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Exhibit (5)(b)
SUB-INVESTMENT ADVISORY AGREEMENT
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This Sub-Investment Advisory Agreement is made as of the 29th day of
December, 1998, by and between The Provident Bank, an Ohio banking corporation
(the "Adviser"), and XxXxxxxx, Race & Xxxxx, Inc., a Florida corporation (the
"Sub-Adviser").
WHEREAS, the Adviser serves as investment adviser of The Riverfront
Funds, an Ohio business trust, and an open-end management investment company
(the "Trust"), which has filed a registration statement (the "Registration
Statement") under the Investment Company Act of 1940, as amended (the "1940
Act") and the Securities Act of 1933.
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is The Riverfront Income Equity Fund (the "Portfolio");
and
WHEREAS, the Adviser desires to avail itself of the services,
information, advice, assistance and facilities of an investment adviser
experienced in the management of a portfolio of income producing securities to
assist the Adviser in performing services for the Portfolio; and
WHEREAS, the Sub-Adviser represents that it has the legal power and
authority to perform the services contemplated hereunder without violation of
applicable law (including the Investment Advisers Act of 1940), and is engaged
in the business of rendering investment advisory services to investment
companies and desires to provide such services to the Trust and the Adviser; and
WHEREAS, the Sub-Adviser is familiar with the investment objectives,
policies and restrictions of the Portfolio and has reviewed the Investment
Advisory Agreement dated as of December 29, 1998, between the Adviser and the
Trust (the "Adviser Agreement").
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
1. APPOINTMENT OF THE SUB-ADVISER. The Adviser hereby appoints the
Sub-Adviser to provide a continuous investment program for that portion of the
Portfolio allocated to it from time to time by the Trust's Board of Trustees
(the "DRZ Portfolio"), subject to such instructions and supervision as the
Adviser may from time to time furnish and further subject to the control and
direction of the Trust's Board of Trustees, for the period and on the terms
hereinafter set forth. The Board of Trustees may, from time to time, make
additions to and withdrawals from the assets of the DRZ Portfolio allocated to
the Sub-Adviser. The Sub-Adviser hereby accepts such appointment and agrees
during such period to render the services and to assume the obligations herein
set forth for the compensation herein provided. The Sub-Adviser will provide the
services under this Agreement in accordance with the Portfolio's
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investment objectives, policies and restrictions as stated in the Portfolio's
most recent Prospectus and Statement of Additional Information and as the same
may, from time to time, be supplemented or amended and in resolutions of the
Trust's Board of Trustees. The Adviser agrees to furnish the Sub-Adviser from
time to time copies of all amendments of or supplements to such Prospectus and
Statement of Additional Information. The Sub-Adviser shall for all purpose
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 Adviser, the Portfolio or the Trust in any way.
2. SUB-ADVISORY SERVICES. Subject to such instructions and supervision
as the Adviser may from time to time furnish, the continuous investment program
of the DRZ Portfolio provided by the Sub-Adviser shall include, among other
things, investment research and management with respect to all securities,
investments and cash equivalents in the DRZ Portfolio. The Sub-Adviser will
determine from time to time what securities and other investments will be
purchased, retained or sold by the DRZ Portfolio, the appropriate portion of the
DRZ Portfolio's assets to be invested in particular countries or geographic
regions, the use of foreign exchange contracts and other foreign currency
matters, and the manner in which voting rights, rights to consent to corporate
action and other rights pertaining to the DRZ Portfolio's investments should be
exercised. The Sub-Adviser will implement such determinations through the
placement, in the name of the Portfolio, of orders for the execution of
portfolio transactions with it through such brokers or dealers as it may select.
In fulfilling its responsibilities hereunder, the Sub-Adviser agrees
that it will:
(a) use the same skill and care in providing such services as
it uses in providing services to other fiduciary accounts
for which it has investment responsibilities;
(b) conform with all applicable Rules and Regulations of the
United States Securities and Exchange Commission ("SEC")
and in addition will conduct its activities under this
Agreement in accordance with any applicable regulations
of any government authority pertaining to the investment
advisory activities of the Sub-Adviser and shall furnish
such written reports or other documents substantiating
such compliance as the Adviser reasonably may from time
to time request;
(c) not make loans to any person to purchase or carry shares
of beneficial interest in the Trust or make loans to the
Trust;
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(d) place orders pursuant to investment determinations for
the DRZ Portfolio either directly with the issuer or with
an underwriter, market maker or broker or dealer. In
placing orders with brokers and dealers, the Sub-Adviser
will use its reasonable best efforts to obtain prompt
execution of orders in an effective manner at the most
favorable price. Consistent with this obligation, the
Sub-Adviser may, to the extent permitted by law, purchase
and sell portfolio securities to and from brokers and
dealers who provide brokerage and research services
(within the meaning of Section 28(e) of the Securities
Exchange Act of 1934) to or for the benefit of the DRZ
Portfolio and/or other accounts over which the Sub-
Adviser exercises investment discretion. Subject to the
review of the Trust's Board of Trustees from time to time
with respect to the extent and continuation of the
policy, the Sub-Adviser is authorized to pay a broker or
dealer who provides such brokerage and research services
a commission for effecting a securities transaction for
the DRZ Portfolio which is in excess of the amount of
commission another broker or dealer would have charged
for effecting that transaction if the Sub-Adviser
determines in good faith that such commission was
reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer,
viewed in terms of either that particular transaction or
the overall responsibilities of the Sub-Adviser with
respect to the accounts as to which it exercises
investment discretion. In no instance will portfolio
securities be purchased from or sold to the Trust, BISYS
Fund Services Limited Partnership, the Adviser or Sub-
Adviser or any affiliate of the foregoing except as may
be permitted by the 1940 Act;
(e) maintain all necessary or appropriate books and records with
respect to the DRZ Portfolio's securities transactions in
accordance with all applicable laws, rules and regulations,
including but not limited to Section 31(a) of the 1940 Act and
will furnish the Trust's Board of Trustees such periodic and
special reports as the Board reasonably may request;
(f) treat confidentially and as proprietary information of
the Adviser and the Trust all records and other
information relative to the Adviser and the Trust and
prior, present, or potential shareholders, and will not
use such records and information for any purpose other
than performance of its responsibilities and duties
hereunder, except that subject to prompt notification to
the Trust and the Adviser, the Sub-Adviser may divulge
such information to duly constituted authorities, or when
so requested by the Adviser and the Trust, PROVIDED,
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HOWEVER, that nothing contained herein shall prohibit the
Sub-Adviser from advertising or soliciting the public
generally with respect to other products or services,
regardless of whether such advertisement or solicitation may
include prior, present or potential shareholders of the
Portfolio;
(g) maintain its policy and practice of conducting its
fiduciary functions independently. In making investment
recommendations for the Trust, the Sub-Adviser's
personnel will not inquire or take into consideration
whether the issuers of securities proposed for purchase
or sale for the Trust's account are customers of the
Adviser, the Sub-Adviser or of their respective parents,
subsidiaries or affiliates. In dealing with such
customers, the Sub-Adviser and its parent, subsidiaries,
and affiliates will not inquire or take into
consideration whether securities of those customers are
held by the Trust; and
(h) render, upon request of the Adviser or the Trust's Board
of Trustees, written reports concerning the investment
activities of the DRZ Portfolio.
3. EXPENSES. During the term of this Agreement, the Sub-
Adviser will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities
(including brokerage commissions, if any) purchased for the DRZ
Portfolio.
4. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records, if any,
which it maintains for the Portfolio are the property of the Portfolio and
further agrees to surrender promptly to the Adviser or the Trust any such
records upon the Adviser's or the Trust's request and that such records shall be
available for inspection by the SEC. The Sub-Adviser further agrees to preserve
for the periods and at the places prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act.
5. COMPENSATION OF THE SUB-ADVISER. In consideration of services
rendered pursuant to this Agreement, the Adviser will pay the Sub-Adviser a fee
at the annual rate of the value of the DRZ Portfolio's average daily net assets
set forth in Schedule A hereto. Such fee shall be accrued daily and paid monthly
as soon as practicable after the end of each month. If the Sub-Adviser shall
serve for less than the whole of any month, the foregoing compensation shall be
prorated. For the purpose of determining fees payable to the Sub-Adviser, the
value of the DRZ Portfolio's net assets shall be computed at the times and in
the manner specified in the Trust's Registration Statement. If the Adviser is
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required to reduce its fee or to reimburse the Trust because the expenses of the
Fund exceed applicable state securities regulations or are in excess of any
voluntary expense limitations set forth in the Trust's current Registration
Statement, the Sub-Adviser's fee hereunder shall be reduced by an amount equal
to such excess expense multiplied by the ratio that the Sub-Adviser's fee
hereunder bears to the sum of the fees paid to the Adviser and to BISYS Fund
Services Limited Partnership (under the Trust's Administration Agreement with
BISYS Fund Services Limited Partnership) by the Trust with respect to the
Portfolio. Notwithstanding anything contained herein to the contrary, the Sub-
Adviser shall not be compensated on the basis of a share of capital gains or
upon capital appreciation of the Portfolio or any portion thereof except as may
be authorized by applicable law.
6. SERVICES NOT EXCLUSIVE. The services of the Sub-Adviser hereunder
are not to be deemed exclusive, and the Sub-Adviser shall be free to render
similar services to others and to engage in other activities, so long as the
services rendered hereunder are not impaired. It is understood that the action
taken by the Sub-Adviser under this Agreement may differ from the advice given
or the timing or nature of action taken with respect to other clients of the
Sub-Adviser, and that a transaction in a specific security may not be
accomplished for all clients of the Sub-Adviser at the same time or at the same
price.
7. USE OF NAMES. The Adviser shall not use the name of the Sub-Adviser
in any prospectus, sales literature or other material relating to the Trust in
any manner not approved prior thereto by the Sub-Adviser; provided, however,
that the Sub-Adviser shall approve all uses of its name which merely refer in
accurate terms to its appointment hereunder or which are required by the SEC or
a state securities commission; and, provided further, that in no event shall
such approval be unreasonably withheld. The Sub-Adviser shall not use the name
of the Trust or the Adviser in any material relating to the Sub-Adviser in any
manner not approved prior thereto by the Adviser; provided, however, that the
Adviser shall approve all uses of its or the Trust's name which merely refer in
accurate terms to the appointment of the Sub-Adviser hereunder or which are
required by the SEC or a state securities commission; and, provided further,
that in no event shall such approval be unreasonably withheld.
8. LIABILITY OF THE SUB-ADVISER. Absent willful misfeasance, bad faith,
gross negligence, or reckless disregard of obligations or duties hereunder on
the part of the Sub-Adviser, or loss resulting from breach of fiduciary duty
with respect to the receipt of compensation for services, the Sub-Adviser shall
not be liable 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.
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9. LIMITATION OF TRUST'S LIABILITY. The Sub-Adviser acknowledges that
it has received notice of and accepts the limitations upon the Trust's liability
set forth in its Declaration of Trust and under Ohio law. The Sub-Adviser agrees
that any of the Trust's obligations shall be limited to the assets of the
Portfolio and that the Sub-Adviser shall not seek satisfaction of any such
obligation from the shareholders of the Trust nor from any trustee, officer,
employee or agent of the Trust.
10. DURATION, RENEWAL, TERMINATION AND AMENDMENT. This Agreement will
become effective as of the date first written above, provided that it shall have
been approved by vote of a majority of the votes attributable to the outstanding
voting securities of the Portfolio, in accordance with the requirements under
the 1940 Act, and, unless sooner terminated as provided herein, shall continue
in effect until December 28, 2000.
Thereafter, if not terminated, this Agreement shall continue in effect
with respect to the Portfolio for successive periods of one year each ending on
December 31 of each year, provided such continuance is specifically approved at
least annually (a) by the vote of a majority of those members of the Trust's
Board of Trustees who are not parties to this Agreement or interested persons of
any party to this Agreement, cast in person at a meeting called for the purpose
of voting on such approval, and (b) by the vote of a majority of the Trust's
Board of Trustees or by the vote of a majority of all votes attributable to the
outstanding Shares of the Portfolio. This Agreement may be terminated as to the
Portfolio at any time, without payment of any penalty, by the Trust's Board of
Trustees, by the Adviser, or by a vote of the majority of the votes attributable
to the outstanding voting securities of the Portfolio upon, 60 days' prior
written notice to the Sub-Adviser, or by the Sub-Adviser upon 60 days' prior
written notice to the Adviser and the Trust's Board of Trustees, or upon such
shorter notice as may be mutually agreed upon. This Agreement shall terminate
automatically and immediately upon termination of the Adviser Agreement. This
Agreement shall terminate automatically and immediately in the event of its
assignment. No assignment of this Agreement shall be made by the Sub-Adviser
without the consent of the Adviser and the Board of Trustees of the Trust. The
terms "assignment" and "vote of a majority of the outstanding voting securities"
shall have the meaning set forth for such terms in the 1940 Act. This Agreement
may be amended at any time by the Adviser and the Sub-Adviser, subject to
approval by the Trust's Board of Trustees and, if required by the 1940 Act and
applicable SEC rules and regulations, a vote of a majority of the votes
attributable to the Portfolio's outstanding voting securities.
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11. CONFIDENTIAL RELATIONSHIP. Any information and advice
furnished by either party to this Agreement to the other shall be
treated as confidential and shall not be disclosed to third parties
except as required by law.
12. 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.
13. MISCELLANEOUS. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Ohio. The captions in this Agreement are included for convenience only and in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed in several counterparts,
all of which together shall for all purposes constitute one Agreement, binding
on all parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
THE PROVIDENT BANK
By
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Title
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XxXXXXXX, RACE & XXXXX, INC.
By
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Title
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Dated: December 29, 1998
SCHEDULE A
To the Sub-Investment Advisory Agreement
between The Provident Bank and
XxXxxxxx, Race & Xxxxx, Inc.
NAME OF FUND COMPENSATION DATE
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The Riverfront Income Annual Rate of .50% of the December 29, 1998
Equity Fund average daily net assets of
the DRZ Portfolio up to $55
million and .55% of the
average daily net assets
of the DRZ Portfolio of $55
million and above.
THE PROVIDENT BANK
By
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Title
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XxXXXXXX, RACE & XXXXX, INC.
By
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Title
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All fees are computed daily and paid monthly.
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