(Form of)
INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement (the "Agreement") dated
_________________, 1997 by and between VONTOBEL FUNDS, INC., a
Maryland corporation (herein called the "Fund"), and VONTOBEL USA
INC., a New York corporation (the "Advisor"), a registered
investment adviser under the Investment Advisers Act of 1940, as
amended.
WHEREAS, the Fund is registered as a diversified, open-end
management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"), consisting of several series of
shares, each having its own investment policies; and
WHEREAS, the Fund desires to retain the Advisor to furnish
investment advisory and management services to certain portfolios
of the Fund, subject to the control of the fund's Board of
Directors, and the Advisor is willing to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, and intending to be bound, it is agreed
between the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Advisor to act
as the advisor to the VONTOBEL EASTERN EUROPEAN DEBT FUND series of
the Fund (the "Portfolio") for the period and on the terms set
forth in this Agreement. The Advisor accepts such appointment and
agrees to furnish the services herein set forth, for the
compensation herein provided.
2. Duties of the Advisor. The Fund employs the Advisor to
manage the investments and reinvestment of the Assets of the
Portfolio, and to continuously review, supervise, and administer
the investment program of the Portfolio, to determine in its
discretion the securities to be purchased or sold, to provide the
Fund and Commonwealth Shareholder Services, Inc. (the
"Administrative Services Agent") with records concerning the
Advisor's activities which the Fund is required to maintain, and to
render regular reports to the Fund's Officers and Board of
Directors and to the Administrator concerning the Advisor's
discharge of the foregoing responsibilities.
The Advisor shall discharge the foregoing
responsibilities subject to the control of the fund's Board of
Directors and in compliance with such policies as the Board may
from time to time establish, and in compliance with the objectives,
policies, and limitations for the Portfolio as set forth in the
Fund's Prospectuses and Statement of Additional Information, as
amended from time to time, and applicable laws and regulations.
The Fund will instruct each of its agents and contractors to
cooperate in the conduct of the business of the Portfolio.
The Advisor accepts such employment and agrees, at its
own expense, to render the services and to provide the office
space, furnishings, and equipment and the personnel required by it
to perform the services on the terms and for the compensation
provided herein.
3. Portfolio Transactions. The Advisor is authorized to
select the brokers and dealers that will execute the purchases and
sales of portfolio securities for the Portfolio and is directed to
use its best efforts to obtain the best price and execution for the
Portfolio's transactions in accordance with the policies of the
Fund as set forth from time to time in the Prospectus and Statement
of Additional Information. The Advisor will promptly communicate
to the Fund and to the Administrative Services Agent such
information relating to portfolio transactions as they may
reasonably request.
It is understood that the Advisor will not be deemed to
have acted unlawfully, or to have breached a fiduciary duty to the
fund or be in breach of any obligation owing to the fund under this
Agreement, or otherwise, by reason of its having directed a
securities transaction on behalf of the fund to an unaffiliated
broker-dealer in compliance with the provisions of Section 28(e) of
the Securities Exchange Act of 1934 or as described from time to
time by the Prospectuses and Statement of Additional Information.
Subject to the foregoing, the Advisor may direct any transaction of
the Portfolio to a broker which is affiliated with the Advisor in
accordance with, and subject to, the policies and procedures
approved by the board of Directors of the Fund pursuant to Rule
17e-1 under the 1940 Act. Such brokerage services are not deemed
to be provided under this Agreement.
4. Compensation of the Advisor. For the services to be
rendered by the Advisor under this Agreement, the Fund shall pay to
the Advisor compensation at the rate specified in the Schedule
attached hereto and made a part of this Agreement. Such
compensation shall be paid to the Advisor within five (5) business
days after the last business day of each month, and calculated by
applying a daily rate, based on the annual percentage rates as
specified in the attached Schedule, to the assets. The fee shall
be based on the average daily net assets for the month involved.
All rights of compensation under this Agreement for
services performed as of the termination date shall survive the
termination of this Agreement.
5. Expenses. During the term of this Agreement, the Advisor
will pay all expenses incurred by it in connection with the
management of the Fund. Notwithstanding the foregoing, the
Portfolio shall pay the expenses and costs of the Portfolio for the
following:
(1) Taxes;
(2) Brokerage fees and commissions with regard to
portfolio transactions;
(3) Interest charges, fees and expenses of the
custodian of the securities;
(4) Fees and expenses of the Fund's transfer agent and
the Administrative Services Agent;
(5) Its proportionate share of auditing and legal
expenses;
(6) Its proportionate share of the cost of maintenance
of corporate existence;
(7) Its proportionate share of compensation of
directors of the Fund who are not interested
persons of the Advisor as that term is defined by
law;
(8) Its proportionate share of the costs of corporate
meetings;
(9) Federal and State registration fees and expenses
incident to the sale of shares of the Portfolio;
(10) Costs of printing and mailing Prospectuses for the
Portfolio's shares, reports and notices to existing
shareholders;
(11) The Advisory fee payable to the Advisor, as
provided in paragraph 4 herein;
(12) Costs of recordkeeping (other than investment
records required to be maintained by the Advisor),
and daily pricing;
(13) Distribution expenses in accordance with any
Distribution Plan as and if approved by the
shareholders of the Portfolio; and
(14) Expenses and taxes incident to the failure of the
Portfolio to qualify as a regulated investment
company under the provisions of the Internal
Revenue Code of 1986, as amended, unless such
expenses and/or taxes arise from the negligence of
another party.
If the expenses projected to be borne by the Portfolio
(exclusive of interest, brokerage commissions, taxes and
extraordinary items, but inclusive of Advisory fees) in any fiscal
year are expected to exceed any applicable state expense limitation
provision to which the Fund is subject, the Advisory fee payable to
the Portfolio to the Advisor shall be reduced on each day such fee
is accrued to the extent of that day's portion of such excess
expenses. The amount of such reduction shall not exceed the actual
amount of the Advisory fee otherwise payable in such year.
Accruals of expenses and adjustment to advisory fees otherwise
payable under this Agreement, and the amounts payable monthly in
accordance with this Agreement, shall be adjusted as required from
month to month.
It is understood that the Fund will register its shares
in states which impose expense limitations on mutual funds only
with the prior written consent of the Advisor and, if consent is
granted, the Advisor agrees to reimburse the Fund for any excess
expenses incurred over such states' limitation up to a maximum of
its Advisory fee.
6. Reports. The Fund and the Advisor agree to furnish to
each other, if applicable, current information required for the
preparation by such parties of prospectuses, statements of
additional information, proxy statements, reports to shareholders,
certified copies of their financial statements, and to furnish to
each other such other information and documents with regard to
their affairs as each may reasonably request.
u. State of the Advisor. The services of the Advisor to the
Fund are not to be deemed exclusive, and the Advisor shall be free
to render similar services to others so long as its services to the
Fund are not impaired thereby.
Pursuant to comparable agreements, the Fund may also
retain the services of the Advisor to serve as the investment
advisor of other series of the Fund.
8. Books and Records. In compliance with the requirements
of the 1940 Act, the Advisor hereby agrees that all records which
it maintains for the Fund are the property of the Fund, and further
agrees to surrender promptly to the Fund any of such records upon
the Fund's request. The Advisor further agrees to preserve for the
periods prescribed by the 1940 Act, and the rules or orders
thereunder, the records required to be maintained by the 1940 Act.
9. Limitation of Liability of Advisor. The duties of the
Advisor shall be confined to those expressly set forth herein, and
no implied duties are assumed by or may be asserted against the
Advisor hereunder. The Advisor shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund
in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith or negligence on the part of the
Advisor in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement (as used
in this paragraph 9, the term "advisor" shall include directors,
officers, employees and other corporate agents of the Advisor as
well as that corporation itself).
10. Permissible Interest. Directors, agents, and
shareholders of the Fund are or may be interested in the Advisor
(or any successor thereof) as directors, officers, or shareholders,
or otherwise; directors, officers, agents and shareholders of the
Advisor are or may be interested in the Fund as directors,
officers, shareholders or otherwise; and the Advisor (or any
successor) is or may be interested in the Fund as a shareholder or
otherwise. In addition, brokerage transactions for the Fund may be
effected through affiliates of the Advisor if approved by the
Fund's Board of Directors subject to the rules and regulations of
the Securities and Exchange Commission, and the policies and
procedures adopted by the Fund.
11. License of Advisor's Name. The Advisor hereby authorizes
the Fund to use the name "Vontobel" for the Portfolio. The Fund
agrees that if this Agreement is terminated it will promptly
redesignate the name of the Portfolio to eliminate any reference to
the name "Vontobel" or any derivation thereof unless the Advisor
waives this requirement in writing.
12. Duties and Termination. This Agreement shall become
effective on the date first above written subject to its approval
by the shareholders of the Portfolio and unless sooner terminated
as provided herein, shall continue in effect for two (2) years from
that date. Thereafter, this Agreement shall be renewable for
successive periods of one year each, provided such continuance is
specifically approved annually (a) by the vote of a majority of
those members of the Fund's Board of Directors who are not parties
to this Agreement or interested persons of any such party (as that
term is defined in the 1940 Act), cast in person at a meeting
called for the purpose of voting on such approval, and (b) by vote
of either the Board of Directors or of a majority of the
outstanding voting securities (as that term is defined in the 0000
Xxx) of the Portfolio. Notwithstanding the foregoing, this
Agreement may be terminated by the Portfolio or by the Fund at any
time on sixty (60) days written notice, without the payment of any
penalty, provided that termination must be authorized either by
vote of the Fund's Board of Directors or by vote of a majority of
the outstanding voting securities of the Portfolio or by the
Advisor on sixty (60) days written notice. This Agreement will
automatically terminate in the event of its assignment (as that
term in defined in the 1940 Act).
13. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally,
but only by an instrument in writing signed by the party against
which enforcement of the change, waiver, discharge or termination
is sought. No material amendment of this Agreement shall be
effective until approved by vote of the holders of a majority of
the Portfolio's outstanding voting securities (as defined in the
1940 Act).
14. Notice. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by
registered or certified mail, postage prepaid, addressed by the
party giving notice to the other party at the address stated below:
(a) To the Fund at: 0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
(b) To the Advisor at: 000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
15. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or
limit any of the provisions hereof or otherwise affect their
construction or effect. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of the Agreement shall not be affected
thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective successors.
16. Applicable Law. This Agreement shall be construed in
accordance with, and governed by, the laws of the State of
Maryland, and the applicable provisions of the 1940 Act. To the
extent that the applicable laws of the State of Maryland, or any of
the provisions herein, conflict with the applicable provisions of
the 1940 Act, the latter shall control.
17. This Agreement may be executed in two or more
counterparts, each of which, when so executed, shall be deemed to
be an original, but such counterparts shall together constitute but
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of
the day and year first above written.
VONTOBEL USA INC.
BY:
Xxxxxxxx Xxxxxxxx
Chief Executive Officer
BY:
Xxxxxx X. Xxxxxxx
Senior Vice President
VONTOBEL FUNDS, INC.
BY:
Xxxx Xxxxx, III
Chairman
SCHEDULE A TO
INVESTMENT ADVISORY AGREEMENT
BY AND BETWEEN
VONTOBEL FUNDS, INC AND VONTOBEL USA INC.
AND THE
VONTOBEL EASTERN EUROPEAN DEBT FUND
Pursuant to Paragraph 4 of the Investment Advisory
Agreement, dated _________________, 1997 between Vontobel Funds,
Inc. (the "Fund") and Vontobel USA Inc. (the Advisor") for the
Vontobel Eastern European Debt Fund series of the Fund, the Fund
shall pay to the Advisor compensation at an annual rate as follows:
1.25% per annum on the first $500 million of the average
daily net assets of the Portfolio and 1% on the
Portfolio's average daily net assets over $500 million
payable monthly.
211027.1
