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Exhibit (5)(i)
SUB-ADVISORY AGREEMENT
(INTERNATIONAL EQUITY FUND)
AGREEMENT made as of January 25, 1994 between Mississippi
Valley Advisors Inc., a Missouri Corporation (the "Adviser"), and Xxxx Xxxxxx,
Inc., a New York corporation ("SubAdviser").
WHEREAS, The ARCH Fund, Inc. (the "Fund") is registered as an
open-end, diversified management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Adviser has been appointed investment adviser to
the Fund's International Equity Portfolio (the "Portfolio"); and
WHEREAS, the Adviser desires to retain Sub-Adviser to assist
it in the provision of a continuous investment program for the Portfolio and
Sub-Adviser is willing to do so;
WHEREAS, the Board of Directors of the Portfolio and the
Portfolio's sole shareholder have approved this Agreement, and Sub-Adviser is
willing to furnish such services upon the terms and conditions herein set
forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Adviser hereby appoints SubAdviser
to act as sub-advisor to the Portfolio as permitted by the Adviser's Advisory
Agreement with the Fund pertaining to the Portfolio. Intending to be legally
bound, Sub-Adviser accepts such appointment and agrees to render the services
herein set forth for the compensation herein provided.
2. SUB-ADVISORY SERVICES. Subject to the supervision of
the Fund's Board of Directors, Sub-Adviser will assist the Adviser in providing
a continuous investment program for the Portfolio, including investment
research and management with respect to all securities and investments and cash
equivalents in the Portfolio. Sub-Adviser will provide services under this
Agreement in accordance with the Portfolio's investment objective, policies and
restrictions as stated in the Portfolio's prospectus and resolutions of the
Fund's Board of Directors applicable to the Portfolio.
Without limiting the generality of the foregoing, SubAdviser
further agrees that it:
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(a) will prepare, subject to the Adviser's approval, lists
of foreign countries for investment by the Portfolio and determine from
time to time what securities and other investments will be
purchased, retained or sold for the Portfolio, including, with the
assistance of the Adviser, the Portfolio's investments in futures and
forward currency contracts;
(b) will manage in consultation with the Adviser the
Portfolio's temporary investments in securities;
(c) will place orders pursuant to its investment
determinations for the Portfolio either directly with the issuer or with
any broker or dealer;
(d) will not purchase shares of the Portfolio for itself
or for accounts with respect to which it exercises sole investment
discretion in connection with such transactions except as permitted by the
Fund's Board of Directors or by federal, state and local law;
(e) will manage the Portfolio's overall cash position, and
determine from time to time what portion of the Portfolio's assets will be
held in different currencies;
(f) will provide the Adviser with foreign broker research, a
quarterly review of international economic and investment developments, and
occasional "White Papers" on international investment issues;
(g) will attend regular business and investmentrelated
meetings with the Fund's Board of Directors and the Adviser if requested
to do so by the Fund and/or the Adviser; and
(h) will maintain books and records with respect to the
securities transactions for the Portfolio, furnish to the Adviser and the
Fund's Board of Directors such periodic and special reports as they may
request with respect to the Portfolio, and provide in advance to the
Adviser all reports to the Board of Directors for examination and review
within a reasonable time prior to the Fund's Board meetings.
3. COVENANTS BY SUB-ADVISER. Sub-Adviser agrees with respect to
the services provided to the Portfolio that it:
(a) will conform with all Rules and Regulations of the
Securities and Exchange Commission;
(b) will telecopy trade information to the Adviser on the
first business day following the day of the
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trade and cause broker confirmations to be sent directly to the
Adviser; and
(c) will treat confidentially and as proprietary
information of the Fund all records and other information relative to
the Fund 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 after
prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be withheld
and will be deemed granted where Sub-Adviser may be exposed to civil
or criminal contempt proceedings for failure to comply, when requested
to divulge such information by duly constituted authorities, or when
so requested by the Fund).
4. SERVICES NOT EXCLUSIVE.
The services furnished by Sub-Adviser hereunder are deemed not
to be exclusive, and nothing in this Agreement shall (i) prevent Sub-Adviser or
any affiliated person (as defined in the 0000 Xxx) of Sub-Adviser from acting
as investment adviser or manager for any other person or persons, including
other management investment companies with investment objectives and policies
the same as or similar to those of the Portfolio or (ii) limit or restrict
Sub-Adviser or any such affiliated person from buying, selling or trading any
securities or other investments (including any securities or other investments
which the Portfolio is eligible to buy) for its or their own accounts or for
the accounts of others for whom it or they may be acting; PROVIDED, HOWEVER,
that Sub-Adviser agrees that it will not undertake any activities which, in its
reasonable judgment, will adversely affect the performance of its obligations
to the Portfolio under this Agreement.
5. PORTFOLIO TRANSACTIONS. Investment decisions for the
Portfolio shall be made by Sub-Adviser independently from those for any other
investment companies and accounts advised or managed by Sub-/Adviser. The
Portfolio and such investment companies and accounts may, however, invest in
the same securities. When a purchase or sale of the same security is made at
substantially the same time on behalf of the Portfolio and/or another
investment company or account, the transaction will be averaged as to price,
and available investments allocated as to amount, in a manner which Sub-Adviser
believes to be equitable to the Portfolio and such other investment company or
account. In some instances, this investment procedure may adversely affect the
price paid or received by the Portfolio or the size of the position obtained or
sold by the Portfolio. To the extent permitted by law, Sub-Adviser may
aggregate the securities to be sold or purchased for the Portfolio with those
to be sold or
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purchased for other investment companies or accounts in order to obtain best
execution.
Sub-Adviser shall place orders for the purchase and sale of
portfolio securities and will solicit broker-dealers to execute transactions in
accordance with the Portfolio's policies and restrictions regarding brokerage
allocations. Sub-Adviser shall place orders pursuant to its investment
determination for the Portfolio either directly with the issuer or with any
broker or dealer selected by Sub-Adviser. In executing portfolio transactions
and selecting brokers or dealers, Sub-Adviser shall use its reasonable best
efforts to seek the most favorable execution of orders, after taking into
account all factors SubAdviser deems relevant, including 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, both for the specific transaction and on a continuing
basis. Consistent with this obligation, 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 Portfolio and/or other accounts over which Sub-Adviser or any of its
affiliates exercises investment discretion. Sub-Adviser is authorized to pay
to a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Portfolio which is in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction if 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 Sub-Adviser's overall responsibilities to the
Portfolio and to the Company. In no instance will portfolio securities be
purchased from or sold to Sub-Adviser, or the Portfolio's principal
underwriter, or any affiliated person thereof except as permitted by the
Securities and Exchange Commission.
6. BOOKS AND RECORDS. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Adviser hereby agrees that
all records which it maintains for the Fund are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
7. EXPENSES. During the term of this Agreement,
SubAdviser will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities
and other investments (including
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brokerage commissions and other transaction charges, if any) purchased for the
Portfolio.
8. COMPENSATION. (a) For the services provided and the
expenses assumed with respect to the Portfolio pursuant to this Agreement, the
Sub-Adviser will be entitled to a fee, computed daily and payable monthly, from
Adviser, calculated at the annual rate of .75% of the Portfolio's average daily
net assets;
(b) For at least the first two months of the Portfolio's
operations, the Sub-Adviser will waive its fees, unless otherwise agreed upon
by the Adviser and the Sub-Adviser; and
(c) If the Adviser reimburses the Fund, pursuant to Section 8(b)
of the Advisory Agreement, with respect to the Portfolio, the Sub-Adviser will
bear its share of the amount of such reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Adviser
under the Advisory Agreement with respect to the Portfolio.
9. STANDARD OF CARE; LIMITATION OF LIABILITY.
SubAdviser shall exercise due care and diligence and use the same skill and
care in providing its services hereunder as it uses in providing services to
other investment companies, but shall not be liable for any action taken or
omitted by Sub-Adviser in the absence of bad faith, willful misconduct, gross
negligence or reckless disregard of its duties.
10. REFERENCE TO SUB-ADVISER. Neither the Adviser nor
any affiliate or agent of it shall make reference to or use the name of
Sub-Adviser or any of its affiliates, or any of their clients, except
references concerning the identity of and services provided by Sub-Adviser to
the Portfolio, which references shall not differ in substance from those
included in the current registration statement pertaining to the Portfolio,
this Agreement and the Advisory Agreement between the Adviser and the Fund with
respect to the Portfolio, in any advertising or promotional materials without
the prior approval of Sub-Adviser, which approval shall not be unreasonably
withheld or delayed. The Adviser hereby agrees to make all reasonable efforts
to cause the Fund and any affiliate thereof to satisfy the foregoing
obligation.
11. DURATION AND TERMINATION. Unless sooner terminated,
this Agreement shall continue until January 25, 1995 and thereafter shall
continue automatically for successive annual periods, provided such continuance
is specifically approved at least annually by the Fund's Board of Directors or
vote of the
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lesser of (a) 67% of the shares of the Portfolio represented at a meeting if
holders of more than 50% of the outstanding shares of the Portfolio are present
in person or by proxy or (b) more than 50% of the outstanding shares of the
Portfolio, provided that in either event its continuance also is approved by a
majority of the Fund's Directors who are not "interested persons" (as defined
in the 0000 Xxx) 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 at any time without penalty, on 60 days' notice, by Adviser,
Sub-Adviser or by the Fund's Board of Directors or by vote of the lesser of (a)
67% of the shares of the Portfolio represented at a meeting if holders of more
than 50% of the outstanding shares of the Portfolio are present in person or by
proxy or (b) more than 50% of the outstanding shares of the Portfolio. This
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
12. 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. No amendment of this
Agreement shall be effective with respect to the Portfolio until approved by
the vote of a majority of the outstanding voting securities of the Portfolio.
13. NOTICE. Any notice, advice or report to be given
pursuant to this Agreement shall be delivered or mailed:
To Sub-Adviser at:
-----------------
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
To the Adviser at:
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One Mercantile Center
7th and Xxxxxxxxxx Xxxxxxx
Xxxxx 0000
Xx. Xxxxx, XX 00000
To the Fund at:
--------------
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
14. 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 of this Agreement shall be held or made invalid by a court,
decision, statute, rule or
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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 and shall be
governed by Maryland law.
15. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
MISSISSIPPI VALLEY ADVISORS INC.
Attest:
/s/ [signature illegible] By:/s/ Xxxx X. Xxxxxx
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XXXX XXXXXX, INC.
Attest:
/s/ [signature illegible] By:/s/ [signature illegible]
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