SUB-ITEM 77Q: EXHIBIT
MANAGEMENT AGREEMENT
Agreement dated and effective as of November 5, 1997 between THE
CZECH REPUBLIC FUND, INC., a Maryland corporation (herein referred to as the
"Fund"), and Value Advisors LLC, a Delaware limited liability company (herein
referred to as the "Investment Manager").
1. Appointment of Investment Manager. The Investment Manager
hereby undertakes and agrees, upon the terms and conditions herein set forth,
to provide overall investment management services for the Fund, and in
connection therewith to (i) supervise the Fund's investment program, including
advising and consulting with the Fund's Board of Directors regarding the
Fund's overall investment strategy; (ii) make, in consultation with the Fund's
Board of Directors, investment strategy decisions for the Fund; (iii) manage
the investing and reinvesting of the Fund's assets; (iv) place purchase and
sale orders on behalf of the Fund; (v)advise the Fund with respect to all
matters relating to the Fund's use of leveraging techniques; (vi) provide or
procure the provision of research and statistical data to the Fund in relation
to investing and other matters within the scope of the investment objective
and limitations of the Fund; (vii) monitor the performance of the Fund's
outside service providers, including the Fund's administrator, transfer agent
and custodian; (viii) be responsible for compliance by the Fund with U.S
Federal, State and other applicable laws and regulations, and (ix) pay the
salaries, fees and expenses of such of the Fund's directors, officers or
employees who are directors, officers or employees of the Investment Manager
or any of its affiliates, except that the Fund will bear travel expenses or an
appropriate portion thereof of directors and officers of the Fund who are
directors, officers or employees of the Investment Manager, to the extent that
such expenses relate to attendance at meetings of the Board of Directors or
any committees thereof. The Investment Manager may delegate any of the
foregoing responsibilities to a third party with the consent of the Fund.
2. Expenses. In connection herewith, the Investment Manager
agrees to maintain a staff within its organization to furnish the above
services to the Fund. The Investment Manager shall bear all expenses arising
out of its duties hereunder.
Except as provided in Section 1 hereof, the Fund shall be
responsible for all of the Fund's expenses and liabilities, including
organizational and offering expenses (which include out-of-pocket expenses,
but not overhead or employee costs of the Investment Manager); expenses for
legal, accounting and auditing services; taxes and governmental fees; dues and
expenses incurred in connection with membership in investment company
organizations; fees and expenses incurred in connection with listing the
Fund's shares on any stock exchange; costs of printing and distributing
shareholder reports, proxy materials, prospectuses, stock certificates and
distribution of dividends; charges of the Fund's custodians and sub-
custodians, administrators and sub-administrators, registrars, transfer
agents, dividend disbursing agents and dividend reinvestment plan agents;
payment for portfolio pricing services to a pricing agent, if any;
registration and filing fees of the Securities and Exchange Commission;
expenses of registering or qualifying securities of the Fund for sale in the
various states; freight and other charges in connection with the shipment of
the Fund's portfolio securities; fees and expenses of non-interested directors
or non-interested members of any advisory or investment board, committee or
panel of the Fund; travel expenses or an appropriate portion thereof of
directors and officers of the Fund, or members of any advisory or investment
board, committee or panel of the Fund, to the extent that such expenses relate
to attendance at meetings of the Board of Directors or any committee thereof,
or of any such advisory or investment board, committee or panel; salaries of
shareholder relations personnel; costs of shareholders meetings; insurance;
interest; brokerage costs; and litigation and other extraordinary or non-
recurring expenses.
3. Transactions with Affiliates. The Investment Manager is
authorized on behalf of the Fund, from time to time when deemed to be in the
best interests of the Fund and to the extent permitted by applicable law, to
purchase and/or sell securities in which the Investment Manager or any of its
affiliates underwrites, deals in and/or makes a market and/or may perform or
seek to perform investment banking services for issuers of such securities.
The Investment Manager is further authorized, to the extent permitted by
applicable law, to select brokers (including any brokers affiliated with the
Investment Manager) for the execution of trades for the Fund.
4. Best Execution; Research Services. The Investment Manager
is authorized, for the purchase and sale of the Fund's portfolio securities,
to employ such dealers and brokers as may, in the judgment of the Investment
Manager, implement the policy of the Fund to obtain the best results taking
into account such factors as price, including dealer spread, the size, type
and difficulty of the transaction involved, the firm's general execution and
operational facilities and the firm's risk in positioning the securities
involved. Consistent with this policy, the Investment Manager is authorized
to direct the execution of the Fund's portfolio transactions to dealers and
brokers furnishing statistical information or research deemed by the
Investment Manager to be useful or valuable to the performance of its
investment advisory functions for the Fund. It is understood that in these
circumstances, as contemplated by Section 28(e) of the Securities Exchange Act
of 1934, the commissions paid may be higher than those which the Fund might
otherwise have paid to another broker if those services had not been provided.
Information so received will be in addition to and not in lieu of the services
required to be performed by the Investment Manager. It is understood that the
expenses of the Investment Manager will not necessarily be reduced as a result
of the receipt of such information or research. Research services furnished
to the Investment Manager by brokers who effect securities transactions for
the Fund may be used by the Investment Manager in servicing other investment
companies and accounts which it manages. Similarly, research services
furnished to the Investment Manager by brokers who effect securities
transactions for other investment companies and accounts which the Investment
Manager manages may be used by the Investment Manager in servicing the Fund.
It is understood that not all of these research services are used by the
Investment Manager in managing any particular account, including the Fund.
5. Remuneration. In consideration of the services to be rendered
by the Investment Manager under this Agreement, the Fund shall pay the
Investment Manager a monthly fee in United States dollars on the fifth
business day of each month for the previous month at an annual rate of 1.00%
of the Fund's average weekly net assets. If the fee payable to the Investment
Manager pursuant to this paragraph 5 begins to accrue before the end of any
month or if this Agreement terminates before the end of any month, the fee for
the period from such date to the end of such month or from the beginning of
such month to the date of termination, as the case may be, shall be prorated
according to the proportion which such period bears to the full month in which
such effectiveness or termination occurs. For purposes of calculating each
such monthly fee, the value of the Fund's net assets shall be computed at the
time and in the manner specified in the Registration Statement.
6. Representations and Warranties. The Investment Manager
represents and warrants that it is duly registered and authorized as an
investment adviser under the Investment Advisers Act of 1940, as amended, and
the Investment Manager agrees to maintain effective all requisite
registrations, authorizations and licenses, as the case may be, until the
termination of this Agreement.
7. Services Not Deemed Exclusive. The services provided
hereunder by the Investment Manager are not to be deemed exclusive and the
Investment Manager and any of its affiliates or related persons are free to
render similar services to others and to use the research developed in
connection with this Agreement for other clients or affiliates. Nothing
herein shall be construed as constituting the Investment Manager an agent of
the Fund.
8. Limit of Liability. The Investment Manager shall exercise its
best judgment in rendering the services in accordance with the terms of this
Agreement. The Investment Manager shall not be liable for any error of
judgment or mistake of law or for any act or omission or any loss suffered by
the Fund in connection with the matters to which this Agreement relates,
provided that nothing herein shall be deemed to protect or purport to protect
the Investment Manager against any liability to the Fund or its shareholders
to which the Investment Manager would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement ("disabling conduct"). The Fund will
indemnify the Investment Manager against, and hold it harmless from, any and
all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses), including any amounts paid in satisfaction of
judgments, in compromise or as fines or penalties, not resulting from
disabling conduct by the Investment Manager. Indemnification shall be made
only following: (i) a final decision on the merits by a court or other body
before whom the proceeding was brought that the Investment Manager was not
liable by reason of disabling conduct, or (ii) in the absence of such a
decision, a reasonable determination, based upon a review of the facts, that
the Investment Manager was not liable by reason of disabling conduct by (a)
the vote of a majority of a quorum of directors of the Fund who are neither
"interested persons" of the Fund nor parties to the proceeding ("disinterested
non-party directors"), or (b) an independent legal counsel in a written
opinion. The Investment Manager shall be entitled to advances from the Fund
for payment of the reasonable expenses (including reasonable counsel fees and
expenses) incurred by it in connection with the matter as to which it is
seeking indemnification in the manner and to the fullest extent permissible
under law. Prior to any such advance, the Investment Manager shall provide to
the Fund a written affirmation of its good faith belief that the standard of
conduct necessary for indemnification by the Fund has been met and a written
undertaking to repay any such advance if it should ultimately be determined
that the standard of conduct has not been met. In addition, at least one of
the following additional conditions shall be met: (a) the Investment Manager
shall provide a security in form and amount acceptable to the Fund for its
undertaking; (b) the Fund is insured against losses arising by reason of the
advance; or (c) a majority of a quorum of disinterested non-party directors,
or independent legal counsel, in a written opinion, shall have determined,
based on a review of facts readily available to the Fund at the time the
advance is proposed to be made, that there is reason to believe that the
Investment Manager will ultimately be found to be entitled to indemnification.
9. Duration and Termination. This Agreement shall remain in
effect until November 4, 1999 and shall continue in effect thereafter for
successive annual periods, 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" (as defined in the Investment
Company Act of 1940 (the "1940 Act")) of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) the Fund's
Board of Directors or the holders of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of the Fund.
Notwithstanding the above, this Agreement (a) may nevertheless be
terminated at any time, without penalty, by the Fund's Board of Directors, by
vote of holders of a majority of the outstanding voting securities (as defined
in the 0000 Xxx) of the Fund or by the Investment Manager, upon 60 days'
written notice delivered to each party hereto, and (b) shall automatically be
terminated in the event of its assignment (as defined in the 1940 Act). Any
such notice shall be deemed given when received by the addressee.
10. Governing Law. This Agreement shall be governed, construed
and interpreted in accordance with the laws of the State of New York,
provided, however, that nothing herein shall be construed as being
inconsistent with the 1940 Act.
11. Notices. Any notice hereunder shall be in writing and shall
be delivered in person or by telex or facsimile (followed by delivery in
person) to the parties at the addresses set forth below.
If to the Fund:
The Czech Republic Fund, Inc.
Oppenheimer Tower
One World Financial Center
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxx
If to the Investment Manager:
Value Advisors LLC
c/o PIMCO Funds Distribution Company
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxxx
or to such other address as to which the recipient shall have informed the
other party in writing.
Unless specifically provided elsewhere, notice given as provided above shall
be deemed to have been given, if by personal delivery, on the day of such
delivery, and, if by facsimile and mail, on the date on which such
facsimile or mail is sent.
12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto caused their duly
authorized signatories to execute this Agreement as of the day and year first
written above.
THE CZECH REPUBLIC FUND, INC.
By:/s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: Secretary
VALUE ADVISORS LLC
By:/s/ Xxxxxxx Xxxxxxxx
Name: Xxxxxxx Xxxxxxxx
Title: Executive Vice President
