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EXHIBIT 99(d)(12)
FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT ("Agreement"), made this 28th
day of March, 2000 by and between PROVIDENTMUTUAL INVESTMENT MANAGEMENT COMPANY,
a Pennsylvania corporation (the "Adviser"), and XXXXXXX X. XXXXXXXXX & COMPANY.,
INC., a New York corporation (the "Sub-Adviser").
Adviser and Sub-Adviser agree as follows:
1. Adviser hereby engages the services of Sub-Adviser in connection with
Adviser's management of the All Pro Large Cap Value Portfolio (the "Portfolio")
of Market Street Fund, Inc. (the "Fund"). Pursuant to this Agreement and subject
to the oversight and supervision by Adviser and the officers and the board of
directors of the Fund, Sub-Adviser shall manage the investment and reinvestment
of that portion of the assets of the Portfolio (hereinafter, the "Portfolio
Segment") that the Adviser shall, from time to time, direct and which shall be
acceptable to Sub-Adviser.
2. Sub-Adviser hereby accepts appointment by Adviser in the foregoing
capacity and agrees, at its own expense, to render the services set forth herein
and to provide the office space, furnishings, equipment and personnel required
by it to perform such services on the terms and for the compensation provided in
this Agreement.
3. In particular, Sub-Adviser shall furnish continuously an investment
program for the Portfolio Segment and shall determine from time to time in its
discretion the securities and other investments to be purchased or sold or
exchanged and what portions of the Portfolio Segment shall be held in various
securities, cash or other investments. In this connection, Sub-Adviser shall
provide Adviser and the officers and directors of the Fund with such reports and
documentation as the latter shall reasonably request regarding Sub-Adviser's
management of the Portfolio Segment assets.
4. Sub-Adviser shall carry out its responsibilities under this Agreement
in compliance with: (a) the Portfolio's investment objective, policies and
restrictions as set forth in the Fund's current registration statement, (b) such
policies or directives as the Fund's directors may from time to time establish
or issue and communicate to the Sub-Adviser in writing, and (c) applicable law
and related regulations. Adviser shall promptly notify Sub-Adviser in writing of
changes to (a) or (b) above and shall notify Sub-Adviser in writing of changes
to (c) above promptly after it becomes aware of such changes.
5. Sub-Adviser shall take all actions which it considers necessary to
implement the investment policies of the Portfolio as these relate to the
Portfolio Segment, and in particular, to place all orders for the purchase or
sale of securities or other investments for the Portfolio
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Segment with brokers or dealers selected by it, and to that end, Sub-Adviser is
authorized as the agent of the Fund to give instructions to the Fund's custodian
as to deliveries of securities or other investments and payments of cash for the
account of the Portfolio. In connection with the selection of brokers or dealers
and the placing of purchase and sale orders with respect to investments of the
Portfolio, Sub-Adviser is directed at all times to seek to obtain best execution
and price within the policy guidelines determined by the Fund's board of
directors and set forth in the Fund's current registration statement.
To the extent permitted by the policy guidelines set forth in the
Fund's current registration statement, Sub-Adviser is authorized to consider, in
the selection of brokers and dealers to execute portfolio transactions, not only
the available prices and rates of brokerage commissions but also other relevant
factors which may include, without limitation, the execution capabilities of
such brokers and dealers, research, custody and other services provided by such
brokers and dealers which the Sub-Adviser believes will enhance its general
portfolio management capabilities, the size of the transaction, the difficulty
of execution, the operational facilities of such brokers and dealers, the risk
to such a broker or dealer of positioning a block of securities, and the overall
quality of brokerage and research services provided by such brokers and dealers.
In connection with the foregoing, Sub-Adviser is specifically authorized to pay
those brokers and dealers who provide brokerage and research services to it, a
higher commission than that charged by other brokers and dealers if the
Sub-Adviser determines in good faith that the amount of such commission is
reasonable in relation to the value of such services in terms of either the
particular transaction or in terms of Sub-Adviser's overall responsibilities
with respect to the Portfolio Segment and to any other client accounts or
portfolios which Sub-Adviser advises. The execution of such transactions shall
not be considered to represent an unlawful breach of any duty created by this
Agreement or otherwise.
On an ongoing basis, but not less often than annually, the Sub-Adviser
shall identify and provide a written description to the Adviser of all "soft
dollar" arrangements that the Sub-Adviser maintains with respect to the
Portfolio Segment or with brokers or dealers which execute transactions for the
Portfolio Segment. Prior to the commencement of the active management of the
Portfolio Segment, and periodically thereafter, but not less often than
annually, the Sub-Adviser shall provide the Adviser with a written description
of all arrangements with third parties and other individuals, entities, brokers,
or money management firms that have or may receive or share in the payment of
fees for services in connection with securing or continuing this Agreement.
Sub-Adviser also is authorized to aggregate purchase and sale orders
for securities held (or to be held) in the Portfolio Segment with similar orders
being made on the same day for other eligible client accounts or portfolios
managed by Sub-Adviser. When an order is so aggregated: (a) the actual prices
applicable to the aggregated transaction will be averaged and the Portfolio
Segment and each other account or portfolio participating in the aggregated
transaction shall be treated as having purchased or sold its portion of the
securities at such average price, and (b) all transaction costs incurred in
effecting the aggregated transaction shall be shared on a pro-rata basis among
the accounts or portfolios (including the Portfolio Segment) participating in
the
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transaction. Adviser recognizes that in some cases this procedure may adversely
affect the size of the position obtainable for the Portfolio Segment.
When recommending or effecting a transaction in a particular security
or investment for more than one client account or portfolio (including the
Portfolio Segment), Sub-Adviser may allocate such recommendations or
transactions among all accounts and portfolios for whom the recommendation is
made or transaction is effected on a basis that Sub-Adviser considers equitable.
6. Sub-Adviser's services under this Agreement are not exclusive.
Sub-Adviser may provide the same or similar services to other clients. Adviser
acknowledges that, except when transactions for multiple clients are aggregated,
transactions in a specific security or other investment may not be recommended
or executed at the same time or price for all client accounts or portfolios
(including the Portfolio Segment) for which that security or investment is
recommended or executed. This Agreement does not require Sub-Adviser to give
priority to the Portfolio Segment over other client accounts or portfolios.
Sub-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 Adviser, the Fund or the Portfolio or
otherwise be deemed agents of the Adviser, the Fund or the Portfolio.
7. The Adviser delegates the Adviser's discretionary authority to exercise
voting rights with respect to the securities and other investments in the
Portfolio Segment to the Sub-Adviser. The Sub-Adviser shall exercise these
voting rights unless and until the Adviser revokes this delegation. The Adviser
may revoke this delegation at any time without cause. The Sub-Adviser shall
maintain and preserve a record, in an easily-accessible place for a period of
not less than three years, of the Sub-Adviser's voting procedures, and of the
Sub-Adviser's actual votes, and shall supply this record to the Adviser, or any
authorized representative of the Adviser, upon the written request of the
Adviser or the Adviser's authorized representative, as appropriate.
8. Sub-Adviser or an affiliated person of Sub-Adviser may act as broker
for the Portfolio in connection with the purchase or sale of securities or other
investments for the Portfolio, subject to: (a) the requirement that Sub-Adviser
seek to obtain best execution and price within the policy guidelines determined
by the Fund's board of directors and set forth in the Fund's current
registration statement; (b) the provisions of the Advisers Act; (c) the
provisions of the Securities Exchange Act of 1934, as amended; and (d) other
applicable provisions of law. Such brokerage services are not within the scope
of the duties of Sub-Adviser under this Agreement. Subject to the requirements
of applicable law and any procedures adopted by Fund's board of directors,
Sub-Adviser or its affiliated persons may receive brokerage commissions, fees or
other remuneration from the Portfolio or the Fund for such services in addition
to Sub-Adviser's fees for services under this Agreement.
9. Nothing in this Agreement shall require Sub-Adviser to take or receive
physical possession of cash, securities or other investments of the Portfolio
Segment.
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10. Sub-Adviser is registered with the U.S. Securities and Exchange
Commission under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"). Sub-Adviser shall remain so registered throughout the term of this
Agreement and shall notify Adviser immediately if Sub-Adviser ceases to be so
registered as an investment adviser.
11. Sub-Adviser: (a) is duly organized and validly existing under the laws
of the State of New York with the power to own and possess its assets and carry
on its business as it is now being conducted, (b) has the authority to enter
into and perform the services contemplated by this Agreement, (c) is not
prohibited by the Investment Company Act of 1940 (the "1940 Act") or the
Advisers Act from performing the services contemplated by this Agreement, (d)
has met, and will continue to seek to meet for the duration of this Agreement,
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 this Agreement, and (e) will promptly
notify Adviser of the occurrence of any event that would disqualify it from
serving as an investment adviser to an investment company pursuant to Section
9(a) of the 1940 Act.
12. Adviser: (a) is duly organized and validly existing under the laws of the
Commonwealth of Pennsylvania with the power to own and possess its assets and
carry on its business as it is now being conducted, (b) has the authority to
enter into and perform the services contemplated by this Agreement, (c) is not
prohibited by the 1940 Act or the Advisers Act from performing the services
contemplated by this Agreement, (d) has met, and will continue to seek to meet
for the duration of this Agreement, any other applicable federal or state
requirements, or the applicable requirements of any regulatory or industry
self-regulatory agency, necessary to be met by Sub-Adviser in order to perform
its services under this Agreement, and (e) will promptly notify Sub-Adviser of
the occurrence of any event that would disqualify it from serving as an
investment adviser to an investment company pursuant to Section 9(a) of the 1940
Act. Adviser represents that the Fund is (and during the term of this Agreement,
will remain) registered as an open-end management investment company under the
1940 Act and that the shares of the Fund's stock representing an interest in the
Portfolio are (and during the term of this Agreement will remain) registered
under the Securities Act of 1933 and under any applicable state securities laws.
13. Sub-Adviser has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and will provide Adviser
and the Fund with a copy of the Policy. Within 20 days of the end of
each calendar quarter during which this Agreement remains in effect,
the president or a vice president of Sub-Adviser shall certify to
Adviser or the Fund that Sub-Adviser has complied with the requirements
of Rule 17j-1 during the previous quarter and that there have been no
violations of Policy or, if such a violation has occurred, that
appropriate action has been taken in response to such violation.
14. For the services rendered, the facilities furnished and the expenses
assumed by Sub-Adviser, Adviser shall pay Sub-Adviser at the end of each month a
fee based on the average daily net assets of the Portfolio Segment at the
following annual rates:
0.60% of the first $10,000,000
0.50% of the next $15,000,000
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0.40% of the next $25,000,000
0.30% of the next $50,000,000
0.25% of the next $50,000,000
0.225% of the next $50,000,000
0.20% of the next $50,000,000
0.175% of the next $50,000,000
and
0.15% of amounts in excess of $300,000,000
Sub-Adviser's fee shall be accrued daily at 1/365th of the applicable annual
rate set forth above. For the purpose of accruing compensation, the net assets
of the Portfolio Segment shall be determined in the manner and on the dates set
forth in the current prospectus of the Fund, and, on days on which the net
assets are not so determined, the net asset value computation to be used shall
be as determined on the immediately preceding day on which the net assets were
determined. In the event of termination of this Agreement, all compensation due
through the date of termination will be calculated on a pro-rated basis through
the date of termination and paid within thirty business days of the date of
termination.
During any period when the determination of net asset value is
suspended, the net asset value of the Portfolio as of the last business day
prior to such suspension shall for this purpose be deemed to be the net asset
value at the close of each succeeding business day until it is again determined.
15. Sub-Adviser hereby undertakes and agrees to maintain, in the form and
for the period required by Rule 31a-2 under the Investment Company Act of 1940,
as amended, all records relating to the Portfolio Segment's investments that are
required to be maintained by the Fund pursuant to the requirements of paragraphs
(b)(5), (b)(6), (b)(7), (b)(9), (b)(10) and (f) of Rule 31a-1 under the 1940
Act.
Sub-Adviser agrees that all books and records which it maintains for
the Portfolio or the Fund are the property of the Fund and further agrees to
surrender promptly to the Adviser or the Fund any such books, records or
information upon the Adviser's or the Fund's request (provided, however, that
Sub-Adviser may retain copies of such records). All such books and records shall
be made available, within five business days of a written request, to the Fund's
accountants or auditors during regular business hours at Sub-Adviser's offices.
Adviser and the Fund or either of their authorized representative shall have the
right to copy any records in the possession of Sub-Adviser which pertain to the
Portfolio or the Fund. Such books, records, information or reports shall be made
available to properly authorized government representatives consistent with
state and federal law and/or regulations. In the event of the termination of
this Agreement, all such books, records or other information shall be returned
to Adviser or the Fund. The Sub-Adviser agrees that the policies and procedures
established by the Sub-Adviser for managing the Portfolio Segment, including,
but not limited to, all policies and procedures designed to ensure compliance
with federal and state regulations governing management and operation of the
Portfolio, shall be made available for inspection by the Adviser and the Fund or
either of their authorized representatives not less frequently than annually.
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16. Sub-Adviser agrees that it will not disclose or use any records or
confidential information obtained pursuant to this Agreement in any manner
whatsoever except as authorized in this Agreement or specifically by Adviser or
the Fund, or if such disclosure is required by federal or state regulatory
authorities.
Sub-Adviser may disclose the investment performance of the Portfolio
and the Portfolio Segment, provided that such disclosure does not reveal the
identity of the Adviser, the Portfolio or the Fund. Sub-Adviser may, however,
disclose that Adviser, the Fund and the Portfolio are its clients, provided that
such disclosure does not reveal the investment performance or the composition of
the Portfolio Segment.
17. In the absence of willful misfeasance, bad faith or gross negligence on
the part of Sub-Adviser or its officers, directors or employees, or reckless
disregard by Sub-Adviser of its duties under this Agreement (together,
"disabling conduct"), Sub-Adviser shall not be liable to Adviser, the Portfolio,
the Fund or to any shareholder of the Portfolio 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.
18. Sub-Adviser agrees to indemnify and defend Adviser, its officers,
directors, partners, employees and any person who controls Adviser for any
actual loss or expense (including reasonable attorney's fees) arising out of any
claim, demand, action, suit or proceeding arising out of any actual material
misstatement or omission in the Fund's registration statement, any proxy
statement, or communication to current or prospective investors in the Portfolio
relating to written disclosure or oral disclosure confirmed in writing by
Sub-Adviser about Sub-Adviser provided to Adviser or the Fund by Sub-Adviser. In
no event shall Sub-Adviser be responsible for any indirect, consequential or
special damages.
19. Adviser agrees to indemnify and defend Sub-Adviser, its officers,
directors, partners, employees and any person who controls Adviser for any
actual loss or expense (including reasonable attorney's fees) arising out of any
claim, demand, action, suit or proceeding arising out of any actual material
misstatement or omission in the Fund's registration statement, any proxy
statement, or other communication to current or prospective investors in the
Portfolio (other than a misstatement or omission relating to disclosure about
Sub-Adviser provided to Adviser or the Fund by Sub-Adviser). In no event shall
Adviser be responsible for any indirect, consequential or special damages.
20. This Agreement shall not become effective unless and until it is
approved by the board of directors of the Fund, including a majority of
directors who are not parties to this Agreement or interested persons of any
such party to this Agreement, and, to the extent required by law, a majority of
the outstanding shares of the class of the Fund's stock representing an interest
in the Portfolio. This Agreement shall come into full force and effect on the
date which it is so approved. This Agreement shall continue in effect for two
years and shall thereafter continue in effect from year to year so long as such
continuance is specifically approved at least annually by (a) the board of
directors of the Fund, or by the vote of a majority of the outstanding shares of
the
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class of stock representing an interest in the Portfolio, and (b) a majority of
those directors 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.
21. This Agreement may be terminated at any time without the payment of any
penalty, by the Fund's board of directors, or by vote of a majority of the
outstanding shares of the class of stock representing an interest in the
Portfolio on sixty days written notice to the Adviser and Sub-Adviser, or by the
Adviser, or by the Sub-Adviser, on sixty days written notice to the other. This
Agreement shall automatically terminate in the event of its assignment or in the
event of the termination of the investment advisory agreement between the
Adviser and the Fund regarding the Adviser's management of the Portfolio.
22. This Agreement may be amended by the parties only if such amendment is
specifically approved by (a) a majority of those directors 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, if required by
applicable law, (b) the vote of a majority of outstanding shares of the class of
the Fund's stock representing an interest in the Portfolio.
23. The terms "assignment", "affiliated person" and "interested person",
when used in this Agreement, shall have the respective meanings specified in the
1940 Act. The term "majority of the outstanding shares of the class" means the
lesser of (a) 67% or more of the shares of such class present at a meeting if
more than 50% of such shares are present or represented by proxy or (b) more
than 50% of the shares of such class.
24. This Agreement shall be construed in accordance with laws of the
Commonwealth of Pennsylvania, and applicable provisions of the Advisers Act and
1940 Act.
25. 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.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
Providentmutual Investment Management Company
By:
Title: President
ATTEST:
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Xxxxxxx X. Xxxxxxxxx & Company., Inc.
By:
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Title:
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ATTEST:
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