XXXXXXXX INVESTMENT TRUST
This SUB-ADVISORY AGREEMENT (the "Agreement") is made as of
_______________, 2003, by and among Xxxxxxxx Investment Trust, an Ohio business
trust (the "Trust"), Xxxxxxxx Investment Counsel, Inc., a Michigan corporation
(the "Adviser"), and JLB & Associates, Inc., a Michigan corporation (the
"Sub-Adviser").
WHEREAS, the Trust is an Ohio business trust registered as an open-end
diversified management investment company under the Investment Company Act of
1940 (the "1940 Act"); and
WHEREAS, the Adviser is an investment adviser registered under the
Investment Advisers Act of 1940, as amended, and has been retained by the Trust
to provide investment services to the Trust;
WHEREAS, the Sub-Adviser also is an investment adviser registered under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust and the Adviser desire to retain the Sub-Adviser to
furnish it with portfolio management services in connection with the Adviser's
investment advisory activities on behalf of the Ave Xxxxx Growth Fund (the
"Fund"), a series of the Trust, and the Sub-Adviser is willing to furnish such
services to the Adviser and the Fund;
NOW THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is agreed as follows:
1. EMPLOYMENT OF THE SUB-ADVISER. In accordance with and subject to the
Investment Advisory Agreement between the Trust and the Adviser, the Trust and
the Adviser hereby appoint the Sub-Adviser to manage the investment and
reinvestment of the assets of the Fund, subject to the control and direction of
the Adviser and the Trust's Board of Trustees, for the period and on the terms
hereinafter set forth. The Sub-Adviser hereby accepts such employment and agrees
during such period to render the services and to perform the duties called for
by this Agreement for the compensation herein provided. The Sub-Adviser shall at
all times maintain its registration as an investment adviser under the
Investment Advisers Act of 1940 and shall otherwise comply in all material
respects with all applicable laws and regulations, both state and federal. The
Sub-Adviser shall for all purposes herein be deemed an independent contractor
and shall, except as expressly provided or authorized (whether herein or
otherwise), have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust or the Fund.
2. DUTIES OF THE SUB-ADVISER. The Sub-Adviser will provide the following
services and undertake the following duties:
a. The Sub-Adviser will manage the investment and reinvestment of the
assets of the Fund, subject to and in accordance with the investment objectives,
policies and restrictions of the Fund and any directions which the Adviser or
the Trust's Board of Trustees may give from time to time with respect to the
Fund. In furtherance of the forgoing, the Sub-Adviser will make all
determinations with respect to the investment of the assets of the Fund and the
purchase and sale of portfolio securities and shall take such steps as may be
necessary or advisable to implement the same. The Sub-Adviser also will
determine the manner in which voting rights, rights to consent to corporate
action and any other rights pertaining to the portfolio securities will be
exercised. The Sub-Adviser will render regular reports to the Trust's Board of
Trustees and to the Adviser (or such other persons as the Adviser shall engage
to assist it in the evaluation of the performance and activities of the
Sub-Adviser). Such reports shall be made in such form and manner and with
respect to such matters regarding the Fund and the Sub-Adviser as the Trust or
the Adviser shall from time to time request.
b. The Sub-Adviser shall provide support to the Adviser with respect to the
marketing of the Fund, including but not limited to: (i) permission to use the
Sub-Adviser's name as provided in Section 5, (ii) permission to use the past
performance and investment history of the Sub-Adviser as the same is applicable
to the Fund, (iii) access to the individual(s) responsible for day-to-day
management of the Fund for marketing conferences, teleconferences and other
activities involving the promotion of the Fund, subject to the reasonable
request of the Adviser, and (iv) permission to use biographical and historical
data of the Sub-Adviser and individual manager(s).
c. The Sub-Adviser will, in the name of the Fund, place orders for the
execution of all portfolio transactions in accordance with the policies with
respect thereto set forth in the Trust's registration statements under the 1940
Act and the Securities Act of 1933, as such registration statements may be in
effect from time to time. In connection with the placement of orders for the
execution of portfolio transactions, the Sub-Adviser will create and maintain
all necessary brokerage records of the Fund in accordance with all applicable
laws, rules and regulations, including but not limited to records required by
Section 31(a) of the 1940 Act. All records shall be the property of the Trust
and shall be available for inspection and use by the Securities and Exchange
Commission (the "SEC"), the Trust or any person retained by the Trust. Where
applicable, such records shall be maintained by the Adviser for the periods and
in the places required by Rule 31a-2 under the 1940 Act. When placing orders
with brokers and dealers, the Sub-Adviser's primary objective shall be to obtain
the most favorable price and execution available for the Fund, and in placing
such orders the Sub-Adviser may consider a number of factors, including, without
limitation, the overall direct net economic result to the Fund (including
commissions, which may not be the lowest available but ordinarily should not be
higher than the generally prevailing competitive range), the financial strength
and stability of the broker, the efficiency with which the transaction will be
effected, the ability to effect the transaction at all where a large block is
involved and the availability of the broker or dealer to stand ready to execute
possibly difficult transactions in the future. The Sub-Adviser is specifically
authorized, to the extent authorized by law (including, without
limitation, Section 28(e) of the Securities Exchange Act of 1934, as amended),
to pay a broker or dealer who provides research services to the Sub-Adviser an
amount of commission for effecting a portfolio transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
such transaction, in recognition of such additional research services rendered
by the broker or dealer, but only if the Sub-Adviser determines in good faith
that the excess commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer viewed in
terms of the particular transaction or the Sub-Adviser's overall
responsibilities with respect to discretionary accounts that it manages, and
that the Fund derives or will derive a reasonably significant benefit from such
research services. The Sub-Adviser will present a written report to the Board of
Trustees of the Trust, at least quarterly, indicating total brokerage expenses,
actual or imputed, as well as the services obtained in consideration for such
expenses, broken down by broker-dealer and containing such information as the
Board of Trustees reasonably shall request.
d. In the event of any reorganization or other change in the Sub-Adviser,
its investment principals, supervisors or members of its investment (or
comparable) committee, the Sub-Adviser shall give the Adviser and the Trust's
Board of Trustees written notice of such reorganization or change within a
reasonable time (but not later than 30 days) after such reorganization or
change.
e. The Sub-Adviser will bear its expenses of providing services to the Fund
pursuant to this Agreement except such expenses as are undertaken by the Adviser
or the Trust.
f. The Sub-Adviser will manage the Fund and the investment and reinvestment
of such assets so as to comply with the provisions of the 1940 Act, the current
Prospectus and Statement of Additional Information of the Fund, and with
Subchapter M of the Internal Revenue Code of 1986, as amended.
3. COMPENSATION OF THE SUB-ADVISER.
As compensation for the services to be rendered and duties undertaken
hereunder by the Sub-Adviser, the Adviser will pay to the Sub-Adviser a monthly
sub-advisory fee equal to 0.40% per annum of the average daily net assets of the
Fund. The Sub-Adviser's fee will be reduced on a pro-rata basis to the extent
the Adviser waives any of its advisory fees or reimburses expenses of the Fund.
4. ACTIVITIES OF THE SUB-ADVISER. It is understood that the Sub-Adviser may
perform investment advisory services for various other clients, including other
investment companies. If requested by the Adviser, the Sub-Adviser will report
(generally via conference call or in writing) to the Board of Trustees of the
Trust (at regular quarterly meetings and at such other times as such Board of
Trustees reasonably shall request) (i) information regarding any potential
conflicts of interest arising by reason of its continuing provision of advisory
services to the Fund and to its other accounts, and (ii) such other information
as the Board of Trustees shall reasonably
request regarding the Fund, the Fund's performance, the services provided by the
Sub-Adviser to the Fund as compared to its other accounts and the plans of, and
the capability of, the Sub-Adviser with respect to providing future services to
the Fund and its other accounts. The Sub-Adviser agrees to submit to the Trust a
statement defining its policies with respect to the allocation of business among
the Fund and its other clients.
The Sub-Adviser has supplied to the Adviser and the Trust copies of its
Form ADV with all exhibits and attachments thereto and will hereafter supply to
the Adviser, promptly upon the preparation thereof, copies of all amendments or
restatements of such document.
The Sub-Adviser has also delivered to the Adviser and the Trust copies of
its code of ethics complying with the requirements of Rule 17j-1 under the 1940
Act (the "Code"). If in the opinion of counsel to the Trust, the code of ethics
does not satisfy the requirements of Rule 17j-1, the Sub-Adviser will adopt a
code of ethics that does. The Sub-Adviser shall promptly furnish the Adviser and
Trust with all amendments or supplements to its code of ethics at least
annually. On a quarterly basis, the Sub-Adviser shall report to the Adviser and
the Board on compliance by the access persons of the Fund with its Code of
Ethics, and upon the written request of the Adviser or the Trust, the
Sub-Adviser shall permit the Adviser and the Trust, or their respective
representatives to examine the reports required to be made to the Sub-Adviser by
the access persons of the Fund under such code.
5. USE OF NAMES. Neither the Adviser nor the Trust shall use the name of
the Sub-Adviser in any prospectus, sales literature or other material relating
to the Adviser or the Trust in any manner not approved in advance by the
Sub-Adviser; provided, however, that the Sub-Adviser will approve all uses of
its name which merely refer in accurate terms to its appointment hereunder or
which are required by the SEC or a state securities commission; and provided
further, that in no event shall such approval be unreasonably withheld. The
Sub-Adviser shall not use the name of the Adviser or the Trust in any material
relating to the Sub-Adviser in any manner not approved in advance by the Adviser
or the Trust, as the case may be; provided, however, that the Adviser and the
Trust shall each approve all uses of their respective names which merely refer
in accurate terms to the appointment of the Sub-Adviser hereunder or which are
required by the SEC or a state securities commission; and, provided further,
that in no event shall such approval be unreasonably withheld.
6. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not be
liable for any mistake of judgment or otherwise, except for lack of good faith,
provided that nothing herein shall be deemed to protect, or purport to protect,
the Sub-Adviser against any liability to the Adviser, the Trust or to any
shareholder to which the Sub-Adviser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder, or by reason of the Sub-Adviser's reckless disregard of its
obligations and duties hereunder. As used in this Section 6, the term
"Sub-Adviser" shall include the Sub-Adviser and/or any of its
affiliates and the directors, officers and employees of the Sub-Adviser and/or
any of its affiliates.
7. LIMITATION OF TRUST'S LIABILITY. The Sub-Adviser acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Declaration of Trust. The Sub-Adviser agrees that (i) the
Trust's obligations to the Sub-Adviser under this Agreement (or indirectly under
the Investment Advisory Agreement between the Trust and the Adviser) shall be
limited in any event to the assets of the Fund and (ii) the Sub-Adviser shall
not seek satisfaction of any such obligation from the holders of shares of the
Fund nor from any Trustee, officer, employee or agent of the Trust.
8. FORCE MAJEURE. The Sub-Adviser shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but not
limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Sub-Adviser shall take reasonable steps to minimize
service interruptions but shall have no liability with respect thereto.
9. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall become effective on the date of its execution and
shall remain in force for a period of two (2) years from such date, and from
year to year thereafter provided that such continuance is specifically approved
by the parties and, in addition, by (i) the vote of the holders of a majority of
the outstanding voting securities (as herein defined) of the Fund or by vote of
a majority of the Trust's Board of Trustees and (ii) by the vote of a majority
of the Trustees who are not parties to this Agreement or interested persons of
either the Adviser or the Sub-Adviser, cast in person at a meeting called for
the purpose of voting on such approval.
b. This Agreement may be terminated at any time, without payment of any
penalty, (i) by the Adviser if the Fund receives an exemptive order issued by
the Securities and Exchange Commission permitting the Adviser to enter into and
materially amend sub-advisory agreements of the Trust, without shareholder
approval subject to oversight of the Trust's Board of Trustees ("Exemptive
Order"), by the Trust's Board of Trustees or by a vote of the majority of the
outstanding voting securities of the Fund, in any such case upon not less than
60 days' prior written notice to the Sub-Adviser and (ii) by the Sub-Adviser
upon not less than 60 days' prior written notice to the Adviser and the Trust.
This Agreement shall terminate automatically in the event of (A) its assignment
or (B) the termination of the Investment Advisory Agreement between the Trust
and the Adviser.
c. This Agreement may be amended at any time by the parties hereto, subject
to approval by the Trust's Board of Trustees and, or by the Adviser, subject to
oversight by the Trust's Board of Trustees, if the Fund receives an Exemptive
Order and, if required by
applicable SEC rules and regulations, a vote of the majority of the outstanding
voting securities of the Fund.
d. The terms "assignment," "interested persons" and "majority of the
outstanding voting securities" shall have the meaning set forth for such terms
in the 1940 Act.
10. SEVERABILITY. If any provision of this Agreement shall become or shall
be found to be invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
11. NOTICE. Any notices under this Agreement shall be in writing addressed
and delivered personally (or by telecopy) or mailed postage-paid, to the other
party at such address as such other party may designate in accordance with this
paragraph for the receipt of such notice. Until further notice to the other
party, it is agreed that the address of the Trust and that of the Adviser for
this purpose shall be 0000 Xxxx Xxxxx Xxxx, Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000 and
that the address of the Sub-Adviser shall be 00000 Xxx Xxxxx Xx., Xxxxx 000,
Xxxxxxxx, Xxxxxxxx 00000.
12. MISCELLANEOUS. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Michigan. The captions in this Agreement
are included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
XXXXXXXX INVESTMENT TRUST XXXXXXXX INVESTMENT COUNSEL, INC.
By: __________________________ By: _____________________________
Name: ________________________ Name: __________________________
Title: _______________________ Title: __________________________
JLB & ASSOCIATES, INC.
By: __________________________
Name: ________________________
Title: _______________________
