ADVISORY AGREEMENT
ADVISORY
AGREEMENT, dated July 25, 2005, between Xxxxxxx, Xxxxxxx Funds, Inc., a Maryland
corporation (the "Fund"), and Xxxxxxx, Loevner Management, L.P., a New Jersey
limited partnership (the "Adviser").
In
consideration of the mutual agreements herein made, the parties hereto agree
as
follows:
1. Attorney-in-Fact.
The Fund
appoints the Adviser as its attorney-in-fact to invest and reinvest the assets
of the Institutional Emerging Markets Portfolio (the "Portfolio"), as fully
as
the Fund itself could do. The Adviser hereby accepts this
appointment.
2. Duties
of the Adviser.
(a) The
Adviser shall be responsible for managing the investment portfolio of the
Portfolio, including, without limitation, providing investment research,
advice
and supervision, determining which portfolio securities shall be purchased
or
sold by the Portfolio, purchasing and selling securities on behalf of the
Portfolio and determining how voting and other rights with respect to portfolio
securities of the Portfolio shall be exercised, subject in each case to the
control of the Board of Directors of the Fund (the "Board") and in accordance
with the objective, policies and principles of the Portfolio set forth in
the
Registration Statement, as amended, of the Fund, the requirements of the
Investment Company Act of 1940, as amended, (the "Act") and other applicable
law. In performing such duties, the Adviser shall provide such office space,
and
such executive and other personnel as shall be necessary for the investment
operations of the Portfolio. In managing the Portfolio in accordance with
the
requirements set forth in this paragraph 2, the Adviser shall be entitled
to act
upon advice of counsel to the Fund or counsel to the Adviser.
(b)
Subject to Section 36 of the Act, the Adviser shall not be liable to the
Fund
for any error of judgment or mistake of law or for any loss arising out of
any
investment or for any act or omission in the management of the Portfolio
and the
performance of its duties under this Agreement except for losses arising
out of
the Adviser's willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement. It is agreed that the Adviser
shall
have no responsibility or liability for the accuracy or completeness of the
Fund's Registration Statement under the Act and the Securities Act of 1933
except for information about the Adviser contained in the Prospectus included
as
part of such Registration Statement supplied by the Adviser for inclusion
therein. The Fund agrees to indemnify and hold the Adviser harmless from
and
against all claims, losses, costs, damages and expenses, including reasonable
fees and expenses for counsel, incurred by it resulting from any claim, demand,
action or suit in connection with or arising out of any action or omission
by
the Adviser in the performance of this Agreement except for those claims,
losses, costs, damages and expenses resulting from the Adviser's willful
misfeasance, bad faith, or gross negligence in the performance of its duties
or
by reason of its reckless disregard of its obligations and duties under this
Agreement.
(c)
The
Adviser and its officers may act and continue to act as investment advisers
and
managers for others (including, without limitation, other investment companies),
and nothing in this Agreement will in any way be deemed to restrict the right
of
the Adviser to perform investment management or other services for any other
person or entity, and the performance of such services for others will not
be
deemed to violate or give rise to any duty or obligation to the
Fund.
(d)
Except as provided in Section 5, nothing in this Agreement will limit or
restrict the Adviser or any of its officers, affiliates or employees from
buying, selling or trading in any securities for its or their own account
or
accounts. The Fund acknowledges that the Adviser and its officers, affiliates
or
employees, and its other clients may at any time have, acquire, increase,
decrease or dispose of positions in investments which are at the same time
being
acquired or disposed of for the account of the Portfolio. The Adviser will
have
no obligation to acquire for the Portfolio a position in any investment which
the Adviser, its officers, affiliates or employees may acquire for its or
their
own accounts or for the account of another client, if in the sole discretion
of
the Adviser, it is not feasible or desirable to acquire a position in such
investment for the account of the Portfolio, provided that the Adviser shall
have acted in good faith and in a manner deemed equitable to the Portfolio.
The
Adviser represents that it has adopted a code of ethics governing personal
trading that complies in all material respects with the recommendations
contained in the Investment Company Institute “Report of the Advisory Group on
Personal Investing,” dated May 9, 1994, and the Adviser agrees to furnish a copy
of such code of ethics to the Directors of the Fund.
(e)
If
the purchase or sale of securities consistent with the investment policies
of
the Portfolio and one or more other clients serviced by the Adviser is
considered at or about the same time, transactions in such securities will
be
allocated among the Portfolio and clients in a manner deemed fair and reasonable
by the Adviser. Although there is no specified formula for allocating such
transactions, the various allocation methods used by the Adviser, and the
results of such allocations, are subject to periodic review by the Board.
3. Expenses.
The
Adviser shall pay all of its expenses arising from the performance of its
obligations under this Agreement. Except as provided below, the Adviser shall
not be required to pay any other expenses of the Fund (including out-of-pocket
expenses, but not including the Adviser's overhead or employee costs), including
without limitation, organization expenses of the Fund; brokerage commissions;
maintenance of books and records which are required to be maintained by the
Fund's custodian or other agents of the Fund; telephone, telex, facsimile,
postage and other communications expenses; expenses relating to investor
and
public relations; freight, insurance and other charges in connection with
the
shipment of the Fund's portfolio securities; indemnification of Directors
and
officers of the Fund; travel expenses (or an appropriate portion thereof)
of
Directors and officers of the Fund to the extent that such expenses relate
to
attendance at meetings of the Board of Directors of the Fund or any committee
thereof or advisors thereto held outside of Somerville, New Jersey; interest,
fees and expenses of independent attorneys, auditors, custodians, accounting
agents, transfer agents, dividend disbursing agents and registrars; payment
for
portfolio pricing or valuation service to pricing agents, accountants, bankers
and other specialists, if any; taxes and government fees; cost of stock
certificates and any other expenses (including clerical expenses) of issue,
sale, repurchase or redemption of shares; expenses of registering and qualifying
shares of the Fund under Federal and state laws and regulations; expenses
of
printing and distributing reports, notices, dividends and proxy materials
to
existing stockholders; expenses of printing and filing reports and other
documents filed with governmental agencies, expenses of printing and
distributing prospectuses; expenses of annual and special stockholders'
meetings; costs of stationery, fees and expenses (specifically including
travel
expenses relating to Fund business) of Directors of the Fund who are not
employees of the Adviser or its affiliates; membership dues in the Investment
Company Institute; insurance premiums and extraordinary expenses such as
litigation expenses.
4. Compensation.
(a) As
compensation for the services performed and the facilities and personnel
provided by the Adviser pursuant to this Agreement, the Fund will pay to
the
Adviser promptly at the end of each calendar month, a fee, calculated on
each
day during such month, at an annual rate of 1.25% of the Portfolio's average
daily net assets. The Adviser shall be entitled to receive during any month
such
interim payments of its fee hereunder as the Adviser shall request, provided
that no such payment shall exceed 50% of the amount of such fee then accrued
on
the books of the Portfolio and unpaid.
(b)
If
the Adviser shall serve hereunder for less than the whole of any month, the
fee
payable hereunder shall be prorated.
(c)
For
purposes of this Section 4, the "average daily net assets" of the Portfolio
shall mean the average of the values placed on the Portfolio's net assets
on
each day pursuant to the applicable provisions of the Fund's Registration
Statement, as amended.
5. Purchase
and Sale of Securities.
The
Adviser shall purchase securities from or through and sell securities to
or
through such persons, brokers or dealers as the Adviser shall deem appropriate
in order to carry out the policy with respect to the allocation of portfolio
transactions as set forth in the Registration Statement of the Fund, as amended,
or as the Board may direct from time to time. The Adviser will use its
reasonable efforts to execute all purchases and sales with dealers and banks
on
a best net price basis. The Adviser will consider the full range and quality
of
services offered by the executing broker or dealer when making these
determinations. Neither the Adviser nor any of its officers, affiliates or
employees will act as principal or receive any compensation from the Portfolio
in connection with the purchase or sale of investments for the Portfolio
other
than the fee referred to in Paragraph 4 hereof.
6. Term
of Agreement.
This
Agreement shall continue in full force and effect until two years from the
date
hereof, and will continue in effect from year to year thereafter if such
continuance is approved in the manner required by the Act, provided that
this
Agreement is not otherwise terminated. The Adviser may terminate this Agreement
at any time, without the payment of any penalty, upon 60 days' written notice
to
the Fund. The Fund may terminate this Agreement with respect to the Portfolio
at
any time, without the payment of any penalty, on 60 days' written notice
to the
Adviser by vote of either the majority of the non-interested members of the
Board or a majority of the outstanding voting securities (as defined in Section
2(a)(42) of the Act) of the Portfolio. This Agreement will
automatically
terminate in the event of its assignment (the term “assignment” for this purpose
having the meaning defined in Section 2(a)(4) of the Act).
7. Changes
in Membership.
The
Adviser is a limited partnership and, pursuant to the New Jersey Uniform
Securities Law and the Investment Advisers Act of 1940, shall notify the
Fund of
any change in the membership of such partnership within a reasonable time
after
the change.
8. Notices.
Any
notice or other communication authorized or required hereunder shall be in
writing or by confirming telegram, cable, telex or facsimile sending device.
Notice shall be addressed to the Fund at 00
Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxx Xxxxxx 00000, Attention: President;
and toInvestors
Bank & Trust Company, 000 Xxxxxxxxx Xxxxxx, XXX00, Xxxxxx, Xxxxxxxxxxxxx
00000, Attention: Xxxx X. XxxXxxxx. Either party may designate a different
address by notice to the other party. Any such notice or other communication
shall be deemed given when actually received.
9. Amendment.
This
Agreement may be amended by the parties hereto with respect to the Portfolio
only if such amendment is specifically approved (i) by the Board of Directors
of
the Fund or by the vote of a majority of outstanding shares of the Portfolio
(“Shares”), and (ii) by the Director(s) who are not interested persons (the term
“non interested” for this purpose having the meaning defined in section 2 (a)
(19) of the Act) of the Fund (“Non-Interested Director(s)”), which vote must be
cast in person at a meeting called for the purpose of voting on such
approval.
10. Right
of Adviser In Corporate Name.
The
Adviser and the Fund each agree that the phrase "HLM," which comprises a
component of the Portfolio's corporate name, is a property right of the Adviser.
The Fund agrees and consents that (i) it will only use the phrase "HLM" as
a
component of its corporate name and for no other purpose; (ii) it will not
purport to grant to any third party the right to use the phrase "HLM" for
any
purpose; (iii) the Adviser or any corporate affiliate of the Adviser may
use or
grant to others the right to use the phrase "HLM" or any combination or
abbreviation thereof, as all or a portion of a corporate or business name
or for
any commercial purpose, including a grant of such right to any other investment
company, and at the request of the Adviser, the Fund will take such action
as
may be required to provide its consent to such use or grant; and (iv) upon
the
termination of any investment advisory agreement into which the Adviser and
the
Fund may enter, the Fund shall, upon request by the Adviser, promptly take
such
action, at its own expense, as may be necessary to change the Portfolio's
corporate name to one not containing the phrase "HLM" and following such
a
change, shall not use the phrase "HLM" or any combination thereof, as part
of
the Portfolio's corporate name or for any other commercial purpose, and shall
use its reasonable efforts to cause its officers, directors and stockholders
to
take any and all actions which the Adviser may request to effect the foregoing
and recovery to the Adviser any and all rights to such phrase.
11. Miscellaneous.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of New Jersey. Anything herein to the contrary notwithstanding, this
Agreement shall not be construed to require or to impose any duty upon either
of
the parties to do anything in violation of any applicable laws or
regulations.
IN
WITNESS WHEREOF,
the
Fund and the Adviser have caused this Agreement to be executed by their duly
authorized officers as of the date first written above.
ATTEST XXXXXXX,
XXXXXXX FUNDS, INC.
By:/s/
Xxxxx X. Xxxxxxx
By:____
President
ATTEST XXXXXXX,
XXXXXXX MANAGEMENT, L.P.
BY:
HLM
HOLDINGS, INC., GENERAL PARTNER
By:/s/
Xxxxx X. Xxxxxxx
By:____
President
