INVESTMENT ADVISORY, MANAGEMENT AND
ADMINISTRATION AGREEMENT
AGREEMENT, dated and effective as of September 7, 1998 between
THE BRAZIL 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"), and to furnish or
cause to be furnished all required reports or other information under Brazilian
securities laws, 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 by the Fund or by
the Manager as a Brazilian administrator or adviser of 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. In connection with the rendering of the services required
under paragraph 1, the Fund and the Manager have entered into an agreement dated
October 30, 1996 with Banco de Boston S.A., as amended from time to time, to
furnish administrative services to the Manager pursuant to such agreement. The
Manager may also contract with or consult with such banks, other securities
firms or other parties in Brazil or elsewhere as it may deem appropriate to
obtain information and advice, including investment recommendations, advice
regarding economic factors and trends, advice as to currency exchange matters,
and clerical and accounting services and other assistance, but any fee,
compensation or expenses to be paid to any such parties shall be paid by the
Manager, and no obligation shall be incurred on the Fund's behalf in any such
respect.
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 1.20% per annum of the value of the Fund's average weekly net assets up
to $150 million; 1.05% per annum of the value of the Fund's average weekly net
assets from $150 million up to and including $300 million, 1.00% per annum of
the Fund's average weekly net assets from $300 million up to and including $500
million and 0.90% per annum of the Fund's average weekly net assets in excess of
$500 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.
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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
Brazilian issuers, or from utilizing (in providing such services) information
furnished to the Manager by any Brazilian administrator and others as
contemplated by sections 1 and 2 of this Agreement 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.
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
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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 remain in effect for an initial term
ending on September 30, 1999, and shall continue in effect 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 but
only after written notice to the Fund and to the Comissao de Valores Mobiliarios
of not less than 60 days (or such longer period as may be required under the
Regulations of the National Monetary Council).
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
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.
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IN WITNESS WHEREOF, the parties have executed this Agreement
by their officers thereunto duly authorized as of the day and year first written
above.
THE BRAZIL FUND, INC.
By: _________________________
Vice President
XXXXXXX XXXXXX INVESTMENTS, INC.
By: _________________________
Managing Director
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