MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made this 30th day of November, 1998, between
Profit Funds Investment Trust (the "Trust"), a business trust organized under
the laws of the Commonwealth of Massachusetts, and Investor Resources Group, LLC
(the "Manager"), a limited liability company organized under the laws of the
State of Delaware.
WHEREAS, the Trust has been organized to operate as an openend investment
company registered under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the Trust currently issues shares of a single series, the Profit
Value Fund (the "Fund"), and the Trustees have the power to create additional
series; and
WHEREAS, the Fund has been created for the purpose of investing and
reinvesting its assets in securities pursuant to the investment objective and
policies as set forth in the Trust's registration statement under the Act and
the Securities Act of 1933 (the "Registration Statement"), as heretofore amended
and supplemented; and the Trust desires to avail itself of the services,
information, advice, assistance and facilities of a manager and to have a
manager provide or perform for it various management, statistical, portfolio
adviser selection and other services for the Fund; and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended;
NOW, THEREFORE, the Trust and Manager agree as follows:
1. EMPLOYMENT OF THE MANAGER. The Trust hereby employs the Manager to
manage the investment and reinvestment of the assets of the Fund in the manner
set forth in paragraph 2 of this Agreement, subject to the direction of the
Board of Trustees and the officers of the Trust, for the period, in the manner,
and on the terms hereinafter set forth. The Manager hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth. The Manager shall for all purposes herein be
deemed to be an independent contractor and shall, except as expressly provided
or authorized (whether herein or otherwise), have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund.
2. OBLIGATION OF AND SERVICES TO BE PROVIDED BY THE MANAGER. The Manager
undertakes to provide the services hereinafter set forth and to assume the
following obligations:
A. Investment Management Services.
(a) The Manager shall have overall supervisory responsibility for
the general management and investment of the assets and
portfolio securities of the Fund subject to and in accordance
with the investment objective and policies of the Fund, and
any directions which the Trust's Board of Trustees may issue
to the Manager from time to time.
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(b) The Manager shall provide overall investment programs and
strategies for the Fund, shall revise such programs as
necessary and shall monitor and report periodically to the
Board of Trustees concerning the implementation of the
programs.
(c) The Manager shall have full investment discretion and shall
make all determinations with respect to the investment of the
Fund's assets and the purchase and sale of portfolio
securities with those assets.
(d) The Manager shall render regular reports to the Trust, at
regular meetings of the Board of Trustees, of, among other
things, the portfolio investments of the Fund and measurement
and analysis of the results achieved by the Fund.
(e) The Manager shall employ or provide and compensate the
executive, administrative, secretarial and clerical personnel
necessary to provide the services set forth in this paragraph
2, and shall bear the expense thereof, except as may otherwise
be provided in Section 4 of this Agreement. The Manager shall
also compensate all officers and employees of the Trust who
are officers or employees of the Manager.
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(f) The Manager shall pay all expenses incurred in connection with
the sale or distribution of the Fund's shares to the extent
such expenses are not assumed by the Fund under the Trust's
Plan of Distribution.
B. Provision of Information Necessary for Preparation of Securities
Registration Statements, Amendments and Other Materials. The Manager
will make available and provide financial, accounting and
statistical information required by the Trust in the preparation of
registration statements, reports and other documents required by
federal and state securities laws, and such information as the Trust
may reasonably request for use in the preparation of registration
statements, reports and other documents required by federal and
state securities laws.
C. Other Obligations and Services. The Manager shall make available its
officers and employees to the Board of Trustees and officers of the
Trust for consultation and discussions regarding the administration
and management of the Fund and its investment activities.
3. EXECUTION AND ALLOCATION OF PORTFOLIO BROKERAGE COMMISSIONS. The
Manager, subject to the limitations contained in this paragraph 3, shall place,
on behalf of the Fund, orders for the execution of portfolio transactions. The
Manager is not
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authorized by the Trust to take any action, including the purchase or sale of
securities for the Fund's account, (a) in contravention of (i) any investment
restrictions set forth in the Act and the rules thereunder, (ii) specific
instructions adopted by the Board of Trustees and communicated to the Manager,
or (iii) the investment objective, policies and restrictions of the Fund as set
forth in the Registration Statement, or (b) which would have the effect of
causing the Fund to fail to qualify or to cease to qualify as a regulated
investment company under the Internal Revenue Code of 1986, as amended, or any
succeeding statute.
Subject to the foregoing, the Manager shall determine the securities to be
purchased or sold by the Fund and will place orders pursuant to its
determination with or through such persons, brokers or dealers in conformity
with the policy with respect to brokerage as set forth in the Registration
Statement or as the Board of Trustees may direct from time to time. It is
recognized that, in providing the Fund with investment supervision of the
placing of orders for portfolio transactions, the Manager will give primary
consideration to securing the best qualitative execution, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. Consistent with this policy, the Manager may select brokers or
dealers who
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also provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to other funds and/or the
other accounts over which it exercises investment discretion. It is understood
that neither the Trust nor the Manager have adopted a formula for allocation of
the Fund's investment transaction business. It is also understood that it is
desirable for the Fund that the Manager have access to supplemental investment
and market research and security and economic analyses provided by certain
brokers who may execute brokerage transactions at a higher commission to the
Fund than may result when allocating brokerage to other brokers on the basis of
seeking the lowest commission. Therefore, the Manager is authorized to place
orders for the purchase and sale of securities for the Fund with such certain
brokers, subject to review by the Trust's Board of Trustees from time to time
with respect to the extent and continuation of this practice, provided that the
Manager determines in good faith that the amount of the commission is reasonable
in relation to the value of the brokerage and research services provided by the
executing broker or dealer. The determination may be viewed in terms of either a
particular transaction or the Manager's overall responsibilities with respect to
the Fund and to other accounts over which it exercises investment discretion. It
is understood that although the information may be useful to the Trust and the
Manager, it is not possible to place a dollar value on such information.
Consistent with the Rules of Fair Practice of the National
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Association of Securities Dealers, Inc., and subject to seeking best qualitative
execution, the Manager may give consideration to sales of shares of the Fund as
a factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund.
On occasions when the Manager deems the purchase or sale of a security to
be in the best interest of the Fund as well as other clients, the Manager, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be sold or purchased in order to
obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as expenses incurred in the transaction, will be made by the Manager in the
manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Trust and to such other clients.
The Manager will not execute any portfolio transactions for the Fund's
account with a broker or dealer which is an "affiliated person" (as defined in
the Act) of the Trust or the Manager without the prior approval of the Trust.
The Trust agrees that it will provide the Manager with a list of brokers and
dealers which are "affiliated persons" of the Trust or the Manager.
The Manager shall render regular reports to the Trust of the total
brokerage business placed by the Fund and the manner in which the allocation has
been accomplished.
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4. EXPENSES OF THE FUND. It is understood that the Fund will pay, or that
the Trust will enter into arrangements that require third parties to pay, all
expenses of the Fund other than those expressly assumed by the Manager herein,
which expenses payable by the Fund shall include:
A. Expenses of all audits by independent public accountants;
B. Expenses of transfer agent, dividend disbursing agent, accounting
and pricing agent and shareholder recordkeeping services;
C. Expenses of custodial services, including recordkeeping services
provided by the custodian;
D. Expenses of obtaining security valuation quotations for calculating
the value of the Fund's net assets;
E. Salaries and other compensation of any of its executive officers and
employees, if any, who are not officers, directors, stockholders or
employees of the Manager;
F. Taxes or governmental fees levied against the Fund;
G. Brokerage fees and commissions in connection with the purchase and
sale of the Fund's portfolio securities;
H. Costs, including the interest expense, of borrowing money;
I. Costs and/or fees incident to Board of Trustee and shareholder
meetings, the preparation and mailings of prospectuses, reports and
notices to the existing
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shareholders of the Fund, the filing of reports with regulatory
bodies, the maintenance of the Trust's existence as a business
trust, membership in investment company organizations, and the
registration of shares with federal and state securities
authorities;
J. Legal fees, including the legal fees related to the registration and
continued qualification of the Fund's shares for sale and legal fees
arising from litigation to which the Trust may be a party and
indemnification of the Trust's officers and trustees with respect
thereto;
K. Costs of printing share certificates (in the event such certificates
are issued) representing shares of the Fund;
L. Trustees' fees and expenses of Trustees who are not directors,
officers, employees or stockholders of the Manager or any of its
affiliates; and
M. The Fund's pro rata portion of the fidelity bond required by Section
17(g) of the Act and other insurance premiums.
5. ACTIVITIES AND AFFILIATES OF THE MANAGER.
----------------------------------------
A. The services of the Manager hereunder are not to be deemed
exclusive, and the Manager and any of its affiliates shall be free
to render similar services to others. The Manager shall use the same
skill and care in the management of the Fund's assets as it uses in
the administration of other accounts to which it provides asset
management, consulting and portfolio
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manager selection services, but shall not be obligated to give the
Fund more favorable or preferential treatment vis-a-vis its other
clients.
B. Subject to and in accordance with the Agreement and Declaration of
Trust and Bylaws of the Trust and to Section 10(a) of the Act, it is
understood that Trustees, officers and agents of the Trust and
shareholders of the Fund are or may be interested in the Manager or
its affiliates as directors, officers, agents or stockholders of the
Manager or its affiliates; that directors, officers, agents and
stockholders of the Manager or its affiliates are or may be
interested in the Trust as Trustees, officers, agents, shareholders
or otherwise; that the Manager or its affiliates may be interested
in the Trust as shareholders or otherwise; and that the effect of
any such interests shall be governed by said Declaration of Trust,
Bylaws and the Act.
6. COMPENSATION OF THE MANAGER. For all of the services to be rendered and
payments made as provided in this Agreement, the Fund will pay the Manager a
fee, computed and accrued daily and paid monthly, at the annual rate of 1.25% of
the Fund's average daily net assets.
The value of the daily net assets of the Fund shall be determined pursuant
to the applicable provisions of the Declaration of Trust and to resolutions of
the Board of Trustees
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of the Trust. If, pursuant to such provisions, the determination of net asset
value is suspended for any particular business day, then for the purposes of
this paragraph 6, the value of the net assets of the Fund as last determined
shall be deemed to be the value of its net assets as of the close of business on
that day, or as of such other time as the value of the Fund's net assets may
lawfully be determined on that day. If the determination of the net asset value
of the Fund's shares has been suspended for a period including such month, the
Manager's compensation payable for such month shall be computed on the basis of
the value of the net assets of the Fund as last determined (whether during or
prior to such month).
7. LIABILITIES OF THE MANAGER.
----------------------------
A. Except as provided below in this paragraph 7, in the absence of
willful misfeasance, bad faith, gross negligence, or reckless
disregard of obligations or duties hereunder on the part of the
Manager ("disabling conduct"), the Manager shall not be subject to
liability to the Trust or to any shareholder of the Fund for any act
or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
B. The Manager shall not be indemnified for any liability unless (i) a
final decision is made on the merits by a court or other body before
whom the proceeding was
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brought that the Manager was not liable by reason of disabling
conduct, or (ii) in the absence of such a decision, a reasonable
determination is made, based upon a review of the facts, that the
Manager was not liable by reason of disabling conduct, by (a) the
vote of a majority of a quorum of the Trustees who are not
interested persons of the Trust or the Manager or (b) an independent
legal counsel in a written opinion. The Trust will advance
attorneys' fees or other expenses incurred by the Manager in
defending a proceeding, upon the undertaking by or on behalf of the
Manager to repay the advance unless it is ultimately determined that
the Manager is entitled to indemnification, so long as the Manager
meets at least one of the following as a condition to the advance:
(i) the Manager shall provide a security for its undertaking, (ii)
the Trust shall be insured against losses arising by reason of any
lawful advances, or (iii) a majority of a quorum of the Trustees who
are not interested persons of the Trust or the Manager, or an
independent legal counsel in a written opinion, shall determine,
based on a review of the readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that the
Manger ultimately will be found entitled to indemnification. Any
person employed by the Manager who may also be or become an employee
of the Trust
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shall be deemed, when acting within the scope of his employment by
the Trust, to be acting in such employment solely for the Trust and
not as the Manager's employee or agent.
C. No provision of this Agreement shall be construed to protect any
Trustee, director, officer or agent of the Trust or the Manager from
liability in violation of Sections 17(h) and (i) of the Act.
8. RENEWAL AND TERMINATION.
-----------------------
A. This Agreement shall become effective on the date first written
above and shall remain in full force and effect for two (2) years
from the date hereof and from year to year thereafter, but only so
long as such continuance is specifically approved at least annually
by the vote of a majority of the Trustees who are not interested
persons of the Trust or the Manager, cast in person at a meeting
called for the purpose of voting on such approval and by a vote of
the Board of Trustees or of a majority of the outstanding voting
securities. The aforesaid provision that this Agreement may be
continued "annually" shall be construed in a manner consistent with
the Act and the rules and regulations thereunder.
B. This Agreement:
(a) may at any time be terminated with respect to the Fund,
without the payment of any penalty, either
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by vote of the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Fund, on
sixty (60) days' written notice to the Manager;
(b) shall immediately terminate in the event of its assignment;
and (c) may be terminated by the Manager on sixty (60) days'
written notice to the Trust.
C. As used in this Section 8, the terms "assignment," "interested
person" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Act and the
rules and regulations thereunder.
D. Any notice under this Agreement shall be given in writing addressed
and delivered or mailed postpaid, to the other party to this
Agreement at its principal place of business.
9. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
10. LIMITATION OF LIABILITY. It is expressly agreed that the obligations
of the Trust hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Trust, personally,
but bind only the trust property of the Trust, as provided in the Declaration of
Trust of
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the Trust. The execution and delivery of this Agreement have been authorized by
the Trustees and shareholders of the Trust and signed by the officers of the
Trust, acting as such, and neither such authorization by such Trustees and
shareholders nor such execution and delivery by such officers shall be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the trust property of the Trust as provided
in its Declaration of Trust.
11. USE OF NAME. The Manager may use the name "Profit Funds" or any
derivation thereof in connection with another business enterprise, including any
registered investment company with which the Manager is, or may become
associated, so long as such use is permitted under the Act and other applicable
law.
12. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, and no amendment of this
Agreement shall be effective until approved by vote of the holders of a majority
of the outstanding voting securities of the Fund and by the Board of Trustees,
including a majority of the Trustees who are not interested persons of the
Manager or of the Trust, cast in person at a meeting called for the purpose of
voting on such approval.
13. GOVERNING LAW. To the extent that state law has not been preempted by
the provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of
Delaware.
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IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed, as of the day and year first written above.
PROFIT FUNDS INVESTMENT TRUST
ATTEST: BY: /s/ Xxxxxx X. Profit
---------------------------
/s/ X. Xxxxx
---------------------- Title: President
INVESTOR RESOURCES GROUP, LLC
ATTEST: BY: /s/ Xxxxxx X. Profit
---------------------------
/s/ X. Xxxxx
---------------------- Title: President
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ADDENDUM TO MANAGEMENT AGREEMENT
Addendum dated November 20, 2008 to the Management Agreement (the
"Agreement") between Profit Funds Investment Trust (the "Trust"), on behalf of
The Profit Fund (the "Fund"), and Profit Investment Management (the "Adviser").
RECITALS
A. The Agreement authorizes the payment of a monthly advisory fee equal
to an annual rate of 1.25% of the Fund's average daily net assets.
B. The Fund is responsible, pursuant to the Agreement, for paying the
operational expanses of the Fund.
C. The Adviser desires to waive its fee and to reimburse the Fund's
expenses, and the Trust has agreed to accept such waiver and
reimbursement.
NOW THEREFORE, it is agreed that:
1. Effective immediately and through February 1, 2010, the Adviser shall
waive advisory fees and reimburse the Fund for the Fund's expenses, excluding
brokerage fees and commissions, taxes, borrowing costs (such as (a) interest and
(b) dividend expense on securities sold short) and such extraordinary or
non-recurring expenses as may arise, including litigation to which the Fund may
be a party and indemnification of the Trust's trustees and officers with respect
thereto, in order to maintain total Fund operating expenses at 1.75% of its
average daily net assets.
2. The Agreement is unchanged in all other respects.
IN WITNESS WHEREOF, the parties have caused this Addendum to be signed by
their officers designated below, all as of the date first written above.
PROFIT INVESTMENT MANAGEMENT
By: /s/ Xxxxxx X. Profit
------------------------------
Title: President
------------------------------
ACCEPTED BY:
------------
PROFIT FUNDS INVESTMENT TRUST
By: /s/ Xxxxxx X. Profit
------------------------------
Title: President
------------------------------
FIRST AMENDMENT TO
PROFIT FUNDS INVESTMENT TRUST
MANAGEMENT AGREEMENT
WHEREAS, Profit Funds Investment Trust (the "Trust") and Profit Investment
Management, Inc. (the "Adviser"), each having its principal place of business at
0000 Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxx Xxxxxx, Xxxxxxxx 00000, have entered
into a Management Agreement as of November 30, 1998 (the "Agreement");
WHEREAS, the parties agree to amend the Agreement;
NOW, THEREFORE, effective February 1, 2009, the Trust and the Adviser
agree to amend the Agreement as follows:
1. Paragraph 6 of the Agreement is hereby amended to read as follows:
6. For all services to be rendered and payments made as provided
in this Agreement, the Fund will pay the Manager a fee,
computed and accrued daily and paid monthly, at the annual
rate of 0.75% of the Fund's average daily net assets.
The value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the
Declaration of Trust and to resolutions of the Board of
Trustees of the Trust. If, pursuant to such provisions, the
determination of net asset value is suspended for any
particular business day, then for the purposes of this
paragraph 6, the value the net assets of the Fund as last
determined shall be deemed to be the value of its net assets
as of the close of business on that day, or as ouch other time
as the value of the Fund's net assets may lawfully be
determined on that day. If the determination of the net asset
value of the Fund's shares has been suspended for a period
including such month, the Manager's compensation payable for
such month shall be computed on the basis of the value of the
net assets of the Fund as last determined (whether during or
prior to such month).
2. Excepted as amended hereof, the Agreement shall remain in full force
and effect.
Executed this 28th day of January, 2009
PROFIT FUNDS INVESTMENT TRUST
By: /s/ Xxxxxx Profit
------------------------------------
Xxxxxx Profit, President and Trustee
PROFIT INVESTMENT MANAGEMENT, INC.
By: /s/ Xxxxxx Profit
------------------------------------
Xxxxxx Profit, President
