INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT, dated and effective as of this 1st day of
October, 1993, is made and entered into by and between BAILARD, XXXXX & XXXXXX
INTERNATIONAL FUND GROUP, INC., a Maryland corporation (hereinafter called the
"Company"), and BAILARD, XXXXX & XXXXXX, INC., a California corporation
(hereinafter called the "Adviser").
WHEREAS, the Company is engaged in business as an open-end
management investment company and is so registered under the Investment Company
Act of 1940 (the "1940 Act"); and
WHEREAS, the Adviser is engaged principally in the business of
rendering investment management services and is so registered under the
Investment Advisers Act of 1940; and
WHEREAS, the Company is authorized to issue shares of capital
stock in separate series (the "Series") with each Series representing interests
in a separate portfolio of securities and other assets; and
WHEREAS, the Company is currently offering shares in two
series, the Bailard, Xxxxx & Xxxxxx International Fixed-Income Fund (the
"Fixed-Income Fund") and the Bailard, Xxxxx & Xxxxxx International Equity Fund
(the "Equity Fund") (collectively, the "Initial Series"); and
WHEREAS, the Company desires to retain the Adviser to render
investment management services as described hereunder with respect to the
Initial Series and the Adviser is willing so to do.
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between
the parties hereto as follows:
1. Appointment of the Adviser.
(a) Initial Series. The Company hereby appoints the Adviser to
act as adviser and investment manager to the Initial Series for the period and
on the terms herein set forth. The Adviser accepts such appointment and agrees
to render the services herein set forth, for the compensation herein provided.
(b) Additional Series. In the event that the Company
establishes one or more series of shares other than the Initial Series with
respect to which it desires to retain the Adviser to render management and
investment advisory services hereunder, it shall so notify
the Adviser in writing, indicating the advisory fee which will be payable with
respect to the additional series of shares. If the Adviser is willing to render
such services, it shall so notify the Company in writing, whereupon such series
of shares shall become a Series hereunder.
The Adviser shall, for all purposes herein, be deemed an
independent contractor and not an agent of the Company.
2. Investment Management Services of the Adviser.
(a) Subject to the supervision of the Company's Board of
Directors ("Board"), the Adviser agrees to provide supervision of the portfolio
of each Series and to determine what securities or other property shall be
purchased or sold by each Series, giving due consideration to the policies of
each Series as expressed in the Company's Articles of Incorporation, By-laws,
Form N-1A Registration Statement ("Registration Statement") under the 1940 Act
and under the Securities Act of 1933 (the "1933 Act"), and prospectus as in use
from time to time, as well as to the factors affecting the status of each Series
as a "regulated investment company" under the Internal Revenue Code of 1986. In
its duties hereunder, the Adviser shall further be bound by any and all
determinations by the Board relating to investment policy, which determinations
shall in writing be communicated to the Adviser.
(b) Except with respect to assets placed with a Sub-Adviser as
provided hereinbelow, the Adviser shall provide adequate facilities and
qualified personnel for the placement of, and shall place orders for the
purchase, or other acquisition, and sale, or other disposition, of portfolio
securities for each Series. With respect to such transactions, the Adviser,
subject to such direction as may be furnished from time to time by the Board,
shall endeavor as the primary objective to obtain the most favorable prices and
executions of orders. Subject to such primary objective, the Adviser may place
orders with brokerage firms which have sold shares of any Series. The Adviser is
specifically authorized to allocate portfolio brokerage and portfolio principal
transactions business to firms that provide brokerage and research services or
facilities and to cause the Series 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 determines in good faith that such amount of commission is
reasonable in relation to the commissions paid by other similarly situated
investors and the value of the brokerage and research services (as such services
are defined in Section 28(e) of the Securities Exchange Act of 1934) 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
Series and other accounts over which the Adviser has investment discretion. The
authority to pay higher brokerage commissions, as provided in the preceding
sentence, shall not apply with respect to portfolio transactions the commission
rates for which are fixed, rather than negotiated. The receipt by the Adviser of
any such brokerage and research services shall not be deemed to give rise to any
requirement for abatement of the compensation payable to the
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Adviser pursuant to Section 4 hereof.
(c) On occasions when the Adviser deems the purchase or sale
of a security or other asset to be in the best interests of a Series as well as
other clients of the Adviser, the Adviser, to the extent permitted by applicable
laws and regulations, may aggregate the securities or other assets to be so sold
or purchased when the Adviser believes that to do so will be in the best
interests of the Series. In such event, allocation of the securities or other
assets so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Adviser in the manner the Adviser considers to
be the most equitable and consistent with its fiduciary obligations to the
Series and to such other clients.
3. Administrative Duties of the Adviser . The Adviser will
administer the affairs of each Series subject to the supervision of the Board
and the following terms, and provided that nothing herein contained shall be
deemed to relieve or deprive the Board of its responsibility for control of the
conduct of the affairs of the Company.
(a) (i) The Adviser will supervise all aspects of the
operations of each Series, including the oversight of transfer agency,
custodial, pricing and accounting services, except as hereinafter set
forth. The Adviser will oversee the computation by unaffiliated service
providers of the net asset value and the net income of each Series as
described in the currently effective Registration Statement, or as more
frequently as the Board shall request such computation.
(ii) The Adviser will provide the Company with such
corporate, administrative and clerical personnel (including officers of
the Company) and services as are reasonably deemed necessary or
advisable by the Board.
(b) The Adviser will oversee the maintenance of all books and
records of the Company, and will furnish the Board with such periodic and
special reports as the Board reasonably may request. In compliance with the
requirements of Rule 3la-3 under the 1940 Act, the Adviser hereby agrees that
all records which it maintains for the Company are the property of the Company,
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any records which it maintains for the Company and which are required to be
maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender
promptly to the Company any records which it maintains for the Company upon
request by the Company.
(c) The Adviser will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of each Series'
prospectus, statement of additional information, proxy material, tax returns and
required reports with or to the Series' shareholders, the Securities and
Exchange Commission and other appropriate federal or state regulatory
authorities.
(d) The Adviser will provide the Company with, or obtain for
it, adequate
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office space and all necessary office equipment and services, including
telephone service, utilities, stationery supplies and similar items.
4. Investment Management Fees.
(a) Each Series shall pay to the Adviser on or before the
tenth (10th) day of each month, as compensation for the services rendered by the
Adviser during the preceding month, an amount to be computed by applying to the
average daily net asset value of such Series the applicable annual rates set
forth on Appendix A hereto.
(b) The fees on Appendix A shall be computed and accrued daily
at one three-hundred-sixty-fifth (1/365th) of the applicable rates set forth
therein. The net asset value of each Series shall be determined in the manner
set forth in the Registration Statement at the 4:00 p.m. closing of the New York
Stock Exchange on each day the New York Stock Exchange is open. In the event of
termination other than at the end of a calendar month, the monthly fee shall be
prorated for the portion of the month prior to termination and paid on or before
the tenth (10th) day subsequent to termination.
(c) The Adviser agrees to reduce the investment management fee
payable to it under this Agreement by the amount by which the expenses of the
Company for any fiscal year of the Company shall exceed the most stringent
limits prescribed by any state in which the Company shares are offered for sale.
The expense limitation commitment of the Adviser is subject to the qualification
that if, as a result of so fully reimbursing the Company for such excess
expenses, less than 90% of the Company's gross income would be derived from
qualifying sources described in Section 851(b)(2) of the Internal Revenue Code
of 1986 or any successor provisions (which include dividends, interest, payments
with respect to securities loans and gains from the sale of stock, certain other
securities or foreign currencies and certain other income), treating as income
for this purpose any expense reimbursement, then the Adviser will reimburse the
Company only in such an amount as will not result in less than 90% of the
Company's gross income being received from qualifying sources and any
unreimbursed portion of the excess will be carried forward for a period of up to
three fiscal years. Costs incurred in connection with the purchase or sale of
portfolio securities, including brokerage fees and commissions, 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. Expenses shall be excluded from the calculation of the
applicable expense limitations to the fullest extent authorized by applicable
law. Proper accruals shall be made by the Company for any projected reduction of
investment management fees hereunder and corresponding amounts shall be withheld
from the fees paid by the Company to the Adviser, subject to recovery by the
Adviser of any amounts withheld in excess of the actual reduction for any fiscal
year. Any additional reduction computed at the end of the fiscal year shall be
deducted from the fee for the last month of such fiscal year (or thereupon
promptly paid by the Adviser).
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(e) The above provision in subsection (d) with respect to
expense limitation shall be calculated and administered separately with respect
to each Series, as opposed to the Company in the aggregate, if and to the extent
so required by state securities authorities.
5. Expenses.
(a) The Adviser assumes and shall pay for the cost of
maintaining the staff and personnel necessary to perform its obligations under
this Agreement, and shall, at its own expense, provide the office space,
equipment and facilities which it is obligated to provide under Section 2 and
Section 3 hereof. Except as otherwise expressly provided herein, the Company
assumes and shall pay or cause to be paid all expenses of the Company,
including, without limitation: (a) all costs and expenses incident to (i) the
registration of the Company under the 1940 Act or (ii) any public offering of
capital stock ("Shares") of the Series, for cash or otherwise, including costs
and expenses relating to the registration of Shares under the Securities Act of
1933 (the "1933 Act"), the qualification of Shares under state securities laws,
the printing or other reproduction and distribution of any registration
statement (and all amendments thereto) under the 1933 Act, the preliminary and
final prospectuses included therein, and any other necessary documents incident
to such public offering (other than costs and expenses incident to the
reproduction and distribution of prospectuses to prospective new investors and
the advertising of Shares); (b) the charges and expenses of any custodian
appointed by the Company for the safekeeping of its cash, portfolio securities
and other property; (c) the investment management fees payable hereunder to the
Adviser; (d) the charges and expenses of auditors and bookkeepers; (e) the
charges and expenses of any Share transfer, dividend agent or registrar
appointed by the Company; (f) broker's commissions chargeable to the Company in
connection with portfolio securities transactions to which a Series is a party;
(g) all taxes, including securities issuance and transfer taxes, and
organizational fees payable by the Company to Federal, state or other
governmental agencies; (h) the costs and expenses of engraving or printing of
certificates representing Shares; (i) fees involved in registering and
maintaining registrations of the Company and of Shares with the Securities and
Exchange Commission and various states and other jurisdictions; j) all expenses
of meetings of shareholders and the Board of Directors of the Company and of
preparing, printing and mailing proxy statements and quarterly, semiannual,
annual and any other reports to shareholders; (k) fees and travel expenses of
Board members and officers of the Company; l) all fees and expenses incident to
any dividend or distribution reinvestment program; (m) charges and expenses of
legal counsel in connection with matters relating to the Company, including
without limitation, legal services rendered in connection with the Company's
organization, financial structure and relations with its shareholders, issuance
of Shares, and registrations and qualifications of Shares under Federal, state
and other laws; (n) association dues; (o) interest payable on Series borrowings;
(p) fees and expenses of obtaining any exemptions from any provisions of any
Federal, state or other securities laws; (q) fees or expenses incurred incident
to the obtaining of any rulings of, or advice from, the U.S. Internal Revenue
Service or any other taxing authority incident to the taxation of a Series or
its shareholders; (r) costs of information obtained from sources
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other than the Adviser or its affiliated persons (as defined in the 0000 Xxx)
relating to the pricing and valuation of securities; and (s) postage.
(b) The payment or assumption by the Adviser of any expense of
the Company or any Series that the Adviser is not required by this Agreement to
pay or assume shall not obligate the Adviser to pay or assume the same or any
similar expense of the Company or any Series on any subsequent occasion.
(c) The Company will reimburse the Adviser for any expenses of
the Company paid, but not assumed by, the Adviser from time to time upon
presentation to the Company of an itemized schedule of such expenses.
6. Other Business of the Adviser . Nothing contained in this
Agreement shall be construed to prohibit the Adviser from performing investment
advisory, management, or distribution services for other investment companies
and other persons or companies, or to prohibit affiliates of the Adviser from
engaging in such businesses or in other related or unrelated businesses.
7. Indemnification . The Company agrees (i) not to hold the
Adviser or any of its officers or employees liable for, and (ii) to indemnify or
insure the Adviser and its officers and employees ("Indemnified Parties")
against, any costs and liabilities the Indemnified Parties may incur as a result
of any claim against the Indemnified Parties in the good faith exercise of their
powers hereunder or arising out of an act or omission of the Company's custodian
of assets, or of any broker or agent selected by the Adviser in a commercially
reasonable manner, excepting matters as to which the Indemnified Parties shall
be finally adjudged to have been guilty of willful misfeasance, bad faith, gross
negligence, reckless disregard of duty or breach of fiduciary duty (all as used
in the 1940 Act) or otherwise in violation of applicable law.
8. Term of Agreement .
(a) This Agreement shall become effective with respect to the
initial Series on the date hereof (the "Effective Date") and, with respect to
any additional Series, on the date of receipt by the Company of notice from the
Adviser in accordance with Section l(b) hereof that the Adviser is willing to
serve as Adviser with respect to such Series. Unless terminated as herein
provided, this Agreement shall remain in full force and effect until December
31, 1994 with respect to the Initial Series and, with respect to each additional
Series, until the December 31 following the first anniversary of the date on
which such Series becomes a Series hereunder, and shall continue in full force
and effect for periods of one year thereafter with respect to each Series so
long as such continuance with respect to any such Series is approved at least
annually (i) by either the Board or by a vote of a majority (as defined in the
0000 Xxx) of the outstanding voting securities of such Series, and (ii) in
either event by the vote of a majority of the Directors of the Company who are
not
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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.
Any approval of this Agreement by a majority (as defined in
the 0000 Xxx) of the outstanding voting securities of any Series shall be
effective to continue this Agreement with respect to any such Series
notwithstanding (i) that this Agreement has not been approved by the holders of
a majority (as defined in the 0000 Xxx) of the outstanding voting securities of
any other Series not affected thereby, and (ii) that this Agreement has not been
approved by the vote of a majority (as defined in the 0000 Xxx) of the
outstanding voting securities of the Company, unless such approval shall be
required by any applicable law or otherwise.
(b) This Agreement may be terminated with respect to any
Series at any time, without payment of any penalty, by the Board or by the vote
of a majority (as defined in the 0000 Xxx) of the outstanding voting securities
of the affected Series, on 60 days written notice to the Adviser, or by the
Adviser on 180 days written notice to the Company.
(c) This Agreement shall automatically and immediately
terminate in the event of its assignment.
9. Delegation of the Adviser's Duties as Investment Manager .
With respect to one or more of the Series, the Adviser may enter into one or
more agreements ("Sub-Advisory Contract") with a sub-adviser (a "Sub-Adviser")
in which the Adviser delegates to such Sub-Adviser the performance of any or all
of the services specified in Sections 2 and 3 of this Agreement, provided that:
(i) each Sub-Advisory Contract imposes on the Sub-Adviser bound thereby all the
duties and conditions to which the Adviser is subject with respect to the
covered services under Sections 2 and 3 of this Agreement; (ii) each
Sub-Advisory Contract meets all requirements of the 1940 Act and rules
thereunder; and (iii) the Adviser shall not enter into a Sub-Advisory Contract
unless it is approved by the Board and the shareholders of the affected Series,
if required by the 1940 Act, prior to implementation.
10. Miscellaneous Matters.
(a) This Agreement supersedes any prior agreement between the
parties relating to the subject matter hereof, including, without limitation,
the Investment Management Agreement dated August 1, 1990.
(b) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
(c) All notices or communications hereunder shall be in
writing and, if sent to the Adviser shall be mailed by certified or registered
mail, or delivered, faxed, or
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telegraphed and confirmed in writing to the Adviser at 0000 Xxxxxx Xxxxx, Xxx
Xxxxx, Xxxxxxxxxx 00000, Att'n: [Xxxxxxx X. Xxxxxx], and if to the Company shall
be mailed by certified or registered mail, or delivered, faxed, or telegraphed
and confirmed in writing to the Company at 0000 Xxxxxx Xxxxx, Xxx Xxxxx,
Xxxxxxxxxx 00000, Att'n: Xxxx Xxxxxx, with a copy to Xxxxxx, Xxxxxxxxxx &
Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Att'n: Xxxxx X.
Xxxxxxxx, Esq.
11. Choice of Law. This Agreement shall be construed in
accordance with the laws of the State of California and the 1940 Act. To the
extent that the applicable laws of the State of California conflict with the
applicable provisions of the 1940 Act, the latter shall control.
12. Interpretation. This Agreement has been negotiated at
arm's length and between persons sophisticated and knowledgeable in the matters
dealt with in this Agreement. Accordingly, any rule of law (including California
Civil Code section 1654) or legal decision that would require interpretation of
any ambiguities in this Agreement against the party that has drafted it is not
applicable and is waived. The provisions of this Agreement shall be interpreted
in a reasonable manner to effect the purpose of the parties and this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate originals by their officers thereunto duly
authorized as of the date first above written.
BAILARD, XXXXX & XXXXXX BAILARD, XXXXX & XXXXXX, INC.
INTERNATIONAL FUND GROUP, INC.
By /s/ Xxxxxxx X. Xxxxxx By /s/ P. M. Hill
---------------------------------- ---------------------------------
President President
Xxxxxxx X. Xxxxxx, Xx. Xxxxx X. Xxxx
------------------------------------ -----------------------------------
(Print Name) (Print Name)
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APPENDIX A
to Investment Management Agreement
Equity Fund: .95% of average daily net assets
-----------
Fixed-Income Fund: .75% of average daily net assets
-----------------
A-1
BAILARD, XXXXX & XXXXXX
[GRAPHIC OMITTED]
September 5, 1997
000 Xxxxx Xxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000-0000
Telephone 000 000 0000
Facsimile 000 000 0000
Bailard, Xxxxx & Xxxxxx International Fund Group, Inc.
000 Xxxxx Xxxx, Xxx. #0000
Xxxxxx Xxxx, XX 00000-0000
Re: Investment Management Agreement
Ladies and Gentlemen:
Reference is made to the Investment Management Agreement (the
"Agreement") between Bailard,. Xxxxx & Xxxxxx, Inc. ("BB&K") and the Bailard,
Xxxxx & Xxxxxx International Fund Group, Inc., (the "Client") dated October 1,
1993. With reference to Section 7 and any other provisions of the Agreement
which purport to indemnify or hold harmless BB&K or its officers or employees,
BB&K represents and warrants to Client, and Client acknowledges, that Client
does not waive any of its rights of action at common law or under the federal
and state securities laws.
Very truly yours,
Bailard, Xxxxx & Xxxxxx, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Title: President
-----------------------------
Acknowledged:
Bailard, Xxxxx & Xxxxxx International Fund Group, Inc.
By: /s/ P. M. Hill
-------------------------------------------
Title: Chairman
----------------------------------------
