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EXHIBIT (5)(c)
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SUB-INVESTMENT ADVISORY AGREEMENT
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This Sub-Investment Advisory Agreement is made as of the 15th day of
August, 1995, and amended as of January 1, 1997, by and between The Provident
Bank, an Ohio banking corporation (the "Adviser"), and ▇▇▇▇▇▇▇▇, Race & ▇▇▇▇▇,
Inc., a Florida corporation (the "Sub-Adviser").
WHEREAS, the Adviser serves as investment adviser of The Riverfront
Funds, Inc., a Maryland corporation, and an open-end management investment
company (the "Company"), 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 Company 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 Company 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 August 1, 1994, between the Adviser and the
Company (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 Company's Board of Directors
(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 Company's Board of Directors, for the period and on the terms
hereinafter set forth. The Board of Directors 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
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compensation herein provided. The Sub-Adviser will provide the services under
this Agreement in accordance with the Portfolio's 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 Company's Board of
Directors. 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 Company 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 capital stock in the Company or make loans to the
Company;
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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 Company's Board of Directors 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 Company,
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 Company's Board of Directors such periodic
and special reports as the Board reasonably may request;
(f) treat confidentially and as proprietary information of
the Adviser and the Company all records and other
information relative to the Adviser and the Company 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 Company and the Adviser, the Sub-Adviser may divulge
such information to duly constituted authorities, or when
so requested by the Adviser and the Company, 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 Company, the Sub-Adviser's personnel will not inquire or take
into consideration whether the issuers of securities proposed for
purchase or sale for the Company'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 Company; and
(h) render, upon request of the Adviser or the Company's Board of
Directors, 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 Company any such
records upon the Adviser's or the Company'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 Company's Registration Statement. If the Adviser
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is required to reduce its fee or to reimburse the Company because the expenses
of the Fund exceed applicable state securities regulations or are in excess of
any voluntary expense limitations set forth in the Company'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 Company's Administration
Agreement with BISYS Fund Services Limited Partnership) by the Company 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 Company 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 Company 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 Company'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 COMPANY'S LIABILITY. The Sub-Adviser acknowledges that
it has received notice of and accepts the limitations upon the Company's
liability set forth in its Articles of Incorporation and under Maryland law. The
Sub-Adviser agrees that any of the Company'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 Company nor from any Director,
officer, employee or agent of the Company.
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 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
31, 1996.
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 Company's
Board of Directors 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
Company's Board of Directors 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 Company's Board of Directors, by the Adviser, or by a vote of the majority
of 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 Company's Board of Directors, 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 Directors of the Company.
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 Company's Board of Directors and, if required by the
1040 Act and applicable SEC rules and regulations, a vote of a majority of the
Portfolio's outstanding voting securities.
11. CONFIDENTIAL RELATIONSHIP. Any information and advice furnished
by either party to this Agreement to the other shall be
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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 Senior Vice President
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▇▇▇▇▇▇▇▇, RACE & ▇▇▇▇▇, INC.
By
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Title President
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Dated: January 1, 1997
SCHEDULE A
To the Sub-Investment Advisory Agreement
between The Provident Bank and
▇▇▇▇▇▇▇▇, Race & ▇▇▇▇▇, Inc.
Name of Fund COMPENSATION DATE
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The Riverfront Income Annual Rate of .50% of the January 1, 1997
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 Senior Vice President
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▇▇▇▇▇▇▇▇, RACE & ▇▇▇▇▇, INC.
By
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Title President
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All fees are computed daily and paid monthly.
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