Exhibit 99.(d)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made this 23rd day of October, 2000, between FPA
PERENNIAL FUND, INC., a Maryland corporation (hereinafter called the "Fund"),
and FIRST PACIFIC ADVISORS, INC., a Massachusetts corporation (hereinafter
called the "Adviser").
W I T N E S S E T H :
WHEREAS, the Fund and the Adviser wish to enter into an Agreement
setting forth the terms on which the Adviser will perform certain investment
advisory and management services for the Fund.
NOW, THEREFORE, in consideration of the premises and covenants
hereinafter contained, the Fund and the Adviser agree as follows:
1. EMPLOYMENT OF ADVISER
The Fund hereby employs the Adviser to manage the investment and
reinvestment of the assets of the Fund and to administer its affairs, to the
extent described herein, subject to the supervision of the Board of Directors of
the Fund, for the period and on the terms set forth in this Agreement. The
Adviser hereby accepts such employment and agrees during such period to render
the services and to assume the obligations herein set forth. The Adviser agrees
to use its best efforts and judgment in the performance of its obligations
hereunder. The Adviser shall, for all purposes herein, be deemed 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.
2. ADVISORY SERVICES
Subject to any general directions furnished by the Board of
Directors of the Fund, the Adviser agrees to formulate and implement a
continuing program for the management of the assets of the Fund and to determine
from time to time what securities or other property shall be purchased or sold
by the Fund, and the portion of its assets to be held in cash or cash
equivalents, giving due consideration to, among other things, the policies of
the Fund as expressed in the Fund's Certificate of Incorporation, By-Laws,
Registration Statement under the Investment Company Act of 1940, as amended (the
"1940 Act"); Registration Statement under the Securities Act of 1933, as amended
(the "1933 Act"), and reports under the Securities Exchange Act of 1934 (the
"1934 Act"), as well as to the factors affecting the Fund's status as a
regulated investment company under the Internal Revenue Code of 1954, as
amended. The Adviser shall obtain and evaluate such statistical, financial, and
other information relating to the economy, industries, businesses, securities
markets, and securities as it may deem necessary or useful in the performance of
its obligations hereunder.
3. OTHER SERVICES AND EXPENSES OF ADVISER
The Adviser shall furnish to the Fund the following services and
facilities:
(a) Office space, furniture, equipment and supplies, which may be the
same as occupied or used by the Adviser;
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(b) Qualified personnel for administering the affairs, managing the
investments, and preparing and maintaining the books of account,
records, reports and tax returns of the Fund, except as specified in
Section 5 hereof;
(c) Adequate facilities and qualified personnel for the placement with
broker-dealers of orders for the purchase and sale of portfolio
securities for the Fund;
(d) Members of the Adviser's organization to serve without compensation
from the Fund (except as specified otherwise in Section 5 hereof) as
officers or agents of the Fund, if desired by the Fund;
(e) General purpose accounting forms, supplies, stationery and postage
and telephones and utilities relating to the obligations of the
Adviser hereunder.
4. EXPENSES OF THE FUND
Except to the extent expressly assumed by the Adviser herein, the Fund
will pay all costs and expenses in connection with its operations. Without
limiting the generality of the foregoing, the Fund shall pay the following costs
and expenses:
(a) Fees and charges of independent accountants, custodian and
depository and legal counsel for the Fund;
(b) Fees and charges of the Fund's transfer agent, including the costs
of maintaining the Fund's shareholder account books and records,
dividend disbursing agent and registrar, if any;
(c) Costs of designing, printing, engraving and issuing certificates
representing shares of the Fund;
(d) Expenses, including fees and disbursements of counsel, in connection
with litigation by or against the Fund;
(e) Taxes, including franchise, income, issue, transfer, business
license and other corporate fees payable by the Fund to Federal,
State or other governmental agencies;
(f) Premiums for the fidelity bond maintained by the Fund pursuant to
Section 17 of the 1940 Act and for any errors and omissions
insurance policy maintained by the Fund;
(g) Dues for the Fund's membership in trade organizations;
(h) Interest on indebtedness, if any, incurred by the Fund;
(i) Costs of designing, printing and mailing periodic and other reports
to shareholders, proxy statements, dividend notice and other
communications to the Fund's shareholders;
(j) Expenses of meeting of shareholders and directors of the Fund;
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(k) Brokers' commissions, issued and transfer taxes and other costs
chargeable to the Fund in connection with security transactions to
which the Fund is a party or with securities owned by the Fund;
(l) Fees and expenses in connection with maintaining registration of the
Fund under the Federal securities laws and under the laws of states
which regulate the sale of the Fund's shares and complying with the
requirements of the Securities and Exchange Commission under the
1940 Act, the 1933 Act, the 1934 Act and applicable state securities
laws.
The advisory fee payable hereunder has been negotiated on the
understanding, and the parties hereto agree, that the Adviser has received, and
shall continue to receive, supplementary research and other information from
broker-dealers which execute portfolio transactions for the Fund.
5. COMPENSATION OF ADVISER
For the services to be rendered pursuant to this Agreement, the Fund shall
pay to the Adviser a monthly fee computed at the annual rates of 0.75% on the
first $50 million of the Fund's average net asset value and 0.65% on the excess
over $50 million of the Fund's average net asset value. Such average net asset
value shall be determined by taking the average of all of the determinations of
net asset value, made in the manner provided in the Fund's Certificate of
Incorporation, for each business day during a given calendar month. Such fee
shall be payable for each calendar month as soon as practicable after the end of
the month.
In addition to the above-stated fee, the Fund shall reimburse the Adviser
monthly for the costs incurred by the Adviser in providing financial services to
the Fund including, among other normal financial services for the Fund,
maintaining the accounts, books and other documents which constitute the record
forming the basis for the Fund's financial statements, preparation of such
financial statements, preparation of such financial statements and other the
Fund documents and reports of a financial nature required by Federal and state
laws, calculating daily net asset value of the Fund, and participating in the
production of the Fund's registration statements, prospectuses, proxy
solicitation materials and reports to stockholders (including compensation of
the Treasurer or other principal financial officer of the Fund, compensation of
personnel working under such person's direction and expenses of office space,
facilities and equipment used by such personnel in the performance of their
financial services duties to the Fund); provided, however, that such
reimbursement shall not exceed for any fiscal year of the Fund 0.10% of the
average net asset value of the Fund. Such maximum reimbursement shall be
calculated in the same manner as the fee referred to in the preceding paragraph.
The fees and reimbursements to be paid to the Adviser shall be payable for
the period commencing on the date hereof and ending on the date of termination
hereof. If this Agreement is terminated, the fees and reimbursements shall be
prorated for any fraction of a month at termination.
The fees and reimbursements payable hereunder shall be reduced by an
amount which is equivalent to any solicitation fees received by the Adviser, or
any affiliated person of the Adviser, in connection with a tender of portfolio
securities of the Fund in acceptance of an exchange or tender offer. The Adviser
shall use its best efforts to recapture any available solicitation fees.
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The Adviser also agrees to reduce the advisory fee and reimbursement
payable hereunder by the amount by which certain operating expenses of the Fund
(after the exclusions described below and after reflecting any advisory fee and
reimbursement reduction provided for in the preceding paragraph) for any fiscal
year shall exceed 1 1/2% of the first $30 million of the Fund's average net
asset value taken at the close of business on the last business day of each
calendar month of such year, plus 1% of the remaining average net asset value of
the Fund so taken. For purposes of this expense limitation provision, the
following expenses shall be excluded from the total operating expenses in
computing "certain operating expenses": (i) interest, (ii) taxes, (iii) any
expenditures pursuant to Section 6 hereof for brokerage and research services,
and (iv) any extraordinary expenses, such as those of litigation, merger,
reorganization, or recapitalization, to the extent such extraordinary expenses
are permitted to be excluded by the rules or policies of the states in which
shares of the Fund are from time to time qualified for sale. All expenditures,
including costs incurred in connection with the purchase, holding, or sale of
portfolio securities, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, shall be
accounted for as capital items and not as expenses. Any accrued advisory fee
reduction under this expense limitation provision shall be withheld by the Fund
from the fees paid hereunder. Any additional reduction computed at the end of
the fiscal year shall be paid to the Fund within five days of the computation as
a reduction of advisory fees paid during the fiscal year.
For purposes of this Section 5, the term "fiscal year" shall exclude the
portion of the current fiscal year which shall have elapsed prior to the date
hereof and shall include the portion of the then current fiscal year which shall
have elapsed at the date of termination of this Agreement.
6. BROKERAGE AND RESEARCH SERVICES
The advisory fee payable hereunder has been negotiated on the
understanding, and the parties hereto agree, that the Adviser shall receive,
supplementary research and other information from brokers and dealers which
execute portfolio transactions for the Fund. The Adviser may employ, retain, or
otherwise avail itself of the services or facilities of other persons or
organizations for the purpose of providing the Adviser or the Fund with such
statistical and other factual information, such advice regarding economic
factors and trends, such advice as to occasional transactions in specific
securities or such other information, advice or assistance as the Adviser may
deem necessary, appropriate or convenient for the discharge of its obligations
hereunder or otherwise helpful to the Fund, or in the discharge of Adviser's
overall responsibilities with respect to any other accounts which it might serve
as investment adviser. The Adviser and any person performing executive,
administrative or trading functions for the Fund, whose services were made
available to the Fund by the Adviser, are specifically authorized to allocate
brokerage and principal business to firms that provide such services or
facilities and to cause the Fund to pay a member of a securities exchange, or
any other securities broker or dealer, an amount of commission for effecting a
securities transaction in excess of the amount of commission another member of
an exchange, broker or dealer would have charged for effecting that transaction,
if the Adviser or such person determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and research
services (as such services are defined in Section 28(e) of the 0000 Xxx)
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Adviser with
respect to the accounts as to which the Adviser exercises investment discretion
(as that term is defined in Section 3(a)(35) of the 1934 Act). Subject to
seeking best execution, the Adviser may also consider sales of shares of the
Fund as a factor in the selection of broker-dealers to execute portfolio
transactions for the Fund.
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7. OTHER ACTIVITIES
The Adviser may perform investment advisory, management or distribution
services for other investment companies and other persons or companies, and
affiliates of the Adviser may engage in other related or unrelated businesses.
Except as otherwise required by the 1940 Act, any of the shareholders,
directors, officers and employees of the Fund may be a shareholder, director,
officer or employee of, or be otherwise interested in, the Adviser, and in any
person controlled by or under common control with the Adviser, and the Adviser,
and any person controlled by or under common control with the Adviser, may have
an interest in the Fund.
8. LIABILITY OF ADVISER
Neither the Adviser nor any of its officers, directors or employees, nor
any person performing executive, administrative or trading functions for the
Funds whose services were made available to the Fund by the Adviser, shall 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
for loss resulting from willful misfeasance, bad faith or negligence in the
performance of its or his duties, or from reckless disregard by the Adviser or
any such person of the duties of the Adviser under this Agreement. Without
limiting the generality of the foregoing, neither the Adviser nor any such
person shall be deemed to have acted unlawfully or to have breached any duty to
the Fund under State or Federal law in effect at the date of the enactment of
Section 28(e) of the 1934 Act solely by reason of having caused the Fund to pay
a member of any securities exchange or any other securities broker or dealer, an
amount of commission for effecting a securities transaction in excess of the
commission another member of a securities exchange or another securities broker
or dealer would have charged for effecting that transaction if the Adviser or
such person 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 member, broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Adviser with
respect to the account as to which the Adviser exercises investment discretion.
9. TERM OF AGREEMENT
This Agreement shall continue in effect to April 30, 2001. It may be
continued in effect thereafter by mutual consent, provided that such continuance
shall be specifically approved at least annually by (i) the Board of Directors
of the Fund, or by the vote of a majority (as defined in the 0000 Xxx) of the
outstanding voting securities of the Fund, and (ii) by a majority of directors
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 approval.
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10. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of the Fund or by the vote of a majority (as
defined in the 0000 Xxx) of the outstanding voting securities of the Fund, on
sixty (60) days' written notice to the Adviser, or by the Adviser on like notice
to the Fund. This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized and the corporate seals to
be affixed as of the day and year first above written.
FPA PERENNIAL FUND, INC.
By: /s/ XXXX X. XXXX
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Xxxx X. Xxxx
President
FIRST PACIFIC ADVISORS, INC.
By: /s/ J. XXXXXXX XXXXXX
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J. Xxxxxxx Xxxxxx
Principal
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