Exhibit 23(d)(2)(i)
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INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 29th day of December, 1999, by and between LM
Institutional Advisors, Inc. ("Manager"), a Maryland corporation, and Xxxx Xxxxx
Fund Adviser, Inc. ("LMFA"), a Maryland corporation, each of which is registered
as an investment adviser under the Investment Advisers Act of 1940, as amended.
WHEREAS, the Manager is the manager of certain of the series of LM
Institutional Fund Advisors II, Inc. (the "Corporation"), an open-end,
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Manager wishes to retain LMFA to provide certain investment
advisory services in connection with the Manager's management of LM Value
Institutional Portfolio ("Fund"), a series of the Corporation; and
WHEREAS, LMFA is willing to furnish such services on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. Appointment. The Manager hereby appoints LMFA as investment adviser
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for the Fund for the period and on the terms set forth in this Agreement. LMFA
accepts such appointment and agrees to furnish the services herein set forth for
the compensation herein provided.
2. Delivery of Documents. The Manager has furnished LMFA with copies of
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each of the following:
(a) The Corporation's Articles of Incorporation and all amendments thereto
(such Articles of Incorporation, as presently in effect and as they shall from
time to time be amended, are herein called the "Articles");
(b) The Corporation's By-Laws and all amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) Resolutions of the Corporation's Board of Directors (the "Directors")
authorizing the appointment of the Manager as the manager and LMFA as investment
adviser and approving the Investment Management Agreement between the Manager
and the Corporation
with respect to the Fund dated June 3, 1998 (the "Management Agreement") and
this Agreement;
(d) The Fund's most recent prospectus (such prospectus, as presently in
effect, and all amendments and supplements thereto are herein called the
"Prospectus"); and
(e) The Fund's most recent statement of additional information (such
statement of additional information, as presently in effect, and all amendments
and supplements thereto are herein called the "Statement of Additional
Information").
The Manager will furnish LMFA from time to time with copies of all amendments of
or supplements to the foregoing.
3. Investment Advisory Services. (a) Subject to the supervision of the
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Directors and the Manager, LMFA shall as requested by the Manager regularly
provide the Fund with investment research, advice, management and supervision
and shall furnish a continuous investment program for the Fund consistent with
the Fund's investment objectives, policies, and restrictions as stated in the
Fund's current Prospectus and Statement of Additional Information. LMFA shall
as requested by the Manager determine from time to time what securities or other
property will be purchased, retained or sold by the Fund, and shall implement
those decisions, all subject to the provisions of the Corporation's Articles and
By-Laws, the 1940 Act, the applicable rules and regulations of the Securities
and Exchange Commission, and other applicable federal and state law, as well as
the investment objectives, policies, and restrictions of the Fund, as each of
the foregoing may be amended from time to time. LMFA will as requested by the
Manager place orders pursuant to its investment determinations for the Fund
either directly with the issuer or with any broker, dealer or futures commission
merchant (collectively, a "broker"). In the selection of brokers and the
placing of orders for the purchase and sale of portfolio investments for the
Fund, LMFA shall seek to obtain for the Fund the most favorable price and
execution available, except to the extent it may be permitted to pay higher
brokerage commissions for brokerage and research services as described below.
In using its best efforts to obtain for the Fund the most favorable price and
execution available, LMFA, bearing in mind the Fund's best interests at all
times, shall consider all factors it deems relevant, including, by way of
illustration, price, the size of the transaction, the nature of the market for
the security, the amount of the commission, the timing of the transaction taking
into consideration market prices and trends, the reputation, experience and
financial stability of the broker involved and the quality of service rendered
by the broker in other transactions. Subject to such policies as the Directors
may determine and communicate to LMFA in writing, LMFA shall not be deemed to
have acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Fund to pay a broker that
provides brokerage and research services to LMFA or any affiliated person of
LMFA an amount of commission for effecting a portfolio investment transaction in
excess of the amount of commission another broker would have charged for
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effecting that transaction, if LMFA determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker, viewed in terms of either that particular
transaction or LMFA's overall responsibilities with respect to the Fund and to
other clients of LMFA and any affiliated person of LMFA as to which LMFA or any
affiliated person of LMFA exercises investment discretion. LMFA shall also
perform such other functions of management and supervision as may be requested
by the Manager and agreed to by LMFA.
(b) LMFA will as requested by the Manager oversee the maintenance of all
books and records with respect to the investment transactions of the Fund in
accordance with all applicable federal and state laws and regulations, and will
furnish the Directors with such periodic and special reports as the Directors or
the Manager reasonably may request.
(c) The Corporation hereby agrees that any entity or person associated
with LMFA (or with any affiliated person of LMFA) which is a member of a
national securities exchange is authorized to effect any transaction on such
exchange for the account of the Fund which is permitted by Section 11(a) of the
Securities Exchange Act of 1934, as amended, and Rule 11a2-2(T) thereunder, and
the Corporation hereby consents to the retention of compensation for such
transactions in accordance with Rule 11a2-2(T)(a)(2)(iv) or otherwise.
4. Services Not Exclusive. LMFA's services hereunder are not deemed to be
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exclusive, and LMFA shall be free to render similar services to others. It is
understood that persons employed by LMFA to assist in the performance of its
duties hereunder might not devote their full time to such service. Nothing
herein contained shall be deemed to limit or restrict the right of LMFA or any
affiliate of LMFA to engage in and devote time and attention to other businesses
or to render services of whatever kind or nature.
5. Books and Records. In compliance with the requirements of Rule 31a-3
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under the 1940 Act, LMFA hereby agrees that all books and records which it
maintains for the Fund are property of the Fund and further agrees to surrender
promptly to the Fund or its agents any of such records upon the Fund's request.
LMFA further agrees to preserve for the periods prescribed by Rule 31a-2 under
the 1940 Act any such records required to be maintained by Rule 31a-1 under the
1940 Act.
6. Expenses. During the term of this Agreement, LMFA will pay all
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expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities and other property (including brokerage
commissions, if any) purchased for the Fund.
7. Compensation. For the services which LMFA will render to the Manager
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and the Fund under this Agreement, the Manager will pay LMFA a fee, computed
daily and paid monthly, at an annual rate of 0.60% of the average daily net
assets of the Fund. The average
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daily net assets of the Fund shall in all cases be based only on business days
and be computed as of the time of the regular close of business of the New York
Stock Exchange, or such other time as may be determined by the Directors of the
Corporation. Fees due to LMFA hereunder shall be paid promptly to LMFA by the
Manager following its receipt of fees from the Fund. If this Agreement is
terminated as of any date not the last day of a calendar month, a final fee
shall be paid promptly after the date of termination and shall be based on the
percentage of days of the month during which the contract was still in effect.
8. Limitation of Liability. In the absence of willful misfeasance, bad
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faith or gross negligence on the part of LMFA, or reckless disregard of its
obligations and duties hereunder, LMFA shall not be subject to any liability to
the Manager, the Fund or any shareholder of the Fund, for any act or omission in
the course of, or connected with, rendering services hereunder.
9. Definitions. As used in this Agreement, the terms "assignment,"
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"interested person," "affiliated person," and "majority of the outstanding
voting securities" shall have the meanings given to them by Section 2(a) of the
1940 Act, subject to such exemptions and interpretations as may be granted by
the Securities and Exchange Commission by any rule, regulation or order; the
term "specifically approve at least annually" shall be construed in a manner
consistent with the 1940 Act and the rules and regulations thereunder; and the
term "brokerage and research services" shall have the meaning given in the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
10. Term. This Agreement shall become effective upon its execution, and
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shall remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 12) until terminated as follows:
a. The Corporation may at any time terminate this Agreement by not
more than 60 days' written notice delivered or mailed by registered mail,
postage prepaid, to the Manager and LMFA, or
b. If (i) the Directors or the shareholders of the Fund by vote of a
majority of the outstanding voting securities of the Fund, and (ii) a
majority of the Directors who are not interested persons of the
Corporation, the Manager or LMFA, by vote cast in person at a meeting
called for the purpose of voting on such approval, do not specifically
approve at least annually the continuance of this Agreement, then this
Agreement shall automatically terminate at the close of business on the
second anniversary of its execution, or upon the expiration of one year
from the effective date of the last such continuance, whichever is later;
provided, however, that if the continuance of this Agreement is submitted
to the shareholders of the Fund for their approval and such shareholders
fail to approve such continuance of this Agreement as
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provided herein, LMFA may continue to serve hereunder in a manner
consistent with the 1940 Act and the rules and regulations thereunder, or
c. The Manager may at any time terminate this Agreement by not less
than 60 days' written notice delivered or mailed by registered mail,
postage prepaid, to LMFA, and LMFA may at any time terminate this Agreement
by not less than 60 days' written notice delivered or mailed by registered
mail, postage prepaid, to the Manager.
Action by the Corporation under paragraph (a) of this Section 10 may be
taken either (i) by vote of a majority of the Directors, or (ii) by the vote of
a majority of the outstanding voting securities of the Fund.
11. Further Actions. Each party agrees to perform such further acts and
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execute such further documents as are necessary to effectuate the purposes
hereof.
12. No Assignment; Amendments. This Agreement shall terminate
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automatically in the event of its assignment or in the event that the Management
Agreement shall have terminated for any reason. Any termination of this
Agreement pursuant to Section 10 shall be without the payment of any penalty.
This Agreement shall not be amended unless such amendment is approved by the
vote of a majority of the outstanding voting securities of the Fund (provided
that such shareholder approval is required by the 1940 Act and the rules and
regulations thereunder, giving effect to any interpretations of the Securities
and Exchange Commission and its staff) and by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
Directors who are not interested persons of the Corporation, the Manager or
LMFA.
13. Miscellaneous. This Agreement embodies the entire agreement and
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understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. Should any part of this Agreement be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective successors.
14. Non-Exclusive Right. In the event this Agreement is terminated or
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upon written notice from LMFA at any time, the Corporation hereby agrees that it
will eliminate from the Fund's name any reference to the name of "LMFA." The
Corporation, on behalf of the Fund, shall have the non-exclusive use of the name
"LMFA" in whole or in part only so long as this Agreement is effective or until
such notice is given.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
LM INSTITUTIONAL ADVISORS, INC.
Attest:
By: By:
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XXXX XXXXX FUND ADVISER, INC.
Attest:
By: By:
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The foregoing is accepted by:
LM INSTITUTIONAL FUND ADVISORS II, INC.
Attest:
By: By:
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