CS FIRST BOSTON STRATEGIC INCOME FUND, INC.
(being changed to "BEA STRATEGIC INCOME FUND, INC.")
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the l3th day of June, 1995 between CS First Boston
Strategic Income Fund, Inc., a Maryland corporation whose name is being changed
to "BEA Strategic Income Fund, Inc." (the "Fund"), and BEA Associates, a New
York general partnership (the "Adviser").
WITNESSETH
WHEREAS, the Fund is a diversified, closed-end investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Fund desires to retain the Adviser to render investment
advisory services to the Fund, and the Adviser is willing to render such
services;
NOW, THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. The Fund hereby appoints the Adviser to act as investment adviser
to the Fund. The Adviser accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. Subject to the supervision of the Board of Directors of the Fund,
the Adviser will manage the portfolio of securities and investments (including
cash) belonging to the Fund including the purchase, retention and disposition
thereof and the execution of agreements relating thereto, in accordance with the
Fund's investment objective, policies and restrictions as stated in the
Prospectus (as defined in paragraph 4(f) of this Agreement) and subject to the
following understandings:
(a) The Adviser shall furnish a continuous investment program for the
Fund and in so doing shall determine from time to time what investments or
securities will be purchased, retained or sold by the Fund, and what
portion of the assets will be invested or held uninvested as cash;
(b) The Adviser shall use its best judgment in the performance of its
duties under this Agreement;
(c) The Adviser, in the performance of its duties and obligations
under this Agreement, shall art in conformity with the Articles of
Incorporation, the Bylaws and Prospectus of the Fund and with the
instructions and directions of the Board of Directors of the Fund and will
conform to and comply with the requirements of the 1940 Act and all other
applicable federal and state laws and regulations;
(d) The Adviser shall determine the securities to be purchased or sold
by the Fund and as agent for the Fund will effect portfolio transactions
pursuant to its determinations either directly with the issuer or with any
broker and/or dealer in such securities; in placing orders with brokers
and/or dealers the Adviser intends to seek the best available price and
execution for purchases and sales; the Adviser shall also determine whether
or not the Fund shall enter into repurchase or reverse repurchase
agreements;
On occasions when the Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other customers,
the Adviser may, to the extent permitted by applicable laws and
regulations, but shall not be obligated to, aggregate the securities to be
so sold or purchased in order to obtain the best execution and lower
brokerage commissions, if any. 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 Adviser in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to the Fund and, if
applicable, to such other customers;
(e) The Adviser shall maintain books and records with respect to the
securities transactions of the Fund and shall render to the Fund's Board of
Directors such periodic and special reports as the Board of Directors may
reasonably request;
(f) The Adviser shall provide the Fund's Custodian as required with
information relating to all transactions concerning the assets belonging to
the Fund, except purchases of and any sales of the Fund's Common Stock
("Fund Shares"); and
(g) The investment management services of the Adviser to the Fund
under this Agreement are not to be deemed exclusive, and the Adviser shall
be free to render similar services to others.
3. The Adviser is authorized to select the brokers and dealers that
will execute the purchases and sales of portfolio securities for the Fund and is
directed to use its best efforts to obtain the best available price and
execution, except as prescribed herein. Unless and until otherwise directed by
the Board of Directors of the Fund, the Adviser may also effect individual
securities transactions at commission rates in excess of the minimum commission
rates available, if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage or research
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services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Fund. The execution of such transactions shall not be deemed to represent an
unlawful act or breach of any duty created by this Agreement or otherwise.
4. The Fund has delivered copies of each of the following documents to
the Adviser and will promptly notify and deliver to it all future amendments and
supplements, if any:
(a) Articles of Incorporation of the Fund, filed with the Department
of Assessments and Taxation of the State of Maryland on January 27, 1988
(such Articles of Incorporation, as presently in effect and as amended from
time to time, being herein called the "Articles of Incorporation");
(b) Bylaws of the Fund (such Bylaws, as presently in effect and as
amended from time to time, being herein called the "Bylaws");
(c) Certified resolutions of the Board of Directors of the Fund
authorizing the appointment of the Adviser and approving the form of this
Agreement;
(d) Registration Statement under the 1940 Act and the Securities Act
of 1933, as amended, on Form N-2 (No. 33-19869) (the "Registration
Statement") as filed with the Securities and Exchange Commission (the
"Commission") on January 29, 1988 relating to the Fund and the Fund Shares,
and all amendments thereto;
(e) Notification of Registration of the Fund under the 1940 Act on
Form N-8A as filed with the Commission on January 29, 1988 and all
amendments thereto; and
(f) Prospectus of the Fund dated April 22, 1988 (such prospectus being
herein called the "Prospectus").
5. The Adviser shall authorize and permit any of its partners, agents
and employees who may be elected as directors or officers of the Fund to serve
in the capacities in which they are elected. Services to be furnished by the
Adviser under this Agreement may be furnished through the medium of any of such
partners, agents or employees of the Adviser.
6. The Adviser shall keep the Fund's books and records required to be
maintained by it pursuant to paragraph 2(e) of this Agreement. The Adviser
agrees that all records which it maintains for the Fund are the property of the
Fund and it will promptly surrender any of such records to the Fund upon the
Fund's request. The Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 of the Commission under the 1940 Act any such records
as are required to be maintained by the
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Adviser with respect to the Fund by Rule 3la-1 of the Commission under the 1940
Act.
7. During the term of this Agreement the Adviser will pay all expenses
(including without limitation the compensation of all its partners, agents and
employees serving as directors or officers of the Fund pursuant to paragraph 5
of this Agreement) incurred by it in connection with its activities under this
Agreement other than the cost of securities and investments purchased for the
Fund (including taxes and brokerage commissions, if any).
8. For the services provided and the expenses borne pursuant to this
Agreement, the Fund will pay to the Adviser as full compensation therefor a fee,
computed weekly and payable quarterly, at an annual rate equal to 0.50% per
annum of the average weekly net assets of the Fund. This fee for each quarter
will be paid to the Adviser during the month succeeding such quarter.
9. 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 the
matters to which this Agreement relates, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services (in which case any award of damages shall be limited to the period
and the amount set forth in Section 36(b)(3) of the 0000 Xxx) or a loss
resulting from willful misfeasance, bad faith or gross negligence on its part
in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
10. This Agreement shall become effective upon the later of (a) the
termination of the previous Investment Advisory Agreement between the Fund
and CS First Boston Investment Management Corporation or (b) its approval by
the stockholders of the Fund in the manner prescribed by the 1940 Act. Upon
becoming effective, this Agreement shall remain in effect until January 31,
1997 and shall continue in effect from year to year thereafter if such
continuance is approved at least annually by (a) a majority of the
outstanding voting securities (as defined in the 0000 Xxx) or by vote of the
Fund's Board of Directors, cast in person at a meeting called for the purpose
of voting on such approval, and (b) vote of a majority of the Directors of
the Fund who are not parties to this Agreement or "interested persons" (as
defined in the 0000 Xxx) of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval. This Agreement may
be terminated by the Fund 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 (as defined in the 0000 Xxx) of the Fund on 60
days' written notice to the Adviser, or by the Adviser at any time, without
the payment of any penalty, on 90 days' written notice to the Fund. This
Agreement will automatically and
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immediately terminate in the event of its assignment (as defined in the 1940
Act).
11. The Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided herein or
authorized by the Board of Directors of the Fund from time to time, have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
12. This Agreement may be amended by mutual consent, but the consent
of the Fund must be approved (a) by vote of a majority of those Directors of the
Fund who are not parties to this Agreement or "interested persons" (as defined
in the 0000 Xxx) of any such party, cast in person at a meeting called for the
purpose of voting on such amendment, and (b) by vote of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of the Fund.
13. Notices of any kind to be given to the Adviser by the Fund shall
be in writing and shall be duly given if mailed or delivered to the Adviser at
One Citicorp Center, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
President, or at such other address or to such other individual as shall be
specified by the Adviser to the Fund in accordance with this paragraph 13.
Notices of any kind to be given to the Fund by the Adviser shall be in writing
and shall be duly given if mailed or delivered to the Fund at CS First Boston
Strategic Income Fund, Inc., One Citicorp Center, 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: President, or at such other address or to such
other individual as shall be specified by the Fund to the Adviser in accordance
with this paragraph 13. The Adviser agrees to notify the Fund of any change in
its membership within a reasonable time of such change.
14. The Fund agrees that if this Agreement is terminated and the
Adviser shall no longer be the adviser to the Fund, the Fund will, within a
reasonable period of time, change its name to delete reference to "BEA".
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
CS FIRST BOSTON STRATEGIC INCOME FUND, INC.
(being changed to "BEA Strategic Income Fund, Inc.")
By: [signature illegible]
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BEA ASSOCIATES
By: [signature illegible]
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