EXHIBIT 5(u)
PROPOSED
INVESTMENT ADVISORY AGREEMENT
[SPECIAL EQUITY FUND]
[BOND FUND]
[SHORT-TERM INCOME FUND]
AGREEMENT made as of [____________ _____, 1996] between
COREFUNDS, INC., a Maryland corporation (hereinafter the "Fund"), and CORESTATES
INVESTMENT ADVISERS, INC., a Pennsylvania corporation (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 is authorized to issue shares of Common
Stock in separate classes representing shares in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund desires to retain the Investment Adviser to
furnish investment advisory services to the Fund and certain of its portfolios,
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 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 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
(f) the Fund's most recent Prospectuses and
Statement of Additional Information (such Prospectuses and Statement of
Additional Information, as presently in effect and all amendments and
supplements thereto, are herein called the "Prospectuses").
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 Directors, the Investment Adviser will provide a continuous investment
program for certain portfolios of the Fund, including investment guidelines and
management with respect to all securities and investments and cash equivalents
held by [Special Equity Fund, Bond Fund and Short-Term Income Fund] and such
other portfolios (hereinafter collectively, the "Portfolios") offered by the
Fund and identified by the Fund as appropriate. 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 Prospectuses 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 CoreStates
Financial Corp or any affiliated person of either the Fund or CoreStates
Financial Corp; (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 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 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;
(g) 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
(h) 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.
4. Services Not Exclusive. The investment management
services furnished 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 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
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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 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 pursuant to this Agreement, effective as of the date of this Agreement,
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 .20% of the Portfolios' average daily net assets; provided,
however, that if the total expenses 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 SEI Financial
Management Corporation 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, however, that notwithstanding the
foregoing, the Investment Adviser shall 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 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 trade names, 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 date such material is furnished to the Investment Adviser. The
provisions of this section shall survive the termination of this Agreement.
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9. Limitation of Liability. The Investment Adviser shall not
be liable 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 as of the date first above written, 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 [______________ ___, _____]. 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 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 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. Name Protection After Termination. In the event this
Agreement is terminated by either party or upon written notice from the
Investment Adviser at any time, the Fund hereby agrees that it will eliminate
from its corporate name any references to the name "CoreFunds." The Fund shall
have the nonexclusive use of the name "CoreFunds" in whole or in part so long as
this Agreement is effective or until such notice is given.
12. 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 until approved by vote of a majority of the Fund's
outstanding voting securities.
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13. 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 Pennsylvania 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.
COREFUNDS, INC.
By_________________________________
CORESTATES INVESTMENT ADVISERS, INC.
By_________________________________
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