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Exhibit 5b
AMENDED AND RESTATED
SUB-ADVISORY AGREEMENT
AGREEMENT dated July 28, 1988, between PROVIDENT NATIONAL
BANK, a national banking association (herein called "Provident"), and PROVIDENT
INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation registered as an
investment adviser under the Investment Advisers Act of 1940 and wholly-owned by
Provident (herein called "PIMC").
WHEREAS, PIMC is the investment adviser to Municipal Fund for
California Investors, Inc. (the "Fund"), an open-end, diversified, management
investment company registered under the Investment Company Act of 1940;
WHEREAS, PIMC entered into a sub-advisory agreement made as of
February 28, 1983 (the "Sub-Advisory Agreement") between PIMC and Provident for
certain investment research, administrative, and statistical services in
connection with PIMC's advisory activities on behalf of the Fund, which at such
time offered shares in only one portfolio; the Fund's California Money Fund
portfolio (the "Cal Money Portfolio");
WHEREAS, the Fund, as of the date hereof, now offers shares in
two portfolios: the Cal Money Portfolio and the Fund's California Intermediate
Municipal Fund portfolio (the "Cal Intermuni Portfolio") (the Cal Money
Portfolio and the Cal Intermuni Portfolio collectively refereed to herein as the
"Portfolios" and each as a "Portfolio");
WHEREAS, PIMC wishes to amend and restate in full the
Sub-Advisory Agreement to retain Provident to provide it with investment
research, administrative, and statistical services in connection with PIMC's
advisory activities on behalf of both the Cal Money Portfolio and the Cal
Intermuni Portfolio; and
WHEREAS, Provident is willing to provide such services to PIMC
upon the conditions and for the compensation set forth below,
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto that the
"Sub-Advisory Agreement" is hereby amended and restated in full as follows:
1. Appointment. PIMC hereby appoints Provident its sub-adviser
as required by the Advisory Agreement between PIMC and the Fund dated as of July
28, 1988 (such Agreement or the most recent successor advisory agreement between
such parties is referred to herein as the "Advisory Agreement"). Provident
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accepts such appointment and agrees to render the services herein set forth for
the compensation herein provided.
2. Sub-Advisory Services. Subject to the supervision of the
Board of Directors of the Fund, Provident, through its Trust Division and on
behalf of each Portfolio of the Fund, will provide each Portfolio investment
research and credit analysis concerning prospective and existing Portfolio
investments, make recommendations with respect to each Portfolio's continuous
investment program, supply PIMC computer facilities and operating personnel, and
provide such statistical services as PIMC may from time to time reasonably
request. Provident will provide the services rendered by it hereunder in
accordance with each Portfolio's investment objective, policies and restrictions
as stated in the Portfolio's prospectus, as presently in effect and Provident
further agrees that it:
(a) will use the same skill and care in providing
such services as it uses in providing services to fiduciary accounts for which
it has investment responsibilities;
(b) will conform with all applicable Rules and
Regulations of the Securities and Exchange Commission (hereinafter called the
"Rules"), and will in addition conduct its activities under this Agreement in
accordance with the 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 its activities hereunder;
(c) will not invest its assets or assets of any
fiduciary account managed by it in shares of a Portfolio, make loans for
purposes of purchasing or carrying such shares, or make loans to a Portfolio;
(d) will maintain or cause PIMC to maintain books
and records with respect to each Portfolio's securities transactions;
(e) will render to the Fund's Board of Directors
such periodic and special reports as the Board may request; and
(f) will maintain its policy and practice of
conducting its Trust Division independently of its commercial Division. In
making investment recommendations for each Portfolio, Trust Division personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
Commercial Division. In dealing with commercial customers, the Commercial
Division will not inquire or take into consideration whether securities of those
customers are held by the Portfolio.
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3. Services Not Exclusive. Provident's services hereunder are
not deemed to be exclusive, and Provident shall be free to render similar
services to others so long as its services under this Agreement are not impaired
thereby.
4. Books and Records. In compliance with the requirements of
Rule 31a-3 of the Rules, Provident hereby agrees that all records which it
maintains for each Portfolio are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request.
Provident further agrees to preserve, or cause PIMC to preserve, for the periods
prescribed by Rule 31-2, the records required to be maintained by Rule 31-1 of
the Rules.
5. Expenses. During the term of this Agreement. Provident will
pay all expenses incurred by it in connection with its activities under this
Agreement.
6. Compensation. For the services which Provident will render
to PIMC under this Agreement, PIMC will pay to Provident a monthly fee equal to
75% of each month's advisory fee received by PIMC from the Fund with respect to
each Portfolio pursuant to the Advisory Agreement between PIMC and the Fund.
Notwithstanding the foregoing, the fee payable to Provident shall be adjusted
each quarter as necessary to assure that, with respect to each Portfolio, PIMC
has income from all sources before application of federal, State, or other
income taxes of at least $22,500 during each quarter. The sub-advisory fee shall
be paid by PIMC to Provident at least quarterly.
7. Limitation on Liability. Provident will not be liable for
any error of judgment or mistake of law or for any loss suffered by PIMC or by
the Fund 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 its part in the performance of its duties or from
reckless disregard by it of its obligations or duties under this Agreement.
8. Duration and Termination. This Agreement, unless sooner
terminated as provided herein, shall continue with respect to a Portfolio until
May 31, 1989. Thereafter, if not terminated, this Agreement shall continue with
respect to a Portfolio for successive period of 12 months each, 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 Fund who are not
parties to this Agreement or interest persons of the Fund or any such party,
cast in person at a meeting called for the propose of voting on such approval,
and (b) by the Board of Directors of the Fund or by a vote of a majority of the
outstanding voting securities of the Portfolio,
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on 60 days' written notice to PIMC, and will be terminated upon any termination
of the Advisory Agreement between the Fund and PIMC. This Agreement will also
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meanings as such terms
have in the Investment Company Act of 1940.)
9. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. No amendment of this
Agreement shall be effective with respect to a Portfolio until approved by vote
of the holders of a majority of the Portfolio's outstanding voting securities.
10. 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.
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.
PROVIDENT NATIONAL BANK
Attest:
/s/ Signature illegible By: /s/ Signature illegible
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(Corporate Seal)
PROVIDENT INSTITUTION
MANAGEMENT CORPORATION
Attest:
/s/ Signature illegible By: /s/ Xxxxxx X. Xxxxx
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(Corporate Seal)
