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Exhibit (5)(j)
SUB-ADVISORY AGREEMENT
(INTERNATIONAL EQUITY FUND)
AGREEMENT made as of August 29, 1996 between Mississippi
Valley Advisors Inc., a Missouri corporation (the "Adviser"), and Xxxx Xxxxxx,
Inc., a New York corporation ("Sub-Adviser").
WHEREAS, The ARCH Fund, Inc. (the "Fund") is registered as an
open-end, 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 Fund has approved this
Agreement, subject to approval by the shareholders of the Portfolio, 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 Sub-Adviser 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.
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Without limiting the generality of the foregoing, Sub-Adviser
further agrees that it:
(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
investment-related 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:
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(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 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
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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 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
determinations 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 Sub-Adviser 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 Fund. 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.
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7. Expenses. During the term of this Agreement, Sub-Adviser
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 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, Sub-Adviser
will be entitled to a fee, computed daily and payable monthly, from Adviser,
calculated at the annual rate of .75% of the first $50 million of the
Portfolio's average daily net assets, plus .50% of the next $50 million of
average daily net assets, plus .25% of average daily net assets in excess of
$100 million.
(b) 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. Sub-Adviser
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.
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11. Duration and Termination. Unless sooner terminated, this
Agreement shall continue until January 25, 1998, 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 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:
One Mercantile Center
7th and Xxxxxxxxxx Xxxxxxx
Xxxxx 0000
Xx. Xxxxx, XX 00000
To the Fund at:
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
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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 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/Xxxxxxx X. Xxxxxxxxxxx By: /s/Xxxxx X. Xxxxxxx III
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XXXX XXXXXX, INC.
Attest:
/s/Xxxx X. Xxxx By: /s/D. Xxxxxxx Xxxxxx
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