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Exhibit (g)
MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the 11th day of August, 2000, by and between
READINGTON HOLDINGS, INC., a corporation organized under the laws of the State
of New Jersey (hereinafter referred to as the "Company"), and FUND ASSET
MANAGEMENT, L.P., a Delaware limited partnership (the "Investment Adviser").
W I T N E S S E T H:
WHEREAS, the Company intends to engage in business a an closed-end
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 Advisers Act of 1940, as amended; and
WHEREAS, the Company desires to retain the Investment Adviser to render
management and investment advisory services to the Company 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 Company on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and the covenants
hereinafter contained, the Company and the Investment Adviser hereby agree as
follows:
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ARTICLE I
Duties of the Investment Adviser
The Company hereby employs the Investment Adviser to act as a manager
and investment adviser of the Company 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 Company, 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 Company in any way or otherwise be deemed agents of the
Company.
(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 Company. It is understood that the
Investment Adviser or its affiliates may enter into separate agreements with the
Company for the provision of management and administrative services necessary
for the operation of the Company. The Investment Adviser shall provide the
Company 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 Company, conduct relations with custodians, depositories,
transfer agents, dividend disbursing agents, other shareholder
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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 Company's compliance with the investment
policies and restrictions (the "Investment Policy") set forth in the current
registration statement relating to the Company under the Investment Company Act
(the "Registration Statement"). For purposes of determining compliance with the
Investment Policy, the average credit rating of the assets of the Company shall
be determined in accordance with Schedule D. The Investment Adviser shall make
reports to the Board of Directors of its performance of its obligations
hereunder and furnish advice and recommendations with respect to such other
aspects of the business and affairs of the Company as it shall determine to be
desirable.
(b) Investment Advisory Services. The Investment Adviser shall provide
(or cause its affiliates to provide) the Company 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 Company, shall furnish
continuously an investment program for the Company and shall determine from time
to time which securities shall be purchased, sold or exchanged and what portion
of the assets of the Company shall be held in the various securities and other
financial instruments in which the Company invests and the portion of the assets
of the Company that shall be held in cash, subject always to the restrictions
set forth in the Amended and Restated Certificate of Incorporation and the
By-Laws of the Company, as amended from time to time, the provisions of the
Investment Company Act and the statements relating to the Company's investment
objectives, investment policies and investment restrictions as the same are set
forth in the Registration Statement. The Investment Adviser shall make decisions
for the Company as to
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the manner in which voting rights, rights to consent to corporate action and any
other rights pertaining to the Company'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 Company, 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 Company's account with
brokers or dealers selected by it, and to that end, the Investment Adviser is
authorized as the agent of the Company to give instructions to the Custodian of
the Company as to deliveries of securities and payments of cash for the account
of the Company. In connection with the selection of such brokers or dealers and
the placing of such orders with respect to assets of the Company, 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 as set forth in the
Registration Statement. 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 Company is affiliated.
(c) Affiliated Sub-Advisers. In carrying out its responsibilities
hereunder, the Investment Adviser may employ, retain or otherwise avail itself
of the services of other persons or entities including without limitation,
affiliates of the Investment Adviser, on such terms as the Investment Adviser
shall determine to be necessary, desirable or appropriate. However, if the
Investment Adviser chooses to retain or avail itself of the services of another
person or entity to
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manage assets of the Company, such other person or entity must be (i) an
affiliate of the Investment Adviser, (ii) retained at the Investment Adviser's
own cost and expense, and (iii) retained subject to the requirements of Section
15 of the Investment Company Act. Retention of one or more affiliated
sub-advisers, or the employment or retention of other persons or entities to
perform services, shall in no way reduce the responsibilities or obligations of
the Investment Adviser under this Agreement and the Investment Adviser shall be
responsible for all acts and omissions of such affiliated sub-advisers, or other
persons or entities, in connection with the performance of the Investment
Adviser's duties hereunder.
(d) 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 general partner is Princeton Services, Inc. The
Investment Adviser will notify the Company 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, or cause its affiliates to 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. The Investment Adviser shall
pay, or cause its affiliates to pay, compensation of all officers of the Company
and all Directors of the Company who are affiliated persons of the Investment
Adviser or any sub-adviser, or an affiliate of the Investment Adviser or any
sub-adviser.
(b) The Company. The Company assumes and shall pay or cause to be paid
all other expenses of the Company including, without limitation: taxes, expenses
for legal and auditing
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services, costs of printing proxies, stock certificates, shareholder reports and
Registration Statements, charges of the custodian, any sub-custodian and
transfer agent, expenses of portfolio transactions, Securities and Exchange
Commission fees, fees and actual out-of-pocket expenses of all Directors of the
Company who are not affiliated persons of the Investment Adviser or any
sub-adviser, or of an affiliate of the Investment Adviser or any sub-adviser,
accounting and pricing costs (including the daily calculation of the net asset
value), insurance and interest, brokerage costs, litigation and other
extraordinary or non-recurring expenses, and other expenses properly payable by
the Company.
ARTICLE III
Compensation of the Investment Adviser
Management and Investment Advisory Fee. For the services rendered, the
facilities furnished and expenses assumed by the Investment Adviser, the Company
shall pay to the Investment Adviser at the end of each calendar month an
investment advisory fee at the annual rate determined pursuant to Exhibit A
calculated on the average monthly value of the New Investments (as defined in
the Registration Statement) of the Company commencing on the day following
effectiveness hereof. The average monthly value of the New Investments shall be
calculated in accordance with procedures established by the Board of Directors.
In addition, the Company will pay the Investment Adviser at the end of each
calendar month a management fee for services described on Exhibit B. Contained
on Exhibit B is an estimate of these expenses for the first 12 months of this
Agreement. All other management services described in Article I(a) and not
listed on Exhibit B will be paid for by the Company to the service provider. A
list of these expenses as well as an estimate of these expenses is provided on
Exhibit C. If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last
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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
herein. During any period when the determination of average monthly value of the
New Investments is suspended by the Board of Directors, the average monthly
value of the New Investments as of the last business day prior to such
suspension shall for this purpose be deemed to be the average monthly value of
the New Investments at the close of each succeeding business day until it is
again determined.
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 Company, 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 Company contemplated hereby and
the partners, directors, officers and employees of the Investment Adviser and
such affiliates.
ARTICLE V
Activities of the Investment Adviser
The services of the Investment Adviser to the Company 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
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render services to others. It is understood that the Board of Directors,
officers, employees and shareholders of the Company are or may become interested
in the Investment Adviser and its affiliates, as directors, officers, employees,
partners, 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 Company, and that the Investment Adviser
and directors, officers, employees, partners and shareholders of its affiliates
may become interested in the Company 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 for a period of two years thereafter and
thereafter continue from year to year, but only so long as such continuance is
specifically approved at least annually by (i) the Board of Directors of the
Company, or by the vote of a majority of the outstanding voting securities of
the Company, 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 Company, 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.
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ARTICLE VII
Amendments of this Agreement
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of the Directors of the Company, including 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 and, when required by the Investment Company Act, by the
vote of a majority of the outstanding voting securities of the Company.
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
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.
READINGTON HOLDINGS, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
_____________________________________
Title: Secretary
FUND ASSET MANAGEMENT, L.P.
By: PRINCETON SERVICES, INC.,
General Partner
By: /s/ Xxxx Xxxxx
_____________________________________
Title: Chief Operating Officer
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EXHIBIT A
Schedule of Investment Management Fee Calculation
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New Investments* Percentage**
---------------- ------------
$0-$50 Million 0.20%
$50-$100 Million 0.15%
$100-$250 Million 0.10%
> $250 Million 0.08%
* As defined in the Registration Statement
** Annually
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EXHIBIT B
Management Services and Estimate of
-----------------------------------
First Year Management Fee Paid to the Investment Advisor
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Services Estimated First Year Fee
-------- ------------------------
Accounting Fees $25,000
Registration Fees $800
Transfer Agent Fees $11,500
Pricing Fees $1,950
TOTAL: $39,250
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EXHIBIT C
Other Management Services Provided by Third Party Service Providers
-------------------------------------------------------------------
And Estimate of First Year Fees Paid to Third Party Service Providers
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Services Estimated First Year Fee
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Audit Fees $24,000
Legal Fees $1,500
Custodian Fees $2,145
TOTAL: $27,645
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SCHEDULE D
Calculation of Average Credit Rating
ML COMPOSITE XXXXX S&P COMPOSITE RTG
936 GVT GVT TSY
912 AGN AGN AGCY
864 Aaa AAA AAA
840 AAA-
816 Aa1 AA+ AA1
792 Aa2 AA AA2
792 P1 A1+
000 Xx0 XX- XX0
000 A1 A+ A1
732 A1
720 A2 A A2
696 A3 X- X0
000 X0 X0
000 Xxx0 BBB+ BBB1
648 Baa2 BBB BBB2
636 A3
624 Baa3 BBB- BBB3
624 P3
600 Ba1 BB+ BB1
576 Ba2 BB BB2
552 Ba3 BB- BB3
000 X
000 X0 B+ B1
504 B2 B B2
480 B3 B- B3
456 CCC1
432 Caa CCC CCC2
408 CCC3
408 C
384 CC1
360 Ca CC CC2
336 CC3
312 C1
288 C C C2
264 C3
240 DDD1
216 DDD2
192 DDD3
168 DD1
168 D
144 DD2
120 DD3
96 D1
72 D2
45 D3
