ADVISORY AGREEMENT
M.S.D.& T. FUNDS, INC.
Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
July 21, 1989
Mercantile-Safe Deposit
& Trust Company
Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
This will confirm the agreement, entered into in consideration of the
premises and mutual covenants herein contained, and for other good and valuable
consideration, between the undersigned (the "Company") and you as follows:
1. General. The Company is an open-end investment company. This
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Agreement relates to one of the Company's short-term money market portfolios --
the Tax-Exempt Money Market Fund (Trust) (the "Fund"). The Company proposes to
engage in the business of investing and reinvesting the assets of the Fund in
the manner and in accordance with the investment objective, policies and
limitations specified with respect to the Fund in the Company's Prospectuses and
Statement of Additional Information, (the "Prospectus") included in the
Company's Registration Statement, as amended from time to time (the
"Registration Statement"), filed under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the Securities Act of 1933, as amended. Copies of
the Prospectus have been furnished to you. Any amendments to the Prospectus
shall be furnished to you promptly.
2. Advisory Services. Subject to the supervision and approval of
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the Company's Board of Directors, you will provide investment management of the
Fund's portfolio in accordance with the Fund's investment objective, policies
and limitations as stated in the Prospectus as from time to time in effect, and
resolutions of the Company's Board of Directors of which you will be advised.
In connection therewith, you will obtain and provide investment research and
will supervise the Fund's investments and conduct a continuous program of
investment, evaluation and, if appropriate, sale and reinvestment of the Fund's
assets. You will 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.
You will comply with all Rules and Regulations of the Securities and
Exchange Commission applicable to you in connection with your performance of
this Agreement, and will in addition conduct your activities under this
Agreement in accordance with other law, including banking law, applicable to
you.
You will not make loans for the purpose of purchasing or carrying Fund
shares, or make interest-bearing loans to the Company.
You will place orders pursuant to your investment determination for
the Fund either directly with the issuer or with any broker or dealer selected
by you. In executing portfolio transactions and selecting brokers or dealers,
you will use your reasonable best efforts to seek the most favorable execution
of orders, after taking into account all factors you deem 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, you 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 you or any of your affiliates
exercisers investment discretion. You are 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 you determine 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 your
overall responsibilities to the Fund and to the Company. In no instance will
portfolio securities be purchased from or sold to you, or the Fund's principal
underwriter, or any affiliated person thereof except as permitted by the
Securities and Exchange Commission.
3. Assistance. You may employ or contract with other persons to
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assist you in the performance of this Agreement. Such persons may include other
investment advisory or management firms and officers or employees who are
employed by both you and the Company. The fees or other compensation of such
persons shall be paid by you and no obligation may be incurred on the Company's
behalf to any such person.
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4. Fees. In consideration of other arrangements between you and the
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Company, no fee will be payable to you under this Agreement.
5. Expenses. You will bear all your own expenses in connection with
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the performance of your services under this Agreement, provided that such
expenses will not include the expenses to be borne by the Fund, as set forth
below. The expenses to be borne by the Fund include, without limitation, the
following: organizational costs; taxes; interest; brokerage fees and
commissions and other expenses in any way related to the execution, recording
and settlement of portfolio security transactions; fees of Directors who are not
also your officers; Securities and Exchange Commission fees; state Blue Sky
qualification fees; charges of custodians and transfer and dividend paying
agents; premiums for directors and officers liability insurance; costs of
fidelity bonds; industry association fees, outside auditing and legal expenses;
costs of maintaining corporate existence; costs of maintaining required books
and accounts; cost of office facilities and supplies; data processing, clerical,
accounting and bookkeeping services and other administrative expenses; costs
attributable to investor services (including, without limitation, telephone and
personnel expenses); costs of shareholders' reports and meetings, costs of
preparing, printing and mailing share certificates, proxy statements and
prospectuses; and any extraordinary expenses.
6. Liability. You shall exercise your best judgment in rendering
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the services to be provided to the Fund. The Fund agrees as an inducement to
you and to others who may assist you in providing services to the Fund that you
and such other persons shall not be liable for any alleged or actual error of
judgment or mistake of law or for any alleged or actual loss suffered by the
Fund or the Company and the Fund and the Company agree to indemnify and hold
harmless you and such other persons against and from any claims, liabilities,
actions, suits, proceedings, judgments or damages (and expenses as and when
incurred in connection therewith, including the reasonable cost of investigating
or defending same, including, but not limited to attorneys' fees) arising out of
any such alleged or actual error of judgment or mistake of law or loss; provided
that nothing herein shall be deemed to protect or purport to protect you or any
other such person against any liability to the Company or to its security
holders to which you or they would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder, or by reason of reckless disregard of the obligations and duties
hereunder.
7. Other Accounts. The Company understands that you and other
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persons with whom you contract to provide the services hereunder may from time
to time act as investment adviser to one or more other investment companies and
fiduciary or other managed
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accounts, and the Company has no objection to your or their so acting. When
purchase or sale of securities of the same issuer is suitable for the investment
objectives of two or more companies or accounts managed by you or such other
persons which have available funds for investment, the available securities may
be allocated in a manner believed by you and such other persons to be equitable
to each company or account. It is recognized that in some cases this procedure
may adversely affect the price paid or received by the Fund or the size of the
position obtainable for or disposed of by the Fund.
In addition, it is understood that you and the persons with whom you
contract to assist in the performance of your duties hereunder will not devote
their full time to such service and nothing contained herein shall be deemed to
limit or restrict your or their right to engage in and devote time and attention
to similar or other businesses.
8. Books and Records. In compliance with the requirements of Rule
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31a-3 under the 1940 Act, you agree that all records which you maintain for the
Company are the property of the Company and you further agree to surrender
promptly to the Company any of such records upon the Company's request. You
further agree to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act such records that you, as investment adviser, are required to maintain
by Rule 31a-1 under the 1940 Act.
9. Term. This Agreement shall continue with respect to the Fund
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until the expiration of two years from the date of this Agreement and thereafter
shall continue automatically for successive annual periods ending on the
anniversary of the date of this Agreement, provided such continuance, with
respect to the Fund is specifically approved at least annually by the Company'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 the Company'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 with respect to the Fund without
penalty, on 60 days' notice, by you or by the Company'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).
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10. Amendment. This Agreement may be amended only by an instrument
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in writing signed by the party against which enforcement of the amendment is
sought. No amendment of this Agreement shall be effective with respect to the
Fund until approved by vote of a majority of the Fund's outstanding voting
securities.
11. M.S.D.& T. or Mercantile-Safe Deposit & Trust Company. The
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Company recognizes that from time to time your directors, officers and employees
may serve as directors, trustees, partners, officers and employees of other
corporations, business trusts, partnerships or other entities (including other
investment companies) and that such other entities may include the name "M.S.D.&
T." or "Mercantile-Safe Deposit & Trust Company" as part of their name. You or
your affiliates may enter into investment advisory or other agreements with such
other entities. If you cease to act as the Company's investment adviser, the
Company agrees that, at you request, the Company will take all necessary action
to change the name of the Company and its Funds to a name not including "M.S.D.&
T." or "Mercantile-Safe Deposit & Trust Company" in any form or combination of
words.
12. Miscellaneous. The captions in this Agreement are included for
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convenience of reference only and in no way define or limit 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; provided, that nothing herein shall be construed in a
manner inconsistent with the 1940 Act, the Investment Advisers Act of 1940, or
any rule or regulation of the Securities and Exchange Commission thereunder.
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If the foregoing is in accordance with your understanding, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
M.S.D.& T. FUNDS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
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Accepted:
MERCANTILE-SAFE DEPOSIT & TRUST COMPANY
By: /s/ [signature illegible]
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