Xxxxx Xxxxxx Management (Hong Kong) Limited
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxx Xxxx
January 1, 1996
Xxxxx Xxxxxx Investment Management (Bermuda) Limited
Xxxxx Xxxxx,
00 Xxxxx Xxxxxx
Xxxxxxxx, XX00, Xxxxxxx
Re: Service Agreement
Ladies and Gentlemen:
Xxxxx Xxxxxx Management (Hong Kong) Limited ("LGM-HK") is the
investment adviser to Greater China Growth Portfolio (the "Portfolio") under an
Investment Advisory Agreement dated October 27, 1992 between LGM-HK and the
Portfolio (the "Investment Advisory Agreement"). Subject to the approval of the
Board of Trustees of the Portfolio, LGM-HK has selected Xxxxx Xxxxxx Investment
Management (Bermuda) Limited ("LGIM-B"), a company under common control with
LGM-HK, to provide portfolio management services for the Portfolio. You agree
that you are willing to provide such services for the Portfolio and,
accordingly, LGM-HK and you agree as follows:
1. Portfolio Management Duties of LGIM-B. LGM-HK hereby employs LGIM-B
to provide continuing and suitable portfolio management services to the
Portfolio and to manage the investment and reinvestment of the assets of the
Portfolio, subject to the supervision of LGM-HK and the Trustees of the
Portfolio, for the period and on the terms set forth in this Agreement.
LGIM-B hereby accepts such employment, and undertakes to afford to the
Portfolio the advice and assistance of LGIM-B's organization in the choice of
investments and in the purchase and sale of securities for the Portfolio and to
furnish for the use of the Portfolio office space and all necessary office
facilities, equipment and personnel for servicing the investments of the
Portfolio and to pay the salaries and fees of all officers and Trustees of the
Portfolio who are members of LGIM-B's organization and all personnel of LGIM-B
performing services relating to research and investment activities. LGIM-B shall
for all purposes herein be deemed to be an independent contractor and shall,
except as otherwise expressly provided or authorized, have no authority to act
for or represent the Portfolio in any way or otherwise be deemed an agent of the
Portfolio.
LGIM-B shall provide the Portfolio with such portfolio management
services and supervision as LGM-HK may from time to time consider necessary for
the proper supervision of the Portfolio's investments. LGIM-B shall furnish
continuously an investment program and shall determine from time to time what
securities shall be purchased, sold or exchanged and what portion of the
Portfolio's assets shall be held uninvested, subject always to the applicable
restrictions of the Declaration of Trust, By-Laws and registration statement of
the Portfolio under the Investment Company Act of 1940, all as from time to time
amended. Should the Trustees of the Portfolio at any time, however, make any
specific determination as to investment policy for the Portfolio and notify
LGIM-B thereof in writing, LGIM-B shall be bound by such determination for the
period, if any, specified in such notice or until similarly notified that such
determination has been revoked. LGIM-B shall take, on behalf of the Portfolio,
all actions which it deems necessary or desirable to implement the investment
policies of the Portfolio.
LGIM-B shall place all orders for the purchase or sale of portfolio
securities for the account of the Portfolio with brokers or dealers or banks or
firms or other persons selected by LGIM-B, and to that end LGIM-B is authorized
as the agent of LGM-HK and the Portfolio to give instructions to the custodian
of the Portfolio as to deliveries of securities and payment of cash for the
account of the Portfolio. In connection with the selection of such brokers or
dealers or banks or firms or other persons and the placing of such orders,
LGIM-B shall use its best efforts to seek to execute security transactions at
prices which are advantageous to the Portfolio and (when a disclosed commission
is being charged) at reasonably competitive commission rates. In selecting
brokers or dealers qualified to execute a particular transaction, brokers or
dealers may be selected who also provide brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934)
to LGIM-B and LGIM-B is expressly authorized to pay any broker or dealer who
provides such brokerage and research services a commission for executing a
security transaction which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if LGIM-B
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
overall responsibilities which LGIM-B and its affiliates have with respect to
accounts over which they exercise investment discretion. Subject to the
requirement set forth in the second sentence of this paragraph, LGIM-B is
authorized to consider, as a factor in the selection of any broker or dealer
with whom purchase or sale orders may be placed, the fact that such broker or
dealer has sold or is selling shares of EV Classic Greater China Growth Fund, EV
Marathon Greater China Growth Fund, EV Traditional Greater China Growth Fund, or
any other investment company or series thereof that invests substantially all of
its assets in the Portfolio.
LGIM-B shall not be responsible for providing certain special
administrative services to the Portfolio under this Agreement. Xxxxx Xxxxx
Management, in its capacity as Administrator of the Portfolio, shall be
responsible for providing such services to the Portfolio under the Portfolio's
separate Administration Agreement with the Administrator.
2. Compensation. For all services to be rendered and expenses paid or
assumed by you as herein provided, LGM-HK will cause the Portfolio to pay you
monthly in arrears on the last business day of each month the entire amount of
the advisory fee that LGM-HK is entitled to receive from the Portfolio.
3. Allocation of Charges and Expenses. It is understood that the Portfolio
will pay all its expenses other than those expressly stated to be payable by
LGIM-B hereunder, which expenses payable by the Portfolio shall include, without
implied limitation, (i) expenses of maintaining the Portfolio and continuing its
existence, (ii) registration for the Portfolio under the Investment Company Act
of 1940, (iii) commissions, fees and other expenses connected with the
acquisition, holding and disposition of securities and other investments, (iv)
auditing, accounting and legal expenses, (v) taxes and interest, (vi)
governmental fees, (vii) expenses of issue, sale and redemption of Interests in
the Portfolio, (viii) expenses of registering and qualifying the Portfolio and
Interests in the Portfolio under federal and state securities laws and of
preparing and printing registration statement or other offering documents or
memoranda for such purposes and for distributing the same to Holders and
investors, and fees and expenses of registering and maintaining registrations of
the Portfolio and of the Portfolio's placement agent as broker-dealer or agent
under state securities laws, (ix) expenses of reports and notices to Holders and
of meetings of Holders and proxy solicitations therefor, (x) expenses of reports
to governmental officers and commissions, (xi) insurance expenses, (xii)
association membership dues, (xiii) fees, expenses and disbursements of
custodians and subcustodians for all services to the Portfolio (including
without limitation safekeeping of funds, securities and other investments,
keeping of books, accounts and records, and determination of net asset values,
book capital, account balances and tax capital account balances), (xiv) fees,
expenses and disbursements of transfer agents, dividend disbursing agents,
Holder servicing agents and registrars for all services to the Portfolio, (xv)
expenses for servicing the accounts of Holders, (xvi) any direct charges to
Holders approved by the Trustees of the Portfolio, (xvii) compensation and
expenses of Trustees of the Portfolio who are not members of LGIM-B's
organization, (xviii) the administration fees payable by the Portfolio under any
administration or similar agreement to which the Portfolio is a party, and
(xvix) such non-recurring items as may arise, including expenses incurred in
connection with litigation, proceedings and claims and the obligation of the
Portfolio to indemnify its Trustees, officers and Holders with respect thereto.
4. Other Interests. It is understood that Trustees and officers of the
Portfolio and Holders of Interests in the Portfolio are or may be or become
interested in LGIM-B as directors, officers, employees, shareholders or
otherwise and that directors, officers, employees and shareholders of LGIM-B are
or may be or become similarly interested in the Portfolio, and that LGIM-B may
be or become interested in the Portfolio as a shareholder or otherwise. It is
also understood that directors, officers, employees and shareholders of LGIM-B
may be or become interested (as directors, trustees, officers, employees,
shareholders or otherwise) in other companies or entities (including, without
limitation, other investment companies) which LGIM-B may organize, sponsor or
acquire, or with which it may merge or consolidate, and that LGIM-B or its
subsidiaries or affiliates may enter into advisory or management agreements or
other contracts or relationships with such other companies or entities.
5. Limitation of Liability of LGIM-B. The services of LGIM-B to LGM-HK and
the Portfolio are not deemed to be exclusive, LGIM-B being free to render
services to others and engage in other business activities. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of LGIM-B, LGIM-B shall not be
subject to liability to LGM-HK, the Portfolio or to any Holder for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses which may be sustained in the acquisition, holding or disposition
of any security or other investment.
6. Duration and Termination of this Agreement. This Agreement shall become
effective on January 1, 1996 and, unless terminated as herein provided, shall
remain in full force and effect through and including February 29, 1996 and
shall continue in full force and effect indefinitely thereafter, but only so
long as such continuance after February 29, 1996 is specifically approved at
least annually (i) by the Board of Trustees of the Portfolio or by vote of a
majority of the outstanding voting securities of the Portfolio and (ii) by the
vote of a majority of those Trustees of the Portfolio who are not interested
persons of LGM-HK, LGIM-B or the Portfolio cast in person at a meeting called
for the purpose of voting on such approval.
The Portfolio or either party hereto may, at any time on sixty (60)
days' prior written notice to the other, terminate this Agreement without the
payment of any penalty, by action of the Trustees of the Portfolio or the
directors of LGM-HK or LGIM-B, as the case may be, and the Portfolio may, at any
time upon such written notice to LGM-HK or LGIM-B, terminate this Agreement by
vote of a majority of the outstanding voting securities of the Portfolio. This
Agreement shall terminate automatically in the event of its assignment or the
assignment or termination of the Investment Advisory Agreement.
7. Amendments of the Agreement. This Agreement may be amended by a writing
signed by both parties hereto, provided that no amendment to this Agreement
shall be effective until approved (I) by the vote of a majority of those
Trustees of the Portfolio who are not interested persons of LGM-HK, LGIM-B or
the Portfolio cast in person at a meeting called for the purpose of voting on
such approval, and (ii) by vote of a majority of the outstanding voting
securities of the Portfolio.
8. Limitation of Liability. LGIM-B expressly acknowledges the provision in
the Declaration of Trust of the Portfolio (Sections 5.2 and 5.6) limiting the
personal liability of the Trustees and officers of the Portfolio, and LGIM-B
hereby agrees that it shall not have recourse to or seek satisfaction from any
Trustee or officer of the Portfolio for payment of claims or obligations as
between the Portfolio and LGIM-B.
9. Certain Definitions. The terms "assignment" and "interested persons"
when used herein shall have the respective meanings specified in the Investment
Company Act of 1940 now in effect or as hereafter amended subject, however, to
such exemptions as may be granted by the Securities and Exchange Commission by
any rule, regulation or order. The term "vote of a majority of the outstanding
voting securities" shall mean the vote, at a meeting of Holders, of the lesser
of (a) 67 per centum or more of the Interests in the Portfolio present or
represented by proxy at the meeting if the Holders of more than 50 per centum of
the outstanding Interests in the Portfolio are present or represented by proxy
at the meeting, or (b) more than 50 per centum of the outstanding Interests in
the Portfolio. The terms "Holders" and "Interests" when used herein shall have
the respective meaning, specified in the Declaration of Trust of the Portfolio.
10. Responsibility of LGM-HK. Notwithstanding this Agreement, LGM-HK shall
remain ultimately responsible for all of its obligations under the Investment
Advisory Agreement.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more conterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
Very truly yours,
XXXXX XXXXXX MANAGEMENT
(HONG KONG) LIMITED
By: /s/ Xxxxxxx Xxxxxx Xxxxxxx Xxxx
Xxxxxxx Xxxxxx Xxxxxxx Xxxx
The foregoing Agreement is hereby agreed to as of the date hereof.
XXXXX XXXXXX INVESTMENT
MANAGEMENT (BERMUDA) LIMITED
By: /s/ Xxx. Xxxxxx Xxxxx Xxxxxx
Xxx. Xxxxxx Xxxxx Xxxxxx
