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.
Xxxxx Xxxxxx Investment Management
(Bermuda) Limited
January 1, 1996
Page 2
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 determi-
nation 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 re-
sponsibilities 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
Xxxxx Xxxxxx Investment Management
(Bermuda) Limited
January 1, 1996
Page 3
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 ex-
penses 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
Xxxxx Xxxxxx Investment Management
(Bermuda) Limited
January 1, 1996
Page 4
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, 1995 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
Xxxxx Xxxxxx Investment Management
(Bermuda) Limited
January 1, 1996
Page 5
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 "in-
terested persons" when used herein shall have the respective meanings
specified in the Investment Company Act of 1940 as 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 out-
standing 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 Agree-
ment, LGM-HK shall remain ultimately responsible for all of its
obligations under the Investment Advisory Agreement.
11. Miscellaneous. The captions in this Agreement are in-
cluded 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 counterparts,
Xxxxx Xxxxxx Investment Management
(Bermuda) Limited
January 1, 1996
Page 6
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:___________________________
The foregoing Agreement is hereby
agreed to as of the date hereof.
XXXXX XXXXXX INVESTMENT
MANAGEMENT (BERMUDA) LIMITED
By:___________________________
