EXHIBIT 99(g)
INVESTMENT ADVISORY AND
MANAGEMENT AGREEMENT
AGREEMENT, dated as of March 13, 1997, between XXXXXX XXXXXXX RUSSIA & NEW
EUROPE FUND, INC., a Maryland corporation (the "Fund"), and XXXXXX XXXXXXX ASSET
MANAGEMENT INC., a Delaware corporation (the "Investment Manager").
WHEREAS, the Fund is a closed-end, non-diversified management investment
company registered under the U.S. Investment Company Act of 1940, as amended
(the "1940 Act"), the shares of common stock of which are registered under the
Securities Act of 1933, as amended; and
WHEREAS, the Fund's investment objectives are set forth in the Prospectus
dated September 24, 1996 (the "Prospectus") contained in the Fund's Registration
Statement on Form N-2 (File Nos. 33-75012 and 811-8346) (the "Registration
Statement"); and
WHEREAS, the Fund desires to retain the Investment Manager to render
investment management services with respect to its assets and the Investment
Manager is willing to render such services.
NOW, THEREFORE, in consideration of the mutual covenants hereafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. Appointment of Investment Manager. (a) The Fund hereby employs the
Investment Manager for the period and on the terms and conditions set forth
herein, subject at all times to the supervision of the Board of Directors of the
Fund, to:
(i) make all investment decisions for the Fund, prepare and
make available to the Fund research and statistical data in connection
therewith, and to supervise the acquisition and disposition of securities
by the Fund, including the selection of brokers or dealers to carry out
transactions, all in accordance with the Fund's investment objective and
policies and limitations, as the same are set forth in the Prospectus, and
in accordance with guidelines and directions from the Fund's Board of
Directors;
(ii) assist the Fund as it may reasonably request in the
conduct of Fund's business, subject to the direction and control of the
Fund's Board of Directors;
(iii) maintain or cause to be maintained for the Fund all
books and records required under the 1940 Act, to the extent that such
books and records are not maintained or furnished by the administrators,
custodians or other agents of the Fund; and
(iv) furnish at the Investment Manager's expense for the use
of the Fund such office space and facilities as the Fund may require for
its reasonable needs, to the extent not furnished by the Fund's
administrators, custodians or other agents, and furnish at the Investment
Manager's expense clerical services in the United States related to
research, statistical and investment work.
The Investment Manager is authorized as agent of the Fund to give instructions
to the custodians from time to time of the Fund's assets as to deliveries of
securities and payments of cash for the account of the Fund. In connection with
the selection of brokers or dealers and the placing of orders for the purchase
and sale of securities for the Fund, the Investment Manager is directed at all
times to seek to obtain for the Fund the most favorable net results as
determined by the Board of Directors of the Fund. Subject to this requirement
and the provisions of the 1940 Act, the U.S. Securities Exchange Act of 1934, as
amended,
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and any other applicable provisions of law, nothing shall prohibit the
Investment Manager from selecting brokers or dealers with which it or the Fund
is affiliated or which provide the Investment Manager with investment research
services as described in the Fund's Prospectus.
(b) The Investment Manager accepts such employment and agrees
during the term of this Agreement to render such services, to permit any of its
directors, officers or employees to serve without compensation as directors or
officers of the Fund if elected to such positions, and to assume the obligations
set forth herein for the compensation herein provided. The Investment Manager
shall for all purposes herein provided be deemed to be an independent contractor
and, unless otherwise expressly provided or authorized, shall have no authority
to act for or represent the Fund in any way or otherwise be deemed an agent of
the Fund.
2. Compensation. For the services and facilities described in
Section 1, the Fund agrees to pay in United States dollars to the Investment
Manager, a fee, computed weekly and payable monthly, at an annual rate of 1.60%
of the Fund's average weekly net assets. For the month and year in which this
Agreement becomes effective or terminates, there shall be an appropriate
proration on the basis of the number of days that this Agreement is in effect
during such month and year, respectively.
3. Investment in Fund Stock. The Investment Manager agrees that it will
not make a short sale of any capital stock of the Fund, or purchase any share of
the capital stock of the Fund other than for investment.
4. Non-Exclusivity of Services. Nothing herein shall be construed as
prohibiting the Investment Manager from providing investment advisory services
to, or entering into investment advisory agreements with, any other clients
(such as other registered investment companies), including clients who may
invest in RNE country issuers (as such term is defined in the Fund's
Prospectus), so long as the Investment Manager's services to the Fund are not
impaired thereby.
5. Standard of Care; Indemnification. (a) The Investment Manager may
rely on information reasonably believed by it to be accurate and reliable.
Neither the Investment Manager nor its officers, directors, employees, agents or
controlling persons (as defined in the 0000 Xxx) shall be subject to any
liability for any act or omission, error of judgment or mistake of law, or for
any loss suffered by the Fund, 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 on the part of the Investment Manager
in the performance of its duties or by reason of reckless disregard on the part
of the Investment Manager of its obligations and duties under this Agreement.
Any person, even though also employed by the Investment Manager, who may be or
become an employee of the Fund shall be deemed, when acting within the scope of
his employment by the Fund, to be acting in such employment solely for the Fund
and not as an employee or agent of the Investment Manager.
(b) The Fund agrees to indemnify and hold harmless the Investment
Manager, its officers, directors, employees, agents, shareholders, controlling
persons or other affiliates (each an "Indemnified Party"), for any losses, costs
and expenses incurred or suffered by any Indemnified Party arising from any
action, proceeding or claims which may be brought against such Indemnified Party
in connection with the performance or non-performance in good faith of its
functions under this Agreement, except losses, costs and expenses resulting from
willful misfeasance, bad faith or gross negligence in the performance of such
Indemnified Party's duties or from reckless disregard on the part of such
Indemnified Party of such Indemnified Party's obligations and duties under this
Agreement.
6. Allocation of Charges and Expenses. (a) The Investment Manager shall
assume and pay for maintaining its staff and personnel, and shall, at its own
expense, provide the equipment, office space
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and facilities necessary to perform its obligations hereunder. The Investment
Manager shall pay the salaries and expenses of such of the Fund's officers and
employees, as well as the fees and expenses of such of the Fund's directors who
are directors, officers or employees of the Investment Manager or any of its
affiliates, provided, however, that the Fund, and not the Investment Manager,
shall bear travel expenses or an appropriate fraction thereof of directors and
officers of the Fund who are directors, officers or employees of the Investment
Manager or its affiliates to the extent that such expenses relate to attendance
at meetings of the Fund's Board of Directors or any committees thereof.
(b) In addition to the fee of the Investment Manager, the Fund
shall assume and pay the following expenses: organization expenses (but not the
overhead or employee costs of the Investment Manager); legal fees and expenses
of counsel to the Fund; auditing and accounting expenses; taxes and governmental
fees; New York Stock Exchange listing fees, dues and expenses incurred in
connection with membership in investment company organizations; fees and
expenses of the Fund's custodians, sub-custodians, transfer agents and
registrars; fees and expenses with respect to administration, except as may be
herein expressly provided otherwise or provided otherwise pursuant to
administration agreements; expenses for portfolio pricing services by a pricing
agent, if any; expenses relating to investor and public relations; freight,
insurance and other charges in connection with the shipment of the Fund's
portfolio securities; brokerage commissions or other costs of acquiring or
disposing of any portfolio holding of the Fund; expenses of preparation and
distribution of reports, notices and dividends to stockholders; expenses of the
dividend reinvestment and cash purchase plan (except for brokerage expenses paid
by participants in such plan); costs of stationery; any litigation expenses; and
costs of stockholders' and other meetings.
7. Potential Conflicts of Interest. (a) Subject to applicable statutes
and regulations, it is understood that directors, officers or agents of the Fund
are or may be interested in the Investment Manager or its affiliates as
directors, officers, employees, agents, shareholders or otherwise, and that the
directors, officers, employees, agents or shareholders of the Investment Manager
or its affiliates may be interested in the Fund as directors, officers, agents
or otherwise.
(b) If the Investment Manager considers the purchase or sale of
securities for the Fund and other advisory clients of the Investment Manager at
or about the same time, transactions in such securities will be allocated among
the Fund and such other clients in a manner deemed fair and reasonable by the
Investment Manager, subject to any guidelines that may be adopted by the Board
of Directors of the Fund.
8. Duration and Termination. (a) This Agreement shall be effective for
a period of two years commencing on the later of (i) the date that the requisite
stockholder approval as required under Section 15 of the 1940 Act has been
obtained or (ii) the date that the Agreement and Plan of Merger, dated February
4, 1997, between Xxxx Xxxxxx, Discover & Co. and Xxxxxx Xxxxxxx Group Inc. is
consummated. Thereafter, this Agreement will continue in effect from year to
year, provided that such continuance is specifically approved at least annually
by (A) a vote of a majority of the members of the Fund's Board of Directors who
are neither parties to this Agreement nor interested persons of the Fund or of
the Investment Manager or of any entity regularly furnishing investment advisory
services with respect to the Fund pursuant to an agreement with the Investment
Manager, cast in person at a meeting called for the purpose of voting on such
approval, and (B) a vote of a majority of either the Fund's Board of Directors
or the Fund's outstanding voting securities.
(b) This Agreement may nevertheless be terminated at any time,
without payment of penalty, by the Fund or by the Investment Manager upon 60
days' written notice. This Agreement shall automatically be terminated in the
event of its assignment, provided, however, that a transaction which does not,
in accordance with the 1940 Act, result in a change of actual control or
management of the
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Investment Manager's business shall not be deemed to be an assignment for the
purposes of this Agreement.
(c) Termination of this Agreement shall not (i) affect the right
of the Investment Manager to receive payments of any unpaid balance of the
compensation described in Section 2 earned prior to such termination, or (ii)
extinguish the Investment Manager's right of indemnification under Section 5.
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 1940 Act.
9. Amendment. This Agreement 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 or of the Investment Manager, cast in person at a
meeting called for the purpose of voting on such approval.
10. Governing Law. 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 1940 Act.
11. Notices. Any communication hereunder shall be in writing and shall
be delivered in person or by telex or facsimile (followed by mailing such
communication, air mail postage prepaid, on the date on which such telex or
facsimile is sent, to the address set forth below). Any communication or
document to be made or delivered by one person to another pursuant to this
Agreement shall be made or delivered to that other person at the following
relevant address (unless that other person has by fifteen (15) days' notice to
the other specified another address):
If to the Investment Manager:
Xxxxxx Xxxxxxx Asset Management Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to the Fund:
Xxxxxx Xxxxxxx Russia & New Europe Fund, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Communications or documents made or delivered by personal delivery shall be
deemed to have been received on the day of such delivery. Communications or
documents made or delivered by telex or facsimile shall be deemed to have been
received, if by telex, when acknowledged by the addressee's correct answer back
code and, if by facsimile, upon production of a transmission report by the
machine from which the facsimile was sent which indicates that the facsimile was
sent in its entirety to the
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facsimile number of the recipient; provided that a hard copy of the
communication or document so made or delivered by telex or facsimile was posted
the same day as the communication or document was made or delivered by
electronic means.
12. Jurisdiction. Each party hereto irrevocably agrees that any suit,
action or proceeding against either of the Investment Manager or the Fund
arising out of or relating to this Agreement shall be subject exclusively to the
jurisdiction of the United States District Court for the Southern District of
New York or the Supreme Court of the State of New York, New York County, and
each party hereto irrevocably submits to the jurisdiction of each such court in
connection with any such suit, action or proceeding. Each party hereto waives
any objection to the laying of venue of any such suit, action or proceeding in
either such court, and waives any claim that such suit, action or proceeding has
been brought in an inconvenient forum. Each party hereto irrevocably consents to
service of process in connection with any such suit, action or proceeding by
mailing a copy thereof in English by registered or certified mail, postage
prepaid, to their respective addresses as set forth in this Agreement.
13. Representation and Warranty of the Investment Manager. The
Investment Manager represents and warrants that it is duly registered as an
investment adviser under the U.S. Investment Advisers Act.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties have executed this Investment Advisory and
Management Agreement by their officers thereunto duly authorized as of the day
and year first written above.
XXXXXX XXXXXXX RUSSIA & NEW EUROPE
FUND, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
XXXXXX XXXXXXX ASSET MANAGEMENT INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
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