Exhibit 4(c)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 10th day of July, 2006 by and between XXXXXXX XXXXX
MUNICIPAL BOND FUND, INC., a Maryland corporation (the "Fund"), on behalf of
HIGH YIELD PORTFOLIO (the "Portfolio"), and FUND ASSET MANAGEMENT, L.P., a
Delaware limited partnership (the "Investment Adviser").
W I T N E S S E T H :
WHEREAS, the Fund is engaged in business as a diversified, open-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Board of Directors of the Fund (the "Directors") is
authorized to establish separate portfolios of the Fund, each of which pursues
its investment objective through separate investment policies, by designating
authorized shares of common stock of the Fund; and
WHEREAS, the Directors have established the Portfolio as a portfolio of
the Fund by reclassifying and designating authorized shares of common stock of
the Fund; and
WHEREAS, the Investment Adviser 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 the Investment Adviser to render
management and investment advisory services to the Portfolio in the manner and
on the terms hereinafter set forth; and
WHEREAS, the Investment Adviser is willing to provide management and
investment advisory services to the Portfolio on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Investment Adviser hereby agree as
follows:
ARTICLE I
DUTIES OF THE INVESTMENT ADVISER
The Fund hereby employs the Investment Adviser to act as a manager and
investment adviser of the Portfolio and to furnish or arrange for affiliates to
furnish, the management and investment advisory services described below,
subject to policies of, review by and overall control of the Directors, for the
period and on the terms and conditions set forth in this Agreement. The
Investment Adviser 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. The Investment Adviser and its affiliates shall for all purposes herein
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 or
the Portfolio in any way or otherwise be deemed an agent of the Fund or the
Portfolio.
(a) Management and Administrative Services. The Investment Adviser shall
perform, or arrange for the performance by affiliates of, the management and
administrative services necessary for the operation of the Portfolio, including
administering stockholder accounts and handling stockholder relations. The
Investment Adviser shall provide the Fund and the Portfolio with office space,
equipment and facilities and such other services as the Investment Adviser,
subject to review by the Directors, shall from time to time determine to be
necessary or useful to perform its obligations under this Agreement. The
Investment Adviser shall also, on behalf of the Portfolio, conduct relations
with custodians, depositories, transfer agents, dividend disbursing agents,
other 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. The Investment Adviser
shall generally monitor the Portfolio's compliance with investment policies and
restrictions as set forth in the currently effective prospectus and statement of
additional information relating to the shares of the Portfolio under the
Securities Act of 1933, as amended (the "Prospectus" and "Statement of
Additional Information," respectively). The Investment Adviser shall make
reports to the Directors of its performance of the obligations hereunder and
furnish advice and recommendations with respect to such other aspects of the
business and affairs of the Portfolio as it shall determine to be desirable.
(b) Investment Advisory Services. The Investment Adviser shall provide (or
arrange for affiliates to provide) the Portfolio with such investment research,
advice and supervision as the Fund and the Portfolio may from time to time
consider necessary for the proper supervision of the assets of the Portfolio,
shall furnish continuously an investment program for the Portfolio and shall
determine from time to time which securities shall be purchased, sold or
exchanged and what portion of the assets of the Portfolio shall be held in the
various securities in which the Portfolio invests, options, futures, options on
futures or cash, subject always to the restrictions set forth in 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
Portfolio's investment objectives, investment policies and investment
restrictions as the same are set forth in the Prospectus and Statement of
Additional Information. The Investment Adviser shall also make decisions for the
Portfolio as to the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the Portfolio's portfolio
securities shall be exercised. Should the Directors at any time, however, make
any definite determination as to investment policy and notify the Investment
Adviser thereof in writing, the Investment Adviser shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The Investment
Adviser shall take, on behalf of the Portfolio, 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 Portfolio's account with brokers or dealers selected by it,
and to that end, the Investment Adviser is authorized as the agent of the
Portfolio to give instructions to the custodian of the Portfolio as to
deliveries of securities and payments of cash for the account of the Portfolio.
In connection with the selection of such brokers or dealers and the placing of
such orders with respect to assets of the Portfolio, the Investment Adviser is
directed at all times to seek to obtain execution and price within the policy
guidelines determined by the Directors as 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
2
1934, as amended, and other applicable provisions of law, the Investment Adviser
may select brokers or dealers with which it or the Fund or the Portfolio is
affiliated.
(c) Affiliated Sub-Advisers. In carrying out its responsibilities
hereunder, the Investment Adviser may employ, retain or otherwise avail itself
of the services of other persons or entities, including, without limitation,
affiliates of the Investment Adviser, on such terms as the Investment Adviser
shall determine to be necessary, desirable or appropriate. However, if the
Investment Adviser chooses to retain or avail itself of the services of another
person or entity to manage assets of the Portfolio, such other person or entity
must be (i) an affiliate of the Investment Adviser, (ii) retained at the
Investment Adviser's own cost and expense, and (iii) retained subject to the
requirements of Section 15 of the Investment Company Act. Retention of one or
more affiliated sub-advisers, or the employment or retention of other persons or
entities to perform services, shall in no way reduce the responsibilities or
obligations of the Investment Adviser under this Agreement, and the Investment
Adviser shall be responsible for all acts and omissions of such affiliated
sub-advisers, or other persons or entities, in connection with the performance
of the Investment Adviser's duties hereunder.
(d) Notice Upon Change in Partners of Investment Adviser. The Investment
Adviser is a limited partnership and its limited partner is Xxxxxxx Xxxxx & Co.,
Inc. and its general partner is Princeton Services, Inc. The Investment Adviser
will notify the Fund and the Portfolio of any change in the membership of the
partnership within a reasonable time after such change.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
(a) The Investment Adviser. The Investment Adviser 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,
equipment and facilities which it is obligated to provide under Article I
hereof, and shall pay all compensation of officers of the Fund and the Portfolio
and all Directors who are affiliated persons of the Investment Adviser.
(b) The Portfolio. The Portfolio assumes and shall pay or cause to be paid
all other expenses of the Portfolio (except for the expenses paid by FAM
Distributors, Inc. (the "Distributor")), including, without limitation:
organizational costs, redemption expenses, expenses of portfolio transactions,
expenses of registering shares under federal and state securities laws, pricing
costs (including the daily calculation of net asset value), expenses of printing
stockholder reports, stock certificates (if any), prospectuses and statements of
additional information, Securities and Exchange Commission fees, interest,
taxes, custodian and transfer agency fees, fees and actual out-of-pocket
expenses of Directors who are not affiliated persons of the Investment Adviser,
fees for legal and auditing services, litigation expenses, costs of printing
proxies and other expenses related to stockholder meetings, and other expenses
properly payable by the Portfolio. It is also understood that the Portfolio
shall reimburse the Investment Adviser for its costs, if any, in providing
accounting services to the Portfolio. The Distributor will pay certain of the
expenses of the Portfolio incurred in connection with the continuous offering of
Portfolio shares.
3
ARTICLE III
COMPENSATION OF THE INVESTMENT ADVISER
(a) Investment Management Fee. For the services rendered, the facilities
furnished and expenses assumed by the Investment Adviser, the Portfolio shall
pay to the Investment Adviser at the end of each calendar month a fee at the
annual rate of 0.55% of that portion of the average daily net assets of the
Portfolio not exceeding $250 million; 0.525% of that portion of the average
daily net assets of the Portfolio in excess of $250 million but not exceeding
$500 million; and 0.50% of that portion of the average daily net assets of the
Portfolio in excess of $500 million, commencing on the day following
effectiveness hereof, 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. 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.
(b) Fee Payment. Payment of the Investment Adviser's compensation for the
preceding month shall be made as promptly as possible after completion of the
computations contemplated by Article III(a) above. During any period when the
determination of net asset value is suspended by the Directors, the average net
asset value of a share for 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.
ARTICLE IV
LIMITATION OF LIABILITY OF THE INVESTMENT ADVISER
The Investment Adviser shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in the management of the Portfolio, 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 "Investment Adviser" shall include any affiliates of the
Investment Adviser performing services for the Portfolio contemplated hereby and
the partners, shareholders, directors, officers and employees of the Investment
Adviser and such affiliates.
ARTICLE V
ACTIVITIES OF THE INVESTMENT ADVISER
The services of the Investment Adviser to the Portfolio are not to be
deemed to be exclusive, and the Investment Adviser and any person controlled by
or under common control with the Investment Adviser (for purposes of Article V
referred to as "affiliates") is free to render services to others. It is
understood that Directors, officers, employees and stockholders of the Fund or
the Portfolio are or may become interested in the Investment Adviser and its
affiliates, as directors, officers, employees, partners and shareholders or
otherwise and that the Investment Adviser and the directors, officers,
employees, partners and shareholders of the Investment Adviser and its
affiliates are or may become similarly interested in the Portfolio as
stockholders or otherwise.
4
ARTICLE VI
DURATION AND TERMINATION OF THIS CONTRACT
This Agreement shall become effective as of the date first written above
and shall remain in force for a period of two years thereafter and thereafter
continue from year to year, but only so long as such continuance is specifically
approved at least annually by (i) the Directors, or by the vote of a majority of
the outstanding voting securities of the Portfolio, 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.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Directors or by vote of a majority of the outstanding voting
securities of the Portfolio, or by the Investment Adviser, 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 the vote of the Directors, including 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 and, where required by the Investment Company Act, by the vote of
a majority of the outstanding voting securities of the Portfolio.
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 the
Investment Company Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with 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.
5
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
XXXXXXX XXXXX MUNICIPAL BOND FUND, INC.,
on behalf of High Yield Portfolio
By: ____________________________________
Name:
Title:
FUND ASSET MANAGEMENT, L.P.
By: PRINCETON SERVICES, INC.,
its General Partner
By: ____________________________________
Name:
Title:
6
