Exhibit 5(b)
SUB-ADVISORY AGREEMENT
, 1999
Xxxxxx X. Xxxxx & Company
0000 X. Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
This will confirm the agreement by and among Maxus Asset Management Inc.
(the "Adviser"), Longboat Trust (the "Trust") and Xxxxxx X. Xxxxx & Company (the
"Sub-Adviser") as follows:
1. The Trust is a registered open-end management investment company
currently consisting of one investment portfolio, OTI Special Opportunities Fund
(the "Fund"). The Trust engages in the business of investing and reinvesting the
assets of the Fund in the manner and in accordance with the investment objective
and restrictions specified in the Trust"s Registration Statement, as amended
from time to time (the "Registration Statement"), filed by the Trust under the
Investment Company Act of 1940 (the "Company Act") and the Securities Act of
1933.
2. The Trust has engaged the Adviser to manage the investing and
reinvesting of the Fund"s assets and to provide the advisory services specified
elsewhere in the Investment Advisory and Administration Agreement (the "Advisory
Agreement") between the Trust and the Adviser, subject to the overall
supervision of the Board of Trustees of the Trust (the "Board of Trustees").
3. The Adviser hereby employs the Sub-Adviser to perform for the Fund
certain advisory services and the Sub-Adviser hereby accepts such employment.
Each business day, the Sub-Adviser shall furnish the Adviser with
recommendations with respect to the purchase and sale of investments for the
Fund in accordance with (i) the investment objectives, policies and restrictions
of the Fund as set forth in the Registration Statement and (ii) any other
limitations or requirements established by the Board of Trustees from time to
time as communicated in writing to the Sub-Adviser. The Sub-Adviser shall also
furnish such additional reports and information as the Adviser or the Board of
Trustees shall reasonably request. The Adviser shall retain the responsibility
for determining whether the recommended transactions shall be executed and for
effecting such transactions.
4. The Adviser shall be responsible for the fees paid to the Sub-Adviser
for its services. The Sub-Adviser agrees that it shall have no claim against the
Trust or the Fund respecting compensation under this Agreement. In consideration
of the services to be rendered by the Sub-Adviser under this Agreement, the
Adviser shall pay the Sub-Adviser on the first business day of each month a fee
at the annual rate of .50 percent of the average value of the Fund"s daily net
assets. Net asset value will be calculated in the manner set forth in the
Advisory Agreement.
5. It is understood that to assist the Sub-Adviser in performing its duties
under this Agreement, Sub-Adviser will contract to obtain a proprietary stock
price indicator service from OTI Research Inc. ("OTI"). The Adviser agrees to
reimburse Sub-Adviser for a percentage of the amounts paid by Sub- Adviser to
OTI, such percentage to be agreed upon from time to time by Adviser and
Sub-Adviser. Any such contract between Sub-Adviser and OTI (i) shall be subject
to the prior approval of Adviser which approval shall not be unreasonably
withheld (ii) shall provide that the Adviser is a third-party beneficiary of
such contract and that the Adviser shall succeed to all rights of Sub-Adviser
under such contract if this Sub-Advisory Agreement is terminated for any reason,
(iii) shall continue in effect for so long as the Adviser is the investment
adviser to the Fund, and (iv) shall provide that all reports and analyses which
presently are or may in the future be produced by OTI which OTI and the Adviser
jointly determine are relevant to the Fund"s portfolio shall be transmitted to
the Adviser and the Sub-Adviser at least one hour before such reports and
analyses are transmitted to any other party and that such reports and analyses
shall not be transmitted to any other party before 10:00 a.m.
Cleveland time.
6. Sub-Adviser represents, warrants and agrees as follows:
(a) Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act");
(b) Sub-Adviser shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(c) Sub-Adviser shall conduct its responsibilities under this
Agreement at all times in conformance with the Advisers Act, the
Company Act, and any other applicable state and/or
self-regulatory organization regulations.
(d) Sub-Adviser shall be responsible for providing the personnel,
office space and equipment necessary to fulfill its obligations
under this Agreement and, except as specifically set forth in
Paragraph 5, shall pay all expenses incurred by it in fulfilling
such obligations.
7. The Adviser and the Trust understand that Sub-Adviser now acts and will
continue to act as investment adviser to various fiduciary or other managed
accounts, and the Adviser and the Trust have no objection to Sub-Adviser so
acting. In addition, it is understood that the persons employed by Sub-Adviser
to assist in the performance of its 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 Sub-Adviser or any affiliate of Sub-Adviser to engage in
and devote time and attention to other businesses or to render services of
whatever kind or nature. The Adviser and the Trust understand that Sub-Adviser
now acts and may in the future act as investment adviser to one or more other
investment companies, and the Advisor and the Trust have no objection to
Sub-Adviser so acting.
8. Sub-Adviser shall exercise its best judgment in rendering to the Adviser
and the Trust the services described above and the Adviser and the Trust agree
as an inducement to Sub-Adviser"s undertaking the same that Sub-Adviser shall
not be liable hereunder for any mistake of judgment or in any other event
whatsoever, provided that nothing herein shall be deemed to protect or purport
to protect Sub-Adviser against any liability to the Adviser or the Trust or to
the Trust"s security holders to which Sub-Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties hereunder, or by reason of Sub-Adviser"s reckless disregard of its
obligations and duties hereunder.
9. Sub-Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Adviser or the Fund in connection with the
matters to which this Agreement relates, except for 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. Any person, even though also an officer,
partner, employee, or agent of Sub-Adviser who may be or become an officer,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust, to be rendering
such services to, or acting solely for, the Trust and not as an officer,
partner, employee, or agent or one under the control or direction of Sub-Adviser
even though paid by it.
10. This Agreement shall become effective on the date hereof and shall
continue in force for so long as the Adviser is the investment adviser to the
Trust, provided that this Agreement shall continue in force for a period of more
than two years from the date hereof only so long as such continuance is
specifically approved at least annually by (i) the Board of Trustees or (ii) by
a vote of a majority (as defined in the Company Act) of the Fund"s outstanding
voting securities; provided that in either event the continuance is also
approved by a majority of the Trustees who are not "interested persons" (as
defined in the Company Act) of any party to this Agreement, by vote cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable without penalty, at any time by (i) the Board of
Trustees or (ii) by vote of holders of a majority of the Fund"s outstanding
voting securities on 60 days written notice to Sub-Adviser. This Agreement will
also terminate automatically in the event of its assignment (as defined in the
Company Act).
11. Neither Adviser nor Sub-Adviser shall take any action which would cause
a termination of the Advisory Agreement or this Agreement without the consent of
the other, which consent shall not be unreasonably withheld.
12. Adviser and Sub-Adviser shall for all purposes herein be deemed to be
independent contractors and, unless expressly authorized to do so, shall have no
authority to act for or represent the Trust, the Fund, or each other in any way,
or in any way be deemed an agent for the Trust, the Fund, or each other.
13. This contract shall be governed by and construed in accordance with the
laws of the State of Ohio.
14. Neither the Trustees, shareholders, officers, employees or agents of
the Trust shall be personally liable upon, nor shall resort be had to their
private property for the satisfaction of, any obligations of the Trust, and the
Adviser and the Sub-Adviser shall look solely to the property of the Trust for
the satisfaction of any claim.
If the foregoing correctly sets forth the agreement by and among the Trust,
the Adviser and the Sub-Adviser, please so indicate by signing and returning to
the Company the enclosed copy hereof.
Very truly yours,
MAXUS ASSET MANAGEMENT INC.
By:
Xxxxxxx X. Xxxxxx, President
Accepted and Agreed:
XXXXXX X. XXXXX & COMPANY
By:
Xxxxxx X. Xxxxx, President
LONGBOAT TRUST
By:
Xxxxxxx X. Xxxxxx, Chairman
