INVESTMENT ADVISORY, MANAGEMENT AND
ADMINISTRATION AGREEMENT
AGREEMENT, dated and effective as of September 7, 1998 between
XXXXXXX NEW EUROPE FUND, INC., a Maryland corporation (herein referred to as the
"Fund"), and XXXXXXX XXXXXX INVESTMENTS, INC., a Delaware corporation (herein
referred to as the "Manager").
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is agreed by
the parties as follows:
1. The Manager hereby undertakes and agrees, upon the terms
and conditions herein set forth, (i) to make investment decisions for the Fund,
to prepare and make available to the Fund research and statistical data in
connection therewith and to supervise the acquisition and disposition of
securities by the Fund, including the selection of brokers or dealers to carry
out the transactions, all in accordance with the Fund's investment objectives
and policies and in accordance with guidelines and directions from the Fund's
Board of Directors; (ii) to assist the Fund as it may reasonably request in the
conduct of the Fund's business, subject to the direction and control of the
Fund's Board of Directors; (iii) to maintain or cause to be maintained for the
Fund all books, records, reports and any other information required under the
Investment Company Act of 1940, as amended (the "1940 Act"), to the extent that
such books, records and reports and other information are not maintained or
furnished by the custodian or other agents of the Fund; (iv) to furnish at the
Manager's expense for the use of the Fund such office space and facilities as
the Fund may require for its reasonable needs in the City of New York and to
furnish at the Manager's expense clerical services in the United States related
to research, statistical and investment work; (v) to render to the Fund
administrative services such as preparing reports to and meeting materials for
the Fund's Board of Directors and reports and notices to stockholders, preparing
and making filings with the Securities and Exchange Commission (the "SEC") and
other regulatory and self-regulatory organizations, including preliminary and
definitive proxy materials and post-effective amendments to the Fund's
registration statement on Form N-2 under the Securities Act of 1933, as amended,
and 1940 Act, as amended from time to time, providing assistance in certain
accounting and tax matters and investor and public relations, monitoring the
valuation of portfolio securities, assisting in the calculation of net asset
value and calculation and payment of distributions to stockholders, and
overseeing arrangements with the Fund's custodian, including the maintenance of
books and records of the Fund; and (vi) to pay the reasonable salaries, fees and
expenses of such of the Fund's officers and employees (including the Fund's
shares of payroll taxes) and any fees and expenses of such of the Fund's
directors as are directors, officers or employees of the Manager; provided,
however, that the Fund, and not the Manager, shall bear travel expenses (or an
appropriate portion thereof) of directors and officers of the Fund who are
directors, officers or employees of the Manager to the extent that such expenses
relate to attendance at meetings of the Board of Directors of the Fund or any
committees thereof or advisers thereto. The Manager shall bear all expenses
arising out of its duties hereunder but shall not be responsible for any
expenses of the Fund other than those specifically allocated to the Manager in
this paragraph 1. In particular, but without limiting the generality of the
foregoing, the Manager shall not be responsible, except to the extent of the
reasonable compensation of such of the Fund's employees as are directors,
officers or employees of the Manager whose services may be involved, for the
following expenses of the Fund: organization and certain offering expenses of
the Fund (including out-of-pocket expenses, but not including overhead or
employee costs of the Manager or of any one or more organizations retained as an
advisor or consultant to the Fund); fees payable to the Manager and to any
advisor or consultants, including an advisory board, if applicable; legal
expenses; auditing and accounting expenses; telephone, telex, facsimile, postage
and other communication expenses; taxes and governmental fees; stock exchange
listing fees; fees, dues and expenses incurred by the Fund in connection with
membership in investment company trade organizations; fees and expenses of the
Fund's custodians, subcustodians, transfer agents and registrars; payment for
portfolio pricing or valuation services to pricing agents, accountants, bankers
and other specialists, if any; expenses of preparing share certificates and
other expenses in connection with the issuance, offering, distribution, sale or
underwriting of securities issued by the Fund; expenses of registering or
qualifying securities of the Fund for sale; expenses relating to investor and
public relations; freight, insurance and other charges in connection with the
shipment of the Fund's portfolio securities; brokerage commissions or other
costs of acquiring or disposing of any portfolio securities of the Fund;
expenses of preparing and distributing reports, notices and dividends to
stockholders; costs of stationery; costs of stockholders' and other meetings;
litigation expenses; or expenses relating to the Fund's dividend reinvestment
and cash purchase plan (except for brokerage expenses paid by participants in
such plan).
2. As exclusive licensee of the rights to use and sublicense
the use of the "Xxxxxxx," "Xxxxxxx Xxxxxx Investments, Inc." and "Xxxxxxx,
Xxxxxxx & Xxxxx" trademarks (together, the "Xxxxxxx Marks"), the Manager hereby
grants the Fund a nonexclusive right and sublicense to use (i) the "Xxxxxxx"
name and xxxx as part of the Fund's name (the "Fund Name"), and (ii) the Xxxxxxx
Marks in connection with the Fund's investment products and services, in each
case only for so long as this Agreement, any other investment management
agreement between the Fund and the Manager (or any organization which shall have
succeeded to the Manager's business as investment manager (the "Manager's
Successor")), or any extension, renewal or amendment hereof or thereof remains
in effect, and only for so long as the Manager is a licensee of the Xxxxxxx
Marks, provided, however, that the Manager agrees to use its best efforts to
maintain its license to use and sublicense the Xxxxxxx Marks. The Fund agrees
that it shall have no right to sublicense or assign rights to use the Xxxxxxx
Marks, shall acquire no interest in the Xxxxxxx Marks other than the rights
granted herein, that all of the Fund's uses of the Xxxxxxx Marks shall inure to
the benefit of Xxxxxxx Trust Company as owner and licensor of the Xxxxxxx Marks
(the "Trademark Owner"), and that the Fund shall not challenge the validity of
the Xxxxxxx Marks or the Trademark Owner's ownership thereof. The Fund further
agrees that all services and products it offers in connection with the Xxxxxxx
Marks shall meet commercially reasonable standards of quality, as may be
determined by the Manager or the Trademark Owner from time to time, provided
that the Manager acknowledges that the services and products the Fund rendered
during the one-year period preceding the date of this Agreement are acceptable.
At your reasonable request, the Fund shall cooperate with the Manager and the
Trademark Owner and shall execute and deliver any and all documents necessary to
maintain and protect (including but not limited to in connection with any
trademark infringement action) the Xxxxxxx Marks and/or enter the Fund as a
registered user thereof. At such time as this Agreement or any other investment
management agreement shall no longer be in effect between the Manager (or the
Manager's Successor) and the Fund, or the Manager no longer is a licensee of the
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Xxxxxxx Marks, the Fund shall (to the extent that, and as soon as, it lawfully
can) cease to use the Fund Name or any other name indicating that it is advised
by, managed by or otherwise connected with the Manager (Manager's Successor) or
the Trademark Owner. In no event shall the Fund use the Xxxxxxx Marks or any
other name or xxxx confusingly similar thereto (including, but not limited to,
any name or xxxx that includes the name "Xxxxxxx") if this Agreement or any
other investment advisory agreement between the Manager (or the Manager's
Successor) and the Fund is terminated.
3. The Fund agrees to pay to the Manager in United States
dollars, as full compensation for the services to be rendered and expenses to be
borne by the Manager hereunder, a monthly fee which, on an annual basis, is
equal to 1.25 % per annum of the value of the Fund's average weekly net assets
up to and including $75 million; 1.15% per annum of the value of the Fund's
average weekly net assets on the next $125 million of assets; and 1.10% per
annum of the value of the Fund's average weekly net assets in excess of $200
million. Each payment of a monthly fee to the Manager shall be made within the
ten days next following the day as of which such payment is so computed. Upon
any termination of this Agreement before the end of a month, the fee for such
part of that month shall be prorated according to the proportion that such
period bears to the full monthly period and shall be payable upon the date of
termination of this Agreement.
The value of the net assets of the Fund shall be determined
pursuant to the applicable provisions of the Articles of Incorporation and
By-laws of the Fund, as amended from time to time.
4. The Manager agrees that it will not make a short sale of
any capital stock of the Fund or purchase any share of the capital stock of the
Fund otherwise than for investment.
5. In executing transactions for the Fund and selecting
brokers or dealers, the Manager shall use its best efforts to seek the best
overall terms available. In assessing the best overall terms available for any
Fund transaction, the Manager shall consider on a continuing basis all factors
it deems relevant, including, but not limited to, breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of any commission for
the specific transaction. In selecting brokers or dealers to execute a
particular transaction and in evaluating the best overall terms available, the
Manager may consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Fund and/or other accounts over which the Manager or an affiliate exercises
investment discretion.
6. Nothing herein shall be construed as prohibiting the
Manager from providing investment advisory services to, or entering into
investment advisory agreements with, other clients (including other registered
investment companies), including clients which may invest in securities of
European issuers, or from utilizing (in providing such services) information
furnished to the Manager by advisors and consultants to the Fund and others; nor
shall anything herein be construed as constituting the Manager as an agent of
the Fund.
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Whenever the Fund and one or more other accounts or investment
companies advised by the Manager have available funds for investment,
investments suitable and appropriate for each shall be allocated in accordance
with procedures believed by the Manager to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in a manner
believed by the Manager to be equitable. The Fund recognizes that in some cases
this procedure may adversely affect the size of the position that may be
acquired or disposed of for the Fund. In addition, the Fund acknowledges that
the persons employed by the Manager to assist in the performance of the
Manager's duties hereunder will not devote their full time to such service and
nothing contained herein shall be deemed to limit or restrict the right of the
Manager or any affiliate of the Manager to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
7. The Manager may rely on information reasonably believed by
it to be accurate and reliable. Neither the Manager nor its officers, directors,
employees or agents shall be subject to any liability for any act or omission,
error of judgment or mistake of law, or for any loss suffered by the Fund, in
the course of, connected with or arising out of any services to be rendered
hereunder, except by reason of willful misfeasance, bad faith, or gross
negligence on the part of the Manager in the performance of its duties or by
reason of reckless disregard on the part of the Manager of its obligations and
duties under this Agreement. Any person, even though also employed by the
Manager, who may be or become an employee of the Fund and paid by the Fund shall
be deemed, when acting within the scope of his employment by the Fund, to be
acting in such employment solely for the Fund and not as an employee or agent of
the Manager.
8. This Agreement shall be in effect for an initial term
ending on September 30, 1999, and shall continue in effect from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually by the affirmative vote of (i) a majority of the members of the
Fund's Board of Directors who are not parties to this Agreement or interested
persons of any party to this Agreement, or of any entity regularly furnishing
investment advisory services with respect to the Fund pursuant to an agreement
with any party to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, and (ii) a majority of the Fund's Board of
Directors or the holders of a majority of the outstanding voting securities of
the Fund. This Agreement may nevertheless be terminated at any time without
penalty, on 60 days' written notice, by the Fund's Board of Directors, by vote
of holders of a majority of the outstanding voting securities of the Fund, or by
the Manager.
This Agreement shall automatically be terminated in the event
of its assignment, provided that an assignment to a corporate successor to all
or substantially all of the Manager's business or to a wholly-owned subsidiary
of such corporate successor which does not result in a change of actual control
or management of the Manager's business shall not be deemed to be an assignment
for the purposes of this Agreement. Any notice to the Fund or the Manager shall
be deemed given when received by the addressee.
9. This Agreement may not be transferred, assigned, sold or in
any manner hypothecated or pledged by either party hereto, except as permitted
under the 1940 Act or rules and regulations adopted thereunder. It may be
amended by mutual agreement, but only after authorization of such amendment by
the affirmative vote of (i) the holders of a majority of the outstanding voting
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securities of the Fund, and (ii) a majority of the members of the Fund's Board
of Directors who are not parties to this Agreement or interested persons of any
party to this Agreement, or of any entity regularly furnishing investment
advisory services with respect to the Fund pursuant to an agreement with any
party to this Agreement, cast in person at a meeting called for the purpose of
voting on such approval.
10. This Agreement shall be construed in accordance with the
laws of the State of New York, without giving effect to the conflicts of laws
principles thereof, provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act. As used herein, the terms "interested
person," "assignment," and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the 1940 Act.
11. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to produce or account for more
than one such counterpart.
12. This Agreement supersedes all prior investment advisory,
management, and/or administration agreements in effect between the Fund and the
Manager.
IN WITNESS WHEREOF, the parties have executed this Agreement
by their officers thereunto duly authorized as of the day and year first written
above.
XXXXXXX NEW EUROPE FUND, INC.
By: _________________________
Vice President
XXXXXXX XXXXXX INVESTMENTS, INC.
By: _________________________
Managing Director
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