ADVISORY AGREEMENT
M.S.D.& T. FUNDS, INC.
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July 21 , 1989
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Mercantile-Safe Deposit
& Trust Company
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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.
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This Agreement relates to three of the Company's short-term money market
portfolios -- the Prime Money Market Fund, the Government Money Market Fund, and
the Tax-Exempt Money Market Fund (individually, a "Fund" and collectively, the
"Funds"). The Company proposes to engage in the business of investing and
reinvesting the assets of each Fund in the manner and in accordance with the
investment objective, policies and limitations specified with respect to each
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
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and approval of the Company's Board of Directors, you will provide investment
management of each Fund's portfolio in accordance with such 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 each Fund's investments and conduct a continuous
program of investment, evaluation and, if appropriate, sale and reinvestment of
such 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 Funds' policies and restrictions regarding brokerage allocations.
In the event that the Company establishes one or more portfolios other
than the Funds with respect to which it desires to retain you as investment
adviser hereunder, it shall notify you in writing. If you are willing to render
such services under this Agreement you shall notify the Company in writing,
whereupon such portfolio shall become a Fund hereunder and shall be subject to
the provisions of this Agreement to the same extent as the other Funds except to
the extent that said provisions (including those relating to compensation
payable by such additional Fund to you as investment adviser) are modified with
respect to such additional Fund in writing by you and the Company at the time.
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 Funds 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 Funds and/or other accounts over which you or any of your affiliates
exercises 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 any 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 particular Fund and to the Company. In no
instance will portfolio securities be purchased from or sold to you, or the
Funds' 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
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to 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.
4. Fees. In consideration of the advisory services rendered
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pursuant to this Agreement, each Fund will pay you on the first business day of
each month a fee at the annual rate of .25 of 1% of the value of such Fund's
average daily net assets during the preceding month. Net asset value shall be
computed in the manner, on such days and at such time or times as described in
the Funds' Prospectus from time to time. The fee for the period from the
effective date of the Registration Statement to the end of the first month
thereafter shall be pro-rated according to the proportion which such period
bears to the full monthly period, and upon any termination of this Agreement
before the end of any month, the fee for such part of a month shall be pro-rated
according to the proportion which such period bears to the full monthly period
and shall be payable upon the date of termination of this Agreement.
5. Expenses. You will bear all your own expenses in connection
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with the performance of your services under this Agreement, provided that such
expenses will not include the expenses to be borne by the Funds, as set forth
below. The expenses to be borne by the Funds include, without limitation, the
following: organizational costs; taxes; interest; brokerage fees and commissions
and other expenses in any way related to the execution, recording
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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
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rendering the services to be provided to each Fund. Each Fund agrees as an
inducement to you and to others who may assist you in providing services to the
Funds 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 such Fund or the Company and each 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 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
a Fund or the size of the position obtainable for or disposed of by a 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
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Rule 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 each
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Fund until the expiration of two years from the date of this Agreement and
thereafter shall continue automatically for successive annual periods ending
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on the anniversary of the date of this Agreement, provided such continuance with
respect to each 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 such 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 such 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 ▇▇▇▇ ▇▇▇) 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 any Fund or all
Funds 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 such 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 such Fund. This Agreement will terminate automatically in
the event of its assignment (as defined in the 1940 Act).
10. Amendment. This Agreement may be amended only by an
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instrument 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 a particular Fund until approved by vote of a majority of that Fund's
outstanding voting securities.
11. M.S.D.& T. or Mercantile-Safe Deposit & Trust Company.
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The 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 your 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
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for 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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Accepted:
MERCANTILE-SAFE DEPOSIT & TRUST COMPANY
By: [signature illegible]
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APPENDIX A
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The following persons are authorized to give Oral and Written
instructions on behalf of M.S.D.& T. FUNDS, INC.
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Vice President /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Vice President /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Assistant Vice President /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇
Assistant Vice President /s/ ▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Investment Accounting Officer /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Assistant Vice President /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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Assistant Portfolio Manager /s/ ▇▇▇▇ ▇▇▇▇▇
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Account Administrator /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Investment Officer /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Assistant Portfolio Manager /s/ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Vice President /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
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Investment Accounting Officer /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇. Investment Accounting Officer /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Investment Accounting Officer /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Investment Accounting Office /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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