Exhibit 5(b)
Form of Sub-Advisory Agreement among Orbitex Group of Funds, Orbitex
Management, Inc. and X.X. Xxxxxx Investment Management Inc.
INVESTMENT SUB-ADVISORY AGREEMENT
Orbitex Asian High Yield Fund
June , 1997
X.X. Xxxxxx Investment Management Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sir or Madam:
Orbitex Group of Funds, a Delaware business trust (the
"Trust"), and Orbitex Management, Inc., a New York corporation (the
"Adviser"), hereby agree with X.X. Xxxxxx Investment Management Inc., a
Delaware corporation (the "Sub-Adviser") as follows:
1. Investment Description; Appointment. The Trust desires to
employ the capital of the Trust's Orbitex Asian High Yield Fund (the
"Fund") by investing and reinvesting in investments of the kind and in
accordance with the limitations specified in its Declaration of Trust
and Bylaws, each as amended to date (the "Charter Documents"), and in
the prospectus (the "Prospectus") and the statement of additional
information (the "Statement") filed with the Securities and Exchange
Commission as part of the Trust's Registration Statement on Form N-1A,
as amended from time to time, and in such manner and to such extent as
from time to time may be approved by the Trust's Board. Copies of the
Prospectus, the Statement and the Charter Documents, each as currently
in effect, have been delivered to the Sub-Adviser. The Trust agrees, on
an ongoing basis, to provide to the Sub-Adviser as promptly as
practicable copies of all amendments and supplements to the Prospectus
and the Statement and amendments to the Charter Documents. The Trust
desires to engage and hereby appoints the Sub-Adviser to act as
investment sub-adviser to the Fund. The Sub-Adviser accepts the
appointment and agrees to furnish the services described herein for the
compensation set forth below.
2. Services as Investment Sub-Adviser, Guidelines and Advice.
Subject to the supervision of the Trust's Board and of the Adviser, the
Sub-Adviser will
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(a) manage the Fund's assets in accordance with the Fund's investment
objective(s) and policies stated in the Prospectus, the Statement and
the Charter Documents, but subject to the Guidelines (as such term is
defined below) if any; (b) make investment decisions for the Fund; (c)
place purchase and sale orders for portfolio transactions for the Fund;
and (d) employ professional portfolio managers and securities analysts
to provide research services to the Fund. In providing these services,
the Sub-Adviser will conduct a continual program of investment,
evaluation and, if appropriate, sale and reinvestment of the Fund's
assets.
The Adviser may on an on-going basis provide or cause to be
provided to the Sub-Adviser guidelines, to be revised as provided below
(the "Guidelines"), setting forth limitations, by dollar amount or
percentage of net assets, on the types of securities in which the Fund
is permitted to invest or investment activities in which the Fund is
permitted to engage. The Guidelines shall remain in effect until 12:00
p.m. on the third business day following actual receipt by the
Sub-Adviser of a written notice, denominated clearly as such, setting
forth revised Guidelines. The Adviser agrees to cause to be delivered
to a person designated in writing for such purpose by the Sub-Adviser
at least monthly, a written report dated the date of its delivery (the
"Report") with respect to the funds' compliance for its current fiscal
year with the short-three test set forth in Section 851(b) (3) of the
Code (the "short-three test"). The Report shall include in chart form
the fund's gross income (within the meaning of Section 851 of the Code)
from the beginning of the current fiscal year to the date of the Report
and its cumulative income and gains described in Section 851(b) (3) of
the Code for such period. If the Report is not timely delivered, the
Sub-Adviser shall be permitted to rely on the most recent Report
delivered to it. The Trust and the Adviser agree that the Sub-Adviser
may rely on the Guidelines and the Report without independent
verification of their accuracy.
3. Brokerage. In selecting brokers or dealers to execute
transactions on behalf of the Fund, the Sub-Adviser will seek the best
overall terms available. In assessing the best overall terms available
for any transaction, the Sub-Adviser will consider factors it deems
relevant, including, without limitation, the breadth of the market in
the security, the price of the security, the financial condition and
execution capability of the broker or dealer and the reasonableness of
the commission, if any, for the specific transaction and on a
continuing basis. In selecting brokers or dealers to execute a
particular transaction, and in evaluating the best overall terms
available, the Sub-Adviser is authorized to consider the brokerage and
research services (within the meaning of Section 28(e) of the
Securities Exchange Act of 1934, as amended) provided to the Fund
and/or other accounts over which the Sub-Adviser or its affiliates
exercise investment discretion.
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4. Information Provided to the Trust. The Sub-Adviser will
keep the Trust and the Adviser informed of developments materially
affecting the Fund, and will, on its own initiative, furnish the Trust
and the Adviser from time to time with whatever information the
Sub-Adviser believes is appropriate for this purpose.
5. Standard of Care. The Sub-Adviser shall exercise its best
judgment in rendering the services described in paragraphs 2, 3 and 4
above. The Sub-Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with
the matters to which this Agreement relates, except a loss resulting
from willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement (each such act or omission
shall be referred to as "Disqualifying Conduct"). The Sub-Adviser shall
not be deemed to have engaged in Disqualifying Conduct it if complies
with the Guidelines and acts in reliance on the Report, and the
Sub-Adviser's failure to act in accordance therewith shall not
constitute evidence that it engaged in Disqualifying Conduct.
6. Compensation. In consideration of the services rendered
pursuant to this Agreement, the Adviser will pay the Sub-Adviser on the
fifth business day of each month a fee for the previous month at the
annual rate of ________% of the Fund's average daily net assets. The
fee for the period from the date the initial public sale of the Fund's
shares commences to the end of the month during which such sale shall
have been commenced shall be prorated according to the proportion that
such period bears to the full monthly period. Upon any termination of
this Agreement before the end of a month, the fee for such part of that
month shall be prorated according to the proportion that such period
bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees
payable to the Sub-Adviser, the value of the Fund's net assets shall be
computed at the times and in the manner specified in the Prospectus
and/or the Statement.
7. Expenses. The Sub-Adviser will bear all of its expenses in
connection with the performance of its services under this Agreement.
All other expenses to be incurred in the operation of the Fund will be
borne by the Trust, except to the extent specifically assumed by the
Sub-Adviser. The expenses to be borne by the Trust include, without
limitation, the following: organizational costs, taxes, interest,
brokerage fees and commissions, Director's fees, Securities and
Exchange Commission fees and state Blue Sky qualification fees,
advisory fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees,
outside auditing and legal expenses, costs of independent pricing
services, costs of maintaining existence,
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costs attributable to investor services (including, without limitation,
telephone and personnel expenses), costs of preparing and printing
prospectuses and statements of additional information for regulatory
purposes and for distribution to existing stockholders, costs of
stockholders' reports and meetings, and any extraordinary expenses.
8. Services to Other Companies or Accounts. The Trust
understands that the Sub-Adviser now acts, will continue to act and may
act in the future as investment adviser to fiduciary and other managed
accounts and as investment adviser to other investment companies, and
the Trust has no objection to the Sub-Adviser so acting, provided that
whenever the Trust and one or more other accounts or investment
companies advised by the Sub-Adviser have available funds for
investment, investments suitable and appropriate for each will be
allocated in accordance with a methodology believed to be equitable to
each entity. The Sub-Adviser agrees to allocate similarly opportunities
to sell securities. The Trust recognizes that, in some cases, this
procedure may limit the size of the position that may be acquired or
sold for the Fund. In addition, the Trust understands that the persons
employed by the Sub-Adviser to assist in the performance of the
Sub-Adviser's duties hereunder will not devote their full time to such
service and nothing contained herein shall be deemed to limit or
restrict the right of the Sub-Adviser or any affiliate of the
Sub-Adviser to engage in and devote time and attention to other
business or to render services of whatever kind or nature.
9. Books and Records. In compliance with the requirements of
Rule 31a-3 under the Investment Company Act of 1940, as amended (the
"Act"), the Sub-Adviser hereby agrees that all records which it
maintains for the Fund are the property of the Trust and further agrees
to surrender promptly to the Trust copies of any of such records upon
the Fund's or the Adviser's request. The Sub-Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 under the Act the
records relating to its activities hereunder required to be maintained
by Rule 31a-1 under the Act and to preserve the records relating to its
activities hereunder required by Rule 204-2 under the Investment
Advisers Act of 1940, as amended, for the period specified in said
Rule.
10. Term of Agreement. This Agreement shall become effective
as of the date of its execution and shall continue in effect for a
period of two years from the date of execution. Thereafter this
Agreement shall continue automatically for successive annual periods,
provided such continuance is specifically approved at least annually by
(i) the Trust's Board or (ii) a vote of a "majority" (as defined in the
Act) of the Fund's outstanding voting securities, provided that in
either event the continuance also is approved by a majority of the
Trust's Board who are not "interested persons" (as defined in the Act)
of any party to this Agreement, by
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vote cast in person at a meeting called for the purpose of voting on
such approval. This Agreement is terminable, without penalty, on 60
days' written notice, by the Adviser, by the Trust's Board, by vote of
holders of a majority of the Fund's shares or by the Sub-Adviser, and
will terminate five business days after the Sub-Adviser receives
written notice of the termination of the advisory agreement between the
Trust and the Adviser. This Agreement also will terminate automatically
in the event of its assignment (as defined in the Act).
11. Indemnification. The Adviser agrees to indemnify and hold
harmless the Sub-Adviser from and against any and all claims, losses,
liabilities or damages (including reasonable attorneys' fees and other
related expenses), howsoever arising, from or in connection with this
Agreement or the performance by the Sub-Adviser of its duties
hereunder; provided, however, that nothing contained herein shall
require that the Sub-Adviser be indemnified for Disqualifying Conduct.
12. Disclosure. Neither the Trust nor the Adviser shall,
without the prior written consent of the Sub-Adviser, make
representations regarding or reference to the Sub-Adviser or any
affiliates in any disclosure document, advertisement, sales literature
or other promotional materials.
13. Miscellaneous. All notices provided for by this Agreement
shall be in writing and shall be deemed given when received, against
appropriate receipt, by Xxxxx Xxxxxxx in the case of the Sub-Adviser,
_______________________ in the case of the Adviser, and the Fund's
Secretary in the case of the Fund, or such other person as a party
shall designate by notice to the other parties. 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.
This Agreement constitutes the entire agreement among the parties
hereto and supersedes any prior agreement among the parties relating to
the subject matter hereof. The paragraph headings of this Agreement are
for convenience of reference and do not constitute a part hereof. This
Agreement shall be governed in accordance with the internal laws of the
State of New York, without giving effect to principles of conflict of
laws.
If the foregoing accurately sets forth our agreement, kindly
indicate your acceptance hereof by signing and returning the enclosed
copy hereof.
Very truly yours,
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By:________________________________
Name:______________________________
Title:_____________________________
By:________________________________
Name:______________________________
Title:_____________________________
Accepted:
X.X. Xxxxxx Investment Management Inc.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
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