EXHIBIT 99.5
FORM OF
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 1st day of January, 1981, by and
between XXXXXXX XXXXX MUNICIPAL BOND FUND, INC., a Maryland
corporation (the "Fund"), and FUND ASSET MANAGEMENT INC., a
Delaware corporation (the "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 (the "Investment Company
Act");
WHEREAS, the Fund is comprised of three separate
Portfolios, each of which pursues its investment objective through
separate investment policies;
WHEREAS, the Adviser is engaged principally in rendering
advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940; and
WHEREAS, the Fund desires to retain the Adviser to render
investment supervisory and corporate administrative services to the
Fund in the manner and on the terms hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, the Fund and the Adviser hereby
agree as follows:
ARTICLE 1.
Duties of the Adviser
The Fund hereby employs the Adviser to act as the
investment adviser to and manager of the Fund and to manage the
investment and reinvestment of the assets of each of its Portfolios
and to administer its affairs, subject to the supervision of the
Board of Directors of the Fund, for the period and on the terms and
conditions set forth in this Agreement. The Adviser hereby accepts
such employment and agrees during such period, at its own expense,
to render the services and to assume the obligations herein set
forth for the compensation provided for herein. The Adviser 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 in any way or
otherwise be deemed an agent of the Fund.
(a) investment Advisory Services. In acting as
investment adviser to the Fund, the Adviser shall regularly provide
the Fund with such investment research, advise and supervision as
the latter may from time to time consider necessary for the proper
supervision of its Portfolios and shall furnish continuously an
investment program and shall determine from time to time what
securities shall be purchased, Bold or exchanged and what portion
of the assets of each Portfolio shall be held in the various
securities in which it may invest, subject always to the
restrictions of the Fund's Articles of Incorporation and By-Laws,
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 currently effective prospectus of the
Fund under the Securities Act of 1933 (the "Prospectus"). The
Adviser shall also be responsible for all duties arising in
connection with any portfolio insurance policies, which the Insured
Portfolio maintains. Should the Board of Directors of the Fund at
any time, however, make any definite determination as to investment
policy and notify the Adviser thereof, the 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 Adviser 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 of each
Portfolio with brokers or dealers selected by it. In connection
with the selection of such brokers or dealers and the placing of
such orders, the Adviser is directed at all times to seek to obtain
for the Fund the most favorable execution and price within the
meaning of such terms as determined by the Board of Directors and
set forth in the Prospectus. Subject to this requirement and the
provisions of the Investment Company Act, the Securities Exchange
Act of 1934, and other applicable provisions of law, nothing shall
prohibit the Adviser from selecting brokers or dealers with which
it or the Fund is affiliated.
(b) Administrative Services. In addition to the
performance of investment advisory services, the Adviser shall
perform or supervise the performance of, administrative services in
'connection with the management of the Fund and the Portfolios. In
this connection, the Adviser agrees to (i) assist in supervising
all aspects of the Fund's operations, including the coordination
of all matters relating to the functions of the custodian, transfer
agent, other shareholder service agents, accountants, attorneys and
other parties performing services or operational functions for the
Fund, (ii) provide the Fund, at the Adviser's expenses, with
services of persons competent to perform such administrative and
clerical functions as are necessary in order to provide effective
administration of the Fund, including duties in connection with
shareholder relations, reports, redemption requests and account
adjustments and the maintenance of certain books and records of the
Fund, (iii) provide the Fund, at the Adviser's expense, with
adequate office space and related services necessary for its
operations as contemplated in this Agreement, and (iv) supervise
and administer the operation of the Exchange Privilege referred to
in the Prospectus. The Fund acknowledges that the Adviser intends
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to arrange for the provision of services and the performance of
functions referred to in this subsection (b) by Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated (the "Administrator") pursuant
to an Administration Agreement between the Adviser and the
Administrator.
ARTICLE 2.
Allocation of Charges and Expenses
(a) The Adviser. The Adviser assumes and shall pay for
maintaining the staff and personnel and shall at its own expense
,provide the equipment, office space and facilities, necessary to
perform its obligations under this Agreement, and shall pay all
compensation of officers of the Fund and the fees of all directors
of the Fund who are affiliated persons of Xxxxxxx Xxxxx & Co., Inc.
or its subsidiaries.
(b) The Fund. The Fund assumes and shall pay all
expenses of the Fund, including, without limitation, organization
costs, insurance (including portfolio insurance maintained by the
Insured Portfolio), taxes, expenses for legal and auditing
services, costs of printing proxies, stock certificates,
shareholder reports and prospectuses (except to the extent paid by
the Distributor) , charges of the Custodian and Transfer Agent,
expenses of redemption of shares, Securities and Exchange
Commission fees, expenses of registering the shares under Federal
and state securities laws, fees and expenses of directors who are
not affiliated persons of Xxxxxxx Xxxxx & Co., Inc. or its
subsidiaries, accounting and pricing costs (including the daily
calculation of net asset value), interest, brokerage costs,
litigation and other extraordinary or non-recurring expenses, and
other expenses properly payable by the Fund.
ARTICLE 3.
Compensation of the Adviser
(a) Investment Advisory Fee. For the services rendered,
the facilities furnished and expenses assumed by the Adviser, the
Fund shall pay to the Adviser at the end of each calendar month a
fee based upon the average daily value of the net assets of the
Portfolios, as determined and computed in accordance with the
description of the method of determination of net asset value
contained in the Prospectus. During any period when the
determination of net asset value is suspended by the Board of
Directors of the Fund, 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.
The fee with respect to each Portfolio shall be at the
rates set forth below. These rates are subject to reduction to the
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extent that the aggregate of the average daily net assets of the
three combined Portfolios exceeds $250 million. [In addition, the
fee payable by the Limited Maturity Portfolio is subject to further
reductions to the extent the combined assets of the Portfolios
exceed $400 million and $550 million.] The reductions shall be
applicable to each Portfolio regardless of size on a "uniform
percentage" basis. Determination of the portion of the net assets
of each Portfolio to which the reduced rates are applicable is made
by multiplying the net assets of that Portfolio by "uniform
percentages", derived by dividing the amount by which the combined
assets of all Portfolios exceed the various applicable breakpoints
by such combined assets.
Aggregate of Rate of Advisory Fee
average daily net High Limited
assets of the three Insured Yield Maturity
combined Portfolio Portfolio Portfolio Portfolio
Not exceeding $250 million 0.40 0.50 0.40
In excess of $250 million but
not exceeding $400 million 0.375 0.475 0.375
In excess of $400 million but
not exceeding $550 million 0.375 0.475 0.350
In excess of $550 million 0.375 0.475 0.325
(b) Expense Limitations. In the event the operating
expenses of any Portfolio, including the investment advisory fee
applicable to such Portfolio payable to the Adviser 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 that Portfolio imposed by state securities laws or
regulations thereunder, as such limitations may be raised or
lowered from time to time, the Adviser shall reduce its investment
advisory fee by the extent of such excess and, if required pursuant
to any such laws or regulations, will reimburse such Portfolio 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 commissions 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 and allocated to such
Portfolio. Whenever the expenses of any Portfolio exceed a pro
rata portion of the applicable annual expense limitations, the
estimated amounts of reimbursement under such limitations shall be
applicable as an offset against the monthly payment of the advisory
fee due to the Adviser.
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ARTICLE 4.
Limitation of Liability of the Adviser
The Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in
connection with any investment policy or the purchase, sale or
redemption of any securities on the recommendation of the Adviser.
Nothing herein contained shall be construed to protect the Adviser
against any liability to the Fund or its security holders to which
the Adviser shall otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence in the performance of its
duties on behalf of the Fund, reckless disregard of the Adviser's
obligations and duties under this Agreement or the violation of any
applicable law.
ARTICLE 5.
Activities of the Adviser
The services of the Adviser under this Agreement are not
to be deemed exclusive, and the Adviser shall be free to render
similar services to others so long as its services hereunder are
not impaired thereby. It is understood that directors, officers,
employees and shareholders of the Fund are or may become interested
in the Adviser, as directors, officers, employees or shareholders
or otherwise and that directors, officers, employees or
shareholders of the Adviser are or may become similarly interested
in the Fund, and that the Adviser is or may become interested in
the Fund as shareholder or otherwise.
ARTICLE 6.
Duration and Termination of this Agreement
This Agreement shall become effective as of the date
first above written and shall remain in force until December 31,
1981 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 shares of the Fund including a majority of the
outstanding shares of each 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 Board of Directors of the Fund
or by vote of a majority of the outstanding shares of the Fund, or
by the Adviser on sixty days' written notice to the other party.
This Agreement shall automatically terminate in the event of its
assignment.
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ARTICLE 7.
Definitions.
The terms "assignment", "affiliated person" and
"interested person", when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act. As
used with respect to the Fund or any of its Portfolios, the term
"majority of the outstanding shares" means the lesser of (i) 67% of
the shares represented at a meeting at which more than 50% of the
outstanding shares are represented or (ii) more than SOW of the
outstanding shares.
ARTICLE 8.
Amendments of this Agreement
This Agreement may be amended by the parties only if
such amendment is specifically approved by (i) the Board of
Directors of the Fund, or by the vote of a majority of outstanding
shares of the Fund, including a majority of the outstanding shares
of each Portfolio, and (ii) a majority of those directors of the
Fund 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 9.
Governing Law
The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as
at the time in effect and the applicable provisions of the
Investment Company Act. To the extent that the applicable law of
the State of New York, or any of the provisions herein, conflict
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with the applicable provisions of the Investment Company Act, the
latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
XXXXXXX XXXXX MUNICIPAL BOND
FUND, INC.
By
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President
Attest:
-------------------------
Secretary
FUND ASSET MANAGEMENT, INC.
By
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Vice President
Attest:
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Secretary
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