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Exhibit g(1)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the day of 1999, by and between
XXXXXXX XXXXX SENIOR FLOATING RATE FUND II, INC., a Maryland corporation
(hereinafter referred to as the "Fund"), and XXXXXXX XXXXX ASSET MANAGEMENT,
L.P., a Delaware limited partnership (the "Investment Adviser").
W I T N E S S E T H:
WHEREAS, the Fund intends to engage in business as a closed-end,
non-diversified, management investment company and is registered as such under
the Investment Company Act of 1940, as amended (the "Investment Company Act");
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 Adviser's Act of 1940, as amended; and
WHEREAS, the Fund desires to retain the Investment Adviser to provide
management and investment advisory services to the Fund 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 Fund 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:
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ARTICLE I
Duties of the Investment Adviser
The Fund hereby employs the Investment Adviser to act as a 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. 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
for all purposes herein shall be deemed to be independent contractors and,
unless otherwise expressly provided or authorized, shall have no authority to
act for or represent the Fund in any way or otherwise be deemed agents of the
Fund.
(a) Management and Administrative Services. The Investment Adviser
shall perform, or arrange for its affiliates to perform, the management and
administrative services necessary for the operation of the Fund, including
administering shareholder accounts and handling shareholder relations, pursuant
to an Administration Agreement of even date herewith.
(b) Investment Advisory Services. The Investment Adviser shall provide,
or arrange for its affiliates to 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 the By-Laws of the Fund,
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as amended from time to time, the provisions of the Investment Company Act and
the statements relating to the Fund's investment objective, investment policies
and investment restrictions as the same are set forth in filings made by the
Fund under the Federal securities laws. The Investment Adviser 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 Board of 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 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, the Investment Adviser is authorized as the agent of the Fund to give
instructions to the Custodian of the Fund as to deliveries of securities and
payments of 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, the Investment Adviser is directed at all times to seek to obtain
execution and prices within the policy guidelines determined by the Board of
Directors and set forth in filings made by the Fund under the Federal securities
laws. 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, the Investment Adviser may select brokers or dealers with
which it or the Fund is affiliated.
(c) Notice Upon Change in Partners of the Investment Adviser. The
Investment Adviser is a limited partnership and its limited partner is Xxxxxxx
Xxxxx & Co., Inc. and its
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general partner is Princeton Services, Inc. The Investment Adviser will notify
the Fund 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,
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 the Investment
Adviser.
(b) The Fund. The Fund assumes and shall pay or cause to be paid all
other expenses of the Fund including, without limitation: taxes, expenses for
legal and auditing services, costs of printing proxies, stock certificates,
shareholder reports, prospectuses, charges of the custodian, any sub-custodian
and transfer agent, expenses of portfolio transactions, Securities and Exchange
Commission fees, expenses of registering the shares of common stock under
Federal, state and foreign laws, fees and actual out-of-pocket expenses of
Directors who are not affiliated persons of the Investment Adviser, accounting
and pricing costs (including the 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. It also is understood
that the Fund will reimburse the Investment Adviser for its costs incurred in
providing accounting services to the Fund.
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ARTICLE III
Compensation of the Investment Adviser
(a) Investment Advisory Fee. For the services rendered, the facilities
furnished and expenses assumed by the Investment Adviser, the Fund shall pay to
the Investment Adviser at the end of each calendar month a fee based on the
average daily value of the net assets of the Fund at the annual rate of 0.95 of
1.0% (0.95%) of the average daily net assets of the Fund, (i.e., the average
daily value of the total assets of the Fund, minus the sum of accrued
liabilities of the Fund and accumulated dividends on shares of outstanding
preferred stock, if any), commencing on the day following effectiveness hereof.
It is understood that the liquidation preference of any outstanding preferred
stock (other than accumulated dividends) is not considered a liability in
determining the Fund's average daily net assets. For purposes of this
calculation, average daily net assets is determined at the end of each month on
the basis of the average net assets of the Fund for each day during the month.
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 the Investment Adviser'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 Board of Directors, the
average net asset value of a share for the day prior to such suspension for this
purpose shall be deemed to be the net asset value at the close of each
succeeding day until it is again determined.
(b) Expense Limitations. In the event the operating expenses of the
Fund, including amounts payable to the Investment Adviser pursuant to subsection
(a) hereof, for any fiscal year
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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 limitations may be raised, lowered or waived
from time to time, the Investment Adviser shall reduce its management and
investment advisory fee by the extent of such 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, distribution
fees, brokerage fees and 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. 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 the
Investment Adviser. 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 the Investment Adviser's fee shall be
applicable.
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 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 "Investment Adviser" shall include any affiliates of the
Investment Adviser
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performing services for the Fund contemplated hereby and directors, officers and
employees of the Investment Adviser and of such affiliates.
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ARTICLE V
Activities of the Investment Adviser
The services of the Investment Adviser to the Fund are not to be deemed
to be exclusive: the Investment Adviser and any person controlled by or under
common control with the Investment Adviser (for purposes of this Article V
referred to as "affiliates") are free to render services to others. It is
understood that Board of Directors, officers, employees and shareholders of the
Fund are or may become interested in the Investment Adviser and its affiliates,
as directors, officers, employees, partners, and shareholders or otherwise and
that directors, officers, employees, partners, and shareholders of the
Investment Adviser and its affiliates are or may become similarly interested in
the Fund, and that the Investment Adviser and directors, officers, employees,
partners, and shareholders of its affiliates may become interested in the Fund
as shareholders or otherwise.
ARTICLE VI
Duration and Termination of this Agreement
This Agreement shall become effective as of the date first above
written and shall remain in force until February 28, 2001 and thereafter, but
only so long as such continuance specifically is 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 or by vote of a majority of the
outstanding voting securities of the Fund,
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or by the Investment Adviser, on sixty days' written notice to the other party.
In the event of its assignment, this Agreement shall automatically terminate.
ARTICLE VII
Amendments of this Agreement
This Agreement may be amended by the parties only if such amendment
specifically is approved by the vote of (i) a majority of the 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 governed by and 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.
XXXXXXX XXXXX SENIOR FLOATING
RATE FUND II, INC.
By _____________________________________
Title:
XXXXXXX XXXXX ASSET MANAGEMENT, L.P.
By _____________________________________
Title:
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