EXHIBIT 99.G
XXXXX XXXXXXXX MLP INVESTMENT COMPANY
INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT (this "Agreement") is made as
of the [__] day of [______], 2004, by and between Xxxxx Xxxxxxxx MLP Investment
Company, a Maryland corporation (hereinafter called the "Company"), and Xxxxx
Xxxxxxxx Capital Advisors, L.P., a California limited partnership (hereinafter
called the "Manager").
WITNESSETH:
WHEREAS, the Company is a non-diversified, closed-end management
investment company, registered as such under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Manager is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and is engaged in the business
of supplying investment advice, investment management and administrative
services, as an independent contractor; and
WHEREAS, the Company desires to retain the Manager to render advice
and services to the Company pursuant to the terms and provisions of this
Agreement, and the Manager is interested in furnishing said advice and services;
and
NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties hereto, intending to be legally
bound hereby, mutually agree as follows:
1. Appointment of Manager. The Company hereby employs the Manager
and the Manager hereby accepts such employment, to render investment advice and
management services with respect to the assets of the Company for the period and
on the terms set forth in this Agreement, subject to the supervision and
direction of the Company's Board of Directors ("the Board").
2. Duties of Manager.
(a) General Duties. The Manager shall act as investment
manager to the Company and shall supervise investments of the Company in
accordance with the investment objectives, programs and restrictions of the
Company as provided in the Company's governing documents, including, without
limitation, the Company's Charter and Bylaws, or otherwise and such other
limitations as the Board may impose from time to time in writing to the Manager.
Without limiting the generality of the foregoing, the Manager shall: (i) furnish
the Company with advice and recommendations with respect to the investment of
the Company's assets and the purchase and sale of portfolio securities for the
Company, including the taking of such other steps as may be necessary to
implement such advice and recommendations; (ii) furnish the Company with
reports, statements and other data on securities, economic conditions and other
pertinent subjects which the Board may reasonably request; (iii) manage the
investments of the Company, subject to the ultimate supervision and direction of
the Board; (iv) provide persons satisfactory to the Board to act as officers and
employees of the Company (such officers and employees, as well as certain
directors, may be directors, officers, partners, or employees of the
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Manager or its affiliates); and (v) render to the Board such periodic and
special reports with respect to the Company's investment activities as the Board
may reasonably request.
(b) Brokerage. The Manager shall place orders for the purchase
and sale of securities either directly with the issuer or with a broker or
dealer selected by the Manager. In placing the Company's securities trades, it
is recognized that the Manager will give primary consideration to securing the
most favorable price and efficient execution, so that the Company's total cost
or proceeds in each transaction will be the most favorable under all the
circumstances. Within the framework of this policy, the Manager may consider the
financial responsibility, research and investment information, and other
services provided by brokers or dealers who may effect or be a party to any such
transaction or other transactions to which other clients of the Manager may be a
party.
It is also understood that it is desirable for the Company that the
Manager have access to investment and market research and securities and
economic analyses provided by brokers and others. It is also understood that
brokers providing such services may execute brokerage transactions at a higher
cost to the Company than might result from the allocation of brokerage to other
brokers on the basis of seeking the most favorable price and efficient
execution. Therefore, the purchase and sale of securities for the Company may be
made with brokers who provide such research and analysis, subject to review by
the Board from time to time with respect to the extent and continuation of this
practice to determine whether the Company benefits, directly or indirectly, from
such practice. It is understood by both parties that the Manager may select
broker-dealers for the execution of the Company's portfolio transactions who
provide research and analysis as the Manager may lawfully and appropriately use
in its investment management and advisory capacities, whether or not such
research and analysis may also be useful to the Manager in connection with its
services to other clients.
On occasions when the Manager deems the purchase or sale of a
security to be in the best interest of the Company as well as of other clients,
the Manager, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most 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 Manager in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Company and to such other clients.
(c) Administrative Services. The Manager shall oversee the
administration of the Company's business and affairs although the provision of
administrative services, to the extent not covered by subparagraphs (a) or (b)
above, is not the obligation of the Manager under this Agreement.
Notwithstanding any other provisions of this Agreement, the Manager shall be
entitled to reimbursement from the Company for all or a portion of the
reasonable costs and expenses, including salary, associated with the provision
by Manager of personnel to render administrative services to the Company.
3. Best Efforts and Judgment. The Manager shall use its best
judgment and efforts in rendering the advice and services to the Company as
contemplated by this Agreement.
4. Independent Contractor. The Manager shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Company in any way, or in any way be deemed an agent for the
Company. It is expressly understood and agreed that the
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services to be rendered by the Manager to the Company under the provisions of
this Agreement are not to be deemed exclusive, and the Manager 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.
5. Manager's Personnel. The Manager shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Manager shall be
deemed to include persons employed or retained by the Manager to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Manager or the Board may desire and reasonably request.
6. Reports by Company to Manager. The Company will from time to time
furnish to the Manager detailed statements of its investments and assets, and
information as to its investment objective and needs, and will make available to
the Manager such financial reports, proxy statements, legal and other
information relating to the Company's investments as may be in its possession or
available to it, together with such other information as the Manager may
reasonably request.
7. Expenses.
(a) With respect to the operation of the Company, the Manager
is responsible for (i) the compensation of any of the Company's directors,
officers, and employees who are affiliates of the Manager (but not the
compensation of employees performing services in connection with expenses which
are the Company's responsibility under Subparagraph 7(b) below) and (ii)
providing office space and equipment reasonably necessary for the operation of
the Company.
(b) The Company is responsible for and has assumed the
obligation for payment of all of its expenses, other than as stated in
Subparagraph 7(a) above, including but not limited to: fees and expenses
incurred in connection with the issuance, registration and transfer of its
shares; brokerage and commission expenses; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities and other
property of the Company, including all fees and expenses of its custodian,
stockholder services agent and accounting services agent; interest charges on
any borrowings; costs and expenses of pricing and calculating its net asset
value and of maintaining its books of account required under the 1940 Act;
exchange listing fees; taxes, if any; expenditures in connection with meetings
of the Company's stockholders and Board that are properly payable by the
Company; salaries and expenses of officers and fees and expenses of directors or
members of any advisory board or committee who are not members of, affiliated
with or interested persons of the Manager; insurance premiums on property or
personnel of the Company which inure to its benefit, including liability and
fidelity bond insurance; the cost of preparing and printing reports, proxy
statements, prospectuses and statements of additional information of the Company
or other communications for distribution to existing stockholders; legal,
auditing and accounting fees; trade association dues; fees and expenses
(including legal fees) of registering and maintaining registration of its shares
for sale under federal and applicable state and foreign securities laws; all
expenses of maintaining and servicing stockholder accounts, including all
charges for transfer, stockholder recordkeeping, dividend disbursing,
redemption, and other agents for the benefit of the Company, if any; and all
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other charges and costs of its operation plus any extraordinary and
non-recurring expenses, except as herein otherwise prescribed.
(c) To the extent the Manager incurs any costs by assuming
expenses which are an obligation of the Company as set forth herein, the Company
shall promptly reimburse the Manager for such costs and expenses, except to the
extent the Manager has otherwise agreed to bear such expenses. To the extent the
services for which the Company is obligated to pay are performed by the Manager,
the Manager shall be entitled to recover from the Company to the extent of the
Manager's actual costs for providing such services.
8. Investment Advisory and Management Fee.
(a) The Company shall pay to the Manager, and the Manager
agrees to accept, as full compensation for all administrative and investment
management and advisory services furnished or provided to the Company pursuant
to this Agreement, a management fee, computed annually at an annual rate of
1.75% of the total assets of the Company, to be adjusted upward or downward (by
up to 1.00% of the Company's total assets) depending on whether and to what
extent the Company's investment performance for the relevant performance period
exceeds the Company's benchmark over the same period. The Company's benchmark
shall be the total return (capital appreciation and dividends) of the Standard &
Poor's 400 Utilities Index plus 600 basis points (the "Benchmark"). Each 0.01%
of difference of the Company's performance compared to the performance of the
Benchmark shall be multiplied by a performance adjustment of 0.002%, up to a
maximum adjustment of 1.00% (as an annual rate). The performance record for the
Benchmark shall be based on the change in value of the Benchmark during the
relevant performance period.
(b) For the period beginning with the commencement of the
Company's operations through the end of the Company's first 12 months of
operations (_____, 2005), on a quarterly fiscal basis the Company will pay Xxxxx
Xxxxxxxx a minimum management fee calculated at an annual rate of 0.75%. At the
end of the Company's first 12 months of operations, the Company will calculate
the performance adjustment based on the Company's performance to that date from
the commencement of the Company's operations. The Company will then calculate
the total management fee based on the average total assets for the prior 12
months, subtract the minimum management fee, and pay the balance of the
management fee to the Manager. After this initial period, the basic management
fee and the performance adjustment will be calculated and paid quarterly
beginning with the quarter ending November 30, 2005 (for the period beginning
after the initial period), using a rolling 12-month performance period.
(c) For purposes of the calculation of the management fee, the
Company's performance for a given period is calculated on a per share basis as a
fraction, the numerator of which is the sum of (W) our net asset value at the
end of the period minus our net asset value at the beginning of the period, (X)
any dividends or distributions paid by us during the period, (Y) taxes paid
during or accrued (on a net basis) for the period, and (Z) management fees paid
or accrued for the period, and the denominator of which is our net asset value
at the beginning of the period.
(d) For purposes of the calculation of the management fee, the
"average total assets" for the prior 12 months shall be determined on the basis
of the average of our total assets for each month in such period. Total assets
for each monthly period will be determined by averaging the total assets at the
last business day of that month with the total
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assets at the last business day of the prior month (or as of the commencement of
operations for the initial period if a partial month). Our total assets shall be
equal to our average monthly gross asset value (which includes assets
attributable to our use of preferred stock, commercial paper or notes issuances
and other borrowings), minus the sum of our accrued and unpaid dividends on any
outstanding common stock and accrued and unpaid dividends on any outstanding
preferred stock and accrued liabilities (other than the principal amount of any
borrowings incurred, commercial paper or notes issued by us and the liquidation
preference of any outstanding preferred stock and accrued taxes).
(e) The management fee may be amended in writing from time to
time by the Company and the Manager.
(f) The Manager may reduce any portion of the compensation or
reimbursement of expenses due to it pursuant to this Agreement and may agree to
make payments to limit the expenses which are the responsibility of the Company
under this Agreement. Any such reduction or payment shall be applicable only to
such specific reduction or payment and shall not constitute an agreement to
reduce any future compensation or reimbursement due to the Manager hereunder or
to continue future payments. Any such reduction will be agreed to prior to
accrual of the related expense or fee and will be estimated daily and reconciled
and paid on a monthly basis. Any fee withheld pursuant to this paragraph from
the Manager shall be reimbursed by the Company to the Manager in the first,
second or third (or any combination thereof) fiscal year next succeeding the
fiscal year of the reduction to the extent approved by the Company's
disinterested directors. The Manager may not request or receive reimbursement
for prior reductions or reimbursements before payment of the Company's operating
expenses for the current year and cannot cause the Company to exceed any more
restrictive limitation to which the Manager has agreed in making such
reimbursement.
(g) The Manager may agree not to require payment of any
portion of the compensation or reimbursement of expenses otherwise due to it
pursuant to this Agreement prior to the time such compensation or reimbursement
has accrued as a liability of the Company. Any such agreement shall be
applicable only with respect to the specific items covered thereby and shall not
constitute an agreement not to require payment of any future compensation or
reimbursement due to the Manager hereunder.
9. Conflicts with Company's Governing Documents and Applicable Laws.
Nothing herein contained shall be deemed to require the Company to take any
action contrary to the Company's Charter, Bylaws, or any applicable statute or
regulation, or to relieve or deprive the Board of its responsibility for and
control of the conduct of the affairs of the Company.
10. Manager's Liabilities.
(a) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Manager, the Manager shall not be subject to liability to the
Company or to any stockholder of the Company 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 by the
Company.
(b) The Company shall indemnify and hold harmless the Manager
and the partners, members, officers and employees of the Manager and its general
partner (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including
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the reasonable cost of investigating and defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the Indemnified Party's performance or non-performance
of any duties under this Agreement provided, however, that nothing herein shall
be deemed to protect any Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties hereunder or by
reason of reckless disregard of obligations and duties under this Agreement.
(c) No provision of this Agreement shall be construed to
protect any director or officer of the Company, or officer of the Manager (or
its managers), from liability in violation of Sections 17(h) and (i) of the 1940
Act.
11. Non-Exclusivity. The Company's employment of the Manager is not
an exclusive arrangement, and the Company may from time to time employ other
individuals or entities to furnish it with the services provided for herein.
12. Consent To The Use Of Name. The Manager hereby consents to the
use by the Company of the name "Xxxxx Xxxxxxxx" as part of the Company's name;
provided, however, that such consent shall be conditioned upon the employment of
the Manager or one of its affiliates as the investment adviser of the Company.
The name "Xxxxx Xxxxxxxx" or any variation thereof may be used from time to time
in other connections and for other purposes by the Manager and its affiliates
and other investment companies that have obtained consent to the use of the name
"Xxxxx Xxxxxxxx". The Manager shall have the right to require the Company to
cease using the name "Xxxxx Xxxxxxxx" as part of the Company's name if the
Company ceases, for any reason, to employ the Manager or one of its affiliates
as the Company 's investment adviser. Future names adopted by the Company for
itself, insofar as such names include identifying words requiring the consent of
the Manager, shall be the property of the Manager and shall be subject to the
same terms and conditions.
13. Term. This Agreement shall become effective at the time the
Company's initial Registration Statement under the Securities Act of 1933 with
respect to the shares of the Company is declared effective by the Securities and
Exchange Commission and shall remain in effect for a period of two (2) years,
unless sooner terminated as hereinafter provided. This Agreement shall continue
in effect thereafter for additional periods not exceeding one (l) year so long
as such continuation is approved for the Company at least annually by (i) the
Board or by the vote of a majority of the outstanding voting securities of the
Company and (ii) the vote of a majority of the directors who are not parties to
this Agreement nor interested persons thereof (other than as directors of the
Company), cast in person at a meeting called for the purpose of voting on such
approval.
14. Termination. This Agreement may be terminated by the Company at
any time without payment of any penalty, by the Board or by the vote of a
majority of the outstanding voting securities of the Company, upon sixty (60)
days' written notice to the Manager, and by the Manager upon sixty (60) days'
written notice to the Company.
15. Termination by Assignment. This Agreement shall terminate
automatically in the event of any transfer or assignment thereof, as defined in
the 1940 Act.
16. Transfer, Assignment. This Agreement may not be transferred,
assigned, sold or in any manner hypothecated or pledged without the affirmative
vote or written consent of the holders of a majority of the outstanding voting
securities of the Company.
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17. Notice of Limited Liability. The Manager agrees that the
Company's obligations under this Agreement shall be limited to the Company and
to its assets, and that the Manager shall not seek satisfaction of any such
obligation from the shareholders of the Company nor from any director, officer,
employee or agent of the Company.
18. Amendment. No amendment of this Agreement shall be effective
unless it is in writing and signed by the parties hereto.
19. Severability. If any provision of this Agreement shall be held
or made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
20. Definitions. The terms "majority of the outstanding voting
securities" and "interested persons" shall have the meanings as set forth in the
1940 Act.
21. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
22. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of [California][Maryland]
without giving effect to the conflict of laws principles thereof; provided that
nothing herein shall be construed to preempt, or to be inconsistent with, any
federal law, regulation or rule, including the 1940 Act and the Investment
Advisers Act of 1940 and any rules and regulations promulgated thereunder.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested by their duly authorized officers, all on the day
and year first above written.
XXXXX XXXXXXXX MLP INVESTMENT COMPANY XXXXX XXXXXXXX CAPITAL ADVISORS, L.P.
By: By:
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Title: Title:
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