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ADVISORY AGREEMENT
AGREEMENT made as of March 11, 1987 between TEMPORARY
INVESTMENT FUND, INC., a Maryland corporation (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 two
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 TempFund portfolio
(herein called "TempFund") and its TempCash portfolio (herein called "TempCash")
(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 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.
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2. Delivery of Documents. The Company has furnished the
Investment Adviser with copies properly certified or authenticated of each of
the following:
(a) Articles of Incorporation of the Company, filed
with the Secretary of State of Maryland on February 8. 1973, as amended (such
Articles of Incorporation, as presently in effect and as they shall from time to
time be amended, herein called the "Articles of Incorporation");
(b) By-Laws of the Company, as amended (such By-
Laws, 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 Directors 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. 2-47015) relating to shares of the
Company's common stock, $.001 par value, representing interests in TempFund, and
all amendments thereto, and the Registration Statement under the Securities Act
of 1933, as amended, on Form N-1 (No. 2-87227) relating to shares of the
Company's common stock, $.001 par value, representing interests in TempCash
(collectively, such shares of common stock are herein called "Shares") and all
amendments thereto;
(e) Registration Statement of the Company under the
Investment Company Act of 1940 on Form N-8B-1 (No. 811-2354) as filed with the
Securities and Exchange Commission on February 9, 1973 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 February 9, 1973 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.
3. Management. Subject to the supervision of the Board of
Directors of the Company, the Investment Adviser will provide a continuous
investment program for each of the Portfolios, including investment research and
management with
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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
Directors 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 subclass thereof) on
each business day as described in their respective Prospectuses or as more
frequently requested by the Company.
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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 (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 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 TempFund, the Company will
pay the Investment Adviser from the assets of
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TempFund 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 TempFund's average net assets, plus .15% of the next $1
billion of its average net assets, plus .125% of the next $1 billion of its
average net assets, plus .1% of the next $1 billion of its average net assets,
plus .095% of the next $1 billion of its average net assets, plus .09% of the
next $1 billion of its average net assets, plus .08% of the next $1 billion of
its average net assets, plus .075% of the next $1 billion of its average net
assets, plus .07% of its average net assets over $8 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
TempFund do not exceed .45% of TempFund's average net assets for any fiscal
year.
(b) For the services provided and the expenses
assumed pursuant to this Agreement with respect to TempCash, the Company will
pay the Investment Adviser from the assets of TempCash 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
TempCash's average net assets, plus .15% of the next $1 billion of its average
net assets, plus .125% of the next $1 billion of its average net assets, plus
.1% of the next $1 billion of its average net assets, plus .095% of the next $1
billion of its average net assets, plus .09% of the next $1 billion of its
average net assets, plus .085% of the next $1 billion of its average net assets,
plus .08% of its average net assets over $7 billion.
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.
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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
Directors 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 Directors 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 Directors 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 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.
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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.
TEMPORARY INVESTMENT FUND, INC.
Attest:
/s/ Xxxxxx X. Xxxxxx, III By /s/ Xxxxxx X. Xxxxx
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Vice President
(Corporate Seal)
PROVIDENT INSTITUTIONAL MANAGEMENT
CORPORATION
Attest:
/s/ Xxxx X. Xxxxxx, Xx. By /s/ Xxxxxx X. Xxxxx
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President
(Corporate Seal)
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