INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 2nd day of December, 2002, by and between The New
America High Income Fund, Inc., a Maryland corporation (the "Fund"), and X. Xxxx
Price Associates, Inc., a Maryland corporation (the "Investment Adviser").
WHEREAS, the Fund is a closed-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund desires to retain the Investment Adviser to render
investment management services to the Fund under the terms of this Agreement in
reliance upon Rule 15a-4 under the 1940 Act prior to the approval by Fund
stockholders of this Agreement and intends to seek Fund stockholder approval of
this Agreement within the time period provided for under such Rule;
WHEREAS the Investment Adviser is willing to render investment management
services to the Fund under the terms described herein;
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. Duties of the Investment Adviser.
The Investment Adviser shall manage the investment and reinvestment of the
Fund's assets; continuously review, supervise, and administer the investment
program of the Fund; determine in its discretion the securities to be purchased,
retained, sold, pledged or loaned (and implement those decisions); determine in
its discretion when, to what extent and under what terms the Fund shall engage
in bank or other borrowings, to the extent permitted by law and authorized by
the Fund's Board of Directors (and, together with the Fund's Administrator, if
and to the extent one shall be appointed by the Fund, or such other parties as
the Investment Adviser may select with the approval of the Fund, implement those
determinations); provide the Fund with records concerning the Investment Adviser
and its activities that the Fund is required to maintain; render regular reports
to the Fund's officers and Directors concerning the Investment Adviser's
discharge of the foregoing responsibilities; and supply the Fund's officers and
Directors with all statistical information and reports reasonably required by
them and reasonably available to the Investment Adviser, including, without
limitation, all information required under Section 15(c) of the 1940 Act.
The Investment Adviser shall discharge the foregoing responsibilities
subject to the control of the officers and Directors of the Fund and in
compliance with such policies as the Directors may from time to time establish,
and in compliance with the objectives, policies, and limitations of the Fund set
forth in the Fund's prospectus, Registration Statement on Form N-2, charter and
relevant arrangements and agreements with respect to the Fund's senior
securities, if any, in each case as amended from time to time, and with all
applicable laws and regulations. The Investment Adviser agrees, at its own
expense, to render the services described herein and to provide the office
space, furnishings and equipment, and personnel required by it to perform those
services on the terms and for the compensation provided herein; provided,
however, that
expenses for necessary services of parties other than the Investment Adviser
rendered in connection with the activities described above shall be borne by
those parties, or by the Fund, as appropriate. The Investment Adviser shall
authorize and permit any of its officers, partners and employees, who may be
elected as officers or Directors of the Fund, to serve in the capacities in
which they are elected.
2. Portfolio Transactions.
The Investment Adviser is authorized to arrange for the execution of the
Fund's portfolio transactions by selecting the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Fund and is
directed to use its best efforts to obtain the best net results, taking into
account such factors as price (including the applicable brokerage commission or
dealer spread), size of order, difficulty of execution and operational
facilities of the firm involved. The Investment Adviser may, in its discretion,
purchase and sell portfolio securities through brokers who provide the
Investment Adviser or the Fund with research, analysis, advice and similar
services, and the Investment Adviser may pay to these brokers, in return for
research and analysis, a higher commission than may be charged by other brokers,
provided that the Investment Adviser determines in good faith that such
commission is reasonable in terms either of that particular transaction or of
the overall responsibility of the Investment Adviser and the Investment
Adviser's other clients and that the total commission paid by the Fund will be
reasonable in relation to the benefits to the Fund over the long term.
On occasions when the Investment Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other clients, the
Investment Adviser, to the extent permitted by applicable laws and regulations,
may, but shall be under no obligation to, aggregate the securities to be so
purchased or sold in order to obtain the most favorable price or lower brokerage
commissions and efficient execution. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transaction will
be made by the Investment Adviser in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to the Fund and to such
other clients.
3. Compensation of the Investment Adviser.
(a) The provisions of this Section 3(a) shall apply to periods prior to
the date this Agreement is approved by holders of a majority of the outstanding
voting securities of the Fund within the meaning of the 1940 Act (such approval
being referred to as "Stockholder Approval").
For the services to be rendered by the Investment Adviser as provided in
Sections 1 and 2 of this Agreement, the Fund shall pay to the Investment Adviser
an investment advisory fee at the annual rate of .45% of the Fund's "Average Net
Assets," based on the average weekly net asset value. For purposes of this
Section 3(a), the Fund's "Average Net Assets" shall mean the Fund's total assets
minus (a) the Fund's accrued liabilities (including the aggregate principal
amount of and the amount of the accrued interest on any senior securities of the
Fund constituting debt within the meaning of Section 18 of the 1940 Act or under
any credit facility with any bank or other lender) and, without duplication of
(a), (b) the aggregate liquidation preference of and the amount of accumulated
dividends on any senior securities of the Fund constituting stock within the
meaning of Section 18 of the 1940 Act.
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(b) The provisions of this Section 3(b) shall apply to periods beginning
with and subsequent to the date of Stockholder Approval. For the services to be
rendered by the Investment Adviser as provided in Sections 1 and 2 of this
Agreement, the Fund shall pay to the Investment Adviser an investment advisory
fee at the annual rate of the Fund's "Base Net Assets" shown in the following
schedule, based on the Fund's average weekly net asset value:
Fund Base Net Assets Fee Rate
-------------------- --------
First $50 million 0.50%
Next $50 million 0.40%
Above $100 million 0.30%
For purposes of this Section 3(b), the Fund's "Base Net Assets" shall mean net
assets attributable to the Fund's outstanding common stock and senior securities
within the meaning of Section 18 of the 1940 Act. Base Net Assets shall include
the liquidation preference and principal amount attributable to the Fund's
senior securities but not accrued interest and dividends relating to such
securities.
(c) The fees due under this Section 3 shall be paid as promptly as
possible after the last day of each month. The first payment of the investment
advisory fee shall be made as promptly as possible at the end of the month next
succeeding the effective date of this Agreement, and shall constitute a full
payment of the fee due the Investment Adviser for all services rendered pursuant
to this Agreement prior to that date. In the event that the Investment Adviser's
right to such fee commences to accrue on a date other than the first day of the
month, the fee provided in this Section 3 shall be computed on the basis of the
period beginning on the first business day on which this Agreement is in effect,
subject to a pro rata adjustment based on the number of days in that period as a
percentage of the total number of days in such month. In the event of
termination of this Agreement, the fee provided in this Section 3 shall be
computed on the basis of the period ending on the last business day on which
this Agreement is in effect, subject to a pro rata adjustment based on the
number of days elapsed in the current fiscal month as a percentage of the total
number of days in such month. The average weekly net asset value of the Fund
shall in all cases be based only on those days when the New York Stock Exchange
is open for business, and shall be computed as of the time of the regular close
of business of the New York Stock Exchange, or such other time as may be
determined by the Fund's Board of Directors. In the event that Stockholder
Approval occurs other than on the first day of a month, the advisory fee for the
portion of the month prior to Stockholder Approval shall be calculated according
to Section 3(a) and the advisory fee for the portion of the month beginning with
Stockholder Approval shall be calculated according to Section 3(b). Each fee
payment to the Investment Adviser shall be accompanied by a report of the Fund
which shall show the amount properly payable to the Investment Adviser under
this Agreement and the detailed computation thereof.
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4. Other Services.
At the request of the Fund, the Investment Adviser shall, subject to
availability, make available to the Fund office facilities, equipment, personnel
and services other than as set forth in Sections 1 and 2 of this Agreement. Such
office facilities, equipment, personnel and services shall be provided for or
rendered by the Investment Adviser and billed to the Fund at the Investment
Adviser's cost.
5. Reports.
The Fund and the Investment Adviser agree to furnish to each other, if
applicable, current prospectuses, registration statements, proxy statements,
reports to shareholders, certified copies of their financial statements, and
such other information with regard to their affairs as each may reasonably
request.
6. Status of the Investment Adviser.
The services of the Investment Adviser to the Fund are not to be deemed
exclusive, and the Investment Adviser shall be free to render similar services
to others so long as its services to the Fund are not impaired thereby. The
Investment Adviser shall be deemed to be an independent contractor and shall,
unless otherwise expressly provided or authorized, have no authority to act for
or represent the Fund in any way or otherwise be deemed an agent of the Fund.
Nothing in this Agreement shall limit or restrict the right of any partner,
officer or employee of the Fund, to engage in any other business or to devote
his or her time and attention in part to the management or other aspects of any
other business, whether of a similar nature or a dissimilar nature.
7. Certain Records.
Any records required to be maintained and preserved pursuant to the
provisions of Rule 31a-1 and Rule 31a-2 promulgated under the 1940 Act which are
prepared or maintained by the Investment Adviser on behalf of the Fund are
property of the Fund and will be surrendered promptly to the Fund on request.
8. Liability of the Investment Adviser.
The Investment Adviser shall not be liable for any error of judgment or
for any loss suffered by the Fund in connection with performance of its
obligations under this Agreement, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of, or
from reckless disregard by it of its obligations and duties under, this
Agreement, or damages resulting from a breach of fiduciary duty with respect to
receipt of compensation for services.
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9. Indemnification.
The Fund will indemnify the Investment Adviser for all liabilities and
expenses, including defense costs, in connection with any litigation pertaining
to the period prior to the Investment Adviser's relationship with the Fund under
this Agreement, other than liabilities resulting from willful misfeasance, bad
faith or gross negligence on the part of the Investment Adviser.
10. Use of Logo.
During the term of this Agreement, the Fund shall furnish to the
Investment Adviser at its principal office copies of all materials prepared for
distribution to shareholders of the Fund or the public, which use the Investment
Adviser's logo and the Fund shall not use any such materials if the Investment
Adviser reasonably objects in writing five (5) days (or such other time as may
be mutually agreed) after receipt thereof.
11. Permissible Interests.
Directors, officers, agents and shareholders of the Fund are or may be
interested in the Investment Adviser (or any successor thereof) as partners,
officers or otherwise; partners, officers and agents of the Investment Adviser
are or may be interested in the Fund as Directors, officers, shareholders or
otherwise; and the Investment Adviser (or any successor thereof) is or may be
interested in the Fund as a shareholder or otherwise.
12. Duration and Termination.
If approved by holders of a majority of the outstanding voting securities
of the Fund at the first shareholders' meeting following the date of this
Agreement, and unless sooner terminated as provided herein, this Agreement shall
continue until December 2, 2004, and thereafter for periods of one year, so long
as such continuance thereafter is specifically approved at least annually (a) by
the vote of a majority of those Directors of the Fund who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by the
Directors of the Fund or by the vote of a majority of the outstanding voting
securities of the Fund; provided, however, that if the shareholders of the Fund
fail to approve the Agreement as provided herein, the Investment Adviser may
continue to serve hereunder in the manner and to the extent permitted by the
1940 Act and the rules and regulations thereunder until such time as such
approval has been obtained, whereupon the provisions of Section 3 hereof shall
apply. The foregoing requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a manner
consistent with the 1940 Act and the rules and regulations thereunder. This
Agreement may be terminated at any time without the payment of any penalty by
the vote of a majority of Directors of the Fund or by the vote of a majority of
the outstanding voting securities of the Fund on 60 days' written notice to the
Investment Adviser or by the Investment Adviser at any time without the payment
of any penalty on 60 days' written notice to the Fund. This Agreement will
automatically and immediately terminate in the event of its assignment. Any
notice under this Agreement shall be given in writing, addressed and delivered,
or mailed postpaid, to the other party at any office of such party. As used in
this Section 11, the terms "assignment," "interested
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person," and "vote of a majority of the outstanding voting securities" shall
have the respective meanings set forth in the 1940 Act and the rules and
regulations thereunder, subject to such exceptions as may be granted by the
Securities and Exchange Commission under the 1940 Act.
13. Notice.
Any notice under this Agreement shall be given in writing, addressed and
delivered, or mailed postpaid, to the other party at the following addresses:
To the Fund New America High Income Fund, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
Fax No.: (000) 000-0000
To the Investment Adviser: X. Xxxx Price Associates, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx
Fax No.: (000) 000-0000
With a copy to: Xxxxx X. Xxxxxxx, Esquire
X. Xxxx Price Associates, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
14. Amendment; Waiver.
No provisions 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, and no amendment of this Agreement shall be effective until approved by
the vote of the majority of the outstanding voting securities of the Fund.
15. Governing Law; Severability; Counterparts.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts. 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
may be executed in any number of counterparts, each of which shall be deemed to
be an original, but such counterparts shall, together, constitute only one
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
X. XXXX PRICE ASSOCIATES, INC. THE NEW AMERICA HIGH INCOME FUND, INC.
By: /s/ Xxxxxx Xxxxxxxxx By: /s/ Xxxxx X. Xxxxx
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