1
EXHIBIT (5)(a)
ADVISORY AGREEMENT
AGREEMENT made as of March 11, 1987 between MUNICIPAL
FUND FOR TEMPORARY INVESTMENT, a Pennsylvania common law trust (herein called
the "Company"), and PROVIDENT INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware
corporation (herein called the "Investment Adviser"), registered as an
investment adviser under the Investment Advisers Act of 1940 and wholly-owned
by Provident National Bank (herein called "Provident").
WHEREAS, the Company is registered as an open-end,
diversified, management investment company under the Investment Company Act of
1940 and presently offers seven series of shares representing interests in four
separate investment portfolios; and
WHEREAS, the Company desires to retain the Investment
Adviser to render investment advisory and administrative services to the
Company, and the Investment Adviser is willing to so render such services;
NOW, THEREFORE, this Agreement
WITNESSETH:
In consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
(a) The Company hereby appoints the
Investment Adviser to act as investment adviser to the Company for its MuniFund
portfolio (herein called "MuniFund"), its InterMuni Fund portfolio
(hereincalled "InterMuni Fund"), its MuniCash portfolio (herein called
"MuniCash") and its LongMuni Fund portfolio (herein called "LongMuni Fund")
(collectively, herein called the "Portfolios") for the period and on the terms
set forth in this Agreement. The Investment Adviser 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 with respect to
which it desires to retain the Investment Adviser to act as investment adviser
hereunder, the Company shall notify the Investment Adviser in writing. If the
Investment Adviser is willing to render such services it shall notify the
Company in writing whereupon, subject to such shareholder approval as may be
required pursuant to Paragraph 10 hereof, such portfolio shall
2
become a Portfolio hereunder and the compensation payable by such new Portfolio
to the Investment Adviser will be as agreed in writing at the time.
2. Delivery of Documents. The Company has
furnished the Investment Adviser with copies properly certified or
authenticated of each of the following:
(a) Declaration of Trust of the Company
(such Declaration of Trust, as presently in effect and as it
shall from time to time be amended, herein called the
"Declaration of Trust");
(b) Code of Regulations of the Company
(such Code of Regulations, as presently in effect and as it
shall from time to time be amended, herein called the
"Regulations");
(c) Resolutions of the Board of Trustees
of the Company authorizing the appointment of the Investment
Adviser and the execution and delivery of this Agreement;
(d) Registration Statement under the
Securities Act of 1933, as amended, on Form N-1 (No. 2-64358)
relating to the units of beneficial interest in MuniFund and
all amendments thereto, Registration Statement under the
Securities Act of 1933, as amended, on Form N-1 (No. 2-77274)
relating to the units of beneficial interest in InterMuni Fund
and all amendments thereto, including post-effective amendment
No. 5 on Form N-1A relating to shares representing units of
beneficial interest in InterMuni Fund and LongMuni Fund, and
the Registration Statement under the Securities Act of 1933,
as amended, on Form N-1 (No. 2-87284) relating to the units of
beneficial interest in MuniCash and all amendments thereto
(collectively, such units of beneficial interest are herein
called "Shares");
(e) Notification of Registration of the
Company under the Investment Company Act of 1940, as amended,
on Form N-8A as filed with the Securities and Exchange
Commission on May 1, 1979, and all amendments thereto; and
(f) Prospectuses of the Company's
Portfolios in effect under the Securities Act of 1933 (such
prospectuses, as presently in effect and as they shall from
time to time be amended and supplemented, herein called the
"Prospectuses").
The Company will furnish the Investment Adviser from
time to time with copies, properly certified or authenticated, of all
amendments of or supplements to the foregoing, if any.
-2-
3
3. Management. Subject to the supervision of
the Board of Trustees of the Company, the Investment Adviser will provide a
continuous investment program for each of the Portfolios, including investment
research and management with respect to all securities, investments, cash and
cash equivalents in the Portfolios. The Investment Adviser will determine from
time to time what securities and other investments will be purchased, retained
or sold by the Company for each of its Portfolios. The Investment Adviser will
provide the services rendered by it hereunder in accordance with the investment
objective and policies of each of the Portfolios as stated in their respective
Prospectuses. The Investment Adviser further agrees that it:
(a) 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
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 the activities
of the Investment Adviser;
(b) will not invest its assets or the
assets of any accounts advised by it or by Provident in
Shares, make loans for the purpose of purchasing or carrying
Shares, or make interest-bearing loans to the Company;
(c) will place orders pursuant to its
investment determinations for each Portfolio either directly
with the issuer or with any broker or dealer. In placing
orders with brokers and dealers, the Investment Adviser will
attempt to obtain the best net price and the most favorable
execution of its orders. Consistent with this obligation,
when the execution and price offered by two or more brokers or
dealers are comparable, the Investment Adviser may, in its
discretion, purchase and sell portfolio securities to and from
brokers and dealers who provide the Company with research
advice and other services. In no instance will portfolio
securities be purchased from or sold to the Company's
principal underwriter, the Investment Adviser or any
affiliated person thereof, except to the extent permitted by
the Securities and Exchange Commission;
(d) will, together with Provident,
maintain all books and records with respect to the securities
transactions of the Portfolios, keep their respective books of
account and will render to the Company's Board of Trustees
such periodic and special reports as the Board may request;
and
-3-
4
(e) will compute the respective net
asset value and net income for each of the Portfolios (and
each series or sub-series thereof) on each business day as
described in the Prospectuses or as more frequently requested
by the Company.
4. Services Not Exclusive. The investment
management services rendered by the Investment Adviser hereunder are not to be
deemed exclusive, and the Investment Adviser shall be free to render similar
services to others so long as its services under this Agreement are not
impaired thereby.
5. Sub-Advisory Agreement. Notwithstanding
anything herein to the contrary, this Agreement shall not be effective until
the Investment Adviser and Provident deliver to the Company a duly executed
copy of the Sub-Advisory Agreement in substantially the form attached as
Exhibit A-1 hereto (herein called the "Sub-Advisory Agreement") pursuant to
which Provident will provide the Investment Adviser with certain investment
advisory services on behalf of each Portfolio. The Investment Adviser agrees
to give the Company prompt written notice of any termination of or notice to
terminate the Sub-Advisory Agreement by any person other than the Company.
6. Books and Records. In compliance with the
requirements of Rule 31a-3 of the Rules, the Investment Adviser hereby agrees
that all records which it maintains for each Portfolio are the property of the
Company and further agrees to surrender promptly to the Company any of such
records upon the Company's request. The Investment Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 the records required to be
maintained by Rule 31a-1 of the Rules.
7. Expenses. During the term of this Agreement,
the Investment Adviser will pay all expenses incurred by it in connection with
its activities under this Agreement other than the cost of (including brokerage
commissions, if any) securities purchased for the Portfolios.
In addition, if the expenses borne by any Portfolio
in any fiscal year exceed the applicable expense limitations imposed by the
securities regulations of any state in which the Shares are registered or
qualified for sale to the public, the Investment Adviser shall reimburse such
Portfolio for one-half of any excess up to the amount of the fees payable by
the particular Portfolio to it during such fiscal year pursuant to paragraph 8
hereof; provided, however, that notwithstanding the foregoing, the Investment
Adviser shall reimburse such Portfolio for one-half of such excess expenses
regardless of the amount of such fees payable to it during such fiscal year to
the extent that the
-4-
5
securities regulations of any state in which the Shares are registered or
qualified for sale so require.
8. Compensation.
(a) For the services provided and the
expenses assumed pursuant to this Agreement with respect to
MuniFund, the Company will pay the Investment Adviser from the
assets belonging to MuniFund and the Investment Adviser will
accept as full compensation therefor a fee, computed daily and
payable monthly, at the following annual rate: .175% of the
first $1 billion of MuniFund's average net assets, plus .15%
of its next $1 billion of average net assets, plus .125% of
its next $1 billion of average net assets, plus .1% of its
next $l billion of average net assets, plus .095% of its next
$1 billion of average net assets, plus .09% of its next $1
billion of average net assets, plus .085% of its next $1
billion of average net assets, plus .08% of its average net
assets over $7 billion. The fee will be reduced by one-half
of the amount necessary to ensure that the ordinary operating
expenses (excluding interest, taxes, brokerage, payments to
Service Organizations pursuant to Servicing Agreements and
extraordinary expenses) of MuniFund do not exceed .45% of
MuniFund's average net assets for any fiscal year.
(b) For the services provided and the
expenses assumed pursuant to this Agreement with respect to
InterMuni Fund, the Company will pay the Investment Adviser
from the assets belonging to InterMuni Fund and the Investment
Adviser will accept as full compensation therefor a fee,
computed daily and payable monthly, at the annual rate of .20%
of InterMuni Fund's average net assets.
(c) For the services provided and the
expenses assumed pursuant to this Agreement with respect to
MuniCash, the Company will pay the Investment Adviser from the
assets belonging to MuniCash and the Investment Adviser will
accept as full compensation therefor a fee, computed daily and
payable monthly, at the following rate: .175% of the first $1
billion of MuniCash's average net assets, plus .15% of its
next $1 billion of average net assets, plus .125% of its next
$1 billion of average net assets, plus .1% of its next $1
billion of average net assets, plus .095% of its next $1
billion of average net assets, plus .09% of its next $1
billion of average net assets, plus .085% of its next $1
billion of average net assets, plus .08% of its average net
assets over $7 billion.
(d) For the services provided and the
expenses assumed pursuant to this Agreement with respect to
LongMuni
-5-
6
Fund, the Company will pay the Investment Adviser from the
assets belonging to LongMuni Fund and the Investment Adviser
will accept as full compensation therefor a fee, computed
daily and payable monthly, at the annual rate of .25% of
LongMuni Fund's average net assets.
The fee attributable to each Portfolio shall be the
several (and not joint or joint and several) obligation of each such Portfolio.
9. Limitation of Liability of the Investment
Adviser. Neither Provident nor the Investment Adviser shall be liable for any
error of judgment or mistake of law or for any loss suffered 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 the part of the Investment Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement. Notwithstanding the foregoing, the Investment
Adviser shall be liable to the Company for the acts and omissions of Provident
to the extent that Provident is liable to the Investment Adviser for such acts
or omissions under the Sub-Advisory Agreement between the Investment Adviser
and Provident.
10. 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 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 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
the Investment Adviser, or by the Investment Adviser at any time, without
payment of any penalty, on 90 days' written notice to the Company. This
Agreement will immediately terminate in the event of its assignment and will
immediately terminate with respect to a Portfolio upon any termination with
respect to such Portfolio of the Sub-Advisory
-6-
7
Agreement. (As used in this Agreement, the terms "majority of the outstanding
voting", "interested person" and "assignment" shall have the same meaning as
such terms have in the Investment Company Act of 1940).
11. 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.
12. 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
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 Delaware law.
13. No Personal Liability. The names "Municipal
Fund for Temporary Investment" and "Trustees of Municipal Fund for Temporary
Investment" refer respectively to the trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated March 30, 1981, which is hereby referred to and a
copy of which is on file at the principal office of the Company. The
obligations of Municipal Fund for Temporary Investment entered into in the name
or on behalf thereof by any of the Trustees, representatives or agents are made
not individually, but in such capacities, and are not binding upon any of the
Trustees, Interestholders or representatives of the Company personally, but
bind only the trust estate, and all persons dealing with the Company must look
solely to the trust property for the enforcement of any claims against the
Company.
-7-
8
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.
MUNICIPAL FUND FOR TEMPORARY
INVESTMENT
Attest;
By:
--------------------- ---------------------------
Vice President
(Seal)
PROVIDENT INSTITUTIONAL
MANAGEMENT CORPORATION
Attest:
By:
--------------------- ---------------------------
President
(Corporate Seal)
-8-
