EXHIBIT 4(a)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this __ day of ______, 2000, by and between MERCURY GLOBAL
HOLDINGS, INC., a Maryland corporation (hereinafter referred to as the "Fund"),
and FUND ASSET MANAGEMENT, L.P., a Delaware corporation (hereinafter referred to
as "FAM").
W I T N E S S E T H
WHEREAS, the Fund is engaged in business as a diversified, open-end
investment Fund registered under the Investment Company Act of 1940, as amended
(hereinafter referred to as the "Investment Company Act"); and
WHEREAS, FAM is engaged principally in rendering management and investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Fund desires to retain FAM to provide management and
investment advisory services to the Fund in the manner and on the terms
hereinafter set forth; and
WHEREAS, FAM is willing to provide management and investment advisory
services to the Fund on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and FAM hereby agree as follows:
ARTICLE I
Duties of FAM
The Fund hereby employs FAM to act as manager and investment adviser of
the Fund and to furnish, or arrange for affiliates to furnish, the management
and investment advisory services described below, subject to the policies of,
review by and overall control of the Board of Directors of the Fund, for the
period and on the terms and conditions set forth in this Agreement. FAM hereby
accepts such employment and agrees during such period, at its own expense, to
render, or arrange for the rendering of, such services and to assume the
obligations herein set forth for the compensation provided for herein. FAM and
its affiliates shall for all purposes herein be deemed to be independent
contractors 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
agents of the Fund.
(a) Management Services. FAM shall perform, or arrange for affiliates to
perform, the management and administrative services necessary for the operation
of the Fund including administering stockholder accounts and handling
stockholder relations. FAM shall provide the Fund with office space, facilities,
equipment and necessary personnel and such other services as FAM, subject to
review by the Directors, shall from time to time determine to be necessary or
useful to perform its obligations under this Agreement. FAM shall also, on
behalf of the Fund, conduct relations with custodians, depositories, transfer
agents, dividend disbursing agents, other stockholder servicing agents,
accountants, attorneys, underwriters, brokers and dealers, corporate
fiduciaries, insurers, banks and such other persons in any such other capacity
deemed to be necessary or desirable. FAM shall generally monitor the Fund's
compliance with
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investment policies and restrictions as set forth in the currently effective
prospectus and statement of additional information relating to the shares of the
Fund under the Securities Act of 1933, as amended (the "Prospectus" and
"Statement of Additional Information," respectively). FAM shall make reports to
the Directors of its performance of obligations hereunder and furnish advice and
recommendations with respect to such other aspects of the business and affairs
of the Fund as it shall determine to be desirable.
(b) Investment Advisory Services. FAM shall provide the Fund with such
investment research, advice and supervision as the latter may from time to time
consider necessary for the proper supervision of the assets of the Fund, shall
furnish continuously an investment program for the Fund and shall determine from
time to time which securities shall be purchased, sold or exchanged and what
portion of the assets of the Fund shall be held in the various securities in
which the Fund invests or cash, subject always to the restrictions of the
Articles of Incorporation and By-Laws of the Fund, as amended from time to time,
the provisions of the Investment Company Act and the statements relating to the
Fund's investment objectives, investment policies and investment restrictions as
the same are set forth in the Prospectus and Statement of Additional
Information. FAM shall make decisions for the Fund as to foreign currency
matters and make determinations as to foreign exchange contracts. FAM shall make
decisions for the Fund as to the manner in which voting rights, rights to
consent to corporate action and any other rights pertaining to the Fund's
portfolio securities shall be exercised. Should the Directors at any time,
however, make any definite determination as to investment policy and notify FAM
thereof in writing, FAM shall be bound by such determination for the period, if
any, specified in such notice or until similarly notified that such
determination has
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been revoked. FAM shall take, on behalf of the Fund, all actions which it deems
necessary to implement the investment policies determined as provided above, and
in particular to place all orders for the purchase or sale of portfolio
securities for the Fund's account with brokers or dealers selected by it, and to
that end, FAM is authorized as the agent of the Fund to give instructions to the
Custodian of the Fund as to deliveries of securities and payments or cash for
the account of the Fund. In connection with the selection of such brokers or
dealers and the placing of such orders with respect to assets of the Fund, FAM
is directed at all times to seek to obtain execution and prices within the
policy of guidelines determined by the Directors and set forth in the Prospectus
and Statement of Additional Information. Subject to this requirement and the
provisions of the Investment Company Act, the Securities Exchange Act of 1934,
as amended, and other applicable provisions of law, FAM may select brokers or
dealers with which it or the Fund is affiliated. Subject to the policies of,
review by and overall control of the Board of Directors, FAM is responsible for
the allocation of the Fund's assets among the various securities markets of the
world.
(c) Notice Upon Change in Partners of FAM. FAM is a limited partnership.
Its limited partner is Xxxxxxx Xxxxx & Co., Inc. and its general partner is
Princeton Services, Inc. FAM will notify the Fund of any change in the
membership of the partnership within a reasonable time after such change.
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ARTICLE II
Allocation of Charges and Expenses
(a) FAM. FAM assumes and shall pay for maintaining the staff and personnel
necessary to perform its obligations under this Agreement, and shall at its own
expense, provide the office space, facilities, equipment and necessary personnel
which it is obligated to provide under Article I hereof, and shall pay all
compensation of officers of the Fund and all Directors of the Fund who are
affiliated persons of FAM.
(b) The Fund. The Fund assumes and shall pay or cause to be paid all other
expenses of the Fund (except for the expenses paid by the Fund's distributor
(the "Distributor")), including, without limitation: taxes, expenses for legal
and auditing services, costs of printing proxies, stock certificates,
stockholder reports, Prospectuses and Statements of Additional Information,
charges of the custodian, any sub-custodian and transfer agent, expenses of
portfolio transactions, expenses of redemption of shares, Securities and
Exchange Commission fees, expenses of registering the shares under Federal,
state and foreign laws, fees and actual out-of-pocket expenses of Directors who
are not affiliated persons of FAM or any investment research provider pursuant
to Article IV hereof, accounting and pricing costs (including the daily
calculation of the net asset value), insurance, interest, brokerage costs,
litigation and other extraordinary or non-recurring expenses, and other expenses
properly payable by the Fund. The Distributor will pay certain of the expenses
of the Fund incurred in connection with the continuous offering of shares of
common stock of the Fund.
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ARTICLE III
Compensation of FAM
(a) Management and Investment Advisory Fee. For the services rendered, the
facilities furnished and expenses assumed by FAM, the Fund shall pay to FAM at
the end of each calendar month a fee based on the average daily value of the net
assets of the Fund, as determined and computed in accordance with the
description of the determination of net asset value contained in the Prospectus
and Statement of Additional Information, at the annual rate of 0.75% of the
average daily net assets of the Fund, commencing on the day following the date
hereof. If this Agreement becomes effective subsequent to the first day of a
month or shall terminate before the last day of a month, compensation for that
part of the month this Agreement is in effect shall be prorated in a manner
consistent with the calculation of the fee as set forth above. Subject to the
provisions of subsection (b) hereof, payment of FAM's compensation for the
preceding month shall be made as promptly as possible after completion of the
computations contemplated by subsection (b) hereof. During any period when the
determination of net asset value is suspended by the Directors, the net asset
value of a share as of the last business day prior to such suspension shall for
this purpose be deemed to be the net asset value at the close of each succeeding
business day until it is again determined.
(b) Expense Limitations. In the event the operating expenses of the Fund,
including amounts payable to FAM pursuant to subsection (a) hereof, for any
fiscal year ending on a date on which this Agreement is in effect exceed the
expense limitations applicable to the Fund imposed by applicable state
securities laws or regulations thereunder, as such limitation may be raised or
lowered from time to time, FAM shall reduce its management fee by the extent of
such
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excess and, if required pursuant to any such laws or regulations, will reimburse
the Fund in the amount of such excess; provided, however, to the extent
permitted by law, there shall be excluded from such expenses the amount of any
interest, taxes, brokerage fees and commissions, distribution fees and
extraordinary expenses (including but not limited to legal claims and
liabilities and litigation costs and any indemnification related thereto) paid
or payable by the Fund. Whenever the expenses of the Fund exceed a pro rata
portion of the applicable annual expense limitations, the estimated amount of
reimbursement under such limitations shall be applicable as an offset against
the monthly payment of the fee due to FAM. Should two or more such expense
limitations be applicable as at the end of the last business day of the month,
that expense limitation which results in the largest reduction in FAM's fee
shall be applicable.
ARTICLE IV
Limitation of Liability of FAM
FAM shall not be liable for any error of judgment or mistake of law or for
any loss arising out of an investment or for any act or omission in the
management of the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder. As used in this Article IV, the term
"FAM" shall include any affiliates of FAM performing services for the Fund
contemplated hereby and directors, officers and employees of FAM and such
affiliates.
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ARTICLE V
Activities of FAM
The services of FAM to the Fund are not to be deemed to be exclusive, FAM
and any person controlled by or under common control with FAM (for purposes of
this Article V referred to as "affiliates") being free to render services to
others. It is understood that Directors, officers, employees and stockholders of
the Fund are or may become interested in FAM and its affiliates, as directors,
officers, employees, partners, and stockholders or otherwise and that directors,
officers, employees, partners, and stockholders of FAM and its affiliates are or
may become similarly interested in the Fund, and that FAM and directors,
officers, employees, partners, and shareholders of its affiliates may become
interested in the Fund as stockholders or otherwise.
ARTICLE VI
Duration and Termination of this Agreement
This Agreement shall become effective as of the date hereof and shall
remain in force until January 31, 2001, and thereafter, but only so long as such
continuance is specifically approved at least annually by (i) the Board of
Directors of the Fund, or by the vote of a majority of the outstanding voting
securities of the Fund, and (ii) by the vote of a majority of those Directors
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.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Directors of the Fund or by vote of a majority of the
outstanding voting securities of
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the Fund, or by FAM, on sixty days' written notice to the other party. This
Agreement shall automatically terminate in the event of its assignment.
ARTICLE VII
Amendments of this Agreement
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the vote of a majority of outstanding voting
securities of the Fund, and (ii) a majority of those Directors 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.
ARTICLE VIII
Definitions of Certain Terms
The terms "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person" and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act and the rules and regulations thereunder, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission under
said Act.
ARTICLE IX
Governing Law
This Agreement shall be construed in accordance with the laws of the State
of New York and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
MERCURY GLOBAL HOLDINGS, INC.
By:
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Xxxxx X. Xxxxx
President
FUND ASSET MANAGEMENT, L.P.
By:
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