Exhibit 99.2(g)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 16th day of February, 1989, by and between
MUNIENHANCED FUND, INC., a Maryland corporation (hereinafter referred to as
the "Fund"), and FUND ASSET MANAGEMENT, INC., a Delaware corporation
(hereinafter referred to as the "Investment Adviser").
W I T N E S S E T H:
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WHEREAS, the Fund is engaged in business as a closed-end investment
company registered under the Investment Company Act of 1940, as amended
(hereinafter referred to as 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 Advisers Act of 1940; 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:
ARTICLE I
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Duties of the Investment Adviser
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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 polices 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 shall for all purposes herein be deemed to be independent
contractors 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 agents of the Fund.
(a) Management 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 Fund including administering
shareholder accounts and handling shareholder relations. The Investment
Adviser shall provide the Fund with office space, facilities, equipment and
necessary personnel and such other services as the Investment Adviser, subject
to review by the Board of 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 Fund, conduct relations with
custodians, depositories, transfer agents, dividend disbursing agents, other
shareholder servicing agents, pricing 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 Fund's
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compliance with investment policies and restrictions as set forth in filings
made by the Fund under the Federal securities laws. The Investment Adviser
shall make reports to the Board of Directors of its performance of obligations
hereunder and furnish advice and recommendations with respect to such other
aspects of the business and affairs of the Fund as it shall determine to be
desirable.
(b) Investment Advisory Services. The Investment Adviser shall 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, options, futures,
options on futures or cash, subject always to the restrictions of 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
Fund's investment objectives, 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
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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.
ARTICLE II
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Allocation of Charges and Expenses
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(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 under Federal,
state and foreign
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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 is also understood that
the Fund will reimburse the Investment Adviser for its costs in providing
accounting services to the Fund.
ARTICLE III
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Compensation of the Investment Adviser
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(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 upon
the average weekly value of the net assets of the Fund at the annual rate of
0.50 of 1.0% (0.50%) of the average weekly net assets of the Fund (i.e., the
average weekly 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), commencing on the day following effectiveness hereof. For
purposes of this calculation, average weekly net assets is determined at the
end of each month on the basis of the average net assets of the Fund for each
week during the month. The assets for each weekly period are determined by
averaging the net assets at the last business day of a week with the net
assets at the last business day of the prior week. 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 weekly net assets. 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
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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 last week prior to such suspension shall for this purpose be deemed to
be the net asset value at the close of each succeeding week 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 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 or lowered 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, 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.
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 expenses
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.
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ARTICLE IV
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Limitation of Liability of the Investment Adviser
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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 performing services for the Fund contemplated hereby and
directors, officers and employees of the Investment Adviser and such
affiliates.
ARTICLE V
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Activities of the Investment Adviser
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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 the 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 Advisor 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 shareholder or otherwise.
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ARTICLE VI
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Duration and Termination of this Agreement
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This Agreement shall become effective as of the date first above written
and shall remain in force until November 30, 1990 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 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.
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, 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
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Amendments of this Agreement
----------------------------
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the vote of a majority of 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
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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 of 1940 and the Rules and
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Regulations thereunder, subject, however, to such exemptions as may be granted
by the securities and Exchange Commission under said Act.
ARTICLE IX
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Governing Law
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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.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
MUNIENHANCED FUND, INC.
By /s/
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Vice President
FUND ASSET MANAGEMENT, INC.
By /s/
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Vice President
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SUPPLEMENT TO INVESTMENT ADVISORY AGREEMENT
WITH
FUND ASSET MANAGEMENT
As of January 1, 1994 Fund Asset Management was reorganized as a limited
partnership, formally known as Fund Asset Management, L.P. ("FAM"). The
general partner of FAM is Princeton Services, Inc. and the limited partners
are Fund Asset Management, Inc. and Xxxxxxx Xxxxx & Co. Inc. Pursuant to Rule
202(a)(1)-1 under the Investment Advisers Act of 1940 and Rule 2a-6 under the
Investment Company Act of 1940 such reorganization did not constitute an
assignment of this investment advisory agreement since it did not involve a
change of control or management of the investment adviser. Pursuant to the
requirements of Section 205 of the Investment Advisers Act of 1940, however,
Fund Asset Management hereby supplements this investment advisory agreement by
undertaking to advise you of any change in the membership of the partnership
within a reasonable time after any such change occurs.
By /s/
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Dated: January 3, 1994
