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EXHIBIT (5)(f)
SUB-ADVISORY AGREEMENT
AGREEMENT dated us of March 11, 1987 between PROVIDENT NATIONAL BANK, a
national banking association (herein called "Provident") and PROVIDENT
INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation registered as an
investment adviser under the Investment Advisers Act of 1940 and wholly-owned by
Provident (herein called "PIMC").
WHEREAS, PIMC is the investment adviser to Trust for Federal Securities
(herein called the "Company"), an open-end, diversified, management investment
company registered under the Investment Company Act of 1940; and
WHEREAS, PIMC wishes to retain Provident to provide it with investment
research, administrative, and statistical services in connection with PIMC's
advisory activities on behalf of the Company's FedFund portfolio (herein called
"FedFund"), its T-Fund portfolio (herein called "T-Fund") and its ShortFed Fund
portfolio (herein called "ShortFed Fund") (collectively, herein called the
"Portfolios"); and
WHEREAS, Provident is willing to provide such services to PIMC upon the
conditions and for the compensation set forth below,
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. (a) PIMC hereby appoints Provident its sub-adviser
with respect to the Portfolios as required by the Advisory Agreement between
PIMC and the Company dated as of March 11, 1987 (such Agreement or the most
recent successor advisory agreement between such parties is herein called the
("Advisory Agreement"). Provident accepts such appointment and agrees to render
the services herein set forth for the compensation herein provided.
(b) In the event that the Company establishes one or more
portfolios other than the Portfolios and PIMC has agreed to act as investment
adviser to such new portfolio under the Advisory Agreement, and PIMC desires to
retain Provident to act as its sub-adviser with respect thereto, PIMC shall
notify Provident in writing. If Provident is willing to render such services it
shall notify PIMC in writing whereupon, subject to such shareholder approval as
may be required pursuant to Paragraph 8 hereof, such portfolio shall become a
Portfolio hereunder and the compensation payable by PIMC to Provident with
respect to the services provided for such Portfolio shall be as agreed in
writing at the time.
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2. Sub-Advisory Services. Subject to the supervision of the Board of
Trustees of the Company, Provident, through its Trust Division and on behalf of
the Company, will provide the Company investment research and credit analysis
concerning prospective and existing investments for each of the Portfolios, make
recommendations with respect to the continuous investment program for each such
Portfolio, supply PIMC computer facilities and operating personnel, and provide
certain statistical services as PIMC may from time to time reasonably request.
Provident will provide the services rendered by it hereunder in accordance with
the investment objective, policies and restrictions as stated in the respective
prospectuses of each of the Portfolios, as presently in effect and as they may
be amended or supplemented from time to time. Provident further agrees that it:
(a) will use the same skill and care in providing such services
as it uses in providing services to fiduciary accounts for which it has
investment responsibilities:
(b) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission (herein called the "Rules"), and
will in addition conduct its activities under this Agreement in
accordance with the regulations of the Board of Governors of the
Federal Reserve System pertaining to the investment advisory activities
of bank holding companies to the same extent as if such regulations
were by their terms applicable to its activities hereunder;
(c) will not invest its assets or assets of any fiduciary account
managed by it in shares of the Company, make loans for purposes of
purchasing or carrying such shares, or make interest-bearing loans to
the Company;
(d) will maintain or cause PIMC to maintain all books and records
with respect to the securities transactions of the Portfolios and shall
keep or cause PIMC to keep their respective books of account;
(e) will render to the Company's Board of Trustees such periodic
and special reports as the Board may request; and
(f) will maintain its policy and practice of conducting its Trust
Division independently of its Commercial Division. In making investment
recommendations for the Portfolios, Trust Division personnel will not
inquire or take into consideration
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whether the issuers of securities proposed for purchase or sale for the
account of a Portfolio are customers of the Commercial Division. In
dealing with commercial customers, the Commercial Division will not
inquire or take into consideration whether securities of those
customers are held by the Portfolios.
3. Services Not Exclusive. Provident's services hereunder are not
deemed to be exclusive, and Provident shall be free to render similar services
to others no long as its services under this Agreement are not impaired thereby.
4. Books and Records. In compliance with the requirements of Rule
31a-3 of the Rules, Provident hereby agrees that all records which it maintains
for the Company are the property of the Company and further agrees to surrender
promptly to the Company any of such records upon the Company's request.
Provident further agrees to preserve, or cause PIMC to preserve, for the periods
prescribed by Rule 31a-2, the records required to be maintained by Rule 31a-1 of
the Rules.
5. Expenses. During the term of this Agreement, Provident will pay
all expenses incurred by it in connection with its activities under this
Agreement.
6. Compensation. For the services which Provident will render to
PIMC under this Agreement, PIMC will pay to Provident a monthly fee equal to 75%
of each month's advisory fee received by PIMC from the Company on behalf of each
Portfolio pursuant to the Advisory Agreement between PIMC and the Company.
Notwithstanding the foregoing, the fee payable to Provident shall be adjusted
each quarter as necessary to assure that PIMC has income from all sources before
application of Federal, state, or other income taxes of at least $22,500 during
each quarter. The sub-advisory fee shall be paid by PIMC to Provident at least
quarterly.
7. Limitation on Liability. Provident will not be liable for any
error of judgment or mistake of law or for any loss suffered by PIMC or by the
Company in connection with the matters to which this Agreement relates, except a
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations or duties under this Agreement.
8. Duration and Termination. This Agreement shall become effective
with respect to a Portfolio upon approval of this Agreement by vote of a
majority of the outstanding voting
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securities of such Portfolio and, unless sooner terminated as provided herein,
shall continue with respect to such Portfolio until March 31, 1988. Thereafter,
if not terminated, this Agreement shall continue with respect to a Portfolio for
successive annual periods ending on March 31, provided such continuance is
specifically approved at least annually (a) by the vote of a majority of those
members of the Board of Trustees of the Company who are not parties to this
Agreement or interested persons of the Company or any such party, cast in person
at a meeting called for the purpose of voting on such approval, and (b) by the
Board of Trustees of the Company or by vote of a majority of the outstanding
voting securities of such Portfolio, provided, however, that this Agreement may
be terminated with respect to a Portfolio by the Company at any time, without
the payment of any penalty, by the Board of Trustees of the Company or by vote
of a majority of the outstanding voting securities of such Portfolio, on 60
days' written notice to PIMC, and will be terminated upon any termination of the
Advisory Agreement between the Company and PIMC. This Agreement will also
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities," interested
person" and "assignment" shall have the same meaning as such terms have in the
Investment Company Act of 1940.)
9. Amendment of this Agreement. No provision of this Agreement may
be changed, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, discharge
or termination is sought, and no amendment of this Agreement affecting a
Portfolio shall be effective until approved by vote of the holders of a majority
of the outstanding voting securities of such Portfolio.
10. 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 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 Delaware law.
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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.
PROVIDENT NATIONAL BANK
Attest:
By:
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(Corporate Seal)
PROVIDENT INSTITUTIONAL
Attest: MANAGEMENT CORPORATION
By:
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(Corporate Seal)
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