Investment Advisory Agreement
Xxxxxxx Municipal Fund, Inc.
March 1, 1999
Page 3 of 7
INVESTMENT ADVISORY AGREEMENT
XXXXXXX MUNICIPAL FUND, INC.
INVESTMENT ADVISORY AGREEMENT, MADE THIS 1ST DAY OF MARCH, 1999, BY AND
BETWEEN XXXXXXX ASSET MANAGEMENT COMPANY, INC., A DELAWARE CORPORATION (THE
"ADVISOR"), AND XXXXXXX MUNICIPAL FUND, INC., A MARYLAND CORPORATION (THE
"CORPORATION"), BOTH HAVING THEIR PRINCIPAL PLACE OF BUSINESS AT 0000 XXXXXXXXXX
XXXXXX, XXXXXXXX, XXXXXXXX.
WHEREAS, THE CORPORATION IS REGISTERED AS AN INVESTMENT COMPANY UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "1940 ACT"), FOR THE PURPOSE OF
INVESTING AND REINVESTING ITS ASSETS IN SECURITIES, OFFERING SEPARATE SERIES
("FUND(S)"), AS SET FORTH IN ITS ARTICLES OF INCORPORATION, ITS BYLAWS AND ITS
REGISTRATION STATEMENTS UNDER THE 1940 ACT AND THE SECURITIES ACT OF 1933 (THE
"1933 ACT"), AS AMENDED, AND THE CORPORATION DESIRES TO AVAIL ITSELF OF THE
SERVICES, INFORMATION, ADVICE, ASSISTANCE AND FACILITIES OF AN INVESTMENT
ADVISOR AND TO HAVE AN INVESTMENT ADVISOR PERFORM FOR IT VARIOUS INVESTMENT
ADVISORY, RESEARCH SERVICES AND OTHER MANAGEMENT SERVICES; AND
WHEREAS, THE ADVISOR IS AN INVESTMENT ADVISOR REGISTERED UNDER THE
INVESTMENT ADVISERS ACT OF 1940, AS AMENDED, AND IS ENGAGED IN THE BUSINESS OF
RENDERING MANAGEMENT AND INVESTMENT ADVISORY SERVICES TO INVESTMENT COMPANIES
AND DESIRES TO PROVIDE SUCH SERVICES TO THE CORPORATION;
NOW, THEREFORE, IN CONSIDERATION OF THE TERMS AND CONDITIONS HEREINAFTER
SET FORTH, IT IS AGREED AS FOLLOWS:
1. EMPLOYMENT OF THE ADVISOR. THE CORPORATION HEREBY EMPLOYS THE ADVISOR TO
MANAGE THE INVESTMENT AND REINVESTMENT OF THE CORPORATION ASSETS, SUBJECT TO THE
CONTROL AND DIRECTION OF THE CORPORATION'S BOARD OF DIRECTORS, FOR THE PERIOD
AND ON THE TERMS HEREINAFTER SET FORTH. THE ADVISOR HEREBY ACCEPTS SUCH
EMPLOYMENT AND AGREES DURING SUCH PERIOD TO RENDER THE SERVICES AND TO ASSUME
THE OBLIGATIONS IN RETURN FOR THE COMPENSATION HEREIN PROVIDED. THE ADVISOR
SHALL FOR ALL PURPOSES HEREIN BE DEEMED TO BE AN INDEPENDENT CONTRACTOR AND
SHALL, EXCEPT AS EXPRESSLY PROVIDED OR AUTHORIZED (WHETHER HEREIN OR OTHERWISE),
HAVE NO AUTHORITY TO ACT FOR OR REPRESENT THE CORPORATION IN ANY WAY OR
OTHERWISE BE DEEMED AN AGENT OF THE CORPORATION.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY THE ADVISOR. THE ADVISOR
UNDERTAKES TO PROVIDE THE FOLLOWING SERVICES AND TO ASSUME THE FOLLOWING
OBLIGATIONS:
A. THE ADVISOR SHALL MANAGE THE INVESTMENT AND REINVESTMENT OF THE
CORPORATION'S ASSETS, SUBJECT TO AND IN ACCORDANCE WITH THE INVESTMENT
OBJECTIVES AND POLICIES OF EACH FUND, AND ANY DIRECTIONS WHICH THE CORPORATION'S
BOARD OF DIRECTORS MAY ISSUE FROM TIME TO TIME. IN PURSUANCE OF THE FOREGOING,
THE ADVISOR SHALL MAKE ALL DETERMINATIONS WITH RESPECT TO THE INVESTMENT OF THE
CORPORATION'S ASSETS AND THE PURCHASE AND SALE OF PORTFOLIO SECURITIES AND SHALL
TAKE SUCH STEPS AS MAY BE NECESSARY TO IMPLEMENT THE SAME. SUCH DETERMINATION
AND SERVICES SHALL ALSO INCLUDE DETERMINING THE MANNER IN WHICH VOTING RIGHTS,
RIGHTS TO CONSENT TO CORPORATE ACTION, ANY OTHER RIGHTS PERTAINING TO THE
CORPORATION'S PORTFOLIO SECURITIES SHALL BE EXERCISED. THE ADVISOR SHALL RENDER
REGULAR REPORTS TO THE CORPORATION'S BOARD OF DIRECTORS CONCERNING THE
CORPORATION'S INVESTMENT ACTIVITIES.
B. THE ADVISOR SHALL, IN THE NAME OF THE CORPORATION, ON BEHALF OF EACH
FUND, PLACE ORDERS FOR THE EXECUTION OF PORTFOLIO TRANSACTIONS IN ACCORDANCE
WITH THE POLICIES WITH RESPECT THERETO SET FORTH IN THE CORPORATION'S CURRENT
REGISTRATION STATEMENT UNDER THE 1940 ACT AND THE 1933 ACT. IN CONNECTION WITH
THE PLACEMENT OF ORDERS FOR THE EXECUTION OF PORTFOLIO TRANSACTIONS THE ADVISOR
SHALL CREATE AND MAINTAIN ALL NECESSARY BROKERAGE RECORDS OF THE CORPORATION IN
ACCORDANCE WITH ALL APPLICABLE LAWS, RULES AND REGULATIONS, INCLUDING BUT NOT
LIMITED TO RECORDS REQUIRED BY SECTION 31(A) OF THE 1940 ACT. ALL RECORDS SHALL
BE THE PROPERTY OF THE CORPORATION AND SHALL BE AVAILABLE FOR INSPECTION AND USE
BY THE SEC, THE CORPORATION OR ANY PERSON RETAINED BY THE CORPORATION. WHERE
APPLICABLE, SUCH RECORDS SHALL BE MAINTAINED BY THE ADVISOR FOR THE PERIODS AND
THE PLACES REQUIRED BY RULE 31A-2 UNDER THE 1940 ACT.
C. THE ADVISOR SHALL BEAR ITS EXPENSES OF PROVIDING SERVICES TO THE
CORPORATION PURSUANT TO THIS AGREEMENT EXCEPT SUCH EXPENSES AS ARE UNDERTAKEN BY
THE CORPORATION. IN ADDITION, THE ADVISOR SHALL PAY THE SALARIES AND FEES OF ALL
DIRECTORS AND EXECUTIVE OFFICERS WHO ARE EMPLOYEES OF THE ADVISOR OR ITS
AFFILIATES ("ADVISOR EMPLOYEES").
3. EXPENSES OF EACH FUND. EACH FUND SHALL PAY ALL EXPENSES OTHER THAN THOSE
EXPRESSLY ASSUMED BY THE ADVISOR. EXPENSES PAYABLE BY THE FUND SHALL INCLUDE,
BUT ARE NOT LIMITED TO:
A. FEES TO THE ADVISOR AS PROVIDED HEREIN;
B. LEGAL AND AUDIT EXPENSES;
C. FEES AND EXPENSES RELATED TO THE REGISTRATION AND QUALIFICATION OF THE
CORPORATION AND ITS SHARES FOR DISTRIBUTION UNDER FEDERAL AND STATE SECURITIES
LAWS;
D. EXPENSES OF THE ADMINISTRATIVE SERVICES AGENT, TRANSFER AGENT, REGISTRAR,
CUSTODIAN, DIVIDEND DISBURSING AGENT AND SHAREHOLDER SERVICING AGENT;
E. ANY TELEPHONE CHARGES ASSOCIATED WITH SHAREHOLDER SERVICING OR THE
MAINTENANCE OF THE FUNDS OR CORPORATION;
F. SALARIES, FEES AND EXPENSES OF DIRECTORS AND EXECUTIVE OFFICERS OF THE
CORPORATION, OTHER THAN ADVISOR EMPLOYEES;
G. TAXES AND CORPORATE FEES LEVIED AGAINST THE CORPORATION;
H. BROKERAGE COMMISSIONS AND OTHER EXPENSES ASSOCIATED WITH THE PURCHASE AND
SALE OF PORTFOLIO SECURITIES FOR THE CORPORATION;
I. EXPENSES, INCLUDING INTEREST, OF BORROWING MONEY;
J. EXPENSES INCIDENTAL TO MEETINGS OF THE CORPORATION'S SHAREHOLDERS AND THE
MAINTENANCE OF THE CORPORATION'S ORGANIZATIONAL EXISTENCE;
K. EXPENSES OF PRINTING STOCK CERTIFICATES REPRESENTING SHARES OF THE
CORPORATION AND EXPENSES OF PREPARING, PRINTING AND MAILING NOTICES, PROXY
MATERIAL, REPORTS TO REGULATORY BODIES AND REPORTS TO SHAREHOLDERS OF THE
CORPORATION;
L. EXPENSES OF PREPARING AND TYPESETTING OF PROSPECTUSES OF THE CORPORATION;
M. EXPENSES OF PRINTING AND DISTRIBUTING PROSPECTUSES TO SHAREHOLDERS OF THE
CORPORATION;
N. ASSOCIATION MEMBERSHIP DUES;
O. INSURANCE PREMIUMS FOR FIDELITY AND OTHER COVERAGE;
P. DISTRIBUTION PLAN EXPENSES, AS PERMITTED BY RULE 12B-1 UNDER THE 1940 ACT
AND AS APPROVED BY THE BOARD; AND
Q. SUCH OTHER LEGITIMATE CORPORATION EXPENSES AS THE BOARD OF DIRECTORS MAY
FROM TIME TO TIME DETERMINE ARE PROPERLY CHARGEABLE TO THE CORPORATION.
4. COMPENSATION OF ADVISOR.
A. AS COMPENSATION FOR THE SERVICES RENDERED AND OBLIGATIONS ASSUMED
HEREUNDER BY THE ADVISOR, THE TRUST SHALL PAY TO THE ADVISOR WITHIN TEN (10)
DAYS AFTER THE LAST DAY OF EACH CALENDAR MONTH A FEE EQUAL ON AN ANNUALIZED
BASIS AS SHOWN ON SCHEDULE A. ANY AMENDMENT TO THE SCHEDULE PERTAINING TO ANY
NEW OR EXISTING FUND SHALL NOT BE DEEMED TO AFFECT THE INTEREST OF ANY OTHER
FUND AND SHALL NOT REQUIRE THE APPROVAL OF THE SHAREHOLDERS OF ANY OTHER FUND.
B. SUCH FEE SHALL BE COMPUTED AND ACCRUED DAILY. UPON TERMINATION OF THIS
AGREEMENT BEFORE THE END OF ANY CALENDAR MONTH, THE FEE FOR SUCH PERIOD SHALL BE
PRORATED. FOR PURPOSES OF CALCULATING THE ADVISOR'S FEE, THE DAILY VALUE OF A
FUND'S NET ASSETS SHALL BE COMPUTED BY THE SAME METHOD AS THE FUND USES TO
COMPUTE THE VALUE OF ITS NET ASSETS IN CONNECTION WITH THE DETERMINATION OF THE
NET ASSET VALUE OF ITS SHARES.
C. THE ADVISOR RESERVES THE RIGHT (I) TO WAIVE ALL OR PART OF ITS FEE AND
ASSUME EXPENSES OF A FUND AND (II) TO MAKE PAYMENTS TO BROKERS AND DEALERS IN
CONSIDERATION OF THEIR PROMOTIONAL OR ADMINISTRATIVE SERVICES.
5. ACTIVITIES OF THE ADVISOR. THE SERVICES OF THE ADVISOR TO THE CORPORATION
HEREUNDER ARE NOT TO BE DEEMED EXCLUSIVE, AND THE ADVISOR SHALL BE FREE TO
RENDER SIMILAR SERVICES TO OTHERS. IT IS UNDERSTOOD THAT DIRECTORS AND OFFICERS
OF THE CORPORATION ARE OR MAY BECOME INTERESTED IN THE ADVISOR AS STOCKHOLDERS,
OFFICERS, OR OTHERWISE, AND THAT STOCKHOLDERS AND OFFICERS OF THE ADVISOR ARE OR
MAY BECOME SIMILARLY INTERESTED IN THE CORPORATION, AND THAT THE ADVISOR MAY
BECOME INTERESTED IN THE CORPORATION AS A SHAREHOLDER OR OTHERWISE.
6. USE OF NAMES. THE CORPORATION SHALL NOT USE THE NAME OF THE ADVISOR IN
ANY PROSPECTUS, SALES LITERATURE OR OTHER MATERIAL RELATING TO THE CORPORATION
IN ANY MANNER NOT APPROVED PRIOR THERETO BY THE ADVISOR; PROVIDED, HOWEVER, THAT
THE ADVISOR SHALL APPROVE ALL USES OF ITS NAME WHICH MERELY REFER IN ACCURATE
TERMS TO ITS APPOINTMENT HEREUNDER OR WHICH ARE REQUIRED BY THE SEC; AND,
PROVIDED, FURTHER, THAT IN NO EVENT SHALL SUCH APPROVAL BE UNREASONABLY
WITHHELD. THE ADVISOR SHALL NOT USE THE NAME OF THE CORPORATION OR ANY
CORPORATION IN ANY MATERIAL RELATING TO THE ADVISOR IN ANY MANNER NOT APPROVED
PRIOR THERETO BY THE CORPORATION; PROVIDED, HOWEVER, THAT THE CORPORATION SHALL
APPROVE ALL USES OF ITS NAME WHICH MERELY REFER IN ACCURATE TERMS TO THE
APPOINTMENT OF THE ADVISOR HEREUNDER OR WHICH ARE REQUIRED BY THE SEC; AND,
PROVIDE, FURTHER, THAT IN NO EVENT SHALL SUCH APPROVAL BE UNREASONABLY WITHHELD.
7. LIABILITY OF THE ADVISOR. ABSENT WILLFUL MISFEASANCE, BAD FAITH, GROSS
NEGLIGENCE, OR RECKLESS DISREGARD OF OBLIGATIONS OR DUTIES HEREUNDER ON THE PART
OF THE ADVISOR, THE ADVISOR SHALL NOT BE SUBJECT TO LIABILITY TO THE CORPORATION
OR TO ANY SHAREHOLDER OF THE CORPORATION FOR ANY ACT 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.
8. FORCE MAJEURE. THE ADVISOR SHALL NOT BE LIABLE FOR DELAYS OR ERRORS
OCCURRING BY REASON OF CIRCUMSTANCES BEYOND ITS CONTROL, INCLUDING BUT NOT
LIMITED TO ACTS OF CIVIL OR MILITARY AUTHORITY, NATIONAL EMERGENCIES, WORK
STOPPAGES, FIRE, FLOOD, CATASTROPHE, ACTS OF GOD, INSURRECTION, WAR, RIOT, OR
FAILURE OF COMMUNICATION OR POWER SUPPLY. IN THE EVENT OF EQUIPMENT BREAKDOWNS
BEYOND ITS CONTROL, THE ADVISOR SHALL TAKE REASONABLE STEPS TO MINIMIZE SERVICE
INTERRUPTIONS BUT SHALL HAVE NO LIABILITY WITH RESPECT THERETO.
9. RENEWAL, TERMINATION AND AMENDMENT. THIS AGREEMENT SHALL CONTINUE IN
EFFECT WITH RESPECT TO THE CORPORATION, UNLESS SOONER TERMINATED AS HEREINAFTER
PROVIDED, THROUGH DECEMBER 31, 1999, AND INDEFINITELY THEREAFTER IF ITS
CONTINUANCE SHALL BE SPECIFICALLY APPROVED AT LEAST ANNUALLY BY VOTE OF THE
HOLDERS OF A MAJORITY OF THE OUTSTANDING VOTING SECURITIES OF THE CORPORATION OR
BY VOTE OF A MAJORITY OF THE CORPORATION'S BOARD OF DIRECTORS; AND FURTHER
PROVIDED THAT SUCH CONTINUANCE IS ALSO APPROVED ANNUALLY BY THE VOTE OF A
MAJORITY OF THE DIRECTORS WHO ARE NOT PARTIES TO THIS AGREEMENT OR INTERESTED
PERSONS OF THE ADVISOR, CAST IN PERSON AT A MEETING CALLED FOR THE PURPOSE OF
VOTING ON SUCH APPROVAL, OR AS ALLOWED BY LAW. THIS AGREEMENT MAY BE TERMINATED
AT ANY TIME, WITHOUT PAYMENT OF ANY PENALTY, BY THE CORPORATION'S BOARD OF
DIRECTORS OR BY A VOTE OF THE MAJORITY OF THE OUTSTANDING VOTING SECURITIES OF
THE CORPORATION UPON 60 DAYS' PRIOR WRITTEN NOTICE TO THE ADVISOR AND BY THE
ADVISOR UPON 60 DAYS' PRIOR WRITTEN NOTICE TO THE CORPORATION. THIS AGREEMENT
MAY BE AMENDED AT ANY TIME BY THE PARTIES, SUBJECT TO APPROVAL BY THE
CORPORATION'S BOARD OF DIRECTORS AND, IF REQUIRED BY APPLICABLE SEC RULES AND
REGULATIONS, A VOTE OF A MAJORITY OF THE CORPORATION'S OUTSTANDING VOTING
SECURITIES. THIS AGREEMENT SHALL TERMINATE AUTOMATICALLY IN THE EVENT OF ITS
ASSIGNMENT. THE TERMS "ASSIGNMENT" AND "VOTE OF A MAJORITY OF THE OUTSTANDING
VOTING SECURITIES" SHALL HAVE THE MEANING SET FORTH FOR SUCH TERMS IN THE 1940
ACT.
10. SEVERABILITY. 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.
11. MISCELLANEOUS. EACH PARTY AGREES TO PERFORM SUCH FURTHER ACTIONS AND
EXECUTE SUCH FURTHER DOCUMENTS AS ARE NECESSARY TO EFFECTUATE THE PURPOSES
HEREOF. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF MARYLAND. THE CAPTIONS IN THIS AGREEMENT
ARE INCLUDED FOR CONVENIENCE ONLY AND IN NO WAY DEFINE OR DELIMIT ANY OF THE
PROVISIONS HEREOF OR OTHERWISE AFFECT THEIR CONSTRUCTION OR EFFECT.
IN WITNESS WHEREOF, THE PARTIES HAVE DULY EXECUTED THIS AGREEMENT AS OF THE
DATE FIRST WRITTEN ABOVE.
XXXXXXX MUNICIPAL FUND, INC.
BY:
TITLE:
XXXXXXX ASSET MANAGEMENT COMPANY, INC.
BY:
TITLE:
INVESTMENT ADVISORY AGREEMENT
XXXXXXX ASSET MANAGEMENT COMPANY, INC.
XXXXXXX MUNICIPAL FUND, INC.
SCHEDULE A
AS COMPENSATION PURSUANT TO SECTION 4 OF THE INVESTMENT ADVISORY AGREEMENT
BETWEEN XXXXXXX ASSET MANAGEMENT COMPANY, INC. (THE "ADVISOR") AND XXXXXXX
MUNICIPAL FUND, INC. ("CMF") DATED MARCH 1, 1999, WITH RESPECT TO EACH CMF
PORTFOLIO, THE ADVISOR IS ENTITLED TO RECEIVE FROM EACH PORTFOLIO AN ANNUAL
ADVISORY FEE (THE "FEE") AS SHOWN BELOW. THE FEE SHALL BE COMPUTED DAILY AND
PAYABLE MONTHLY, BASED ON THE AVERAGE DAILY NET ASSETS OF THE APPROPRIATE
PORTFOLIO.
XXXXXXX NATIONAL MUNICIPAL INTERMEDIATE FUND: 0.60% OF THE FIRST $500
MILLION
0.50% ABOVE $500 MILLION
0.40% ABOVE $1 BILLION
XXXXXXX CALIFORNIA MUNICIPAL INTERMEDIATE FUND: 0.60% OF THE FIRST $500
MILLION
0.50% ABOVE $500 MILLION
0.40% ABOVE $1 BILLION
XXXXXXX MARYLAND MUNICIPAL INTERMEDIATE FUND: 0.60% OF THE FIRST $500
MILLION
0.50% ABOVE $500 MILLION
0.40% ABOVE $1 BILLION
XXXXXXX VIRGINIA MUNICIPAL INTERMEDIATE FUND: 0.60% OF THE FIRST $500
MILLION
0.50% ABOVE $500 MILLION
0.40% ABOVE $1 BILLION
