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EXHIBIT (5)(a)
ADVISORY AGREEMENT
AGREEMENT made as of March 11, 1987 between TRUST FOR FEDERAL
SECURITIES, a Pennsylvania business 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 five classes of shares representing interests in three 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 FedFund portfolio
(herein called "FedFund"), its T-Fund portfolio (herein called "T-Fund") and its
ShortFed Fund portfolio (here in called "ShortFed 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
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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, as amended (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) By-Laws of the Company, as amended (such ByLaws, as presently
in effect and as they shall from time to time be amended, herein called
the "By-Laws");
(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 S-5 (No. 2-53808) relating to shares representing
interests in FedFund and T-Fund, and all amendments thereto, including
post- effective amendment No. 25 relating to shares representing
interests in FedFund, T-Fund and ShortFed Fund (herein called
"Shares");
(e) Registration Statement of the Company under the Investment
Company Act of 1940 on Form N-8B-1 (No. 811-2573) as filed with the
Securities and Exchange Commission on May 28, 1975 and all amendments
thereto;
(f) Notification of Registration of the Company under the
Investment Company Act of 1940 on form N-8A as filed with the
Securities and Exchange Commission on May 28, 1975 and all amendments
thereto; and
(g) 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.
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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 each
Portfolio. 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
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of Trustees such periodic and special reports as the Board may request;
and
(e) will compute the respective net asset value and net income
for each of the Portfolios (and each series or sub-class thereof) on
each business day as described in their respective 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
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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 securities regulations of
any state in which the Company's 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 FedFund and T-Fund, the Company will pay the
Investment Adviser from the assets belonging to FedFund and T-Fund (and in
proportion to each such Portfolio's average net assets) 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
the combined average net assets of FedFund and T-Fund, plus .15% of the next $1
billion of their combined average net assets, plus .125% of the next $1 billion
of their combined average net assets, plus .1% of the next $1 billion of their
combined average net assets, plus .095% of the next $1 billion of their combined
average net assets, plus .09% of the next $1 billion of their combined average
net assets, plus .085% of the next $1 billion of their combined average net
assets, plus .08% of their combined 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
FedFund and of T-Fund do not exceed .45% of each such Portfolio's average net
assets for any fiscal year.
(b) For the services provided and the expenses assumed pursuant
to this Agreement with respect to ShortFed Fund, the Company will pay the
Investment Adviser from the assets belonging to ShortFed Fund and the Investment
Adviser will accept as full compensation therefor a fee, computed daily and
payable monthly, of .20% of the average net assets of ShortFed Fund.
The fee attributable to each Portfolio shall be the several (and not
joint or joint and several) obligations 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
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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 Agreement. (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.)
11. Amendment of this Agreement. No provisions in 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
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the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
13. No Personal Liability. The names "Trust for Federal Securities"
and "Trustees of Trust for Federal Securities" 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 February 27, 1980, which is
hereby referred to and a copy of which is on file at the principal office of the
Company. The obligations of Trust for Federal Securities 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, shareholders 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.
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.
TRUST FOR FEDERAL SECURITIES
Attest:
____________________________ By _________________________
Vice President
(Seal)
PROVIDENT INSTITUTIONAL
Attest: MANAGEMENT CORPORATION
____________________________ By _________________________
President
(Corporate Seal)
XXXX X. XXXXXX, XX.
VICE PRESIDENT & SECRETARY
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