INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of August 2, 1985 between RED OAK CASH RESERVE FUND,
INC., a corporation (herein called the "Fund"), and JERSEY NATIONAL BANK, a
national banking association with its principal offices in Xxxxx Township, New
Jersey (hereinafter the "Investment Adviser").
WHEREAS, the Fund is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Fund desires to retain the Investment Adviser to furnish
investment advisory services to the Fund, and the Investment Adviser is willing
to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Investment Adviser to act
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as investment adviser to the Fund for the period and on the terms set forth in
this Agreement. The Investment Adviser accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
2. Delivery of Documents. The Fund has furnished the Investment Adviser
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with copies properly certified or authenticated of each of the following:
(a) the Fund's Articles of Incorporation, as filed with the
Secretary of State of Maryland on September 11, 1984, and all amendments
thereto (such Articles, as presently in effect and as they shall from
time to time be amended or supplemented, are herein called the "Articles
of Incorporation");
(b) the Fund's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are
herein called the "By-Laws");
(c) resolutions of the Fund's Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
(d) the Fund's Notification of Registration on Form N-8A under the
1940 Act as filed with the Securities and Exchange Commission on
September 11, 1984 and all amendments thereto;
(e) the Fund's Registration Statement on Form N-1A under the
Securities Act of 1933 as amended ("1933 Act") (File No. 2-93214) and
under the 1940 Act as filed with the Securities and Exchange Commission
and all amendments thereto; and
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(f) the Fund's most recent Prospectus and Statement of Additional
Information (such Prospectus and Statement of Additional Information, as
presently in effect and all amendments and supplements thereto, are
herein called the "Prospectus").
The Fund will furnish the Investment Adviser from time to time with
copies of all amendments of or supplements to the foregoing.
3. Management. Subject to the supervision of the Fund's Board of
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Directors, the Investment Adviser will provide a continuous investment program
for the Fund, including investment research and management with respect to all
securities and investments and cash equivalents held by the Fund. The Investment
Adviser will determine from time to time what securities and other investments
will be purchased, retained, or sold by the Fund. The Investment Adviser will
provide the services under this Agreement in accordance with the Fund's
investment objective, policies, and restrictions as stated in the Prospectus and
resolutions of the Fund's Board of Directors. The Investment Adviser further
agrees that it:
(a) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with any regulations of
the Comptroller of the Currency pertaining to the investment advisory
activities of national banks;
(b) will not make loans to any person to purchase or carry the Fund
shares or make loans to the Fund;
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(c) will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or dealer.
In placing orders with brokers and dealers the primary consideration of
the Investment Adviser will be the prompt execution of orders in an
effective manner at the most favorable price. Subject to this
consideration, brokers or dealers who provide supplemental research to
the Investment Adviser may receive orders for transactions with the
Fund. In no instance will portfolio securities be purchased from or sold
to Fairfield Group, Inc., New Jersey National Bank, or any affiliated
person of either the Fund, Fairfield Group, Inc., or New Jersey National
Bank;
(d) will maintain all books and records with respect to the Fund's
portfolio securities transactions and will furnish the Fund's Board of
Directors such periodic and special reports as the Board may request;
(e) will treat confidentially and as proprietary information of the
Fund all records and other information relative to the Fund and prior,
present, or potential shareholders, and will not use such records and
information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification
to and approval in writing by the Fund, which approval shall not be
unreasonably withheld and may not be withheld where the Investment
Adviser may be exposed to civil or criminal
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contempt proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities, or when so requested
by the Fund;
(f) will maintain its policy and practice of conducting its Trust
Division independently of its Commercial Division. In making investment
recommendations for the Fund, Trust Division personnel will not inquire
or take into consideration whether the issuers of securities proposed
for purchase or sale for the Fund'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 Fund;
(g) will provide to the Fund and the Fund's other service providers,
at such intervals as may be reasonably requested by the Fund,
information relating to (i) the performance of services by the
Investment Adviser hereunder, and (ii) market quotations of portfolio
securities held by the Fund;
(h) will direct and use its best efforts to cause the broker or
dealer involved in any portfolio transaction with the Fund to send a
written confirmation of such transaction to the Fund's Custodian and
Transfer Agent; and
(i) will not purchase shares of the Fund for itself or for accounts
with respect to which it is exercising sole investment discretion in
connection with such transactions.
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4. Services Not Exclusive. The investment management services furnished
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by the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to furnish similar services to others so long
as its services under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
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under the 1940 Act, the Investment Adviser hereby agrees that all records which
it maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request. The
Investment Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
6. Expenses. During the term of this Agreement, the Investment Adviser
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will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Fund and the cost of obtaining market
quotations of portfolio securities held by the Fund.
7. Compensation. For the services provided and the expenses assumed
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pursuant to this Agreement, effective as of the date of the initial public sale
of shares of the Fund, the Fund will pay the Investment Adviser and the
Investment Adviser will accept as full compensation therefor a fee, computed
daily and paid monthly, at an annual rate of .50% of the Fund's average daily
net assets; provided, however, that if the total expenses
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borne by the Fund in any fiscal year of the Fund exceed any expense limitations
imposed by applicable state securities laws or regulations, the Investment
Adviser will reimburse the Fund for a portion of such excess equal to the amount
of such excess times the ratio of the fees otherwise payable to the Investment
Adviser hereunder to the aggregate fees otherwise payable to the Investment
Adviser hereunder and Fairfield Group, Inc. pursuant to an Administration
Agreement between it and the Fund. The Investment Adviser's obligation to
reimburse the Fund hereunder is limited in any fiscal year of the Fund to the
amount of the Investment Adviser's fee hereunder for such fiscal year; provided,
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however, that notwithstanding the foregoing, the Investment Adviser shall
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reimburse the Fund for such excess regardless of the fees paid to it to the
extent that the securities laws or regulations of any state having jurisdiction
over the Fund so require. Any such expense reimbursements will be estimated
daily and reconciled and paid on a monthly basis.
8. Use of Investment Adviser's Name and Logo. The Fund agrees that it
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shall furnish to the Investment Adviser, prior to any use or distribution
thereof, copies of all prospectuses, statements of additional information, proxy
statements, reports to shareholders, sales literature, advertisements, and other
material prepared for distribution to shareholders of the Fund or to the public,
which in any way refer to or describe the Investment Adviser or which include
any tradenames, trademarks, or logos of the Investment Adviser or any affiliate
of the Investment Adviser. The Fund further agrees that it shall not use or
distribute any such material if the Investment Adviser reasonably objects in
writing to such use or distribution within ten business days after the
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date such material is furnished to the Investment Adviser. The provisions of
this section shall survive the termination of this Agreement.
9. Limitation of Liability. The Investment Adviser shall not be liable
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for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the performance of this Agreement, 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.
10. Duration and Termination. This Agreement will become effective
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August 2, 1985, provided that it shall have been approved by the Fund's
shareholders, in accordance with the requirements under the 1940 Act, and,
unless sooner terminated as provided herein, shall continue in effect until June
30, 1987. Thereafter, if not terminated, this Agreement shall continue in effect
for successive periods of twelve months each ending on June 30 each year,
provided such continuance is specifically approved at least annually (a) by the
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vote of a majority of those members of the Fund's Board of Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Fund's Board of Directors or by vote of a majority of the Fund's
outstanding voting securities. Notwithstanding the foregoing, this Agreement may
be terminated at any time on sixty days' written notice, without the payment of
any penalty, by the Fund (by vote of the Fund's
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Board of Directors or by vote of a majority of the Fund's outstanding voting
securities) or by the Investment Adviser. This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested persons" and
"assignment" shall have the same meaning of such terms in the 1940 Act.)
11. Amendment of this Agreement. No provision of this Agreement may be
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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 until approved by vote of a majority of the Fund's outstanding voting
securities.
12. Miscellaneous. The captions in this Agreement are included for
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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 Pennsylvania 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.
RED OAK CASH RESERVE FUND, INC.
By /s/ XXXXXXX X. XXXXXX
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NEW JERSEY NATIONAL BANK
By /s/ XXXXXXX X. XXXXX
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