1
EXHIBIT 5H
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated as of May 1, 1997, between Market Street Fund, Inc. (the
"Fund"), a corporation organized under the laws of the State of Maryland, and
Sentinel Advisors Company (the "Adviser"), a Vermont general partnership.
WHEREAS, the Fund is a registered investment company under the Investment
Company Act of 1940 ("Investment Company Act") and maintains several investment
portfolios for the use of the Fund's shareholders which are separate accounts
established and maintained by insurance companies;
WHEREAS, the Growth Portfolio of the Fund has the current objective of
achieving intermediate and long-term growth of capital; with a reasonable level
of income being an important objective but not the primary objective;
WHEREAS, the Fund desires that Sentinel Advisors Company act as investment
adviser with respect to the Growth Portfolio;
WHEREAS, the Investment Company Act prohibits any person from acting as an
investment advisor to an investment company except pursuant to a written
agreement;
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act");
NOW, THEREFORE, the Fund and the Adviser hereby agree as follows:
1. At its own expense and subject to supervision of the Board of
Directors of the Fund (the "Directors"), the Adviser will provide
investment advisory services with respect to the Fund's Growth Portfolio
(the "Portfolio") in accordance with the Portfolio's investment
objectives, policies and restrictions as stated in the Fund's
Prospectus, as from time to time in effect, the Articles of
Incorporation and By-laws of the Fund, and the Investment Company Act
and appropriate State Insurance Laws, each as amended from time to time.
The Adviser agrees to furnish the services described below for the
compensation provided by this Agreement. The Adviser shall for all
purposes herein be deemed to be an independent contractor and shall,
unless otherwise expressly provided or authorized, have no authority to
act for or represent the Fund in any way, or otherwise be deemed an
agent of the Fund.
2. In connection with its obligations hereunder, the Adviser shall,
subject to supervision by the Directors, manage the investment and
reinvestment of the assets of the Portfolio. Subject to the limitations
set forth in Paragraph 1 above, the Adviser shall:
(a) perform research and obtain and evaluate pertinent economic,
statistical, and financial data relevant to the investment policies
of the Portfolio as set forth in the Fund's prospectus, as amended
from time to time;
(b) consult with the Directors and furnish to the Directors
recommendations with respect to an overall investment plan and any
changes thereto for the Portfolio for approval, modification, or
rejection by the Directors;
(c) select specific investment opportunities, consistent with any
overall investment plan approved by the Directors;
(d) take such steps as are necessary to implement any overall
investment plan approved by the Directors, including making and
carrying out decisions to acquire or dispose of permissible
investments, management of investments and any other property of the
Portfolio, and providing or obtaining such services as may be
necessary in managing, acquiring or disposing of investments; and
(e) determine the composition of the assets of the Portfolio, including
the purchase, retention or sale of the securities and cash contained
in the Portfolio.
1
2
3. The Adviser shall effect all purchases and sales of investments for
the Portfolio in a manner consistent with the limitations set forth in
Paragraph 1 above.
4. The Adviser shall regularly report to the Directors with respect to
the implementation of any approved overall investment plan and any other
activities in connection with management of the assets of the Portfolio.
The Adviser, either through persons employed by it or at its own
expense, shall furnish to the Directors, at least once every three
months, a schedule of the investments and other assets held in each
Portfolio and a statement of all purchases and sales for each Portfolio
made since the last report.
5. The Adviser shall maintain all accounts, records, memoranda,
instructions, or authorizations relating to the acquisition or
disposition of investments for the Portfolio as required by law.
The Adviser agrees that all accounts and records which it maintains for
the Fund's Portfolio shall be the property of the Fund and that it will
surrender promptly to the designated officers of the Fund, or to the
Directors, any or all such accounts and records upon request. The Fund
or its authorized representative shall have the right to copy any
records in the possession of the Adviser which pertain to the Portfolio.
The Adviser further agrees to preserve for the period prescribed by the
rules and regulations of the Securities and Exchange Commission all such
records as are required to be maintained pursuant to said rules. The
Adviser also agrees that it will maintain all records and accounts
regarding the investment activities of the Portfolios in a confidential
manner. All such accounts or records shall be made available, within
five (5) business days of a written request, to the Fund's accountants
or auditors during regular business hours at the Adviser's offices. In
addition, the Adviser will provide any materials, reasonably related to
the investment advisory services provided hereunder, as may be
reasonably requested in writing by the Directors, or as may be required
by any governmental agency having jurisdiction over the Fund or any
insurance companies investing in the Fund.
6. (a) For the services provided to the Portfolio, the Adviser will be
compensated monthly in arrears at the effective annual rate of 0.50%
of the first $20 million of the average daily net assets of the
Portfolio, 0.40% of the next $20 million of the average daily net
assets of the Portfolio, and 0.30% of the average daily net assets
of the Portfolio in excess of $40 million.
(b) If this Agreement is terminated at any time, any compensation owed
the Adviser pursuant to subparagraph (a) above shall be payable upon
the date of termination of this Agreement.
7. The Adviser shall be responsible for all expenses incurred in
performing the investment advisory services herein set forth, including
costs of compensating and furnishing office space for officers and
employees of the Adviser connected with investment and economic
research, trading and investment management of the Portfolio. All
brokers' commissions, transfer taxes and other fees relating to
purchases and sales of investments shall be paid out of assets allocated
to the Portfolio.
8. The Adviser shall, subject to the supervision of the Directors,
arrange for the placement of orders for the Portfolio, either directly
with the issuer, with any broker-dealer or underwriter that specializes
in the securities for which the order is made, or with any other broker
or dealer selected by the Adviser, subject to the following limitation;
the Adviser shall use its best judgment to choose brokers who will
obtain the best prices and executions and securities transactions and
whose commissions are most reasonable. In addition to seeking the best
price and execution, the Adviser may also take into consideration
research and statistical information and wire and other quotation
services provided to the Adviser. However, the Adviser shall select only
brokers whose commissions it believes are reasonable. The Adviser will
periodically evaluate the statistical data, research and other
investment services provided by brokers and dealers to it. Such services
may be used by the Adviser in connection with the performance of its
obligations under this Agreement or in connection with other advisory or
investment operations.
2
3
9. The Adviser shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Portfolio in connection with the
subject matter of this Agreement unless such loss arises from willful
misfeasance on its part in the performance of its obligations and duties
or by reason of its reckless disregard of its obligations and duties
under this Agreement.
10. The Adviser and any affiliate of the Adviser may engage in any other
business or act as adviser to or investment manager of any other person,
even though the Adviser, any affiliate of the Adviser, or any such other
person has or may have investment policies similar to those for the
Portfolio, so long as the Adviser's services under this Agreement are
not impaired. It is understood that directors, officers, employees and
shareholders of the Fund are or may become interested in the Adviser, as
directors, officers, employees, shareholders or otherwise and that
directors, officers, employees and shareholders of the Adviser are or
may become similarly interested in the Fund, and that the Adviser may
become interested in the Fund; and that the existence of any such dual
interest shall not affect the validity hereof or any transaction
hereunder except as otherwise provided in the Articles of Incorporation
or By-laws of the Fund and the Adviser, respectively, or by specific
provisions of applicable law.
It is agreed that the Adviser or its affiliates may use any investment
research obtained for the benefit of the Portfolio in providing
investment advice to its other investment advisory accounts or for use
in managing their own accounts. Conversely, such supplemental
information obtained by the placement of business for the Adviser or the
entities advised by the Adviser may be considered by and may be useful
to the Adviser in carrying out its obligations to the Portfolio.
Nothing herein contained shall prevent the Adviser or any affiliate of
the Adviser from buying or selling, or from recommending or directing
any other person to buy or sell, at any time, securities of the same
kind or class recommended by the Adviser to be purchased or sold for the
Portfolio. When the Adviser deems the purchase or sale of a security to
be in the best interests of any of the Portfolio as well as other
accounts or companies, it may, to the extent permitted by applicable
laws and regulations, but will not be obligated to, aggregate the
securities to be sold or purchased for such Portfolio with those to be
sold or purchased for other accounts or companies in order to obtain
favorable execution and low brokerage commissions. In that event,
allocation of the securities purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Adviser in the manner
it considers to be most equitable and consistent with its fiduciary
obligations to the Portfolio and to such other accounts or companies.
The Fund recognizes that in some cases this procedure may adversely
affect the size of the position obtainable for the Portfolio.
11. This Agreement shall not be effective unless and until it is approved
by the Directors, including a majority of the Directors who are not
"interested persons" (as defined in the Investment Company Act), by vote
cast in person at a meeting called for the purpose of voting such
approval and by the parties to this Agreement. This Agreement shall come
into full force and effect on May 1, 1997, or upon the effectiveness of
the amendment to the Fund's Registration Statement reflecting this
Agreement filed with the Securities and Exchange Commission under the
Securities Act of 1933, whichever is later, provided this Agreement
shall have been approved by a vote of the "majority" (as defined in the
Investment Company Act) of the outstanding shares of the Portfolio.
12. This Agreement shall continue until December 31, 1998 and thereafter
for successive annual periods ending December 31, of each year, provided
such continuance is specifically approved at least annually by (i) the
Directors or (ii) by the vote of a "majority" of the shareholders of the
Portfolio as set forth in paragraph 11 above, provided that in either
event the continuance is also approved by a majority of the Directors
who are not "interested persons" (as defined in the Investment Company
Act) of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting such approval. The Fund agrees that it
will notify the Adviser in writing each year of such annual approval.
13. (a) This Agreement shall terminate automatically in the event of its
assignment.
3
4
(b) This Agreement may be terminated at any time without the payment of
any penalty, (i) by a majority of the Directors for cause or upon
sixty days written notice addressed to the Adviser or (ii) by a vote
of a "majority" of the shareholders as set forth in paragraph 11
above, or (iii) by the Adviser on sixty days written notice
addressed to the Fund at its principal place of business. Cause is
defined and limited for this purpose to mean willful misfeasance by
the Adviser in the performance of its duties or reckless disregard
by the Adviser of its obligations and duties under this agreement.
14. This Agreement shall be construed in accordance with Pennsylvania law.
15. The Fund understands that the Adviser now acts, will continue to act,
or may act in the future, as investment adviser to fiduciary and other
managed accounts including other investment companies, and the Fund has
no objection to the Adviser's so acting, provided that the Adviser duly
performs all obligations under this Agreement.
16. The Fund understands that the persons employed by the 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 the Adviser or any of its affiliates to
engage in and devote time and attention to other businesses or to render
services of whatever kind or nature, provided that the Adviser duly
performs all obligations under this Agreement.
17. This Agreement shall be subject to the provisions of the Investment
Company Act and the Investment Advisers Act and the rules, regulations,
and rulings thereunder, as from time to time in effect, including such
exemptions therefrom as the Securities and Exchange Commission may
grant. The terms used in this Investment Advisory Agreement, and any
amendment thereof, shall be interpreted and construed in accordance
therewith. Without limiting the generality of the foregoing, the term
"assignment" shall not include any transaction exempted from section
15(a)(4) of the Investment Company Act by an order of the Securities and
Exchange Commission.
18. The Adviser shall submit to all regulatory and administrative bodies
having jurisdiction over the operations of Provident Mutual Life
Insurance Company of Philadelphia, Providentmutual Life and Annuity
Company of America, National Life Insurance Company or the Fund, present
or future, any materials reasonably related to the investment advisory
services provided hereunder, as may be
4
