EX-10.5(b)
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT, made as of the_____ day of January 1998 by and
between POLESTAR MANAGEMENT COMPANY, a New York corporation ("Polestar
Management"), and GEEWAX TERKER & COMPANY, a Pennsylvania General Partnership
("Geewax Terker").
WITNESSETH:
WHEREAS, Polestar Management and The Noah Investment Group, Inc., a
Maryland corporation (the "Corporation"), on behalf of its separately designated
series, The Noah Fund (the "Fund"), have entered into an Investment Management
Agreement dated as of March 26,1996 (the 'Investment Management Agreement")
pursuant to which Polestar Management will provide investment supervisory and
administrative services to the Fund; and
WHEREAS, Polestar Management wishes to engage the services of Geewax
Terker as Sub-Adviser to the Fund; and
WHEREAS, Geewax Terker is willing to perform sub-advisory services on
behalf of the Fund upon the terms and conditions and for the compensation
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Polestar Management hereby employs Geewax Terker to serve as
sub-adviser with respect to the assets of the Fund under the management of
Polestar Management and to perform the services hereinafter set forth. Geewax
Terker hereby accepts such employment and agrees for the compensation herein
provided to assume all obligations herein set forth and to bear all expenses of
its performance of such obligations (but no other expenses).
2. Geewax Terker shall supervise and direct the investment of the Fund's
assets in accordance with applicable law and the investment objectives, policies
and restrictions set forth in the then-current Prospectus and the then-current
Statement of Additional Information relating to the Fund contained in the
Corporation's Registration Statement under the Investment Company Act of 1940,
as amended (the "1940 Act') and the Securities Act of 1933, as amended, and
subject to such further limitations as the Corporation may, from time to time,
impose by written notice to Polestar Management, provided that Polestar
Management shall have informed
Geewax Terker, in writing, of such further limitations imposed by the
Corporation. Geewax Terker shall formulate and implement a continuing program
for the management of the Fund's assets and resources. Geewax Terker shall amend
and update such program, from time to time, as financial and other economic
conditions warrant.
3. Geewax Terker shall 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 to implement the same.
Such services shall include determining the manner in which the voting rights ,
rights to consent to corporate action, and any other non-investment decisions
pertaining to the Fund's portfolio securities should be exercised in accordance
with the Fund's investment policies and restrictions.
4. Geewax Terker shall regularly furnish reports to Polestar Management
for its use in discharging its obligations under the Investment Management
Agreement, which reports may be distributed by Polestar Management to the
Corporation at periodic meetings of the Corporation's Board of Directors. Such
reports shall include Geewax Terker's economic outlook and investment strategy
and a discussion of the portfolio activity and the performance of the Fund since
the last report and for such other relevant periods as shall be mutually agreed
upon . Copies of all such reports shall be furnished to Polestar Management for
examination and review within a reasonable time prior to the presentation of
such reports to the Corporation's Board of Directors.
Geewax shall furnish the Corporation's Board of Directors with schedules
of the securities in the Fund's portfolio on a quarterly basis. At the Board's
request, and otherwise when Geewax Terker deems it appropriate, it will prepare
and provide the Board with schedules of securities and other statistical data
regarding the activity and positions of the Fund's portfolio.
5. Geewax Terker will not select the brokers and dealers that will
execute the purchase and sale of portfolio securities for the Fund.
Geewax Terker shall promptly communicate to Polestar Management and, if
requested by Polestar Management, to the Corporation's Board of Directors, such
information relating to portfolio transactions as Polestar Management may
reasonably request. The parties understand that the Corporation shall bear all
brokerage commissions and ordinary and reasonable transaction costs in
connection with purchases and sales of portfolio securities for the Fund and all
ordinary and reasonable transaction costs in connection with purchases of such
securities in private placements and subsequent sales thereof.
6. Geewax Terker may employ, retain or otherwise avail itself of the
services and facilities of persons and entities within its own organization or
any other organization for the purpose of providing , Polestar Management, the
Corporation or the Fund with such information, advice or assistance, including,
but not limited to, advice regarding economic factors
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and trends and advice as to transactions in specific securities, as Geewax
Terker may deem necessary, appropriate or convenient for the discharge of its
obligations hereunder or otherwise helpful to Polestar Management, the
Corporation or the Fund, or in the discharge of Geewax Terker's overall
responsibilities with respect to the other accounts which it serves as
investment manager.
7. Polestar Management shall pay to Geewax Terker for all services
rendered by it hereunder a fee calculated as follows:
On average net assets of up to $20,000,000-$1.00 per annum
On average net assets from $20,000,000 to $40,000,000-.75% per annum
On average net assets from $40,000,000 to $90,000,000-.50% per annum
average net assets of $90,000,000 and above- .35% per annum
The net asset value of the Fund shall be calculated as of the close of
business on each day and, in the case of any day that is not a business day, it
shall be determined as of at the close of business on the last preceding
business day.
The sub-advisory fee in excess of $20,000,000 calculated as aforesaid,
shall accrue on each calendar day, and the sum of the daily fee accruals shall
be paid monthly to Geewax Terker on the first business day of the next
succeeding calendar month. The daily fee accruals shall be computed by
multiplying the fraction of one over the number of calendar days in the year by
the annual sub-advisory fee rate in excess of $20,000,000 described above, and
multiplying this product by the net assets of the Fund calculated as described
in the Fund's then current Prospectus as of the close of business on the
previous business day on which the Fund's net asset value was determined.
Geewax Terker shall not be entitled to receive any payment for the
performance of its services hereunder from the Fund and shall look solely and
exclusively to Polestar Management for payment of all fees for such services.
8. (a) Geewax Terker has assumed no responsibility under this
Agreement other than to render the services called for hereunder. Geewax Terker
shall not be liable for any error of judgment or mistake of law or for any loss
suffered by the Corporation or Polestar Management in connection with the
performance of this Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of Geewax Terker in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
(b) Geewax Terker agrees to indemnify Polestar Management with
respect to any loss, liability, judgment, cost or penalty which Polestar
Management may directly
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or indirectly suffer or incur in any way arising out of or in connection with
any material breach of this Agreement by Geewax Terker. Polestar Management
agrees to indemnify Geewax Terker with respect to any loss, liability, judgment,
cost or penalty which Geewax Terker may directly or indirectly suffer or incur
in any way arising out of the performance of its duties under this Agreement as
provided in paragraph 8(c).
(c) Geewax Terker shall be entitled to full indemnification from
Polestar Management for any loss, liability, judgment, cost or penalty arising
from (1) any act by any person or entity (including Polestar Management) for
which Geewax Terker was not involved directly in either the act itself or the
decision making process leading up to such act; (2) any act by Geewax Terker
taken upon the written instructions of Polestar Management or (3) the
performance of Geewax Terker's duties under this Agreement; provided, however,
Geewax Terker shall not be entitled to indemnity under clause (3) of this
sentence for any loss, liability, judgment, cost or penalty resulting from
willful misfeasance, bad faith or negligence in the performance of its duties,
or by reason of its reckless disregard of its obligations and duties, under this
Agreement.
9. (a) This Agreement shall become effective on the day and year
first above written and unless sooner terminated as hereinafter provided, shall
continue in effect through March 26, 1999. Thereafter, this Agreement shall
continue in effect from year to year, so long as its continuance is approved in
the manner required by the 1940 Act.
(b) This Agreement may be terminated at any time without the
payment of any penalty, (i) by the Board of Directors of the Corporation, (ii)
by the vote of a majority of the outstanding voting securities of the Fund,
(iii) by Polestar Management on sixty (60) days' prior written notice to Geewax
Terker, or (iv) by Geewax Terker on sixty (60) days' prior written notice to the
Fund. This Agreement shall terminate automatically in the event of its
assignment, or upon termination of the Investment Management Agreement between
the Corporation and Polestar Management. No provision of this Agreement may be
changed, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought.
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(c) As used in this Agreement the terms "assignment", "interested
person" and "vote of a majority of the outstanding voting securities" of the
Fund shall have the meanings set forth for such terms in the 1940 Act.
(d) Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid (i) if to Geewax Terker, to Geewax
Terker & Company 00 Xxxxx Xxxxxx Xxxxxxxxxxxx, XX 00000; (ii) if to Polestar
Management to Polestar Management Company, 000 Xxxxxxxxxx Xxxx Xxxxxxx Xxxxxx,
XX 00000 and (iii) if to the Corporation, at the forgoing office of Polestar
Management.
10. Nothing in this Agreement shall limit or restrict the right of any
director, officer, or employee of Geewax Terker 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 nature or a dissimilar
nature, nor to limit or restrict the right of Geewax Terker to engage in any
other business or to render services of any kind to any other corporation, firm,
individual or association.
11. 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. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto. Except insofar as the 1940 Act or
other federal laws and regulations may be controlling, this Agreement shall be
governed by, and construed and enforced in accordance with the internal laws of
the Commonwealth of Pennsylvania without regard to conflict of law provisions
12. Geewax Terker shall promptly notify the Corporation and Polestar
Management:
(a) of any material change in the senior management or ownership
of Geewax Terker;
(b) of any change in the manager of the Fund's portfolio;
(c) of any other material change in the nature of the principal
business activities of Geewax Terker.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
ATTEST: POLESTAR MANAGEMENT COMPANY
_________________________ BY______________________________
Secretary President
GEEWAX TERKER & COMPANY
_________________________ BY:______________________________
Witness A General Partner
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