Exhibit (d)(4)
SUB-ADVISORY AGREEMENT
(Capital Opportunities Fund)
AGREEMENT made as of ____________, 2000 between MERCANTILE-SAFE DEPOSIT &
TRUST COMPANY (the "Adviser"), a Maryland trust company, and DELAWARE MANAGEMENT
COMPANY (the "Sub-Adviser"), a series of Delaware Management Business Trust, a
Delaware business trust.
WHEREAS, M.S.D. & T. Funds, Inc. ("M.S.D. & T.") is registered as an open-end,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Adviser has been appointed investment adviser to M.S.D. & T.'s
Capital Opportunities Fund (the "Fund"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to assist it in the
provision of a continuous investment program for the Fund and the Sub-Adviser is
willing to do so; and
WHEREAS, the Board of Directors of the Fund and the Fund's sole shareholder
approved this Agreement, and the 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 the Sub-Adviser to act as sub-
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adviser to the Fund as permitted by the Adviser's Advisory Agreement with M.S.D.
& T. pertaining to the Fund. Intending to be legally bound, the 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 M.S.D. & T.'s Board
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of Directors, the Sub-Adviser will assist the Adviser in providing a continuous
investment program for the Fund, including research and management with respect
to all securities and investments and cash equivalents in the Fund. The Sub-
Adviser will provide services under this Agreement in accordance with the Fund's
investment objective, policies and restrictions as stated in the Fund's
prospectus and statement of additional information and resolutions of
M.S.D. & T.'s Board of Directors applicable to the Fund. The Adviser hereby
undertakes to provide the Sub-Adviser with copies of such prospectus, statement
of additional information, and resolutions as the same became available from
time to time.
Without limiting the generality of the foregoing, the Sub-Adviser further
agrees that it will:
(a) determine from time to time what securities and other investments
will be purchased, retained or sold for the Fund, including, with the assistance
of the Adviser, the Fund's investments in options and futures contracts;
provided, however, that the Sub-Adviser shall not be responsible for taking
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action with respect to any proxies, notices, reports or other communications
relating to any of the Fund's portfolio securities;
(b) manage in consultation with the Adviser the Fund's temporary investments
in securities;
(c) place orders for the Fund either directly with the issuer or with any
broker or dealer;
(d) manage the Fund's overall cash position;
(e) attend regular business and investment-related meetings with
M.S.D. & T.'s Board of Directors and the Adviser if requested to do so by
M.S.D. & T. and/or the Adviser; and
(f) maintain books and records with respect to the securities transactions
for the Fund, furnish to the Adviser and M.S.D. & T.'s Board of Directors such
periodic and special reports as they may request with respect to the Fund, and
provide in advance to the Adviser all reports to the Board of Directors for
examination and review within a reasonable time prior to M.S.D. & T. Board
meetings. The Adviser hereby undertakes to provide the Sub-Adviser with at least
fourteen days prior written notice of the date, time and location of all
M.S.D.& T. Board meetings pertaining to the Fund.
3. Subcontractors. It is understood that the Sub-Adviser may from time to
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time engage or associate itself with such person or persons as the Sub-Adviser
may believe to be particularly fitted to assist the Sub-Adviser in the
performance of certain ministerial or administrative services required by this
Agreement; provided, however, that such person or persons shall have been
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approved by the Board of Directors of M.S.D. & T., that the compensation of such
person or persons shall be paid by the Sub-Adviser and that the Sub-Adviser
shall be as fully responsible to the Adviser and M.S.D. & T. for the acts and
omissions of any subcontractor as it is for its own acts and omissions.
4. Covenants by Sub-Adviser. The Sub-Adviser agrees with respect to the
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services provided to the Fund that it:
(a) will conform with all Rules and Regulations of the Securities and
Exchange Commission ("SEC") applicable to it;
(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
M.S.D. & T. 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 M.S.D. & T., which approval shall not be unreasonably withheld
and may not be withheld and will be deemed granted where the 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 M.S.D. & T.).
5. Services Not Exclusive.
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(a) The services furnished by the Sub-Adviser hereunder are deemed not to
be exclusive, and nothing in this Agreement shall (i) prevent the Sub-Adviser or
any affiliated person (as defined in the 0000 Xxx) of the 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 Fund or (ii) limit or restrict
the 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 Fund 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,
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that the 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 Fund under this Agreement.
(b) Nothing contained herein, however, shall prohibit the Sub-Adviser from
advertising or soliciting the public generally with respect to products or
services, regardless of whether such advertisement or solicitation may
include prior, present or potential shareholders of M.S.D. & T.
6. Portfolio Transactions. Investment decisions for the Fund shall be made
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by the Sub-Adviser independently from those for any other investment companies
and accounts advised or managed by the Sub-Adviser. The Fund 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 Fund 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 the Sub-Adviser believes to be equitable to the Fund and such
other investment company or account. In some instances, this investment
procedure may adversely affect the price paid or received by the Fund or the
size of the position obtained or sold by the Fund. To the extent permitted by
law, the Sub-Adviser may aggregate the securities to be sold or purchased for
the Fund with those to be sold or purchased for other investment companies or
accounts in order to obtain best execution.
The 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 Fund's policies and restrictions regarding brokerage allocations. The
Sub-Adviser shall place orders pursuant to its investment determinations for the
Fund either directly with the issuer or with any
broker or dealer selected by the Sub-Adviser. In executing portfolio
transactions and selecting brokers or dealers, the Sub-Adviser shall use its
reasonable best efforts to seek the most favorable execution of orders, after
taking into account all factors the 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, 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 Fund and/or other accounts over which the Sub-Adviser or any of
its affiliates exercises investment discretion. The 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 Fund 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 Sub-Adviser's overall responsibilities to the Fund
and to M.S.D. & T. In no instance will portfolio securities be purchased from or
sold to the Sub-Adviser, or the Fund's principal underwriter, or any affiliated
person thereof except as permitted by the Securities and Exchange Commission.
7. Books and Records. In compliance with the requirements of Rule 31a-3
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under the 1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for M.S.D. & T. are the property of M.S.D. & T. and further agrees to
surrender promptly to M.S.D. & T. any of such records upon M.S.D. & T.'s
request; provided, however, that the Sub-Adviser may make and retain photocopies
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of such records in order to comply with applicable regulatory requirements. The
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.
8. Expenses. During the term of this Agreement, the Sub-Adviser will pay all
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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
Fund.
9. Compensation. For the services provided and the expenses assumed with
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respect to the Fund pursuant to this Agreement, the Sub-Adviser will be entitled
to a fee, computed daily and payable quarterly, from the Adviser, calculated at
the annual rate of 0.70% of the first $1 billion of the Fund's average daily net
assets, plus 0.60% of the Fund's average daily net assets in excess of $1
billion.
10. Standard of Care; Limitation of Liability. The Sub-Adviser shall
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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 the Sub-
Adviser in the absence of bad faith, willful misconduct, negligence or reckless
disregard of its duties.
11. Reference to Sub-Adviser. Neither the Adviser nor any affiliate or agent
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of the Adviser shall make reference to or use the name of the Sub-Adviser or any
of its affiliates, or any of their clients, except references concerning the
identity of and services provided by the Sub-Adviser to the Fund, which
references shall not differ in substance from those included in the current
registration statement pertaining to the Fund, this Agreement and the Advisory
Agreement between the Adviser and M.S.D. & T. with respect to the Fund, in any
advertising or promotional materials without the prior approval of the Sub-
Adviser, which approval shall not be unreasonably withheld or delayed. The
Adviser hereby agrees to make all reasonable efforts to cause M.S.D. & T. and
any affiliate thereof to satisfy the foregoing obligation.
12. Duration and Termination. Unless sooner terminated, this Agreement shall
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continue until _____________, _____ and thereafter shall continue automatically
for successive annual periods, provided such continuance is specifically
approved at least annually by M.S.D. & T.'s Board of Directors or vote of the
lesser of (a) 67% of the shares of the Fund represented at a meeting if holders
of more than 50% of the outstanding shares of the Fund are present in person or
by proxy or (b) more than 50% of the outstanding shares of the Fund, provided
that in either event its continuance also is approved by a majority of M.S.D. &
T.'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 the Adviser, the Sub-Adviser or by
M.S.D. & T.'s Board of Directors or by vote of the lesser of (a) 67% of the
shares of the Fund represented at a meeting if holders of more than 50% of the
outstanding shares of the Fund are present in person or by proxy or (b) more
than 50% of the outstanding shares of the Fund. This Agreement will terminate
automatically in the event of its assignment (as defined in the 1940 Act).
13. Amendment of this Agreement. No provision of this Agreement may be
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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 Fund until approved by the vote of a majority of
the outstanding voting securities of the Fund.
14. Notice. Any notice, advice or report to be given pursuant to this
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Agreement shall be delivered or mailed:
To Sub-Adviser at:
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Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
To the Adviser at:
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Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
To M.S.D. & T. at:
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Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
15. Miscellaneous. The captions in this Agreement are included for
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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.
16. Counterparts. This Agreement may be executed in two or more
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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.
MERCANTILE-SAFE DEPOSIT & TRUST
COMPANY
By:
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Name:
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Title:
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DELAWARE MANAGEMENT COMPANY,
a series of Delaware Management Business Trust
By:
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Name:
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Title:
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