INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 15th day of June, 1995, and amended
and restated as of the 23rd day of November, 1995, between XXXXXXXXX RUSSIA
FUND, INC. (hereinafter referred to as the "Company"), and XXXXXXXXX ASSET
MANAGEMENT LIMITED (hereinafter referred to as the "Manager").
In consideration of the mutual agreements herein made, the
Company and the Manager understand and agree as follows:
(1) The Investment Manager shall manage the investment and
reinvestment of the Company's assets consistent with the provisions of the
Articles of Incorporation of the Company and the investment policies
adopted and declared by the Company's Board of Directors. In pursuance of
the foregoing, the Investment Manager shall make all determinations with
respect to the investment of the Company's assets and the purchase and sale
of its investment securities, and shall take such steps as may be necessary
to implement those determinations. Such determinations and services shall
include determining the manner in which any voting rights, rights to
consent to corporate action and any other rights pertaining to the
Company's investment securities shall be exercised, subject to guidelines
adopted by the Board of Directors. It is understood that all acts of the
Manager in performing this Agreement are performed by it outside the United
States.
(2) The Manager is not required to furnish any personnel,
overhead items or facilities for the Company.
(3) The Manager shall be responsible for selecting members of
securities exchanges, brokers and dealers (such members, brokers and
dealers being hereinafter referred to as "brokers") for the execution of
the Company's portfolio transactions consistent with the Fund's brokerage
policies and, when applicable, the negotiation of commissions in connection
therewith.
All decisions and placements shall be made in accordance with
the following principles:
A. Purchase and sale orders will usually be placed with
brokers which are selected by the Manager as able to achieve "best
execution" of such orders. "Best execution" shall mean prompt and reliable
execution at the most favorable security price, taking into account the
other provisions hereinafter set forth. The determination of what may
constitute best execution and price in the execution of a securities
transaction by a broker involves a number of considerations, including,
without limitation, the overall direct net economic result to the Company
(involving both price paid or received and any commissions and other costs
paid), the efficiency with which the transaction is effected, the ability
to effect the transaction at all where a large block is involved,
availability of the broker to stand ready to execute possibly difficult
transactions in the future, and the financial strength and stability of the
broker. Such considerations are judgmental and are weighed by the Manager
in determining the overall reasonableness of brokerage commissions.
B. In selecting brokers for portfolio transactions, the
Manager shall take into account its past experience as to brokers qualified
to achieve "best execution," including brokers who specialize in any
foreign securities held by the Company.
C. The Manager is authorized to allocate brokerage
business to brokers who have provided brokerage and research services, as
such services are defined in Section 28(e) of the Securities Exchange Act
of 1934 (the "1934 Act"), for the Company and/or other accounts, if any,
for which the Manager exercises investment discretion (as defined in
Section 3(a)(35) of the 0000 Xxx) and, as to transactions for which fixed
minimum commission rates are not applicable, to cause the Company to pay a
commission for effecting a securities transaction in excess of the amount
another broker would have charged for effecting that transaction, if the
Manager 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, viewed in terms of either that particular
transaction or the Manager's overall responsibilities with respect to the
Company and the other accounts, if any, as to which it exercises investment
discretion. In reaching such determination, the Manager will not be
required to place or attempt to place a specific dollar value on the
research or execution services of a broker or on the portion of any
commission reflecting either of said services. In demonstrating that such
determinations were made in good faith, the Manager shall be prepared to
show that all commissions were allocated and paid for purposes contemplated
by the Company's brokerage policy; that the research services provide
lawful and appropriate assistance to the Manager in the performance of its
investment decision-making responsibilities; and that the commissions paid
were within a reasonable range. Whether commissions were within a
reasonable range shall be based on any available information as to the
level of commission known to be charged by other brokers on comparable
transactions, but there shall be taken into account the Company's policies
that (i) obtaining a low commission is deemed secondary to obtaining a
favorable securities price, since it is recognized that usually it is more
beneficial to the Company to obtain a favorable price than to pay the
lowest commission; and (ii) the quality, comprehensiveness and frequency of
research studies that are provided for the Manager are useful to the
Manager in performing its advisory activities under this Agreement.
Research services provided by brokers to the Manager are considered to be
in addition to, and not in lieu of, services required to be performed by
the Manager under this Agreement. Research furnished by brokers through
which the Company effects securities transactions may be used by the
Manager for any of its accounts, and not all research may be used by the
Manager for the Company. When execution of portfolio transactions is
allocated to brokers trading on exchanges with fixed brokerage commission
rates, account may be taken of various services provided by the broker.
(4) The Company agrees to pay to the Manager a monthly fee
in dollars at an annual rate of 1.25% of the Fund's average weekly net
assets, payable at the end of each calendar month. The Investment Manager
may waive all or a portion of its fees provided for hereunder and such
waiver shall be treated as a reduction in the purchase price of its
services. The Investment Manager shall be contractually bound hereunder by
the terms of any publicly announced waiver of its fee, or any limitation of
the Fund's expenses, as if such waiver or limitation were fully set forth
herein.
(5) This Agreement is amended and restated as of November 23,
1995 and shall continue in effect until June 15, 1997. If not sooner
terminated, this Agreement shall continue in effect for successive periods
of 12 months each thereafter, provided that each such continuance shall be
specifically approved annually by the vote of a majority of the Company's
Board of Directors who are not parties to this Agreement or "interested
persons" (as defined in Investment Company Act of 1940 (the "1940 Act")) of
any such party, cast in person at a meeting called for the purpose of
voting on such approval and either the vote of (a) a majority of the
outstanding voting securities of the Company, as defined in the 1940 Act,
or (b) a majority of the Company's Board of Directors as a whole.
(6) Notwithstanding the foregoing, this Agreement may be
terminated by either party at any time, without the payment of any penalty,
on sixty (60) days' written notice to the other party, provided that
termination by the Company is approved by vote of a majority of the
Company's Board of Directors in office at the time or by vote of a majority
of the outstanding voting securities of the Company.
(7) This Agreement will terminate automatically and
immediately in the event of its assignment (as defined in the 1940 Act).
(8) In the event this Agreement is terminated and the Manager
no longer acts as Manager to the Company, the Manager reserves the right to
withdraw from the Company the use of the name "Xxxxxxxxx" or any name
misleadingly implying a continuing relationship between the Company and the
Manager or any of its affiliates.
(9) Except as may otherwise be provided by the 1940 Act,
neither the Manager nor its officers, directors, employees or agents shall
be subject to any liability for any error of judgment, mistake of law, or
any loss arising out of any investment or other act or omission in the
performance by the Manager of its duties under the Agreement or for any
loss or damage resulting from the imposition by any government of exchange
control restrictions which might affect the liquidity of the Fund's assets,
or from acts or omissions of custodians or securities depositories, or from
any war or political act of any foreign government to which such assets
might be exposed, or for failure, on the part of the custodian or
otherwise, timely to collect payments or to exercise rights with respect to
emerging country securities, except for any liability, loss or damage
resulting from willful misfeasance, bad faith or gross negligence on the
Manager's part or by reason of reckless disregard of the Manager's duties
under this Agreement.
(10) It is understood that the services of the Manager are
not deemed to be exclusive, and nothing in this Agreement shall prevent the
Manager, or any affiliate thereof, from providing similar services to other
investment companies and other clients, including clients which may invest
in the same types of securities as the Company, or, in providing such
services, from using information furnished by others. When the Manager
determines to buy or sell the same security for the Company that the
Manager or one or more of its affiliates has selected for clients of its
affiliates, the orders for all such security transactions shall be placed
for execution by methods determined by the Manager, with approval by the
Company's Board of Directors, to be impartial and fair.
(11) This Agreement shall be construed in accordance with
the laws of the State of Maryland, provided that nothing herein shall be
construed as being inconsistent with applicable Federal and state
securities laws and any rules, regulations and orders thereunder.
(12) If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby and, to this extent, the
provisions of this Agreement shall be deemed to be severable.
(13) Nothing herein shall be construed as constituting the
Manager an agent of the Company.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers and their
respective corporate seals to be hereunto duly affixed and attested.
TEMPLETON RUSSIA FUND, INC.
By:\s\XXXX X. XXX
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Xxxx X. Xxx
Vice President
XXXXXXXXX ASSET MANAGEMENT LIMITED
By:\s\XXXXXXX X. XXXXXXX
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Xxxxxxx X. Xxxxxxx
Director
