of Books and Records Complete the following information for each location at which you keep your books and records, other than your principal office and place of business. You must complete a separate Schedule D Page 1 for each location. No Information Filed FORM ADV UNIFORM APPLICATYON FOR INVESTMENT ADVISER REGISTRATION Primary Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05 / 200 ADV -Amendment, SCHEDULE D, Page 2 I 10/18/2004 4:45 17 PM Form ADV, Schedule D Page 2 Use this Schedule D Page 2 to report details for items listed below. Report only new information or changes/updates to previously submitted information. Do not repeat previously submitted information. Form ADV, Schedule D Section 1.L. -Registration with Foreign Financial Regulatory Authorites List the name, in English, of each foreign. financial regulatory authority and country with which you are registered. You must complete a separate Schedule D Page 2 for each foreign financial regulatory authority with whom you are registered. No Information Filed Form ADV, Schedule D Section 2.A(7) -Affiliated Adviser No Information Filed Form ADV, Schedule D Section 2.A(8) -Newly Formed Adviser If you are relying on rule 203A-2(d), the newly formed adviser exemption from the prohibition on registration, you are required to make certain representations about your eligibility for SEC registration. By checking the appropriate boxes, you will be deemed to have made the required representations. You must make both of these representations. ~"` I am not registered or required to be registered with the SEC or a state securities authority and I have a reasonable expectation that I will be eligible to register with the SEC within 120 days after the date my registration with the SEC becomes effective. ~`"' I undertake to withdraw from SEC registration if, on the 120th day after my registration with the SEC becomes effective, I would be prohibited by Section 203A(a) of the Advisers h++..n•Ilrrrl „acre ~.r,,,,/T~c1/C'entent/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21/2004 ~_ ~%~DII All Pages Act from registering with the SEC. Yage Z4 of ly Form ADV, Schedule D Section 2 A(9) -Multi-State Adviser ~ If you are relying on rule 203A-2(e), the multi-state adviser exemption from the prohibition on registration, you are required to make certain representations about your eligibility for SEC registration. By checking the appropriate boxes, you will be deemed to have made the required representations. If you are applying for registration as an investment adviser with the SEC, you must make both of these representations ~'" I have reviewed the applicable state and federal laws and have concluded that I am required by the laws of 30 or more states to register as an investment adviser with the securities authorities of those states. ~"` I undertake to withdraw from SEC registration if I file an amendment to this registration indicating that I would be required by the laws of fewer than 25 states to register as an investment adviser with the securities authorities of those states. If you are submitting your annual updating amendment, you must make this representation: ("'Within 90 days prior to the date of filing this amendment, I have reviewed the applicable state and federal laws and have concluded that I am required by the laws of at least 25 states to register as an investment adviser with the securities authorities in those states. FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/ 2003 ADV -Amendment, SCHEDULE D, Page 3 10/18J2004 4:45:17 PM ~orm ADV, Schedule D Page 3 ~ Use this Schedule D Page 3 to report details for items listed below. Report only new information or changes/updates to previously submitted information. Do not repeat previously submitted information. Form ADV, Schedule D Section 2.A(10) -SEC Exemptive Order No Information Filed Form ADV, Schedule D Section 4 -Successions ~ Complete the following information if you are succeeding to the business of a currently- registered investment adviser. If you acquired more than one firm in the succession you are reporting on this Form ADV, you must complete a separate Schedule D Page 3 for each acquired firm. See Part 1A Instruction 4. No Information Filed Form ADV, Schedule D Section 5.I(2) -Wrap Fee Programs I If you are a portfolio manager for one or more wrap fee programs, list the name of each program and its sponsor. You must complete a separate Schedule D page 3 for each wrap fee program for which you are a portfolio manager. No Information Filed Form ADV, Schedule D Section 6.B. -Description of Primary Business ,_u_...~~,.,.,~ .,.,,.,a ,.,,,,,iTa~~r'~„tP„t/P,-intHist/Adv/Pages/crd iad_AdvAllPages.asp?RefNu... 10/21/2004 ,, ~ -AL~~V All Pages No Information Filed Yage ~o of !y Form ADV, Schedule D Section 7 A. -Affiliated Advisers Complete the following information for each adviser with whom you are affiliated. You must complete a separate Schedule D Page 3 for each affiliated adviser. No Information Filed FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name• ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/ 2003 ADV -Amendment, SCHEDULE D, Page 4 10/18/2004 4:45:17 PM Form ADV, Schedule D Page 4 Use this Schedule D Page 4 to report details for items listed below. Report only new information or changes/updates to previously submitted information. Do not repeat previously submitted information. Form ADV, Schedule D Section 7.B. -Limited Partnership Participation ou rnust complete a separate Schedule D Page 4 for each limited partnership in which you or a elated person is a general partner and each limited liability company for which you or a related person is a manager. No Information Filed Form ADV, Schedule D Section 10 -Control Persons You must complete a separate Schedule D Page 4 for each control person not named in Item 1.A. or Schedules A, B, or C that directly or indirectly controls your management or policies. No Information Filed FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name• ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/ 20 ADV -Amendment, SCHEDULE D, Page 5 10/18/2004 4:45:17 PM Form ADV, Schedule D Page 5 Use this Schedule D Page 5 to report details for items listed below. Report only new information or changes/updates to previously submitted information. Do not repeat previously submitted information. Form ADV, Schedule D -Miscellaneous You may use the space below to explain a response to an Item or to provide any other information. Miscellaneous Text: SUBSTANTIALLY ALL THE APPLICANT'S FINANCING WAS PROVIDED BY THE FOLLOWING PARTIES: BOME INVESTORS, INC., A DELEWARE CORPORATION ($1,687,500); GATEWAY ,.u__...,,,._,, .~,.,.,, ,.,,,,,iT~,~ir~„tP„t/P,-;,,tHist/Adv/Pages/crd iad_AdvAllPages.asp?Refl~TU... 10/21/2004 ~D,V X11 Pages Yage Lb of ~y ~_ ROCKWOOD, INC., A MISSOURI CORPORATION ($492,750); GREGORY R. JOHNSON ($5,400); ' AND JOHN S. MCCARTHY ($4,050). EACH PERSON CONTRIBUTED THE STATED AMOUNT OF CASH IN EXCHANGE FOR PREFERRED MEMBERSHIP INTERESTS IN THE APPLICANT. FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name: ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05/ 200 ADV -Amendment, DRP Pages 10/18/2004 4:45:17 PM Criminal DRPs No Information Filed Regulatory Action DRPs No Information Filed Civil ]udicial DRPs No Information Filed Bond DRPs No Information Filed Judgment/Lien DRPs No Information Filed Arbitration DRPs No Information Filed F V trtM %~-DV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION Primary Business Name• ROCKWOOD CAPITAL ADVISORS LLC CRD Number: 108644 Rev. 05 / 200 DV -Amendment, Execution Pages 0/18/2004 4:45:17 PM Domestic Execution Page I You must complete the following Execution Page to Form ADV. This execution page must be signed and attached to your initial application for SEC or state registration and all amendments to registration. Appointment of Agent for Service of Process By signing this Form ADV Execution Page, you, the undersigned adviser, irrevocably appointeach of the Secretary of the SEC, and the Secretary of State or other legally designated officer, of any other state in which you are submitting a notice filing, as your agents to receive service, and agree that such persons may accept service on your behalf, of any notice, subpoena, summons, order instituting proceedings, demand for arbitration, or other process or papers, and you further agree that such service may be made by registered or certified mail, in any federal or h++r,o•/Irrr~ nac~ ~.~,,,/Tart/C;rnltezlt/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... lU/21/2004 ,_ , ~~V X111 Pages Yage 1 i oz Ly state action, administrative proceeding or arbitration brought against you in any place subject to the jurisdiction of the United States, if the action, proceeding, or arbitration (a) arises out of any activity in connection with your investment advisory business that is subject to the jurisdiction of the United States, and (b) is founded, directly or indirectly, upon the provisions of: (i) the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940, or the Investment Advisers Act of 1940, or any rule or regulation under any of these acts, or (ii) the laws of any state in which you are submitting a notice filing. ignature I, the undersigned, sign this Form ADV on behalf of, and with the authority of, the investment adviser. The investment adviser and I both certify, under penalty of perjury under the laws of the United States of America, that the information and statements made in this ADV, including exhibits and any other information submitted, are true and correct, and that I am signing this Form ADV Execution Page as a free and voluntary act. [ certify that the adviser's books and records will be preserved and available for inspection as required by law. Finally, I authorize any person having custody or possession of these books and records to make them available to federal and state regulatory representatives. Signature Date MM/DD/YYYY FRANK JAY ATEN 10/18/2004 CRD Number 108644 Printed Name Title FRANK JAY ATEN CIO Non-Resident Investment Adviser Execution Page ou must complete the following Execution Page to Form ADV. This execution page must be igned and attached to your initial application for SEC or state registration and all amendments ~ registration. i. Appointment of Agent fcr service of Process By signing this Form ADV Execution Page, you, the undersigned adviser, irrevocably appoint the Secretary of State, or equivalent officer, of the state in which you maintain your principal office and place of business and any other state in which you are submitting a notice filing, as your agents to receive service, and agree that such persons may accept service on your behalf, of any' ,notice, subpoena, summons, order instituting proceedings, demand for arbitration, or other process or papers, and you further agree that such service may be made by registered or certified mail, in any federal or state action, administrative proceeding or arbitration brought against you in any place subject to the jurisdiction of the United States, if the action, proceeding or arbitration (a) arises out of any activity in connection with your investment advisory business that is subject to the jurisdiction of the United States, and (b) is founded, directly or indirectly, upon the provisions of: (i) the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940, or the Investment Advisers Act of 1940, or any rule or regulation under any of these acts, or (ii) the laws of the state in which you maintain your principal office and place of business or of any state in which you are ~ submitting a notice filing. 2. Appointment and Consent: Effect on Partnerships If you are organized as a partnership, this irrevocable power of attorney and consent to service of process will continue in effect if any partner withdraws from or is admitted to the partnership, provided that the admission or withdrawal does not create a new partnership. If the partnership dissolves, this irrevocable power of attorney and consent shall be in effect for any action brought i,++„~~~~~,-~ na~r-1 cnm/Tad/Content/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21/2004 ._ ~~,L~.V All Pages against you or any of your former partners. rage ~u or ~y 3. Non-Resident Investment Adviser Undertaking Regarding Books and Records By signing this Form ADV, you also agree to provide, at your own expense, to the U.S. Securities and Exchange Commission at its principal office in Washington, D.C., at any Regional or District Office of the Commission, or at any one of its offices in the United States, as specified by the Commission, correct, current, and complete copies of any or all records that you are required to maintain under Rule 204-2 under the Investment Advisers Act of 1940. This undertaking shall be binding upon you, your heirs, successors and assigns, and any person subject to your written irrevocable consents or powers of attorney or any of your general partners and managing ,agents. Signature I, the undersigned, sign this Form ADV on behalf of, and with the authority of, the non-resident investment adviser. The investment adviser and I both certify, under penalty of perjury under the laws of the United States of America, that the information and statements made in this ADV, including exhibits and any other information submitted, are true and correct, and that I am signing this Form ADV Execution Page as a free and voluntary act. I certify that the adviser's books and records will be preserved and available for inspection as required by law. Finally, I authorize any person having custody or possession of these books and records to make them available to federal and state regulatory representatives. Signature Date MM/DD/YYYY CRD Number 108644 Printed Name .Title State Registered Investment Adviser Execution Page ~'ou must complete the following Execution Page to Form ADV. This execution page must be signed and attached to your initial application for state registration and all amendments to registration. 1. Appointment of Agent for Service of Process By signing this Form ADV Execution Page, you, the undersigned adviser, irrevocably appoint the legally designated officers and their successors, of the state in which you maintain your principal office and place of business and any other state in which you are applying for registration or amending your registration, as your agents to receive service, and agree that such persons may accept service on your behalf, of any notice, subpoena, summons, order instituting proceedings, demand for arbitration, or other process or papers, and you further agree that such service may be made by registered or certified mail, in any federal or state action, administrative proceeding or arbitration brought against you in any place subject to the jurisdiction of the United States, if the action, proceeding, or arbitration (a) arises out of any activity in connection with your investment advisory business that is subject to the jurisdiction of the United States, and (b) is founded, directly or indirectly, upon the provisions of: (i) the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940, or the Investment Advisers Act of 1940, or any rule or regulation under any of these acts, or (ii) the laws of the state in which you maintain your principal office and place of business or of any state in which you are applying for registration or amending your registration. 2. State-Registered Investment Adviser Affidavit ,,++„~~ii~,-~ „a~~1 r.rn„/Tad/Content/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21/2004 ADV X11 Pages rage ~y of ~7 If you are subject to state regulation, by signing this Form ADV, you represent that, you are in compliance with the registration requirements of the state in which you maintain your principal place of business and are in compliance with the bonding, capital, and recordkeeping requirements of that state. Signature I, the undersigned, sign this Form ADV on behalf of, and with the authority of, the investment adviser. The investment adviser and I both certify, under penalty of perjury under the laws of the United States of America, that the information and statements made in this ADV, including exhibits and any other information submitted, are true and correct, and that I am signing this Form ADV Execution Page as a free and voluntary act. I certify that the adviser's books and records will be preserved and available for inspection as required by law. Finally, I authorize any person having custody or possession of these books and records to make them available to federal and state regulatory representatives. Signature Date MM/DD/YYYY CRD Number 108644 Printed Name Title hrr„c~/Ir.r~l nasd.com/Iad/Content/PrintHist/Adv/Pages/crd_iad_AdvAllPages.asp?RefNu... 10/21/2004 Village of Tequesta Public Safety Officers' Pension Fund Investment Policy Statement L PURPOSE OF INVESTMENT POLICY STATEMENT The Pension Board of Trustees maintains that an important determinant of future investment returns is the expression and periodic review of the Fund's investment objectives. To that end, the Trustees have adopted this statement of Investment Policy. In fi~lfilling their fiduciary responsibility, the Trustees recognize that the retiremeirt system is an essential vehicle for providing income benefits to retired participants or their beneficiaries. The Board also recognizes that the obligations of the Fund are long-term and that investment policy should be made with a view toward performance and return over a number of years. The general investment objective, then, is to obtain a reasonable total rate of return -defined as interest and dividend income plus realized and unrealized capital gains or losses -commensurate with the Prudent Investor Rule and any other applicable statute. Reasonable consistency of return and protection of assets against the inroads of inflation are pazamou~. However, the volatility of interest rates and securities markets make it necessary to judge results within the context of several years rather than over short periods of two yeazs or less. The Pension Board of Trustees will employ a professional Investment Management firm to invest the assets of the fund. Within the pazameters allowed in this IPS, the asset allocation of the fund is solely at the Investment Manager's discretion, including sector weightings and investment style. The Trustees, in performing their investment duties shall comply with the fiduciary standards set forth in Employee Retirement Income Security Act of 1974 (FRIBA) at 29 U.S.C. s. 1104(a) (1) (A) - (C). In case of conflict with other provisions of law authorizing investments, the investment and fiduciary standards set forth in this section shall prevail. II. INVESTMENT PERFORMANCE OBJECTIVES The below fisted performance measures will be used as objective criteria for evaluating effectiveness of the Investment Manager. A. Total Fund Performance The performance of the total Fund-will be measured for rolling three and five year periods. These periods are considered sufficient to accommodate the market cycles experienced with investments. The performance of this portfolio will be compared to the return of a portfolio comprised of 60% Standard & Poor's 500 Stock Index and 40% Lehman Brothers Intermediate Government /Credit Bond Index. 2. On a relative basis, it is expected that the money manager's perfonmance with regard to the total return of combined equity, fixed income, and cash portfolio, will be in the top 40% of the Mobius Universe over three to five-year periods. 3. On an absolute basis, it is expected that total return of the combined equity, fixed income, and cash portfolio, will equal or exceed the actuarial earnings assumption (8 %), and equal or exceed the Consumer Price Index plus 3% over three to five-year periods. B. Equity Performance The equity portion of the portfolio, defined as common stocks and convertible bonds, is expected to perform at a rate at least equal to the S&P 500 Index and be in the top 40% of the Mobius Universe. C. Fixed Income Performance The overall objective of the fixed income portion of the portfolio is to add stability, consistency and safety to the total fund. The fixed income portion of the portfolio, defined as fixed income and preferred stocks, is expected to perform at a rate at least equal to the Lehman Brothers Intermediate Government /Credit Bond Index, and in the top 40% of the Mobius Universe. III. INVESTMENT GUIDELINES A. Authorized Investments All investments made or held in the fund shall be limited to: 1. Time, savings, and money market deposit accounts of a national bank, a state bank or a savings and loan institution, insured by the Federal Deposit Insurance Corporation, provided the amount deposited does not exceed the insured amount. 2. Obligations issued by the United States Government or obligations guaranteed as to principal and interest by the United States Government or by an agency of the United States Government. 3. Stocks, commingled funds administered by national or state banks, mutual funds and bonds or other evidences of indebtedness, issued or guaranteed by a corporation organized under the laws of the United States, any state or organized territory of the United States or the District of Columbia, provided: a. The securities meet the following ranking criteria: i. Fixed Income: Standard & Poor's Investment Grade or Moody's Investmern Grade ii. Equities: At least 90% of the equities shall be rated by a major rating service in the top three quality grades. iii. Money Market: Standard & Poor's AI or Moody's P1. b. Not more than 5% of the Fund's assets shall be invested in the common stock or capital stock of any one issuing company, nor shall the aggregate investment in any one issuing company exceed 5% of the outstanding capitak stock of the company. c. The value of bonds issued by any single corporation shall not exceed 5% of the total fund. B 4. Commingled stock, bond or money market funds whose investments are restricted to securities meeting the above criteria. 5. Foreign securities. Limitations 1. Investments in corporate common stock and convertible bonds shall not exceed 6(?% of the Fund assets at cost or 7'0% of the fund assets at market value. 2. Foreign securities shall not exceed 10% of the value at cast of the fund. 3. All equity securities must have been traded on a major exchange for at least one year. C. Absolute Restrictions There will be no investment activity in the following; 1. Short sales, margin purchases, or borrowing. 2. Commodities. 3. Puts, calls, straddles or hedging. 4. Warrants or other aprions, except as part of purchase of another security 5. Tax-exempt bonds. 6. Repurchase Agreements 7. Venture capital. 8. Illiquid investments, as described in Chapter 215.47, Florida Statutes 9. Any investment prohibited by State or Federal Law. 10. Any investment not specifically allowed as part of this policy. D. Trading Parameters When feasible and appropriate, all securities shall be competitively bid. Except as otherwise required by law, the most economically advantageous bid shall be selected. Commissions paid for purchase of securities must meet the prevailing best-execution rates. rv. colv>r~uxicAT~olvs A. fln a monthly- basis, the custodian shall supply an accounting statement that will include a summary of all receipts and disbursements and the cost and the market value of all assets. On a quarterly basis, the Investment Manager shall provide a written report affirming compliance with the security restrictions of Section III above and a summary of common stock diversification and attendant schedules. In addition, the Investment Manager shall deliver each quarter a report detailing the Fund's performance, adherence to the investment policy, forecast of the market and economy, portfolio analysis and current assets of the Trust: Written reports shall be delivered to the Trustees within 60 days of the end of the quarter. A copy of the written report shall be submitted to the person designated by the city, and shall be available for public inspection. The Investment Manager will provide immediate written and telephone notice to the Trustees of any significant market related or non-market related event, specifically including, but not limited to, any deviation from the standards set forth in Section III above. B. The Investment Manager will disclose any securities that do not comply with section III in each quarterly report. C. If the Fund owns investments, that complied with section IlI at the time of purchase, which subsequently exceed the applicable limit or do not satisfy the applicable investment standard, such excess or noncompliant investments may be continued until it is economically feasible to dispose of such investment in accordance with the prudent man standard of rare, but no additional investment may be made unless authorized by law or ordinance. D. The Trustees shall retain a monitoring service to evaluate and report on a quarterly basis the rate of return and relative performance of the Fund. E. The Trustees will meet quarterly to review the monitoring service's Performance Report. The Trustees will meet with the Investment Manager and appropriate outside consultants to discuss performance results, economic outlook, investment strategy and tactics and other pertinent matters affectung the Fund on a periodic basis. F. At least annually, the Trustees shall provide the Investment Manager with projected disbursement needs of the plan, so that the investment portfolio can be structured in such manner as to provide sufficient liquidity to pay obligations as they come due. To this end, the Investment Manager should, to the extent possible, attempt to match investment maturities with known cash needs and anticipated cash-flow requirements. V. COMPLIANCE A. It is the direction of the Trustees that the plan assets are held by a third party custodian, and that a1I securities purchased by, and all collateral obtained by, the plan shall be properly designated as plan assets. No withdrawal of assets, in whole or in part, shall be made from safekeeping except by an authorized member of the board of Trustees or their designee. Securities transactions between abroker-dealer and the custodian involving purchase or sale of securities by transfer of money or securities must be made on a "delivery vs. payment" basis to insure that the custodian will have the security or money in hand at conclusion of the transaction. B. At the direction of the Trustees, operations of the fund shall be reviewed by independent certified public accountants, as part of any financial audit periodically required. Compliance with the Trustees' internal controls shall be verified. These controls have been designed to prevent lasses of funds that might arise from fraud, error, or misrepresentation by third parties or imprudent actions by the Board or employees of the plan sponsor, to the extent possible C. Each member of the Board of Trustees shall participate in a continuing education program relating to investments and the Trustee's responsibilities to the fund. It is highly suggested that this education process begin during the Trustees' first term. D. With each actuarial valuation, the Board of Trustees shall determine the total expected annual rate of return for the current year, for each of the next several years and for the tong term thereafter. This determination shall be filed promptly with the Department of Management Services, the plan's sponsor and the consulting actuary. E. In general, proxies shall be voted in accordance with the Trustees proxy policy, which states that "The proxy votes must be exercised for the exclusive benefit of the participants of the Fund." On a regular basis, at least annually, each manager shall report a record of his or her proxy vote. VI. CRITERIA FOR INVESTMENT MANAGER REVIEW The Board wishes to adopt standazds by which judgments of the ongoing performance of the Investment Manager may be made. With this in mind, the following are adopted: If, at any time, any one of the following is breached, the Investment Manager will be warned of the Board's serious concern for the Fund's continued safety and performance. A. Four consecutive quarters of total Fund performance below the 50th percentile in manager performance rankings. B. Standard deviation for the Fund in excess of 120% of the policy C. Loss by the Investment Manager of any senior investment personnel. D. Any change in basic investment philosophy by the Investment Manager. E. Failure to attain a 60% vote of confidence by the Board of Trustees. F. Failure to observe the security quality restrictions of section III. Nothing in this section shall limit or diminish the Trustees' right to terminate the Investment Manager at any time for any reason. VII. FLORIDA STATUTES 175, 185 AND APPLICABLE VILLAGEORDINANCES If, at any time, this document is found to be in conflict with Chapters 175 or 185, Florida Statutes, or the applicable Village Ordinances, the Statutes and Ordinances shall prevail. VIII. REVIEW AND AMENDMENTS It is the Trustees intention to review this document periodically and to amend this statement to reflect any changes in philosophy, objectives, or guidelines. In this regard, the Investment Manager's interest in consistency in these matters is recognized and will be taken into account when changes are being considered. If, at any time, the Investment Manager feels that the specific objectives defined herein cannot be met, or the guidelines constrict performance, the Trustees should be notified in writing. By initial and continuing acceptance of this Investment Policy Statement, the Investment Manager concurs with the provisions of this document. Date: 13 December, 2004 ROCKWOOD CAPITAL ADVISORS VILLAGE OF TEQUESTA PUBLIC SAFETY OFFICERS' PE~ISION~~ FUND / By: By: As: Board r ¶19,957 PWBA ISSUES TECHNICAL GUIDANCE ON "SOFT DOLLAR" AND DIRECTED COMMISSION ARRANGEMENTS INVOLVING EMPLOYEE PLANS ERISA Technical Release 86-1, May 22, 1986. ERISA fiduciary responsibility rules: "Soft dollar" arrangements: Directed commission arrangements: Securities Exchange Act of 1934.--The Pension and Welfare Benefits Administration (PWBA) of the Department of Labor has issued the following technical bulletin, stating its policies concerning "soft dollar" and directed commission arrangements, whereby securities brokers provide to employee plan investment managers brokerage and research services with a portion of the brokerage commission paid by the plan to the broker for executing securities transactions. Sec. 28(e) of the Securities Exchange Act of 1934 provides a limited safe harbor from FRIBA's fiduciary responsibility rules for such transactions. Questions arising in connection with specific transactions of this kind may be directed to: Office of Regulations and Interpretations, Pension and Welfare Benefits Administration, doom N5669, 200 Constitution Avenue NW, Washington, DC 20210, Telephone (202) 523-8671.--CCH. Back reference: See Finding Lists. This statement reflects the views of the Pension and Welfare Benefits Administration (PWBA) with regard to "soft dollar" and directed commission arrangements pursuant to its responsibility to administer and enforce the provisions of Title I of the Employee Retirement Income Security Act of 1974 (ERISA). Investment managers, plan sponsors and other members of the pension community which provide services to employee plans have expressed a great deal of interest in the application of the fiduciary responsibility provisions of ERISA to these arrangements. "Soft dollar" and directed commission arrangements typically involve situations in which an investment manager of an employee benefit plan or other plan fiduciary purchases goods or services with a portion of the brokerage commission paid by a plan to a broker for executing a securities transaction. Prior to the elimination of fixed commission rates on stock exchange transactions, investment managers often purchased additional services with commission dollar beyond simple execution, clearance and settlement of securities transactions. After the elimination of fixed commission rates in May 1975, Congress, as part of the Securities Acts Amendments of 1975, added Section 28(e) to the Securities Exchange Act of 1934 (the 1934 Act) to address the practice whereby brokers provided investment managers with brokerage and research services. The Securities and Exchange Commission (the Commission) administers the 1934 Act and has exclusive authority to interpret the scope of Section 28(e) and the terms used therein. Section 28(e) of the 1934 Act provides generally that no person who exercises investment discretion with respect to securities transactions will be deemed to have acted unlawfully or to have breached a fiduciary duty solely by reason of paying Page 1 of 5 brokerage commissions for effecting a securities transaction in excess of the amount of commission another broker-dealer would have charged, if such person determined in good faith that the commission was reasonable in relation to the value of brokerage and research services provided by the broker-dealer. The limited safe harbor provided by Section 28(e) is available only for the provision of brokerage and research services to persons who exercise investment discretion with respect to an account as that term is defined in Section 3(a)(35) of the 1934 Act. The Commission has indicated that if a plan fiduciary does not exercise investment discretion with respect to the securities transaction or uses "soft dollars" to pay for non-research related services, the transaction falls outside the protection afforded by Section 28(e) of the 1934 Act and may be in violation of the securities laws and fiduciary responsibility provisions of ERISA. It has come to the attention of PWBA that ERISA fiduciaries may be involved in several types of "soft dollar" and directed commission arrangements which do not qualify for the "safe harbor" provided by Section 28(e) of the 1934 Act. In some instances, investment managers direct a portion of a plan's securities trades through specific broker-dealers, who then apply a percentage of the brokerage commissions to payfor travel, hotel rooms and other goods and services for such investment managers which do not qualify as research within the meaning of Section 28(e). ' In other instances, plan sponsors who do not exercise investment discretion with respect to a plan direct the plan's securities trades to one or more broker-dealers in return for research, performance evaluation, otheradministrative services ordiscounted commissions. The Commission has indicated that the safe harbor of Section 28(e) is not available for directed brokerage transactions. 2 A fiduciary for an ERISA plan, such as a trustee or investment manager, must meet the fiduciary responsibility standards set forth in part 4 of Title I of ERISA. These standards are designed to help ensure that the fiduciary's decisions are made in the best interests of the plan and are not colored by self-interest. Section 403(c)(1) provides, in part, that the assets of a plan shall be held for the exclusive purpose of providing benefits to the plan's participants and their beneficiaries and defraying reasonable expenses of administering the plan. Section 404(a)(1) sets forth a similar requirement on how a plan fiduciary must discharge his duties with respect to the plan, and provides further that such fiduciary must act prudently and solely in the interest of the participants and beneficiaries. These basic provisions are supplemented by the per se prohibitions of certain classes of transactions set forth in section 406 of ERISA. Section 406(a)(1)(D) of ERISA prohibits a fiduciary of an ERISA plan from causing that plan to engage in a transaction if he knows or should know that the transaction would constitute a direct or indirect transfer to, or use by or for the benefit of, a party in interest, of any assets of that plan. Section 3(14) includes, within the definition of "party in interest' with respect to a plan, any fiduciary with respect to that plan. Thus, section 406(a)(1)(D) would not only prohibit a fiduciary from causing the plan to Page 2 of 5 engage in a transaction which would benefit a third person who is a party in interest, but it also would prohibit the fiduciary from similarly benefiting himself. In addition, section 406 (b)(1) specifically prohibits a fiduciary with respect to a plan from dealing with the assets of that plan in his own interest or for his own account. Section 406(b)(3) supplements these provisions by prohibiting a plan fiduciary from receiving any consideration for his own personal account from any party dealing with the plan in connection with a transaction involving the assets of the plan. When investment management responsibility has been properly delegated to an investment manager, the manager is responsible for all aspects of the investment process. s The manager, in those cases, is required to act prudently both with respect to a decision to buy or sell securities as well as with respect to the decision concerning who will execute the transaction. If such a delegation has occurred, the named fiduciary of the plan is not liable for the particular acts or omissions of the manager but has oversight responsibility to periodically review the investment manager's performance. Where an investment manager has entered into a "soft dollar" arrangement, Section 28(e) of the 1934 Act does not relieve anyone other than the person who exercises investment discretion from the applicability of the fiduciary provisions of ERISA. Therefore, the fiduciary who appoints the investment manager is not relieved of his ,.ongoing duty to monitor the .investment manager to assure that the manager has secured best execution of the plan's brokerage transactions and to assure that the commissions paid on such transactions are reasonable in relation to the value of the brokerage and research services provided to the plan. a it is PWBA's understanding that where a plan sponsor or other pian Tiduciary directs the investment manager to execute securities trades for the plan through one or more specified broker-dealers, the direction generally requires the investment manager to execute a specified percentage of the plan's trades or a specified amount of the plan's commission business through the particular broker-dealers, consistent with the manager's duty to secure best execution for the transactions. A plan sponsor's decision to direct brokerage transactions must be made prudently and solely in the interest of the participants and beneficiaries. In directing a plan's brokerage transactions, the sponsor has an initial responsibility to determine that the broker-dealer is capable of providing best execution for the plan's brokerage transactions. In addition, the sponsor has an ongoing responsibility to monitor the services provided by the broker-dealer so as to assure that the manager has secured best execution of the plan's brokerage transactions and that the commissions paid are reasonable in relation to the value of the brokerage and other services received by the plan. In considering "soft dollar" and directed commission arrangements, FRIBA's prohibited transaction provisions also must be taken into account. A fiduciary with respect to an ERISA plan is generally prohibited, by section 406(b)(1), from causing the plan to Page 3 of 5 engage in a transaction if the fiduciary has an interest in the matter which may affect the fiduciary's best judgment as a fiduciary. For example, an employer which is the named fiduciary for its plan and which does not exercise investment discretion would normally be prohibited from directing the plan's brokerage transactions through a designated broker-dealerwho agrees to utilize a portion of the brokerage commissions received from the plan to procure goods or services for the benefit of the employer. (As previously noted, Section 28(e) is unavailable for such brokerage transactions.) Each use of the broker-dealer that results in the receipt of goods and services by the employer following that designation would create an additional violation of sections 406(a)(1)(D) and 406(b)(1) of ERISA. In addition, where the relief provided by Section 28(e) is unavailable, the receipt by a fiduciary (i.e., the employer) of goods or services for its own personal account from a party (i.e., the broker-dealer) dealing with a plan in connection with a transaction involving the assets of the plan would, in the opinion of PWBA, constitute a violation of section 406(b)(3). Such an arrangement would also violate sections 403(c)(1) and 404(a)(1) to the extent that the employer is benefiting from its use of its position. However, where an investment manager directs brokerage transactions through a designated broker-dealer to procure goods and services on behalf of the plan, and for which the plan would be otherwise obligated to pay, such use of brokerage commissions ordinarily would not violate the fiduciary provisions of ERISA, provided that the amount paid for the brokerage and .other goods and services is reasonable, and the investment manager has fulfilled its fiduciary duty to obtain best execution for the plan's securities transactions. This result does not depend on the availability of the "safe harbor" under Section 28(e) for these transactions. in applying the fiduciary responsibility provisions of ERiSAto the various "soft dollar" and directed commission arrangements thatfall outside of the protection of Section 28(e), it is apparent to PWBA that issues are raised under section 406 of ERISA whenever there is an inducement for the investment manager or other plan fiduciary to direct plan brokerage transactionsthrough particular broker-dealers. The following examples illustrate the application of the fiduciary responsibility provisions of ERISA to "soft dollar" and directed commission arrangements: (1) Employer X instructs the master trustee of its plan to direct all plan brokerage transactions through Broker-Dealer B. Part of the commissions are rebated to the master trustee to reduce its fees. The plan provides that administrative costs, including the fees of the master trustee, are to be paid by the plan. Under these circumstances, this transaction would not, in itself constitute a violation of the prohibited transaction provisions of ERISA since the "soft dollars" are being used for the exclusive benefit of the plan which generated the commissions. However, in order to act prudently under section 404(a)(1) of ERISA, Employer X would be obligated to initially determine that Broker-Dealer B is capable of providing best execution of the plan's brokerage transactions. In addition, Employer X must also periodically monitor the execution of the plan's brokerage transactions and evaluate whether the brokerage commissions paid by the plan are reasonable in light of the total services Page 4 of 5 received by the plan. Moreover, Employer X would be obligated to assure that the arrangement does not result in the payment of unreasonable compensation to the master trustee. (2) Money Manager A enters into an arrangement with Broker-Dealer B whereby Money Manager A would direct brokerage on behalf of its managed plan accounts which would generate fees of $500,000 peryeartoBroker-Dealer B. In return, Broker-Dealer B would provide bookkeeping services that do not constitute research under Section 28(e) for the general corporate purposes of Money ManagerA. Money Manager A has engaged in an act prohibited by sections 406(a)(1)(D), 406(b)(1) and 406(b)(3) of ERISA since Money Manager A has exercised its fiduciary authority over plan assets to benefit itself. Such a transaction would also violate the exclusive purpose provisions of sections 403(c)(1) and 404(a)(1) of ERISA. In these circumstances, the relief provided by Section 28(e) would not be available because the "soft dollars" are paid for services other than research. (3) The named fiduciaries of Plan P retain Money Manager C to manage part of the assets of Plan P. Money Manager C directs the plan's brokerage transactions through Broker-Dealer D. In return, Broker-Dealer D will provide research on tax-exempt securities to Money Manager C. Although tax-exempt securities would not be a suitable investment for Plan P, Money Manager C has determined that this research would be useful to his managed accounts as a whole. Money Manager C's arrangement with Broker-Dealer D is therefore encompassed by Section 28(e) of the 1934 Act. However, in retaining Money Manager C, the named fiduciaries of Plan P are required under section 404(a)(1) of ERISA to periodically review the execution secured by Mo~~ey Manger C and ensure that the brokerage eo~~~missions paid by Plan P to Broker-Dealer D are reasonable. The foregoing discussion is intended to provide general guidance as to the nature of the analysis applicable to these situations. The discussion should not be viewed as expressing an opinion with respect to any specific case. 'See Securities Exchange Act Release No. 34-23170 (April 23,1986). 2See Section VI of Securities Exchange Act Release No. 34-23170 (April 23, 1986). 3Section 405 of ERISA limits the liability of certain plan fiduciaries if management of plan assets has been properly delegated to an investment manager. 41n PWBA's view, an investment manager's responsibilityto seek best execution under the circumstances requires the manager to consider not only the cost of the commissions for the transaction but the quality and reliability of the execution. Page 5 of 5 H. x.411 Mis~ellnneouslCnnrrnci Exhibirs!ER/SA 861 ~Arinl ~Ne F_xh;b;f ~~ -~ CERTIFICATE OF Llf-~BI~IT ', OP ID DATE (MMlDDIYYYY) Y INSURA+P~CE RoCxw-1 09/10/09 4CORD~ IO ' THIS CERTIFICATE 15 ISSUED A5 A MATTER OF INFORMAT ODUGER P ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE THIS CERTIFICATE DOES NOT AMEND, EXTEND OR HOLDER Bowersox Insurance Agency Co . ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOV 3537 5 Kingshighway St Louis MO 63139 314-832-6225 F INSURERS AFFORDING COVERAGE NAIC # ax: Phone: 319-832-7766 OD035 INSURER A: Allled Group INSURED INSURER B: Missouri E®loyers Mutual Ins. Rockwood Capital Advisors LLC INSURERC Federal Insurance Co. 1401 South Brentwood 4DD t INSURER D: e Sll1 St. L0111.5 MO 63144 INSURER E: COVERAGES THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR NAY PERTAIN, THE INSURANCE AFFORDED BY^THE POLICoIc s DEcn avBoDin r.I~AIMS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLIGItS. Hlilor<COr+ i c u~~~~ ~ ~ .,~ ,....,......... -- -- PO CY F C V OL CY X I 10 LIMITS POLICY NUMBER DATE (MMIODIYY DATE (MMIDDIYY LTR NSR TYPE DF INSURANCE EACH OCCURRENCE 5 1 , OOO , OOO GENERAL LIABILITY 506 03/28/04 03/28/05 PREMISES (Ea occurence) S 3OO DOD , p X COMMERCIAL GENERAL LIABILITY BP07170273 MED EXP (Any one person) S 10 , D O D CLAIMS MADE ~ OCCUR PERSONAL 8 ADV INJURY S 1 ,DOD , O D O GENERAL AGGREGATE S 2, D O O, 0 0 0 - PRODUCTS -COMP/OP AGG S 2, 0 0 0, D O O GEN'L AGGREGATE LIM(I APPLIES PER: aT LDC POLICY jE G AUTOMOBILE LIABILITY COMBINED SINGLE UMR (Ea accident) s 1, D O O, 0 0 0 3506 03/26/04 03/2805 ANVAUTO BP0717027 A ALL OWNED AUTOS BODILY INJURY (Per person) S SCHEDULED AUTOS HIRED AUTOS X BODILY INJURY (Per accident) S X NON-OWNED AUTOS PROPERTY DAMAGE S (Per accident) AUTO ONLY - EA ACCIDENT S GARAGE LIABILITY N EA ACC THP OTHEP 5 ANY AUTO ~ . , AUTO ONLY: AGG S EACH OCCURRENCE S 2, OOO , OOO EXCESSIUMBRELLA LIABILITY 3506 03/28/04 03/28/05 AGGREGATE 52,DOO,000 A X OCCUR ^CLAIMSMADE CpA717027 S S DEDUCTIBLE S X RETENTION $ none - I - ITORY LIMIFS ER WORKERS COMPENSATION AND LDYERS'LIABILITY 33-00 01/01/04 01/01/05 E.L-EACH ACCIDENT s 100000 1~M 02083 B EMP ~CUTIVE E.L DISEASE - EP. EMPLOYE S 10 0 0 0 0 OFFIGER/MEMBER EXCLUDED DISEASE -POLICY LIMB E L s 5 0 D 0 0 0 If yes, describe under . . SPECIAL PROVISIONS below OTHER 70427076 05/19/04 05/19/05 5,000,000 C E&O ~ 81911504 05/19/04 05/19/05 500,000 r F.RSSA c DESCRIPTION OF OPERATIONS 1 LOCATIONS I VEHICLE51 tXl:LUSwrva v.uut=u o. ~,.~~,.~~•-•~•- • • -• --- - - - - - For informational & bidding purposes r`nnl r`CI I ATIhAI CERTIFICATE HOLDER -" ~"----- SHOULD AfJY OF THE ABOVE DESCP,IBED POLICIES BE CANCELLED BEFORE THE EXPIRATIOI DATE THEREOF, THE ISSUING INSURER WILL ENDEAVOR TO MAIL 1 D DAYS WRITTEN - NGTICE TO THE CERTIFICATE HOLDER IJAMED TO THE LEFT, BU7 FAILURE TO DO SO SHALL IMPOSE NO OBLIGATION DF. LIABILITY OF ANY KIND UPON THE IIJSUREP-., ITS AGEIJTS OR REPR ES NTATIVES. 4U7H IZ~D REPRESENTATIVE ~) vCnRn 75 (2001/081 988 .,