RESEARCH AND ADVISORY AGREEMENT
Xxxxxxx Xxxxxx Investments, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
December 31, 1997
Daewoo Capital Management Co., Ltd.
00-0, Xxxxxx-xxxx
Xxxxxxxxxx-xx
Xxxxx, Xxxxx
Dear Sirs:
We have entered into an Investment Advisory, Management and
Administration Agreement (the "Management Agreement") dated as of December 31,
1997 with The Korea Fund, Inc., a Maryland corporation (the "Fund"), pursuant to
which we act as investment adviser to and manager of the Fund. A copy of the
Management Agreement has been previously furnished to you. In furtherance of
such duties to the Fund, and with the approval of the Fund, we wish to avail
ourselves of your investment advisory services. Accordingly, with the acceptance
of the Fund, we hereby agree with you as follows for the duration of this
Agreement:
1. You agree to furnish to us such information, investment
recommendations, advice and assistance, as we shall from time to time reasonably
request. In that connection, you agree to continue to maintain a separate staff
within your organization to furnish such services exclusively to us. In
addition, for the benefit of the Fund, you agree to pay the fees and expenses of
any directors or officers of the Fund who are directors, officers or employees
of you or of any of your affiliates, except that the Fund shall bear travel
expenses of one (but not more than one) director, officer or employee of you or
any of your affiliates who is not a resident in the United States to the extent
such expenses relate to his attendance as a director at meetings of the Board of
Directors of the Fund in the United States and shall also bear the travel
expenses of any other director, officer or employee of you or of any of your
affiliates who is resident in the United States to the extent such expenses
relate to his attendance as a director at meetings of the Board of Directors
outside of the United States.
2. We agree to pay in United States dollars to you, as compensation for
the services to be rendered by you hereunder, a monthly fee which, on an annual
basis, is equal to 0.2875% per annum of the value of the Fund's net assets up to
and including $50 million; 0.2750% per annum of the value of the Fund's net
assets on the next $50 million of assets; 0.2500% per annum of the value of the
Fund's net assets on the next $250 million of assets; 0.2375% per annum of the
value of the Fund's net assets on the next $400 million of assets; and 0.2250%
per annum of the value of the Fund's net assets in excess of $750 million. For
purposes of computing the monthly fee, the value of the net assets of the Fund
shall be determined as of the close of business on the last business day of each
month; provided, however, that the fee for the period from the end of the last
month ending prior to termination of this Agreement, for whatever reason, to
date of termination shall be based on the value of the net assets of the Fund
determined as of the close of business on the date of termination and the fee
for such period through the end of the month in which such proceeds are received
shall be prorated according to the proportion which such period bears to a full
monthly period. Each payment of a monthly fee shall be made by us to you within
the fifteen days next following the day as of which such payment is so computed.
The value of the net assets of the Fund shall be determined pursuant to
applicable provision of the Certificate of Incorporation and By-laws of the
Fund.
We agree to work with you, in order to make our relationship as
productive as possible for the benefit of the Fund, to further the development
of your ability to provide the services contemplated by Section 1. To this end
we agree to work with you to assist you in developing your research techniques,
procedures and analysis. We have furnished you with informal memoranda, copies
of which are attached to this Agreement, reflecting our understanding of our
working procedures with you, which may be revised as you work with us pursuant
to this Agreement. We agree not to furnish, without your consent, to any person
other than our personnel and directors and representatives of the Fund any
tangible research material that is prepared by you, that is not publicly
available, and that has been stamped or otherwise clearly indicated by you as
being confidential.
3. You agree that you 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.
4. Your services to us are not to be deemed exclusive and you are free
to render similar services to others, except as otherwise provided in Section 1
hereof.
5. Nothing herein shall be construed as constituting you an agent of us
or of the Fund.
6. You represent and warrant that you are registered as an investment
adviser under the U.S. Investment Advisers Act of 1940, as amended. You agree to
maintain such registration in effect during the term of this Agreement.
7. Neither you nor any affiliate of yours shall receive any
compensation in connection with the placement or execution of any transaction
for the purchase or sale of securities or for the investment of funds on behalf
of the Fund, except that you or your affiliates may receive a commission, fee or
other remuneration for acting as broker in connection with the sale of
securities to or by the Fund, if permitted under the U.S.
Investment Company Act of 1940, as amended.
8. We and the Fund agree that you may rely on information reasonably
believed by you to be accurate and reliable. We and the Fund further agree that
neither you nor your officers, directors, employees or agents shall be subject
to any liability for any act or omission 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 in the performance of your duties or
by reason of reckless disregard of your obligations and duties under this
Agreement.
9. This Agreement shall remain in effect for a period of one year from
the day and date first written above 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 interested persons of the Fund, you or us, 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, by the Fund's Board of Directors or by
vote of holders of a majority of the outstanding voting securities of the Fund,
upon 60 days' written notice delivered or sent by registered mail, postage
prepaid, to you, at your address given above or at any other address of which
you shall have notified us in writing, or by you upon 60 days' written notice to
us and to the Fund, and shall automatically be terminated in the event of its
assignment or of the termination (due to assignment or otherwise) of the
Management Agreement, provided that an assignment to a corporate successor to
all or substantially all of your business or to a wholly-owned subsidiary of
such corporate successor which does not result in a change of actual control or
management of your business shall not be deemed to be an assignment for purposes
of this Agreement. Any such notice shall be deemed given when received by the
addressee.
10. This Agreement may not be transferred, assigned, sold or in any
manner hypothecated or pledged by either party hereto. 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 interested persons of the Fund, you or us, cast in
person at a meeting called for the purpose of voting on such approval.
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11. Any notice hereunder shall be in writing and shall be delivered in
person or by facsimile (followed by mailing such notice, air mail postage paid,
the day on which such facsimile is sent).
Addressed
If to Xxxxxxx Xxxxxx Investments, Inc., to:
Xxxxxxx Xxxxxx Investments, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: President
(Facsimile No. 212-319-7813)
If to Daewoo Capital Management Co., Ltd., to:
00-0, Xxxxxx-xxxx
Xxxxxxxxxx-xx
Xxxxx, Xxxxx
Attention: Chairman
(Facsimile No. 000-000-000-0000)
or to such other address as to which the recipient shall have informed the other
party.
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,
the date on which such facsimile and confirmatory letter are sent.
12. This Agreement shall be construed in accordance with the laws of
the State of New York, provided, however, that nothing herein shall be construed
as being inconsistent with the U.S. Investment Company Act of 1940, as amended.
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 U.S. Investment Company Act of 1940, as amended.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart hereof and return the same to us.
Very truly yours,
XXXXXXX XXXXXX INVESTMENTS, INC.
By _________________________________
President
The foregoing agreement is hereby accepted as of the date first above written.
DAEWOO CAPITAL MANAGEMENT CO., LTD.
By _________________________________
Chairman
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Accepted:
THE KOREA FUND, INC.
By _________________________________
President
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