MANAGEMENT AGREEMENT
Agreement dated and effective as of , 1997 between
MUNICIPAL ADVANTAGE FUND INC., a Maryland corporation (herein
referred to as the "Fund"), and Value Advisors LLC, a Delaware limited
liability company (the "Investment Manager").
1. Appointment of Investment Manager.
The Investment Manager hereby undertakes and agrees, upon the terms and
conditions herein set forth, to (i) supervise the Fund's investment program,
including advising and consulting with the Fund's board of directors and
OpCap Advisors (the "Investment Adviser") regarding the Fund's overall
investment strategy, (ii) advise the Fund and the Investment Adviser with
respect to all matters relating to the Fund's use of leveraging techniques,
including the extent and timing of the Fund's use of such techniques,
(iii) consult with the Investment Adviser on at least a weekly basis regarding
the Investment Adviser's specific decisions concerning the purchase, sale or
holding of particular securities, (iv) provide access on a continuous basis to
economic, financial and political information, research and assistance, (v) be
responsible for matters related to the corporate existence of the Fund,
(vi) monitor the performance of the Fund's outside service providers, including
the Fund's administrator, transfer agent and custodian and (vii) pay the
salaries, fees and expenses of such of the Fund's officers, directors or
employees as are directors, officers or employees of the Investment Manager
or any of its affiliates. In addition, the Investment Manager hereby
undertakes and agrees to appoint OpCap Advisors as investment adviser to
(a) make, in consultation with the Investment Manager and the Fund's Board
of Directors, investment strategy decisions for the Fund, (b) manage the
investing and reinvesting of the Fund's assets, (c) place purchase and sale
orders on behalf of the Fund, (d) provide research and statistical data to the
Fund in relation to investing and other matters within the scope of the
investment objective and limitations of the Fund and (e) provide the following
services: (i) compliance with the rules and regulations of the Securities and
Exchange Commission, including record keeping, reporting requirements and
preparation of registration statements and proxies; (ii) supervision of Fund
operations, including coordination of functions of the transfer agent,
custodian, accountants, counsel and other parties performing services or
operational functions for the Fund, (iii) administrative and clerical services,
including accounting services and maintenance of books and records and
(iv) services to Fund shareholders, including responding to shareholder
inquiries and maintaining a flow of information to shareholders. The
Investment Adviser shall have the sole ultimate discretion over investment
decisions for the Fund.
2. In connection herewith, the Investment Manager
agrees to (i) maintain a staff within its organization to furnish the above
services to the Fund and to the Investment Adviser and (ii) provide the
Fund with persons satisfactory to the Fund's Board of Directors to serve as
officers and employees of the Fund. The Investment Manager shall bear all
expenses arising out of its duties hereunder, except that the Board of
Directors may approve reimbursement for the time spent on Fund operations
of personnel who spend substantial time on the operations (other than the
provision of investment advice) of the Fund or other investment companies
advised by the Investment Manager.
Except as provided in Section 1 hereof and subparagraph
3.(a) of the Advisory Agreement (as defined below), the Fund shall be
responsible for all of the Fund's expenses and liabilities, including
organizational and offering expenses (which include out-of-pocket expenses,
but not overhead or employee costs of the Investment Manager and the Investment
Adviser); expenses for legal, accounting and auditing services; taxes and
governmental fees; dues and expenses incurred in connection with membership
in investment company organizations; fees and expenses incurred in connection
with listing the Fund's shares on any stock exchange; costs of printing and
distributing shareholder reports, proxy materials, prospectuses, stock
certificates and distributions of dividends; charges of the Fund's custodians,
sub-custodians, registrars, transfer agents, dividend-paying agents and
dividend reinvestment plan agents; payment for portfolio pricing services
to a pricing agent, if any; registration and filing fees of the Securities and
Exchange Commission; expenses of registering or qualifying securities of the
Fund for sale in the various states; freight and other charges in connection
with the shipment of the Fund's portfolio securities; fees and expenses of
non-interested directors; travel expenses or an appropriate portion thereof
of directors and officers of the Fund who are directors, officers or employees
of the Investment Manager or the Investment Adviser to the extent that such
expenses relate to attendance at meetings of the Board of Directors or any
committee thereof; costs of shareholders meetings; insurance; interest;
brokerage costs; expenses in connection with the offering and issuance of and,
if applicable, auctions of shares of any preferred stock issued by the Fund;
litigation and other extraordinary or non-recurring expenses.
3. Remuneration. In consideration of the services
to be rendered by the Investment Manager under this agreement, the Fund shall
pay the Investment Manager a monthly fee in United States dollars on the fifth
business day of each month for the previous month at an annual rate of .60% of
the Fund's average weekly net assets (i.e. the average weekly value of the
Fund's assets less its liabilities, exclusive of common and preferred stock
and surplus). If the fee payable to the Investment Manager pursuant to this
paragraph 3 begins to accrue before the end of any month or if this agreement
terminates before the end of any month, the fee for the period from such date
to the end of such month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated according to the proportion
which such period bears to the full month in which such effectiveness or
termination occurs.
Compensation of the Investment Adviser for services
provided under the Advisory Agreement is the sole responsibility of the
Investment Manager.
Representations and Warranties. The Investment Manager represents
and warrants that it is duly registered and authorized as an investment
adviser under the Investment Advisers Act of 1940, as amended, and the
Investment Manager agrees to maintain effective all requisite registrations,
authorizations and licenses, as the case may be, until the termination of this
agreement.
Services Not Deemed Exclusive. The services provided hereunder by the
Investment Manager are not to be deemed exclusive and the Investment Manager
and any of its affiliates or related persons are free to render similar
services to others and to use the research developed in connection with this
agreement for other clients or affiliates. Nothing herein shall be construed
as constituting the Investment Manager an agent of the Investment Adviser
or of the Fund.
Limit of Liability. The Investment Manager shall exercise its best judgment
in rendering the services in accordance with the terms of this agreement. The
Investment Manager shall not be liable for any error of judgment or mistake of
law or for any act or omission or any loss suffered by the Fund in connection
with the matters to which this agreement relates, provided that nothing herein
shall be deemed to protect or purport to protect the Investment Manager against
any liability to the Fund or its shareholders to which the Investment Manager
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or from reckless disregard of its
obligations and duties under this agreement ("disabling conduct"). The Fund
will indemnify the Investment Manager against, and hold it harmless from, any
and all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses), including any amounts paid in satisfaction of
judgments, in compromise or as fines or penalties, not resulting from disabling
conduct. Indemnification shall be made only following: (i) a final decision
on the merits by a court or other body before whom the proceeding was brought
that the Investment Manager was not liable by reason of disabling conduct or
(ii) in the absence of such a decision, a reasonable determination, based upon
a review of the facts, that the Investment Manager was not liable by reason of
disabling conduct by (a) the vote of a majority of a quorum of directors of
the Fund who are neither "interested persons" of the Fund nor parties to the
proceeding ("disinterested non-party directors") or (b) an independent legal
counsel in a written opinion. The Investment Manager shall be entitled to
advances from the Fund for payment of the reasonable expenses incurred by it
in connection with the matter as to which it is seeking indemnification in the
manner and to the fullest extent permissible under law. Prior to any such
advance, the Investment Manager shall provide to the Fund a written affirmation
of its good faith belief that the standard of conduct necessary for
indemnification by the Fund has been met and a written undertaking to repay
any such advance if it should ultimately be determined that the standard of
conduct has not been met. In addition, at least one of the following
additional conditions shall be met: (a) the Investment Manager shall provide
a security in form and amount acceptable to the Fund for its undertaking;
(b) the Fund is insured against losses arising by reason of the advance; or
(c) a majority of a quorum of disinterested non-party directors, or independent
legal counsel, in a written opinion, shall have determined, based on a review
of facts readily available to the Fund at the time the advance is proposed to
be made, that there is reason to believe that the Investment Manager will
ultimately be found to be entitled to indemnification.
Duration and Termination. This agreement shall remain in effect until
, 1999 and shall continue in effect thereafter for successive annual
periods, but only so long as such continuance is specifically approved at least
annually by the affirmative vote of (i) a majority of the members of the Fund's
Board of Directors who are not parties to this Agreement or "interested
persons" (as defined in the Investment Company Act of 1940, as amended
(the "1940 Act")) of any such party, cast in person at a meeting called for
the purpose of voting on such approval and (ii) a majority of the Fund's Board
of Directors or the holders of a majority of the outstanding voting securities
(as defined in the 0000 Xxx) of the Fund.
Notwithstanding the above, this agreement (a) may
nevertheless be terminated at any time, without penalty, by the Fund's
Board of Directors, by vote of holders of a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of the Fund or by the
Investment Manager, upon 60 days' written notice delivered to each party
hereto, and (b) shall automatically be terminated in the event of its
assignment (as defined in the 1940 Act). Any such notice shall be deemed
given when received by the addressee.
Governing Law. This Agreement shall be governed, construed and
interpreted in accordance with the laws of the State of New York, provided,
however, that nothing herein shall be construed as being inconsistent with
the 1940 Act. 9. Notices. Any notice hereunder shall
be in writing and shall be delivered in person or by telex or facsimile
(followed by delivery in person) to the parties at the addresses set forth
below.
If to the Fund:
Municipal Advantage Fund Inc.
Oppenheimer Tower
One World Financial Center
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxx
If to the Investment Manager:
Value Advisors LLC
c/o PIMCO Funds Distribution Company
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxxx
or to such other address as to which the recipient shall have informed the
other party in writing.
Unless specifically provided elsewhere, notice given as
provided above shall be deemed to have been given, if by personal delivery,
on the day of such delivery, and, if by telex or facsimile and mail, on the
date on which such telex or facsimile is sent.
Counterparts. This agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto caused
their duly authorized signatories to execute this agreement as of the day
and year first written above.
MUNICIPAL ADVANTAGE FUND INC.
By:________________________________
Name:
Title:
VALUE ADVISORS LLC
By:________________________________
Name:
Title:
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