IMPACT MANAGEMENT INVESTMENT TRUST
SUB-INVESTMENT ADVISER AGREEMENT
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THIS AGREEMENT (this "Agreement") is made this 16th day of October, 2001,
by and among Equity Assets Management, Inc. (the "Fund Manager"), a Delaware
corporation, Denali Advisors LLC (the "Sub-Adviser"), a Delaware limited
liability company, and Impact Management Investment Trust (the "Company"), a
Massachusetts business trust on behalf of the IMPACT 25 Fund (the "Fund").
WHEREAS, the Fund Manager has entered into an Investment Advisory Agreement
with the Company pursuant to which the Fund Manager acts as the adviser to the
Fund;
WHEREAS, the Company is authorized pursuant to its Declaration of Trust to
issue shares in series and classes and is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended
(the"1940 Act"), and the Fund is one series of the Company;
WHEREAS, the Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act"); and
WHEREAS, the Fund Manager wishes to retain the Sub-Adviser to render
investment advisory services in connection with the management of the Fund, and
the Sub-Adviser is willing to furnish such services to the Fund.
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Fund Manager, the Sub-Adviser, and the
Company on behalf of the Fund as follows:
1. Appointment
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The Fund Manager, with the consent and approval of the Company and its
Board of Trustees, hereby appoints the Sub-Adviser to act as sub-investment
adviser to the Fund for the period and on the terms set forth herein. The
Sub-Adviser accepts the appointment and will furnish the services set forth
herein for the compensation provided herein.
2. Services as Sub-Investment Adviser
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a. The Sub-Adviser acknowledges that the Fund Manager will determine the
allocation of Fund assets between the invested (the "Invested Assets") and the
cash positions thereof. Accordingly, subject to the general supervision and
direction of the Board of Trustees of the Company, the Sub-Adviser shall (i)
manage the Fund in accordance with the Fund's prospectus and statement of
additional information filed with the Securities and Exchange Commission (the
"SEC"), as they may be amended from time to time; (ii) make investment decisions
regarding the Invested Assets of the Fund; (iii) place purchase and sale orders
on behalf of the Fund on a timely basis to implement such investment decisions;
(iv) employ professional portfolio managers and securities analysts to provide
research services to the Fund, including, analysis, advice, and judgments
regarding individual investments, general economic
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conditions, trends and long-range investment policy; and (v) furnish the Fund
with whatever statistical information the Fund may reasonably request with
respect to the securities that the Fund may hold or contemplate purchasing.
b. In providing the services described in Section 2(a) above, the
Sub-Adviser shall:
(1) comply with the 1940 Act and all rules and regulations
thereunder, the Advisers Act, the Internal Revenue Code of 1986, as amended (the
"Code") and all other applicable federal and state laws and regulations, and
with any applicable procedures adopted by the Trustees;
(2) use reasonable efforts to manage the Invested Assets so that the
Fund will qualify, and continue to qualify, as a regulated investment company
under Subchapter M of the Code and regulations issued thereunder;
(3) maintain books and records with respect to the Fund's securities
transactions, render to the Board of Trustees of the Company such periodic and
special reports as the Board may reasonably request, and keep the Trustees
informed of developments materially affecting the Fund's portfolio;
(4) make available to the Fund's administrator, and the Company,
promptly upon their request, such copies of any investment records and ledgers
with respect to the Fund as may be required to assist the administrator and the
Company in their compliance with applicable laws and regulations; and
(5) immediately notify the Company in the event that the Sub-Adviser
or any of its affiliates; (A) becomes aware that it is subject to a statutory
disqualification that prevents the Sub-Adviser from serving as a sub-investment
adviser pursuant to this Agreement; or (B) becomes aware that it is the subject
of an administrative proceeding or enforcement action by the SEC or other
regulatory authority. The Sub-Adviser shall also notify the Company immediately
of any material fact known to the Sub-Adviser respecting or relating to the
Sub-Adviser that is not contained in the Company's registration statement
regarding the Fund (the "Registration Statement"), or any amendment or
supplement thereto, but that is required by federal regulation to be disclosed
therein, and of any statement contained therein that becomes untrue in any
material respect.
3. Documents
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a. The Fund has delivered properly certified or authenticated copies of
each of the following documents to the Sub-Adviser, and shall deliver to the
Sub-Adviser all future amendments and supplements thereto, if any:
(1) A certified resolution of the Board of Trustees of the Company
authorizing the appointment of the Sub-Adviser and approving the form of this
Agreement.
(2) The Registration Statement as filed with the SEC and any
amendments thereto.
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(3) All exhibits, powers of attorneys, certificates and any and all
other documents relating to or filed in connection with the Registration
Statement described above.
b. The Sub-Adviser has delivered properly certified or authenticated
copies of each of the following documents to the Fund, and shall deliver to the
Fund all future amendments and supplements thereto, if any:
(1) The Sub-Adviser's written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and Section 204A the Investment
Advisers Act of 1940 and evidence of its adoption by the Sub-Adviser. Within
forty-five (45) days of the end of the last calendar quarter of each year while
this Agreement is in effect, the president or a vice president or manager of the
Sub-Adviser shall certify to the Fund that the Sub-Adviser has complied with the
requirements of Rule 17j-1 and Section 204A during the previous year and that
there has been no violation of the Sub-Adviser's code of ethics or, if such a
violation has occurred, that appropriate action was taken in response to such
violation. Upon the written request of the Fund, the Sub-Adviser shall permit
the Fund, its employees or its agents to examine the reports required to be made
to the Sub-Adviser by Rule 17j-1(d)(1).
(2) The Sub-Adviser's Form ADV.
4. Brokerage
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Subject to the Sub-Adviser's obligation to obtain best price and execution
and subject to conformance with the policies and procedures disclosed in the
Fund's prospectus and statement of additional information, the Sub-Adviser shall
have discretion to select brokers or dealers to effect the purchase and sale of
securities. When the Sub-Adviser places orders for the purchase or sale of
securities for the Fund, in selecting brokers or dealers to execute such orders,
the Sub-Adviser is expressly authorized to consider the fact that a broker or
dealer has furnished statistical research or other information or services for
the benefit of the Fund directly or indirectly. Without limiting the generality
of the foregoing, the Sub-Adviser is authorized to cause the Fund to negotiate
and pay brokerage commissions which may be in excess of the lowest rates
available to brokers who execute transactions for the Fund or who otherwise
provide brokerage and research services utilized by the Sub-Adviser, subject to
the review of the Company's Board of Trustees from time to time with respect to
the extent and continuation of this practice, and provided that the Sub-Adviser
determines in good faith that the amount of each such commission paid to a
broker is reasonable in relation to the value of the brokerage and research
services provided by such broker viewed in terms of either the particular
transaction to which the commission relates or the Sub-Adviser's overall
responsibilities with respect to accounts as to which the Sub-Adviser exercises
investment discretion. The Sub-Adviser may aggregate securities orders so long
as the Sub-Adviser adheres to a policy of allocating investment opportunities to
the Fund over a period of time on a fair and equitable basis relative to other
clients. In no instance shall the Fund's securities be purchased from or sold to
the Fund's principal underwriter, the Fund Manager, the Sub-Adviser, or any
affiliated person thereof, except to the extent permitted by SEC exemptive order
or by applicable law.
5. Records
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The Sub-Adviser shall maintain and preserve for the periods prescribed
under the 1940 Act any and all records as are required to be maintained by the
Sub-Adviser with respect to the Fund by the 1940 Act. The Sub-Adviser
acknowledges that all records which the Sub-Advisor maintains for the Fund are
the property of the Fund and the Sub-Advisor will promptly surrender any of such
records upon request.
6. Standard of Care
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The Sub-Adviser shall exercise its best judgment in rendering services
under this Agreement. The Sub-Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund or the Fund's
shareholders in connection with the matters to which this Agreement relates;
provided, however, that nothing herein shall be deemed to protect or purport to
protect the Sub-Adviser against any liability to the Fund or to its shareholders
to which the Sub-Adviser would otherwise be subject by reason of misfeasance,
bad faith or negligence on the Sub-Adviser's part in the performance of its
duties or by reason of the Sub-Adviser's reckless disregard of its obligations
and duties under this Agreement. As used in this Section 6, the term
"Sub-Adviser" shall include any officers, directors, employees, or other
affiliates of the Sub-Adviser performing services with respect to the Fund.
7. Compensation
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In consideration of the services rendered pursuant to this Agreement, the
Fund Manager will pay the Sub-Adviser a fee of 50% of the annual advisory fee
paid to the Fund Manager by the Fund. Under the Fund's investment advisory
agreement with the Fund Manager, the Fund pays the Fund Manager a base fee which
on an annual basis equals 1.20% of the Fund's average daily net assets, and
which is adjusted monthly depending on the Fund's investment performance
compared to S&P 500 Index. As a result of the performance fee adjustment, the
annual advisory fee rate could be as high as 1.90%, but will not be less than
0.50%, of the Fund's average daily net assets. Pursuant to the investment
advisory agreement with the Fund Manager, the Fund Manager may voluntarily waive
some or all of the Fund Manager's fees.
8. Expenses
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The Sub-Adviser shall bear all expenses in connection with the performance
of its services under this Agreement, with the exception of the cost of
investment securities, commodities or other instruments purchased for the Fund.
The Fund shall bear certain other expenses to be incurred in its operation,
including: taxes, interest, brokerage fees and commissions, if any; fees of
Trustees of the Company who are not officers, directors or employees of the Fund
Manager or the Sub-Adviser; SEC fees and state blue sky qualification fees;
charges of custodians and transfer and dividend disbursing agents; the Fund's
proportionate share of insurance premiums; outside auditing and legal expenses;
costs of maintenance of the Fund's existence; cost attributable to investor
services, including, without limitation, telephone and personnel expenses;
charges of an independent pricing service; costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders; cost of shareholders reports and
meetings of the shareholders of the Fund and of the officers or Board of
Trustees of the Company; and any
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extraordinary expenses. In addition, the Fund shall pay distribution fees
pursuant to distribution plans adopted under Rule 12b-1 of the 1940 Act.
9. Services to Other Companies or Accounts
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The investment advisory services of the Sub-Adviser to the Fund under this
Agreement are not to be deemed exclusive, and the Sub-Adviser, or any affiliate
thereof, shall be free to render similar services to other investment companies
and other clients (whether or not their investment objectives and policies are
similar to those of the Fund) and to engage in other activities, so long as the
Sub-Adviser's services hereunder are not impaired thereby. Except to the extent
limited by Rule 17j-1 under the 1940 Act, no provision of this Agreement shall
limit or restrict the Sub-Adviser or any affiliated person thereof from buying,
selling or trading any securities or other investments (including any securities
or other investments which the Fund is eligible to buy) for the Sub-Adviser's or
the affiliated person's own accounts or for the accounts of others for whom it
or they may be acting; provided, however, that the Sub-Advisor shall not
undertake any activities which, in its reasonable judgment, will adversely
affect the performance of its obligations to the Fund under this Agreement.
10. Duration and Termination
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This Agreement shall become effective on March 25, 2002, and shall remain
in effect, unless sooner terminated as provided herein, for two years from such
date and shall continue from year to year thereafter, provided each continuance
is specifically approved at least annually by (i) the vote of a majority of the
Board of Trustees of the Company or (ii) a vote of a "majority" (as defined in
the 0000 Xxx) of the Fund's outstanding voting securities, provided that in
either event the continuance is also approved by a majority of the Board of
Trustees who are not "interested persons" (as defined in the 0000 Xxx) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable, without
penalty, on sixty (60) days' written notice by the Board of Trustees of the
Company or by vote of holders of a majority of the Fund's shares or by the
Sub-Adviser. This Agreement will also terminate automatically in the event of
its "assignment" (as defined in the 1940 Act).
11. Amendment
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No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until approved by
an affirmative vote of (i) a majority of the outstanding voting securities of
the Fund, and (ii) a majority of the Trustees of the Company, including a
majority of Trustees who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, if such approval is required by applicable law.
12. Use of Name
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It is understood that the name of Denali Advisors LLC, or any derivation
thereof or logo associated with that name is the valuable property of the
Sub-Adviser and its affiliates, and that
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the Fund has the right to use such name (or derivative or logo) only so long as
this Agreement shall continue with respect to the Fund. Upon termination of this
Agreement, the Fund shall forthwith cease to use such name (or derivative or
logo).
13. Miscellaneous
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a. This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
b. Titles or captions of Sections contained in this Agreement are
inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or the intent of
any provisions thereof.
c. This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one Agreement, binding on all the
parties.
d. This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in accordance with
the laws of the State of Delaware.
e. If any provision of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of this
Agreement or the application of such provision to such person or circumstance,
other than those as to which it is so determined to be invalid or unenforceable,
shall not be affected thereby, and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
f. Notices of any kind to be given to the Sub-Adviser by the Company or
the Fund Manager shall be in writing and shall be duly given if mailed or
delivered to the Sub-Adviser at: Denali Advisors LLC, 0000 Xx Xxxxx Xxxxxxx
Xxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000 or at such other address or to such
individual as shall be specified by the Sub-Adviser to the Company. Notices of
any kind to be given to the Company or the Fund Manager by the Sub-Adviser shall
be in writing and shall be duly given if mailed or delivered to: IMPACT
Management Investment Trust, 000 Xxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX
00000, or at such other address or to such individual as shall be specified by
the Company or the Fund Manager to the Sub-Adviser.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
DENALI ADVISORS LLC
By: /s/ Xxxxxx X. Xxxxxxxxx
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President
EQUITY ASSETS MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxx
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President
IMPACT MANAGEMENT INVESTMENT TRUST
By: X.X. Xxxx
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President
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