EXHIBIT 99B.23(d)-12
SUB-ADVISORY AGREEMENT
(XXXXXX FINANCIAL GROUP LLC/BAY ISLE FINANCIAL LLC)
XXXXXX SMALL CAP VALUE FUND II
(A SERIES OF XXXXXX INVESTMENT PORTFOLIO TRUST)
This SUB-ADVISORY AGREEMENT (the "Agreement") is entered into effective as
of the 28th day of March, 2002, by and between XXXXXX FINANCIAL GROUP LLC, a
Nevada limited liability company ("Xxxxxx"), and BAY ISLE FINANCIAL LLC, a
Delaware limited liability company ("Bay Isle").
RECITALS
X. Xxxxxx has entered into an Investment Advisory Agreement (the "Advisory
Agreement") with Xxxxxx Investment Portfolio Trust, a Delaware business trust
(the "Trust") and an open-end, management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), with respect to
the Xxxxxx Small Cap Value Fund II, a series of the Trust (the "Fund"), pursuant
to which Xxxxxx has agreed to provide investment advisory services with respect
to the Fund.
B. Bay Isle is engaged in the business of rendering investment advisory
services and is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended (the "Advisers Act").
X. Xxxxxx desires to retain Bay Isle to furnish investment advisory
services with respect to the Fund, and Bay Isle is willing to furnish such
services.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Duties of Bay Isle. Xxxxxx hereby engages the services of Bay Isle as
sub-adviser for the Fund in furtherance of the Advisory Agreement. Bay Isle
agrees to perform the following duties, subject to the oversight of Xxxxxx and
to the overall control of the officers and the Trustees of the Trust:
(a) Bay Isle shall manage the investment operations of the Fund and the
composition of its investment portfolio, and determine without prior
consultation with Xxxxxx or the Trust, what securities and other assets of the
Fund will be acquired, held, disposed of or loaned, and shall direct Xxxxxx with
respect to the execution of trades in connection with such determinations, in
conformity with the investment objective, policies and restrictions and the
other statements concerning the Fund in the Trust's trust instrument, as amended
from time to time (the "Trust Instrument"), bylaws and registration statements
under the 1940 Act and the Securities Act of 1933,
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as amended (the "1933 Act"), the 1940 Act and the Advisers Act, the rules and
regulations thereunder, and all other applicable federal and state laws and
regulations, and the provisions of the Internal Revenue Code of 1986, as
amended, applicable to the Fund as a regulated investment company;
(b) Bay Isle shall cause its officers to attend meetings and furnish
oral or written reports, as the Trust or Xxxxxx may reasonably require, in order
to keep Xxxxxx, the Trustees and appropriate officers of the Trust fully
informed as to the condition of the investment portfolio of the Fund, the
investment decisions of Bay Isle, and the investment considerations which have
given rise to those decisions;
(c) Bay Isle shall maintain all books and records required to be
maintained by Bay Isle pursuant to the 1940 Act, the Advisers Act, and the rules
and regulations promulgated thereunder, as the same may be amended from time to
time, with respect to transactions on behalf of the Fund, and shall furnish the
Trustees and Xxxxxx with such periodic and special reports as the Trustees or
Xxxxxx reasonably may request. Bay Isle hereby agrees that all records which it
maintains for the Fund or the Trust are the property of the Trust, agrees to
permit the reasonable inspection thereof by the Trust or its designees and
agrees to preserve for the periods prescribed under the 1940 Act and the
Advisers Act any records which it maintains for the Trust and which are required
to be maintained under the 1940 Act and the Advisers Act, and further agrees to
surrender promptly to the Trust or its designees any records which it maintains
for the Trust upon request by the Trust;
(d) Bay Isle shall submit such reports relating to the valuation of the
Fund's assets and to otherwise assist in the calculation of the net asset value
of shares of the Fund as may reasonably be requested;
(e) Bay Isle shall, on behalf of the Fund, exercise such voting rights,
subscription rights, rights to consent to corporate action and any other rights
pertaining to the Fund's assets that may be exercised, in accordance with any
policy pertaining to the same that may be adopted or agreed to by the Trustees
of the Trust, or, in the event that the Trust retains the right to exercise such
voting and other rights, to furnish the Trust with advice as may reasonably be
requested as to the manner in which such rights should be exercised;
(f) At such times as shall be reasonably requested by the Trustees or
Xxxxxx, Bay Isle shall provide the Trustees and Xxxxxx with economic,
operational and investment data and reports, including without limitation all
information and materials reasonably requested by or requested to be delivered
to the Trustees of the Trust pursuant to Section 15(c) of the 1940 Act, and
shall make available to the Trustees and Xxxxxx any economic, statistical and
investment services normally available to similar investment company clients of
Bay Isle; and
(g) Bay Isle will provide to Xxxxxx for regulatory filings and other
appropriate uses materially accurate and complete information relating to Bay
Isle as may reasonably be requested by Xxxxxx from time to time and,
notwithstanding anything herein to the contrary, Bay Isle shall be liable to
Xxxxxx for all damages, costs and expenses, including without limitation
reasonable
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attorneys' fees (hereinafter referred to collectively as "Damages"), incurred by
Xxxxxx as a result of any material inaccuracies or omissions in such information
provided by Bay Isle to Xxxxxx; provided, however, that Bay Isle shall not be
liable to the extent that any Damages are based upon inaccuracies or omissions
made in reliance upon information furnished to Bay Isle by Xxxxxx.
2. Further Obligations. In all matters relating to the performance of this
Agreement, Bay Isle shall act in conformity with the Trust's Trust Instrument,
bylaws and currently effective registration statements under the 1940 Act and
the 1933 Act and any amendments or supplements thereto (the "Registration
Statements") and with the written policies, procedures and guidelines of the
Fund, and written instructions and directions of the Trustees and Xxxxxx and
shall comply with the requirements of the 1940 Act, the Advisers Act, the rules
and regulations thereunder, and all other applicable federal and state laws and
regulations. Xxxxxx agrees to provide to Bay Isle copies of the Trust's Trust
Instrument, bylaws, Registration Statement, written policies, procedures and
guidelines and written instructions and directions of the Trustees and Xxxxxx
and any amendments or supplements to any of them at, or, if practicable, before
the time such materials become effective. Bay Isle shall maintain errors and
omissions insurance in an amount at least equal to that disclosed to the
Trustees in connection with their approval of this Agreement.
3. Obligations of Xxxxxx. Xxxxxx shall have the following obligations under
this Agreement:
(a) To keep Bay Isle continuously and fully informed (or cause the
custodian of the Fund's assets to keep Bay Isle so informed) as to the
composition of the investment portfolio of the Fund and the nature of all of the
Fund's assets and liabilities from time to time;
(b) To furnish Bay Isle with a certified copy of any financial
statement or report prepared for the Fund by certified or independent public
accountants and with copies of any financial statements or reports made to the
Fund's shareholders or to any governmental body or securities exchange;
(c) To furnish Bay Isle with any further materials or information which
Bay Isle may reasonably request to enable it to perform its function under this
Agreement; and
(d) To compensate Bay Isle for its services in accordance with the
provisions of Section 4 hereof.
4. Compensation. Xxxxxx shall pay to Bay Isle for its services under this
Agreement a fee, payable in United States dollars, at an annual rate of 0.85% of
the first $500 million of average daily net assets of the Fund, 0.80% of the
next $500 million of average daily net assets of the Fund and 0.75% on any part
of the average daily net assets of the Fund in excess of $1 billion, provided,
however, that such fee shall be net of any reimbursement of expenses paid by
Xxxxxx to the Fund. This fee shall be computed and accrued daily and payable
monthly as of the last day of each month during which or part of which this
Agreement is in effect. For the month during which this Agreement becomes
effective and the month during which it terminates, however, there shall be an
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appropriate proration of the fee payable for such month based on the number of
calendar days of such month during which this Agreement is effective.
5. Expenses and Excluded Expenses. Bay Isle shall pay all its own costs and
expenses incurred in fulfilling its obligations under this Agreement.
6. Term. This Agreement shall become effective as of the date first set
forth above and shall continue in effect until April 30, 2003, unless sooner
terminated in accordance with its terms, and shall continue in effect from year
to year thereafter only so long as such continuance is specifically approved at
least annually by the vote of a majority of the Trustees of the Trust who are
not parties hereto or interested persons of the Trust, Xxxxxx or Bay Isle, cast
in person at a meeting called for the purpose of voting on the approval of the
terms of such renewal, and by either the Trustees of the Trust or the
affirmative vote of a majority of the outstanding voting securities of the Fund.
7. Termination. This Agreement may be terminated at any time, without
penalty, by the Trustees or by the shareholders of the Fund acting by vote of at
least a majority of its outstanding voting securities, provided in any such case
that 60 days' advance written notice of termination be given to Bay Isle at its
principal place of business. This Agreement may be terminated (i) by Xxxxxx or
by Bay Isle at any time, without penalty by giving 60 days' advance written
notice of termination to the other party, or (ii) by Xxxxxx or the Trust without
advance notice if Bay Isle becomes unable to discharge its duties and
obligations under this Agreement. In addition, this Agreement shall terminate,
without penalty, upon the termination of the Advisory Agreement.
8. Assignment. This Agreement shall automatically terminate in the event of
its assignment.
9. Amendments. This Agreement may be amended by the parties only in a
written instrument signed by the parties to this Agreement and only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons of the Trust or
Xxxxxx, Bay Isle or their affiliates, and (ii) if required by applicable law, by
the affirmative vote of a majority of the outstanding voting securities of the
Fund.
10. Limitation on Personal Liability. NOTICE IS HEREBY GIVEN that the Trust
is a business trust organized under the Delaware Business Trust Act pursuant to
a Certificate of Trust filed in the office of the Secretary of State of the
State of Delaware. All parties to this Agreement acknowledge and agree that the
Trust is a series trust and all debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a particular
series shall be enforceable against the assets held with respect to such series
only, and not against the assets of the Trust generally or against the assets
held with respect to any other series and further that no Trustee, officer or
holder of shares of beneficial interest of the Trust shall be personally liable
for any of the foregoing.
11. Limitation of Liability of Bay Isle. Xxxxxx will not seek to hold Bay
Isle, and Bay Isle shall not be, liable for any error of judgment or mistake of
law or for any loss arising out of any
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investment or for any act or omission taken with respect to the Fund, except for
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties
hereunder and except to the extent otherwise provided by law. As used in this
section, "Bay Isle" shall include any affiliate of Bay Isle performing services
for the Fund contemplated hereunder and directors, officers, members, owners and
employees of Bay Isle and such affiliates.
12. Activities of Bay Isle. The services of Bay Isle hereunder are not to
be deemed to be exclusive, and Bay Isle is free to render services to other
parties, so long as its services under this Agreement are not materially
adversely affected or otherwise impaired thereby. Nothing in this Agreement
shall limit or restrict the right of any director, officer or employee of Bay
Isle to engage in any other business or to devote his or her time and attention
in part to the management or other aspects of any other business, whether of a
similar or a dissimilar nature. It is understood that Trustees, officers and
shareholders of the Trust are or may become interested in Bay Isle as directors,
officers and shareholders of Bay Isle, that directors, officers, members,
owners, employees and shareholders of Bay Isle are or may become similarly
interested in the Trust, and that Bay Isle may become interested in the Trust as
a shareholder or otherwise.
13. Third Party Beneficiaries. The parties expressly acknowledge and agree
that the Trust and the Fund are third party beneficiaries of this Agreement and
that the Trust and the Fund shall have the full right to xxx upon and enforce
this Agreement in accordance with its terms as if they were signatories hereto.
Any oversight, monitoring or evaluation of the activities of Bay Isle by Xxxxxx,
the Trust or the Fund shall not diminish or relieve in any way the liability of
Bay Isle for any of its duties and responsibilities under this Agreement.
14. Notices. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered personally or
by overnight delivery service or mailed by certified or registered mail, return
receipt requested and postage prepaid, or sent by facsimile and followed by copy
in first class postal mail, addressed to the parties at their respective
addresses set forth below, or at such other address as shall be designated by
any party in a written notice to the other party.
(a) To Xxxxxx at:
Xxxxxx Financial Group LLC
000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, President
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy at the same address to:
Xxxxxxx X. Xxxxx, Vice President
Phone: (000) 000-0000
Fax: (000) 000-0000
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(b) To Bay Isle at:
Bay Isle Financial LLC
000 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: President
Phone: (___) ________
Fax: (___) ________
(c) To the Trust at:
Xxxxxx Investment Portfolio Trust
000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: President
with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxx Xxxxxx & Xxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
15. Certain Definitions. As used in this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignment," "approved at least
annually" and "interested persons" shall have the respective meanings specified
in the 1940 Act, as now in effect or hereafter amended, and the rules and
regulations thereunder, subject to such orders, exemptions and interpretations
as may be issued by the SEC under the 1940 Act and as may be then in effect.
Where the effect of a requirement of the federal securities laws reflected in
any provision of this Agreement is made less restrictive by a rule, regulation,
order, interpretation or other authority of the SEC, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation, order, interpretation or other authority.
16. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Colorado (without giving effect to the conflicts of laws
principles thereof) and the 1940 Act. To the extent that the applicable laws of
the State of Colorado conflict with the applicable provisions of the 1940 Act,
the latter shall control.
17. Miscellaneous. The headings in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions thereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court
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decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers designated below as of the day and year first
above written.
XXXXXX FINANCIAL GROUP LLC
By:
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Name: Xxxx X. Xxxxxxxx
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Title: President
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BAY ISLE FINANCIAL LLC
By:
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Name: Xxxxxxx X.X. Xxxxxx
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Title: President
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