INVESTMENT ADVISORY AGREEMENT
Agreement, dated and effective as of May 15, 1996, between Xxxxxxxx Asian
Growth Fund, Inc., a Maryland corporation (herein referred to as the "Fund") and
Xxxxxxxx Capital Management International Inc., a New York corporation (herein
referred to as the "Investment Adviser").
W I T N E S S E T H:
WHEREAS, the Fund is a non-diversified closed-end management company
registered under the Investment Company Act of 1940, as amended (the "Investment
Company Act");
WHEREAS, the Investment Adviser provides investment advice and is registered
with the Securities and Exchange Commission (the "SEC") as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Advisers Act") and
is registered with the United Kingdom Investment Management Regulatory
Organisation ("IMRO");
WHEREAS, the Fund has previously retained the Investment Adviser to render
investment advisory services to or on behalf of the Fund pursuant to an
Investment Advisory Agreement dated and effective as of December 21, 1993 (the
"Agreement"); and
WHEREAS, the Fund and the Investment Adviser desire to amend the Agreement
in order to revise the provisions relating to the compensation of the Investment
Adviser;
NOW, THEREFORE, in consideration of the promises and covenants hereinafter
contained, the Fund and the Investment Adviser hereby agree as follows:
1. ENGAGEMENT OF THE INVESTMENT ADVISER. The Fund hereby employs the
Investment Adviser to act as the investment adviser to the Fund and to provide
the investment advisory services described below, subject to the supervision of
the Board of Directors of the Fund, 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 to render such services and to
assume the obligations herein set forth for the compensation provided for
herein. The Investment Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority hereunder to act for or represent the Fund in any
way or otherwise be deemed an agent of the Fund.
2. INVESTMENT ADVISORY SERVICES. Subject always to the Fund's Articles of
Incorporation, its Bylaws and its registration statement filed on Form N-2 with
the SEC, as such registration statement may be amended from time to time (the
"Registration Statement"), the Investment Adviser shall act as investment
adviser to the Fund and as such shall furnish continuously an investment program
for the Fund consistent with the Fund's investment objective, policies and
restrictions. In the performance of its duties hereunder, the Investment Adviser
shall:
(a) determine from time to time which securities shall be purchased, sold or
exchanged and what portion of the assets of the Fund shall be held in the
various securities and assets in which the Fund invests or in cash;
(b) make decisions for the Fund with respect to foreign currency matters and
foreign exchange contracts, having regard to foreign exchange controls, if any;
(c) advise the Fund in connection with policy decisions to be made by its
Board of Directors or any committee thereof with respect to its investments and,
as requested, furnish the Fund with research, economic and statistical data in
connection with its investments and investment policies;
(d) submit such reports relating to the valuation of the Fund's securities
as the Fund's Board of Directors or the Fund's administrator may reasonably
request;
(e) place orders for the purchase, sale or exchange of portfolio assets for
the Fund's accounts with brokers or dealers selected by the Investment Adviser;
provided, however, that in connection with the placing of such orders and the
selection of such brokers or dealers the Investment Adviser shall seek to
obtain execution and pricing within the policy guidelines established by the
Fund's Board of Directors and set forth in the Registration Statement of the
Fund as in effect from time to time;
(f) provide information in the possession of the Investment Adviser to the
Fund's administrator as the Fund's administrator may request to maintain and
preserve the records required by the Investment Company Act;
(g) obtain and evaluate such information relating to economies, industries,
businesses, securities markets and securities as the Investment Adviser may deem
necessary or useful in the discharge of its duties hereunder; and
(h) from time to time, or at any time requested by the Fund's Board of
Directors, make reports to the Fund concerning its performance of the foregoing
services and furnish advice and recommendations with respect to other aspects of
the business and affairs of the Fund.
3. ALLOCATION OF CHARGES AND EXPENSES.
(a) The Investment Adviser shall pay for maintaining its staff and personnel
necessary to perform its obligations under this Agreement and shall, at its own
expense, maintain the office space, facilities, equipment and personnel that are
reasonably necessary to carry out its obligations hereunder. In addition, the
Investment Adviser shall pay the reasonable salaries, fees and expenses of such
of the Fund's officers and employees (including the Fund's share of payroll
taxes) and any fees and expenses of such of the Fund's directors as are
directors, officers or employees of the Investment Adviser, provided, however,
that the Fund, and not the Investment Adviser, shall bear out-of-pocket travel
expenses of directors and officers of the Fund who are directors, officers or
employees of the Investment Adviser to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Fund or any committees
thereof.
(b) The Fund assumes and shall pay or cause to be paid fees to the
Investment Adviser and the Fund's administrator and all other expenses of the
Fund including, without limitation: (i) charges and expenses of any custodian,
subcustodian or depositary appointed by the Fund for the safekeeping of its
cash, securities or property and fees and expenses of any transfer agent,
dividend paying agent and registrar for the Fund; (ii) charges and expenses of
accounting and auditing; (iii) expenses and fees associated with registering and
qualifying securities issued by the Fund for sale with the SEC and in various
states and foreign jurisdictions and expenses of preparing share certificates
and other expenses in connection with the issuance, offering or underwriting of
securities issued by the Fund, including stock exchange listing fees and freight
insurance and other charges in connection with the shipment of the Fund's
portfolio securities; (iv) expenses of stationery, preparing, printing and
distributing reports, notices and dividends and other documents to the Fund's
shareholders, including, without limitation, expenses of tender offers for and
repurchases of securities issued by the Fund, in each case, to the extent not
borne by the Fund's administrator; (v) interest on any indebtedness of the Fund;
(vi) governmental fees and taxes of the Fund, including any stock transfer tax
payable on a portfolio security of the Fund; (vii) brokerage commissions and
other expenses incurred in acquiring or disposing of the Fund's portfolio
securities; (viii) costs of directors' and officers' insurance and fidelity
bonds; (ix) compensation and expenses of the directors who are not interested
persons of the Investment Adviser, including out-of-pocket travel expenses; (x)
costs and expenses incidental to holding meetings of the Board of Directors, or
any committees thereof, or meetings of shareholders including out-of-pocket
travel expenses of directors and officers of the Fund who are directors,
officers or employees of the Investment Adviser to the extent that such expenses
relate to attendance at such meetings; (xi) fees for legal, auditing and
consulting services and litigation expenses, including settlement or arbitration
costs; (xii) dues and expenses incurred in connection with membership in
investment company organizations and expenses relating to investor and public
relations; and (xiii) costs, expenses and fees incurred in connection with
obtaining, maintaining, refinancing or repaying indebtedness. It is understood
that the organizational, offering and marketing
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expenses, including accounting, legal and printing expenses and registration
fees incurred by the Investment Adviser on behalf of the Fund in connection with
the initial public offering of the Fund's securities will be reimbursed to the
Investment Adviser by the Fund within the limitations set forth in the
Prospectus of the Fund contained in the Fund's Registration Statement.
4. COMPENSATION OF THE INVESTMENT ADVISER.
(a) For the services rendered, the equipment and facilities furnished and
expenses assumed by the Investment Adviser, commencing on the date of
effectiveness hereof, the Fund shall pay in arrears to the Investment Adviser as
of the end of each calendar month a fee in U.S. dollars at an annual rate of (i)
1.00% of the Fund's average weekly net assets (I.E., the average weekly value of
the total assets of the Fund minus the sum of liabilities of the Fund) up to and
including $300 million; and (ii) 0.85% of the Fund's average weekly net assets
in excess of $300 million. For purposes of this calculation, average weekly net
assets is determined at the end of each month on the basis of the average net
assets of the Fund for each week during the month. The net assets for each
weekly period are determined by averaging the net assets at the last business
day of such weekly period with the net assets at the last business day of the
immediately preceding weekly period. 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 that part of the month that this Agreement is in
effect shall be subject to a pro rata adjustment based on the number of days
elapsed in the relevant month as a percentage of the total number of days in
such month in order to permit the fee to be calculated in a manner consistent
with the calculation of the fee as set forth above. During any period when the
determination of net asset value is suspended by the Board of Directors of the
Fund, the average net asset value of a share for the last week prior to such
suspension shall for this purpose be deemed to be the average net asset value at
the close of each succeeding week until it is again determined.
(b) EXPENSE LIMITATIONS. In the event the operating expenses of the Fund,
including amounts payable to the Investment Adviser pursuant to subsection (a)
hereof, for any fiscal year of the Fund ending on a date on which this Agreement
is in effect, exceed the expense limitations applicable to the Fund imposed by
applicable state securities laws or regulations thereunder, as such limitations
may be raised or lowered from time to time, the Investment Adviser shall reduce
its management fee by the extent of such excess and, if required pursuant to any
such laws or regulations, will reimburse the Fund in the amount of such excess;
provided, however, to the extent permitted by law, there shall be excluded from
such expenses the amount of any interest, taxes, brokerage commissions and
extraordinary expenses (including but not limited to legal claims and
liabilities and litigation costs, including settlement or arbitration costs, and
any indemnification related thereto) paid or payable by the Fund. Whenever the
expenses of the Fund exceed a pro rata portion of the applicable annual expense
limitations, the estimated amount of reimbursement under such limitations shall
be applicable as an offset against the monthly payment of the management fee due
to the Investment Adviser. Should two or more such expense limitations be
applicable as at the end of the last business day of the month, that expense
limitation which results in the largest reduction in the Investment Adviser's
fee shall be applicable.
5. LIMITATION OF LIABILITY OF THE INVESTMENT ADVISER.
(a) 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 execution and management of the Fund, 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 Section 5, the term "Investment Adviser" shall include any affiliates of
the Investment Adviser performing services for the Fund contemplated hereby and
directors, officers and employees of the Investment Adviser as well as that
corporation itself.
(b) The Investment Adviser shall not be liable for any losses caused by
disturbances of its operations by virtue of force majeure, war, riot, or damage
caused by nature or due to other events for which it is not
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responsible (E.G., strike, lock-out or losses caused by the imposition of
foreign exchange controls, expropriation of assets or other acts of domestic or
foreign authorities).
(c) The presence of exculpatory language in this Agreement shall not be
deemed by the Fund, the Investment Adviser or any other party appointed pursuant
to this Agreement, including without limitation any custodian, as in any way
limiting causes of action and remedies which may, notwithstanding such language,
be available to the Fund either under common law or statutory law principles
applicable to fiduciary relationships or under the federal securities laws.
6. OTHER ACTIVITIES OF THE INVESTMENT ADVISER AND ITS AFFILIATES.
(a) Nothing herein contained shall prevent the Investment Adviser or any of
its affiliates from engaging in any other business or from acting as investment
adviser or investment manager for any other person or entity, whether or not
having investment policies or portfolios similar to that of the Fund; and it is
specifically understood that officers, directors and employees of the Investment
Adviser and its affiliates may continue to engage in providing portfolio
management services and advice to other investment companies, whether or not
registered, and to other investment advisory clients. When other clients of the
Investment Adviser desire to purchase or sell a security at the same time such
security is purchased or sold for the Fund, such purchases and sales will, to
the extent feasible, be allocated among the Fund and such clients in a manner
believed by the Investment Adviser to be equitable to the Fund and such clients.
(b) The Investment Adviser reserves the right to grant the use of the name
"XXXXXXXX," or any derivative thereof, to any other investment company or
business enterprise. The Investment Adviser reserves the right to withdraw from
the Fund the use of the name "XXXXXXXX" and the use of its registered service
xxxx; at such time of withdrawal of the right to use the name "XXXXXXXX," the
Investment Adviser agrees that the question of continuing this Agreement may be
submitted to a vote of the Fund's shareholders. In the event of such withdrawal
or the termination of this Agreement, for any reason, the Fund will, on the
written request of the Investment Adviser, take such action as may be necessary
to change its name and eliminate all reference to the word "XXXXXXXX" in any
form, and will no longer use such registered service xxxx.
7. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall remain
in force until the second anniversary of the effective date of this Agreement
first set forth above and from year to year thereafter, but only so long as such
continuance is approved at least annually by (a) the vote of a majority of the
directors of the Fund who are not parties to the Agreement or interested persons
of the Investment Adviser or interested persons of any such party (other than as
directors of the Fund), cast in person at a meeting called for the purpose of
voting on such approval, and (b) the vote of either (i) the Board of Directors
of the Fund or (ii) a majority of the outstanding voting securities of the Fund.
This Agreement may be terminated at any time, without payment of any penalty, by
the Fund either by the vote of the Board of Directors of the Fund or by the vote
of a majority of the outstanding voting securities of the Fund on sixty (60)
days' written notice to the Investment Adviser, and by the Investment Adviser on
sixty (60) days' written notice to the Fund. This Agreement shall automatically
terminate in the event of its assignment by either party. In interpreting the
provisions of this Section 7, the definitions contained in Section 2(a) of the
Investment Company Act (particularly the definitions of "assignment,"
"interested person" and "voting security") shall be applied.
8. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment, transfer, assignment,
sale, hypothecation or pledge of this Agreement shall be effective until
approved by the vote of: (a) the Board of Directors, including a majority of the
directors who are not parties to the Agreement or interested persons of the
Investment Adviser or interested persons of any such party (other than as
directors of the Fund), cast in person at a meeting called for the purpose of
voting on such approval and (b) a majority of the outstanding voting securities
of the Fund.
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9. NOTICE. Any notice or other communication required to be given pursuant
to this Agreement shall be in writing or by fax, with hard copy to follow, and
shall be effective upon receipt. Notices and communications shall be given: (a)
to the Fund at c/x Xxxxxxxx Capital Management International Inc., 000 Xxxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx x00x0, Attention: Xxxxx X. Luckyn Xxxxxx
and (b) to the Investment Adviser at the same address.
10. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York and the applicable provisions of the
Investment Company Act. To the extent 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.
11. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
The Investment Adviser confirms that the Fund is a "business Customer" as
defined by IMRO and is being treated with the same standard of care as an
employee benefit plan subject to regulation under the Employment Retirement
Income Security Act of 1974, as amended.
The Fund confirms that it has been provided with independent legal advice on
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
XXXXXXXX ASIAN GROWTH FUND, INC.
By: /s/ XXXXX X. LUCKYN-XXXXXX
-----------------------------------------
Name:
Title: President
XXXXXXXX CAPITAL MANAGEMENT
INTERNATIONAL INC.
By: /s/ XXXXX XXXXXX
-----------------------------------------
Name:
Title: Senior Vice President and Director
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