EXHIBIT (5)(B)
FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT
This Agreement is made as of ____________________, 1998, by and between
XXXXXXX INVESTMENTS, INC. (formerly known as Royce, Xxxxxxx & Associates, Inc.),
a Connecticut corporation ("EII"), and GOUWS CAPITAL MANAGEMENT, INC., a Maine
corporation (the "Sub-Adviser").
WHEREAS, EII has entered into an Investment Advisory Agreement dated as
of ______________, 1998, with The Winter Harbor Fund Group (the "Trust"), an
open-end investment company registered under the Investment Company Act of 1940,
as amended ("1940 Act"); and
WHEREAS, EII wishes to retain the Sub-Adviser as sub-adviser to furnish
certain investment advisory services to EII and REvest Small Cap Value Fund, a
series of the Trust (the "Series"), and the Sub-Adviser is willing to furnish
such services.
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. EII hereby appoints the Sub-Adviser as its investment
sub-adviser with respect to the Series for the period and on the terms set forth
in this Agreement. The Sub-Adviser accepts such appointment and agrees to render
the services herein set forth, for the compensation herein provided.
2. DUTIES AS SUB-ADVISER.
(a) Subject to the supervision of the Trust's Board of Trustees (the
"Board") and EII, the Sub-Adviser will provide a continuous investment program
for the Series, including investment research. Although EII alone will determine
the investments that will be purchased, retained or sold by the Series, the
Sub-Adviser will assist EII in such determinations. The Sub-Adviser will, at the
direction of EII, be responsible for placing purchase and sell orders for
investments with broker-dealers, and for other related transactions. The
Sub-Adviser will provide services under this Agreement in accordance with the
Series's investment objectives, policies and restrictions as stated in the
Series's Prospectus.
(b) The Sub-Adviser agrees that, in placing orders with brokers, it
will attempt to obtain the best net result in terms of price and execution;
provided that, on behalf of the Series, the Sub-Adviser may, in its discretion,
use brokers who provide the Series with analysis and other research services to
execute portfolio transactions on behalf of the Series, and the Sub-Adviser may
pay to those brokers in return for brokerage and research services a higher
commission than may be charged by other brokers, subject to the Sub-Adviser's
determining in good faith that (i) such commission is reasonable in terms either
of the particular transaction or of the overall responsibility of the
Sub-Adviser and its affiliates to the Series and its other clients, and (ii) the
total commissions paid by the Series will be reasonable in relation to the
benefits to
the Series over the long term. In no instance will portfolio securities be
purchased from or sold to the Sub-Adviser, or any affiliated person thereof,
except in accordance with the federal securities laws and the rules and
regulations thereunder. Whenever the Sub-Adviser simultaneously places orders to
purchase or sell the same security on behalf of the Series and one or more other
accounts advised by the Sub-Adviser, such orders will be allocated as to price
and amount among all such accounts in a manner believed to be equitable to each
account. EII recognizes that in some cases this procedure may adversely affect
the results obtained for the Series.
(c) The Sub-Adviser will maintain all books and records required to be
maintained by the Sub-Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on behalf of the
Series, and will furnish the Board and EII with such periodic and special
reports as the Board or EII reasonably may request. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby agrees
that all records which it maintains for the Series are the property of the
Trust, agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act any records which it maintains for the Trust and which are required to
be maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender
promptly to the Trust any records which it maintains for the Trust upon request
by the Trust.
(d) At such times as shall be reasonably requested by the Board or EII,
the Sub-Adviser will provide the Board and EII with investment analyses and
reports and make available to the Board and EII any statistical and investment
services normally available to similar investment companies based on industry
standards.
3. FURTHER DUTIES. In all matters relating to the performance of this
Agreement, the Sub-Adviser will act in conformity with the Trust's Declaration
of Trust, By-Laws and registration statement under the 1940 Act as may be in
effect from time to time, and any amendments or supplements thereto
("Registration Statement") and with the written instructions and directions of
the Board and EII. The Sub-Adviser will comply with the requirements of the 1940
Act, the Investment Advisers Act of 1940 ("Advisers Act"), the rules thereunder,
and all other applicable federal and state laws and regulations. EII agrees to
provide to the Sub-Adviser, upon request, copies of the Trust's Declaration of
Trust, By-Laws, Registration Statement, written instructions and directions of
the Board and EII, and any amendments or supplements to any of them, as soon as
practicable after such materials become available.
4. SERVICES NOT EXCLUSIVE. The services furnished by the Sub-Adviser
hereunder are not to be deemed exclusive, and the Sub-Adviser shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby. Nothing in this Agreement shall limit or restrict the
right of any director, officer or employee of the Sub-Adviser who may also be a
trustee, officer or employee of the Trust, 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.
5. EXPENSES. During the term of this Agreement, the Sub-Adviser will
bear all expenses incurred by it in connection with its services under this
Agreement.
6. COMPENSATION.
(a) For the services provided and the expenses assumed by the
Sub-Adviser pursuant to this Agreement, EII will pay to the Sub-Adviser a fee,
computed daily and payable monthly, at an annual rate equal to 50% of the
Advisory Fee received by EII from the Trust with respect to the Series pursuant
to the Advisory Agreement, less costs and expenses incurred by EII associated
therewith. The Sub-Adviser and EII acknowledge that, in addition to the
compensation set forth herein, each of the Sub-Adviser and EII have rights,
obligations, and duties arising under a certain Letter of Intent by and among
the Sub-Adviser, EII, and Acadia Trust, N.A., dated December 30, 1997 (the
"Letter"). To the extent that the terms of this Section 6 conflict with the
terms of the Letter, the terms of the Letter shall control.
(b) The fee shall be accrued daily and payable monthly to the
Sub-Adviser on or before the last business day of the next succeeding calendar
month.
(c) If this Agreement becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
7. LIMITATION OF LIABILITY. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Series, the
Trust or its shareholders or by EII in connection with the matters to which this
Agreement relates, except to the extent that such a loss results from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties and obligations under this Agreement and applicable law.
8. REPRESENTATIONS OF SUB-ADVISER. The Sub-Adviser represents, warrants
and agrees as follows:
(a) The Sub-Adviser: (i) is registered as an investment adviser under
the Advisers Act and will continue to be so registered for so long as this
Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the
Advisers Act from performing the services contemplated by this Agreement; (iii)
has met, and will continue to meet for so long as this Agreement remains in
effect, any other applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency, necessary to
be met in order to perform the services contemplated by this Agreement; (iv) has
the authority to enter into and perform the services contemplated by this
Agreement; and (v) will immediately notify EII of the occurrence of an event
that would disqualify the Sub-Adviser from serving as an investment adviser of
an investment company pursuant to Section 9(a) of the 1940 Act or otherwise.
(b) The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and will provide EII with a
copy of such code of ethics, together with evidence of its adoption. Within 45
days after the end of the last calendar quarter of each year that this Agreement
is in effect, the president or a vice-president of the Sub-Adviser shall certify
to EII that the Sub-Adviser has complied with the requirements of Rule 17j-1
during the previous year and that there has been no violation of the
Sub-Adviser's code of ethics or, if such a violation has occurred, that
appropriate action was taken in response to such violation. Upon the written
request of EII, the Sub-Adviser shall permit EII, its employees or its agents to
examine the reports required to be made to the Sub-Adviser by Rule 17j-1(c)(1)
and all other records relevant to the Sub-Adviser's code of ethics.
(c) The Sub-Adviser has provided EII with a copy of its Form ADV as
most recently filed with the Securities and Exchange Commission ("SEC") and
will, promptly after filing any amendment to its Form ADV with the SEC, furnish
a copy of such amendment to EII.
9. DURATION AND TERMINATION.
(a) This Agreement shall become effective upon the date first above
written, provided that this Agreement shall not take effect unless it has first
been approved (i) by a vote of a majority of those trustees of the Trust who are
not parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by vote of a majority of the Series's outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Agreement shall
continue in effect for two years from its effective date. Thereafter, if not
terminated, this Agreement shall continue automatically for successive periods
of twelve months each, provided that such continuance is specifically approved
at least annually (i) by a vote of a majority of those trustees of the Trust who
are not parties to this Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval, and
(ii) by the Board or by vote of a majority of the outstanding voting securities
of the Series.
(c) Notwithstanding the foregoing, this Agreement may be terminated at
any time, without the payment of any penalty, by vote of the Board or by a vote
of a majority of the outstanding voting securities of the Series on 60 days'
written notice to the Trust and the Sub-Adviser. This Agreement may also be
terminated by EII: (i) on 120 days' written notice to the Trust and the
Sub-Adviser, without the payment of any penalty; (ii) upon material breach by
the Sub-Adviser of any of the representations and warranties set forth in
Paragraph 8 of this Agreement, if such breach shall not have been cured within a
20 day period after notice of such breach; or (iii) if the Sub-Adviser becomes
unable to discharge its duties and obligations under this Agreement. The
Sub-Adviser may terminate this Agreement at any time, without the payment of any
penalty, on 120 days' notice to EII. This Agreement will terminate automatically
in the event of its assignment or upon termination of the Advisory Agreement.
10. AMENDMENT OF THIS AGREEMENT. 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, and no amendment of this Agreement shall be
effective until approved by vote of a majority of the Series's outstanding
voting securities.
11. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Maine, 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 Maine conflict with the applicable provisions of the 1940 Act, the
latter shall control.
12. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision or 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 and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"affiliated person," "interested person," "assignment," "broker," "investment
adviser," "net assets," "sale," "sell," and "security" shall have the same
meaning as such terms have in the 1940 Act, subject to such exemption as may be
granted by the SEC by any rule, regulation or order. 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 or order of the SEC,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed, as an instrument under seal, by their duly authorized signatories
as of the date and year first above written.
Attest: XXXXXXX INVESTMENTS, INC.
__________________________ By:______________________________
Attest: GOUWS CAPITAL MANAGEMENT, INC.
__________________________ By:_______________________________
