[FUND NAME]
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made by and between [__________], a Delaware statutory
trust (hereinafter called the "Fund"), and MBIA Capital Management Corp. a
Delaware corporation (hereinafter called the "Investment Adviser").
W I T N E S S E T H:
WHEREAS, the Fund has been organized and operates as an investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), and engages in the business of investing and reinvesting its assets
in securities, and the Investment Adviser is a registered investment adviser
under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and
engages in the business of providing investment management services; and
WHEREAS, the Fund has selected the Investment Adviser to serve as the
investment adviser for the Fund; and
WHEREAS, a majority of the members of the Board of Trustees of the
Fund, including a majority of the independent Trustees, at an in-person Board of
Trustees meeting held on July 21, 2003 called for the purpose of voting on
approval of this Agreement, approved this Agreement, such approval to be
effective as of [August __, 2003].
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Fund hereby employs the Investment Adviser to manage the
investment and reinvestment of the Fund's assets and to administer its affairs,
subject to the direction of the Board of Directors and officers of the Fund for
the period and on the terms hereinafter set forth. The Investment Adviser hereby
accepts such employment and agrees
-1-
during such period to render the services and assume the obligations herein set
forth for the compensation herein provided. The Investment Adviser shall for all
purposes herein, be deemed to be an independent contractor, and shall, unless
otherwise expressly provided and authorized, have no authority to act for or to
represent the Fund in any way, or in any way be deemed an agent of the Fund. The
Investment Adviser shall regularly make decisions as to what securities to
purchase and sell on behalf of the Fund and shall record and implement such
decisions and shall furnish the Board of Directors of the Fund with such
information and reports regarding the Fund's investments as the Investment
Adviser deems appropriate or as the Directors of the Fund may reasonably
request. Subject to compliance with the requirements of the 1940 Act, the
Investment Adviser may retain as a sub-adviser to the Fund, at the Investment
Adviser's own expense, any investment adviser registered under the Advisers Act.
2. The Fund shall conduct its own business and affairs and shall
bear the expenses and salaries necessary and incidental thereto including, but
not in limitation of the foregoing, the costs incurred in: the maintenance of
its existence; the maintenance of its own books, records and procedures; dealing
with its own shareholders; the payment of dividends; transfer of shares,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholder meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; and taxes. Officers and employees of
the Investment Adviser may be trustees, directors, officers and employees of the
funds of which the Investment Adviser serves as investment adviser. Officers and
employees of the Investment Adviser who are trustees, officers and/or employees
of the Fund shall not receive any compensation from the Fund for acting in such
dual capacity.
-2-
In the conduct of the respective businesses of the parties hereto and
in the performance of this Agreement, the Fund and Investment Adviser may share
facilities common to each, with appropriate proration of expenses between them.
3. (a) The Investment Adviser shall place and execute Fund orders
for the purchase and sale of portfolio securities with broker-dealers. Subject
to the primary objective of obtaining the best available prices and execution,
the Investment Adviser will place orders for the purchase and sale of portfolio
securities for the Fund with such broker-dealers as it may select from time to
time, including brokers who provide statistical, factual and financial
information and services to the Fund, to the Investment Adviser, or to any other
fund for which the Investment Adviser provides investment advisory services
and/or with broker-dealers who sell shares of the Fund or who sell shares of any
other fund for which the Investment Adviser provides investment advisory
services. Broker-dealers who sell shares of the funds of which the Investment
Adviser is investment adviser shall only receive orders for the purchase or sale
of portfolio securities to the extent that the placing of such orders is in
compliance with the Rules of the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and
subject to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Investment Adviser is authorized to pay
a member of an exchange, broker or dealer an amount of commission for effecting
a securities transaction in excess of the amount of commission another member of
an exchange, broker or dealer would have charged for effecting that transaction,
in such instances where the Investment Adviser has determined in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member, broker or dealer,
viewed in terms of either that
-3-
particular transaction or the Investment Adviser's overall responsibilities with
respect to the Fund and to other funds for which the Investment Adviser
exercises investment discretion.
4. As compensation for the services to be rendered to the Fund by
the Investment Adviser under the provisions of this Agreement, the Fund shall
pay to the Investment Adviser from the Fund's assets on the last day in each
month on which the New York Stock Exchange is open for trading, a fee at the
rate of .39 of 1% of the Fund's average net assets for each trading day of the
Fund during such month (including assets acquired from the sale of any preferred
shares), plus the proceeds of any outstanding borrowings used for financial
leverage; PROVIDED, that the liquidation preference of any outstanding preferred
shares issued by the Fund (other than accumulated dividends) shall not be
considered a liability for purposes of determining the Fund's net assets.
If this Agreement shall become effective subsequent to the first
day of the month, or shall terminate before the last day of the month, the
Investment Adviser's compensation for such fraction of the month shall be
determined by applying the foregoing percentage to the average of the weekly net
asset values of the Fund during such fraction of a month (or if none, to the net
asset value of the Fund as calculated on the last day of the preceding month on
which the New York Stock Exchange was open for trading) and in the proportion
that such fraction of a month bears to the entire month.
If this Agreement is terminated prior to the end of any calendar
month, the management fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after the
date of termination.
-4-
5. The services to be rendered by the Investment Adviser to the Fund
under the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Adviser shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.
6. The Investment Adviser, its officers, employees, and agents may
engage in other businesses, may render investment advisory services to other
investment companies, or to any other corporation, association, firm or
individual, and may render underwriting services to the Fund or to any other
investment company, corporation, association, firm or individual.
7. In the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of duties of the
Investment Adviser to the Fund, the Investment Adviser shall not be subject to
liabilities to the Fund or to any shareholder of the Fund for any action or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security, or otherwise.
8. This Agreement shall be executed and become effective as of the
date written below. It shall continue in effect until two years from that date
and thereafter it may be renewed thereafter only so long as such renewal and
continuance is specifically approved at least annually by the Board of Directors
or by vote of a majority of the outstanding voting securities of the Fund and
only if the terms and the renewal hereof have been approved by the vote of a
majority of the Directors of the Fund who are not parties hereto or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. No amendment to this Agreement shall be effective
unless the terms thereof have been approved by the vote of a majority of the
outstanding voting securities of the Fund and by the vote of a majority of
Directors of the Fund who are not parties to the Agreement or interested persons
of
-5-
any such party, cast in person at a meeting called for the purpose of voting on
such approval. Notwithstanding the foregoing, this Agreement may be terminated
by the Fund at any time, without the payment of a penalty, on sixty days'
written notice to the Investment Adviser of the Fund's intention to do so,
pursuant to action by the Board of Directors of the Fund or pursuant to a vote
of a majority of the outstanding voting securities of the Fund. The Investment
Adviser may terminate this Agreement at any time, without the payment of
penalty, on sixty days' written notice to the Fund of its intention to do so.
Upon termination of this Agreement, the obligations of all the parties hereunder
shall cease and terminate as of the date of such termination, except for any
obligation to respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Fund to pay to the Investment
Adviser the fee provided in Paragraph 4 hereof, prorated to the date of
termination. This Agreement shall automatically terminate in the event of its
assignment.
9. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
10. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities"; "interested persons"; and "assignment"
shall have the meaning defined in the 1940 Act.
-6-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their duly authorized officers as of August __, 2003.
[FUND NAME]
By
-------------------------
Name:
Title:
MBIA CAPITAL MANAGEMENT CORP.
By:
-------------------------
Name:
Title:
-7-
