EX-99.B(5)
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of the 1st day of April, 1991
by and between MANAGED MUNICIPAL FUND, INC., a Maryland corporation (the "Fund")
and INTERNATIONAL STRATEGY & INVESTMENT INC., a Delaware corporation (the
"Advisor"), with respect to the following recital of fact:
R E C I T A L
WHEREAS, the Fund is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Advisor is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment adviser; and
WHEREAS, the Fund and the Advisor desire to enter an agreement to provide
investment advisory services for the Fund on the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1. Appointment. The Fund hereby appoints the Advisor to manage the Fund's
affairs and supervise all aspects of the Fund's operations, including the
investment and reinvestment of the cash, securities or other properties
comprising the Fund's assets (the "Portfolio"), subject at all times to the
policies and control of the Fund's Board of Directors. The Advisor hereby
accepts such appointment and agrees to render the services herein set forth for
the compensation herein provided.
2. Delivery of Documents. The Fund has furnished the Advisor with copies
properly certified or authenticated of each of the following:
(a) The Fund's Articles of Incorporation, filed with the Secretary of
State of Maryland on January 5, 1990 and all amendments thereto;
(b) The Fund'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", the By-laws and the Articles of Incorporation are
sometimes collectively referred to herein as the "Charter");
(c) Resolutions of the Fund's Board of Directors and shareholders
authorizing the appointment of the Advisor and approving this Agreement;
(d) The Fund's Registration Statement on Form N-1A under the
Securities of 1933, as amended (the "1933 Act") (File No. 33-32819) and under
the 1940 Act as filed with the Securities and Exchange Commission (the "SEC") on
January 8, 1990 relating to the shares of the Fund, and all amendments thereto;
and
(e) The Fund's most recent prospectus (such prospectus, as presently
in effect and all amendments and supplements thereto are herein called
"Prospectus").
The Fund will furnish the Advisor from time to time with copies, properly
certified or authenticated, of all amendments or supplements to the foregoing,
if any, and all documents, notices and reports filed with the SEC.
3. Duties of Investment Advisor. The Advisor shall give the Fund the
benefit of its best judgment, efforts and facilities in rendering its services
as Advisor. In carrying out its obligations under paragraph 1 hereof, the
Advisor shall:
(a) formulate and implement continuing programs for the purchases and
sales of securities consistent with the Prospectus and regularly report thereon
to the Fund's Board of Directors; and
(b) determine what securities shall be represented in the Portfolio
and in what proportion and regularly report them to the Fund's Board of
Directors; and
(c) provide the Board of Directors of the Fund on a regular basis with
financial reports with respect to the Portfolio, investments and analyses of the
Fund's operations and the operations of comparable investment companies; and
(d) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the Portfolio of the Fund,
and whether concerning the individual issuers whose securities are included in
the Portfolio or the activities in which they engage, or with respect to
securities which the Advisor considers desirable for inclusion in the Portfolio;
and
(e) take, on behalf of the Fund, all actions which appear to the Fund
necessary to carry into effect such purchase and sale programs and supervisory
functions as aforesaid, including the placing of orders for the purchase and
sale of portfolio securities; and
(f) maintain such books and records, in cooperation with the Fund's
administrator and the Fund's distributors, as may be required by law or deemed
advisable by the Board of Directors.
4. Portfolio Transactions. The Advisor shall be responsible for decisions
to buy and sell securities for the Portfolio, selection of broker-dealers and
negotiation of commission rates. Portfolio securities may be purchased or sold
by the Fund in principal transactions. The Advisor may also purchase securities
from underwriters at prices which include a commission paid by the issuer to the
underwriter. The purchase price paid to dealers serving as market makers may
include a spread between the bid and asked prices.
The Advisor's primary consideration in effecting a security transaction
shall be to obtain the best net price and the most favorable execution of the
order. To the extent that the execution and prices offered by more than one
dealer are comparable, the Advisor may, in its discretion, effect transactions
with dealers that furnish statistical, research or other information or services
which the Advisor deems to be beneficial to the Portfolio's investment program.
Such research services supplement the Advisor's own research. Research services
may include the following: statistical and background information on the U.S.
economy; forecasts and interpretations with respect to the U.S. money market
fixed income markets; information on federal, state, local and foreign political
developments; portfolio management strategies; performance information on
securities, indices and investment accounts; information concerning prices of
securities; the providing of equipment used to communicate research information;
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and the providing of access to consultants who supply research information.
Certain research services furnished by dealers may be useful to the Advisor with
clients other than the Fund. Similarly, any research services received by the
Advisor through placement of portfolio transactions of other clients may be of
value to the Advisor in fulfilling its obligations to the Fund. The Advisor is
of the opinion that the material received is beneficial in supplementing its
research and analysis; and therefore, it may benefit the Fund and the Portfolio
by improving the quality of the Advisor's investment advice. The advisory fee
paid by the Fund shall not be reduced because the Advisor receives such services
as the Advisor must evaluate information received as a result of such services,
and thus receipt of such services does not reduce the Advisor's workload.
5. Control by Board of Directors. Any management or supervisory activities
undertaken by the Advisor pursuant to this Agreement, as well as any other
activities undertaken by the Advisor on behalf of the Fund pursuant hereto,
shall at all times be subject to any directives of the Board of Directors of the
Fund.
6. Compliance with Applicable Requirements. In carrying out its obligations
under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder as amended; and
(b) the provisions of the Registration Statement of the Fund under the
1933 Act and the 1940 Act; and
(c) the provisions of the Fund's Charter; and
(d) any other applicable provisions of state and federal law and
applicable rules of any registered national securities organization.
7. Expenses. The expenses connected with the Fund shall be allocable
between the Fund and the Advisor as follows:
(a) The Advisor shall furnish, at its expense and without cost to the
Fund (except as provided in paragraph 8 hereof), the services of such officers
and employees as may be required by the Fund for the proper conduct of its
affairs; travel expenses of employees and officers of the Advisor; office space,
equipment, research services and supplies; expenses of maintaining accounts,
books, and records, except to the extent such services are provided by a third
party pursuant to a contract with the Fund.
(b) The Fund assumes and shall pay or cause to be paid all other
expenses of the Fund, including, without limitation: the fees of the Advisor and
the Fund's distributor and administrator; the charges and expenses of any
registrar, any custodian appointed by the Fund for the safekeeping of its cash,
portfolio securities and other property, and any stock transfer, dividend or
accounting agent or agents appointed by the Fund; brokers' commissions, if any,
chargeable to the Fund in connection with portfolio securities transactions to
which the Fund is a party; all taxes, including securities issuance and transfer
taxes, and corporate fees payable by the Fund to federal, state or other
governmental agencies; the cost and expense of engraving or printing of stock
certificates representing shares of the Fund; all costs and expenses in
connection with maintenance of registration of the Fund and its shares with the
SEC and various states and other jurisdictions (including filing fees and legal
fees and disbursements of counsel); the expenses of printing, including
typesetting, and distributing prospectuses of the Fund and supplements thereto
to the Fund's shareholders; all expenses of shareholders' and directors'
meetings and of preparing, printing and mailing of proxy statements
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and reports to shareholders; fees and travel expenses of directors or members of
any advisory board or committee other than such directors or members who are
"interested persons" of the Fund (as defined in Section 2(a)(19) of the 1940
Act), all expenses incident to the payment of any dividend, distribution,
withdrawal or redemption, whether in shares or in cash; charges and expenses of
any outside service used for pricing of the Fund's shares; charges and expenses
of legal counsel, including counsel to the directors of the Fund who are not
"interested persons" of the Fund (as defined in Section 2(a)(19) of the 0000
Xxx) and of independent accountants, in connection with any matter relating to
the Fund; a portion of membership dues of industry associations; interest
payable on Fund borrowings; postage; insurance premiums on property or personnel
(including officers and directors) of the Fund which inure to its benefit;
extraordinary expenses (including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification related thereto); and
all other charges and costs of the Fund's operation unless otherwise explicitly
provided herein.
8. Delegation of Responsibilities. The Advisor may, but shall be under no
duty to, perform services on behalf of the Fund which are not required by this
Agreement upon the request of the Fund's Board of Directors. Such services will
be performed on behalf of the Fund and the Advisor's charge in rendering such
services may be billed monthly to the Fund, subject to examination by the Fund's
independent accountants. Payment or assumption by the Advisor of any Fund
expense that the Advisor is not required to pay or assume under this Agreement
shall not relieve the Advisor of any of its obligations to the Fund nor obligate
the Advisor to pay or assume any similar Fund expense on any subsequent
occasions.
9. Compensation. (a) For the services to be rendered and the expenses
assumed by the Advisor, the Fund shall pay to the Advisor as compensation an
annual amount, calculated daily and paid monthly, equal to .40% of the Fund's
average daily net assets.
(b) Except as hereinafter set forth, compensation under this Agreement
shall be calculated and accrued daily and the amounts of the daily accruals
shall be paid monthly. 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 the part of the month during which this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fees as set
forth above. Payment of the Advisor's compensation for the preceding month shall
be made as promptly as possible after completion of the computations
contemplated by this paragraph 9.
(c) In the event the operating expenses of the Fund, including all
investment advisory and administrative and distribution fees, 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 the securities laws or regulations
thereunder of any state in which the Fund's shares are qualified for sale, as
such limitations may be raised or lowered from time to time, the Advisor shall
reduce its fee to the extent of such excess expenses and, if required pursuant
to any such laws or regulations, will reimburse the Fund for annual operating
expenses in excess of any expense limitation that may be applicable; provided,
however, there shall be excluded from such expenses the amount of any interest,
taxes, brokerage commissions, extraordinary expenses (including but not limited
to legal claims and liabilities and litigation costs and any indemnification
related thereto) and any other amount not includable in calculating such expense
limitation, paid or payable by the Fund. Such reduction, if any, shall be
computed and accrued daily, shall be settled on a monthly basis and shall be
based upon the expense limitation applicable to the Fund as at the end of the
last business day of the month. That expense limitation which results in the
largest reduction shall be applicable.
10. Non-Exclusivity. The services of the Advisor to the Fund are not to be
deemed to be exclusive, and the Advisor shall be free to render investment
advisory and other services to others (including other investment companies)
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and to engage in other activities, so long as its services under this Agreement
are not impaired thereby. It is understood and agreed that officers or directors
of the Advisor may serve as officers or directors of the Fund, and that officers
or directors of the Fund may serve as officers or directors of the Advisor to
the extent permitted by law; and that the officers and directors of the Advisor
are not prohibited from engaging in any other business activity or from
rendering services to any other person, or from serving as partners, officers or
directors of any other firm or corporation, including other investment
companies.
11. Term and Approval. This Agreement shall become effective at the close
of business on the date hereof and shall continue in force and effect until
___________, 199__ and thereafter from year to year, provided that such
continuance is specifically approved at least annually:
(a) (i) by the Fund's Board of Directors or (ii) by the vote of a
majority of the outstanding voting securities (as defined in Section 2(a)(42) of
the 0000 Xxx); and
(b) by the affirmative vote of a majority of the directors who are not
parties to this Agreement or "interested persons" (as defined in Section
2(a)(19) of the 0000 Xxx) of a party to this Agreement (other than as directors
of the Fund), by votes cast in person at a meeting specifically called for such
purpose.
12. Termination. This Agreement may be terminated at any time, on sixty
(60) days' written notice to the other party, without the payment of any
penalty, (i) by vote of the Fund's Board of Directors or (ii) by vote of a
majority of the Fund's outstanding voting securities (as defined in Section
2(a)(42) of the 0000 Xxx) or (iii) by the Advisor. The notice provided for
herein may be waived by either party. This Agreement shall automatically
terminate in the event of its assignment (as defined in Section 2(a)(4) of the
1940 Act.)
13. Liability. In the performance of its duties hereunder, the Advisor
shall be obligated to exercise care and diligence and to act in good faith and
to use its best efforts within reasonable limits in performing all services
provided for under this Agreement, but the Advisor shall not be liable for any
act or omission which does not constitute willful misfeasance, bad faith or
gross negligence on the part of the Advisor or its officers, directors or
employees, or reckless disregard by the Advisor of its duties under this
Agreement.
14. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Fund and
of the Advisor shall be 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000.
15. Questions of Interpretation. Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise derived from
a term or provision of the 1940 Act shall be resolved by reference to such term
or provision of the 1940 Act and to interpretations thereof, if any, by the
United States courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the SEC issued pursuant to the 1940
Act. In addition, where the effect of a requirement of the 1940 Act reflected in
any provision of this Agreement is revised by rule, regulation or order of the
SEC, such provision shall be deemed to incorporate the effect of such rule,
regulation or order. Otherwise the provisions of this Agreement shall be
interpreted in accordance with the laws of Maryland.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the day and year first
above written.
[SEAL] MANAGED MUNICIPAL FUND, INC.
Attest: /s/ Xxxxxx X. Marhaush By /s/ Xxxxxx X. Xxxxxxxx
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[SEAL] INTERNATIONAL STRATEGY & INVESTMENT INC.
Attest: /s/ Xxxx X. Xxxx By /s/ R. Xxxx Xxxxxxx
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