XXXXXXXX INTERNATIONAL FUNDS
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT made as of the 31st day of August,
2004, by and between XXXXXXXX INTERNATIONAL FUNDS, a Delaware statutory trust
(the "TRUST"), on behalf of each series of the Trust listed in Appendix A
hereto, as may be amended from time to time (individually, a "FUND" and
collectively, the "FUNDS") and XXXXXXXX INTERNATIONAL CAPITAL MANAGEMENT, LLC, a
limited liability company organized and existing under the laws of the State of
Delaware (the "ADVISOR").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company,
registered as such under the Investment Company Act of 1940, as amended (the
"1940 ACT"); and
WHEREAS, the Advisor is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "ADVISERS ACT"), and is engaged
in the business of supplying investment advice, investment management and
administrative services as an independent contractor; and
WHEREAS, the Trust desires to retain the Advisor to render advice and,
investment management to the Funds pursuant to the terms and provisions of this
Agreement, and the Advisor is interested in furnishing said advice and
investment management;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
mutually agree as follows:
1. Appointment of Advisor. The Trust hereby appoints and employs the
Advisor and the Advisor hereby accepts such appointment and employment to render
investment advice and investment management with respect to the assets of the
Funds for the period and on the terms set forth in this Agreement, subject to
the supervision and direction of the Trust's Board of Trustees.
2. Duties of Advisor.
(a) General Duties. The Advisor shall act as investment adviser to
the Funds and shall supervise investments of the Funds on behalf of the Funds in
accordance with the investment objectives, programs and restrictions of the
Funds as provided in the Trust's governing documents, including, without
limitation, the Trust's Agreement and Declaration of Trust and By-Laws, or
otherwise and such other limitations as the Trustees may impose from time to
time in writing to the Advisor. Without limiting the generality of the
foregoing, the Advisor shall: (i) furnish the Funds with advice and
recommendations with respect to the investment of each Fund's assets and the
purchase and sale of portfolio securities for the Funds, including the taking of
such other steps as may be necessary to implement such advice and
recommendations; (ii) furnish the Funds with reports, statements and other data
on securities, economic conditions and other pertinent subjects which the
Trust's Board of Trustees may
reasonably request; (iii) manage the investments of the Funds, subject to the
ultimate supervision and direction of the Trust's Board of Trustees; (iv)
provide persons satisfactory to the Trust's Board of Trustees to act as officers
and employees of the Trust and the Funds (such officers and employees, as well
as certain trustees, may be trustees, directors, officers, partners, or
employees of the Advisor or its affiliates) but not including personnel to
provide distribution services to the Funds; and (v) render to the Trust's Board
of Trustees such periodic and special reports with respect to each Fund's
investment activities as the Board may reasonably request.
(b) Brokerage. The Advisor shall place orders for the purchase and
sale of securities either directly with the issuer or with a broker or dealer
selected by the Advisor. In placing each Fund's securities trades, it is
recognized that the Advisor will give primary consideration to securing the most
favorable price and efficient execution, so that each Fund's total cost or
proceeds in each transaction will be the most favorable under all the
circumstances. Within the framework of this policy, the Advisor may consider the
financial responsibility, research and investment information, and other
services provided by brokers or dealers who may effect or be a party to any such
transaction or other transactions to which other clients of the Advisor may be a
party.
It is also understood that it is desirable for the Funds that the Advisor
have access to investment and market research and securities and economic
analyses provided by brokers and others. It is also understood that brokers
providing such services may execute brokerage transactions at a higher cost to
the Funds than might result from the allocation of brokerage to other brokers on
the basis of seeking the most favorable price and efficient execution.
Therefore, the purchase and sale of securities for the Funds may be made with
brokers who provide such research and analysis, subject to review by the Trust's
Board of Trustees from time to time with respect to the extent and continuation
of this practice to determine whether each Fund benefits, directly or
indirectly, from such practice. It is understood by both parties that the
Advisor may select broker-dealers for the execution of the Funds' portfolio
transactions who provide research and analysis as the Advisor may lawfully and
appropriately use in its investment management and advisory capacities, whether
or not such research and analysis may also be useful to the Advisor in
connection with its services to other clients.
On occasions when the Advisor deems the purchase or sale of a security to
be in the best interest of one or more of the Funds as well as of other clients,
the Advisor, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Advisor in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Funds and to such other clients.
3. Best Efforts and Judgment. The Advisor shall use its best judgment
and efforts in rendering the advice to the Funds as contemplated by this
Agreement.
4. Independent Contractor. The Advisor shall, for all purposes herein,
be deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Funds in any way, or in any way be deemed an agent for the Trust or
for the Funds. It is expressly understood and agreed that the services to be
rendered by the Advisor to the Funds under the provisions of this Agreement are
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not to be deemed exclusive, and the Advisor shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. Advisor's Personnel. The Advisor shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Advisor shall be
deemed to include persons employed or retained by the Advisor to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Advisor or the Trust's Board of Trustees may desire and reasonably request.
6. Reports by Funds to Advisor. Each Fund will from time to time
furnish to the Advisor detailed statements of its investments and assets, and
information as to its investment objective and needs, and will make available to
the Advisor such financial reports, proxy statements, legal and other
information relating to each Fund's investments as may be in its possession or
available to it, together with such other information as the Advisor may
reasonably request.
7. Expenses.
(a) With respect to the operation of each Fund, the Advisor is
responsible for the compensation of any of the Trust's trustees, officers, and
employees who are affiliates of the Advisor (but not the compensation of
employees performing services in connection with expenses which are the Fund's
responsibility under Subparagraph 7(b) below).
(b) Each Fund is responsible for and has assumed the
obligation for payment of all of its expenses, other than as stated in
Subparagraph 7(a) above, including but not limited to: fees and expenses
incurred in connection with the issuance, registration and transfer of its
shares; brokerage and commission expenses; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities and other
property of the Trust for the benefit of the Funds including all fees and
expenses of its custodian, shareholder services agent and accounting services
agent; interest charges on any borrowings; costs and expenses of pricing and
calculating its daily net asset value and of maintaining its books of account
required under the 1940 Act; taxes, if any; expenditures in connection with
meetings of each Fund's Shareholders and Board of Trustees that are properly
payable by the Fund; salaries and expenses of officers and fees and expenses of
members of the Trust's Board of Trustees or members of any advisory board or
committee who are not members of, affiliated with or interested persons of the
Advisor; insurance premiums on property or personnel of each Fund which inure to
its benefit, including liability and fidelity bond insurance; the cost of
preparing and printing reports, proxy statements, prospectuses and statements of
additional information of the Fund or other communications for distribution to
existing shareholders; legal, auditing and accounting fees; trade association
dues; fees and expenses (including legal fees) of obtaining and maintaining any
required registration or notification for its shares for sale under federal and
applicable state and foreign securities laws; all expenses of maintaining and
servicing shareholder accounts, including all charges for transfer, shareholder
recordkeeping, dividend disbursing, redemption, and other agents for the
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benefit of the Funds, if any; and all other charges and costs of its operation
plus any extraordinary and non-recurring expenses, except as herein otherwise
prescribed.
(c) To the extent the Advisor incurs any costs by assuming
expenses which are an obligation of a Fund as set forth herein, such Fund shall
promptly reimburse the Advisor for such costs and expenses, except to the extent
the Advisor has otherwise agreed to bear such expenses. To the extent the
services for which a Fund is obligated to pay are performed by the Advisor, the
Advisor shall be entitled to recover from such Fund to the extent of the
Advisor's actual costs for providing such services.
8. Investment Management Fee.
(a) The Funds shall pay to the Advisor, and the Advisor agrees to
accept, as full compensation for all investment management and advisory services
furnished or provided to the Funds pursuant to this Agreement, an annual
investment management fee, not to exceed the per annum percentage of the average
daily net asset value of the Funds' shares, as set forth in the Fee Schedule
attached hereto as Appendix B (the "INVESTMENT MANAGEMENT FEE"), as may be
amended in writing from time to time by the Trust and the Advisor.
(b) The Funds shall pay to the Advisor within five (5) business
days after the end of each calendar month a monthly fee of one-twelfth (1/12) of
the Investment Management Fee of the Funds' average daily net asset value for
the month. The net asset value shall be calculated in the manner provided in
each Fund's prospectus and statement of additional information then in effect.
(c) The initial Investment Management Fee under this Agreement
shall be payable on the first business day of the first month following the
effective date of this Agreement and shall be prorated as set forth below. If
this Agreement is terminated prior to the end of any month, the Investment
Management Fee to the Advisor shall be prorated for the portion of any month in
which this Agreement is in effect which is not a complete month according to the
proportion which the number of calendar days in the month during which the
Agreement is in effect bears to the number of calendar days in the month, and
shall be payable within ten (10) days after the date of termination.
(d) The Advisor may, but is not required to, reduce all or a
portion of the compensation or reimbursement of expenses due to it pursuant to
this Agreement and may agree to make payments to limit the expenses which are
the responsibility of the Funds under this Agreement. Any such reduction,
reimbursement, or payment (collectively, "SUBSIDIES") shall be applicable only
to such specific subsidy and shall not constitute an agreement to continue such
subsidy in the future. Any such subsidy will be agreed to prior to accrual of
the related expense or fee and will be estimated daily and reconciled and paid
on a monthly basis. The Advisor may also agree contractually to limit the
operating expenses of the Funds. The Advisor may seek reimbursement of any
subsidies made by the Advisor either voluntarily or pursuant to contract. The
reimbursement of any subsidy must be sought no later than the end of the third
fiscal year following the year to which the subsidy relates. The Advisor may not
request or receive reimbursement for any subsidies before payment of the
ordinary operating expenses of the Funds for the current fiscal year and cannot
cause the Funds to exceed the limitation to which the Advisor has agreed in
making such reimbursement.
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(e) The Advisor may agree not to require payment of any portion of
the compensation or reimbursement of expenses otherwise due to it pursuant to
this Agreement prior to the time such compensation or reimbursement has accrued
as a liability of the Funds. Any such agreement shall be applicable only with
respect to the specific items covered thereby and shall not constitute an
agreement not to require payment of any future compensation or reimbursement due
to the Advisor hereunder.
9. Fund Share Activities of Advisors Partners, Officers and Employees;
Code of Ethics.
(a) The Advisor agrees that neither it nor any of its partners,
officers or employees shall take any short position in the shares of the Funds.
This prohibition shall not prevent the purchase of such shares by any of the
officers and partners or bona fide employees of the Advisor or any trust,
pension, profit-sharing or other benefit plan for such persons or affiliates
thereof, at a price not less than the net asset value thereof at the time of
purchase, as allowed pursuant to rules promulgated under the 0000 Xxx.
(b) The Advisor represents that it (i) has adopted a written code
of ethics pursuant to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the
Advisers Act; (ii) has provided the Funds with a copy of evidence of the
adoption of the code of ethics by the Advisor; and (iii) will make such reports
to the Funds as are required by Rule 17j-1 under the 1940 Act. The Advisor
agrees to provide the Funds with any information required to satisfy the code of
ethics reporting or disclosure requirements of the Xxxxxxxx-Xxxxx Act of 2002
and any rules or regulations promulgated by the Securities and Exchange
Commission (the "SEC") thereunder (the "XXXXXXXX-XXXXX ACT"). To the extent the
Advisor adopts or has adopted a separate code of ethics or amends or has amended
its code of ethics to comply with such rules or regulations, the Advisor shall
provide the Funds with a copy of such code of ethics and any amendments thereto.
10. Conflicts with Trust's Governing Documents and Applicable Laws.
Nothing herein contained shall be deemed to require the Trust or the Funds to
take any action contrary to the Trust's Agreement and Declaration of Trust,
By-Laws, or any applicable statute or regulation, or to relieve or deprive the
Board of Trustees of the Trust of its responsibility for and control of the
conduct of the affairs of the Trust and Funds.
11. Indemnification.
(a) The Funds agree to indemnify and hold harmless the Advisor and
its officers and directors from all taxes, charges, expenses, assessments,
claims and liabilities (including, without limitation, liabilities arising under
the Securities Act of 1933, as amended ("1933 ACT"), the Securities and Exchange
Act of 1934, as amended (the "1934 ACT"), the 1940 Act, and any state and
foreign securities laws, all as amended from time to time) and expenses,
including (without limitation) reasonable attorneys' fees and disbursements,
arising directly or indirectly from any action or thing which the Advisor takes
or does or omits to take or do (i) at the request or on the direction of or in
reliance on the advice of the Funds or (ii) upon oral or written instructions
from an officer of the Funds, provided that the Advisor shall not be indemnified
against any liability to the Funds or to the Fund's shareholders (or any
expenses incident to such liability) arising out of the Advisor's own willful
misfeasance, bad faith, gross negligence or reckless disregard of its duties and
obligations under this Agreement.
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(b) The Advisor agrees to indemnify and hold harmless the Funds,
the Trust and its officers and Trustees from all claims and liabilities
(including, without limitation, liabilities arising under the 1933 Act, the 1934
Act, the 1940 Act, and any state and foreign securities laws, all as amended
from time to time) and expenses, including (without limitation) reasonable
attorneys' fees and disbursements, arising directly or indirectly from any
action or thing which the Advisor takes or does or omits to take or do which is
in violation of this Agreement, not in accordance with written instructions
given by an officer of the Trust, in violation of written procedures then in
effect, or arising out of the Advisor's own willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties and obligations under this
Agreement.
(c) The Advisor shall provide such security as is necessary to
prevent unauthorized use of any on-line computer facilities. The Advisor agrees
to release, indemnify and hold harmless the Trust and the Funds from any all
direct or indirect liabilities or losses resulting from requests, directions,
actions, or inactions of or by the Advisor, its officers, employees or agents
regarding the redemption, transfer or registration of the Funds' shares for
accounts of shareholders. Principals of the Advisor will be available to consult
from time to time with officers of the Trust and the Trustees concerning
performance of the Advisor's duties contemplated by this Agreement.
(d) No provision of this Agreement shall be construed to protect
any Trustee or officer of the Trust, or partner or officer of the Advisor, from
liability in violation of Sections 17(h) and (i) of the 1940 Act.
12. Non-Exclusivity. The Trust's employment of the Advisor is not an
exclusive arrangement, and the Trust may from time to time employ other
individuals or entities to furnish it with the services provided for herein. In
the event this Agreement is terminated with respect to any Fund, this Agreement
shall remain in full force and effect with respect to all other Funds listed on
Appendix A hereto, as the same may be amended.
13. Term. This Agreement shall become effective on August 31, 2004,
contingent upon the approval of this Agreement by the Board of Trustees of the
Trust. This Agreement shall remain in effect for a period of one (1) year after
August 31, 2004, unless sooner terminated as hereinafter provided. This
Agreement shall continue in effect thereafter for additional periods not
exceeding one (l) year so long as such continuation is approved for each Fund at
least annually by (i) the Board of Trustees of the Trust or by the vote of a
majority of the outstanding voting securities of each Fund and (ii) the vote of
a majority of the Trustees of the Trust who are not parties to this Agreement
nor interested persons thereof, cast in person at a meeting called for the
purpose of voting on such approval.
14. Termination. This Agreement may be terminated by the Trust on behalf
of any one or more of the Funds at any time without payment of any penalty, by
the Board of Trustees of the Trust or by vote of a majority of the outstanding
voting securities of a Fund, upon sixty (60) days' written notice to the
Advisor, and by the Advisor upon sixty (60) days' written notice to a Fund.
15. Termination by Assignment. This Agreement shall terminate
automatically in the event of any transfer or assignment thereof, as defined in
the 1940 Act.
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16. Transfer; Assignment. This Agreement may not be transferred,
assigned, sold or in any manner hypothecated or pledged without the affirmative
vote or written consent of the holders of a majority of the outstanding voting
securities of each Fund.
17. Entire Agreement. This Agreement, including all Appendices hereto,
as the same may be amended from time to time, shall constitute the entire
agreement and understanding between the parties hereto, and supersedes all prior
agreements and understandings, relating to the subject matter hereof.
18. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
19. Notices. Any notice under this Agreement shall be given in writing,
addressed and delivered or mailed postage prepaid, to the other party at the
principal office of such party.
20. Definitions. The terms "majority of the outstanding voting
securities" and "interested persons" shall have the meanings as set forth in the
1940 Act.
21. Notice of Declaration of Trust. The Advisor agrees that the Trust's
obligations under this Agreement shall be limited to the Funds and to their
assets, and that the Advisor shall not seek satisfaction of any such obligation
from the shareholders of the Funds nor from any trustee, officer, employee or
agent of the Trust or the Funds.
22. Nonpublic Personal Information. Notwithstanding any provision herein
to the contrary, the Advisor agrees on behalf of itself and its directors,
partners, officers, and employees (a) to treat confidentially and as proprietary
information of the Trust and the Funds (i) all records and other information
relative to the Trust and the Funds and their prior, present, or potential
shareholders (and clients of said shareholders) and (ii) any Nonpublic Personal
Information, as defined under Section 248.3(t) of Regulation S-P ("REGULATION
S-P"), promulgated under the Xxxxx-Xxxxx-Xxxxxx Act (the "G-L-B ACT"), and (b)
not to use such records and information for any purpose other than the
performance of its responsibilities and duties hereunder, or as otherwise
permitted by the privacy policies adopted by the Trust and the Funds, Regulation
S-P or the G-L-B Act, except after prior notification to and approval in writing
by the Trust. Such written approval shall not be unreasonably withheld by the
Trust or and may not be withheld where the Advisor may be exposed to civil or
criminal contempt proceedings for failure to comply after being requested to
divulge such information by duly constituted authorities, or when so requested
by the Trust.
23. Anti-Money Laundering Compliance. The Advisor acknowledges that, in
compliance with the Bank Secrecy Act, as amended, the USA PATRIOT Act, and any
respective implementing regulations (collectively, the "AML LAWS"), the Trust
has adopted an Anti-Money Laundering Policy. The Advisor agrees to comply with
the Trust's Anti-Money Laundering Policy and the AML Laws, as the same may apply
to the Advisor, now and in the future. The Advisor further agrees to provide to
the Trust and/or the Funds such reports, certifications and contractual
assurances as may be requested by Trust and/or the Funds. The Trust and the
Funds may disclose information respecting the Advisor to governmental and/or
regulatory or self-regulatory authorities to the extent required by applicable
law or regulation and may file reports with such authorities as may be required
by applicable law or regulation.
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24. Certifications; Disclosure Controls and Procedures. The Advisor
acknowledges that, in compliance with the Xxxxxxxx-Xxxxx Act, and the
implementing regulations promulgated thereunder, the Funds are required to make
certain certifications and have adopted disclosure controls and procedures. To
the extent reasonably requested by the Trust or the Funds, the Advisor agrees to
use its best efforts to assist the Trust and the Funds in complying with the
Xxxxxxxx-Xxxxx Act and implementing the Funds' disclosure controls and
procedures. The Advisor agrees to inform the Trust and the Funds of any material
development related to the Trust or the Funds that the Advisor reasonably
believes is relevant to the certification obligations of the Funds under the
Xxxxxxxx-Xxxxx Act.
25. Name of Advisor. The parties agree that the Advisor has a
proprietary interest in the name "Xxxxxxxx," and the Trust agrees to promptly
take such action as may be necessary to delete from its corporate name and/or
the name of the Funds any reference to the name of the Advisor or the name
"Xxxxxxxx," promptly after receipt from the Advisor of a written request
therefore.
26. Captions. 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.
27. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the 1940 Act and the Advisers Act, and any rules and regulations
promulgated thereunder.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, all on the day and
year first above written.
XXXXXXXX INTERNATIONAL FUNDS XXXXXXXX INTERNATIONAL CAPITAL MANAGEMENT, LLC
By: __________________________ By: _____________________________________
Title: _______________________ Title: __________________________________
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APPENDIX A
XXXXXXXX INTERNATIONAL FUNDS
FUND SCHEDULE
Fund Effective Date
- Xxxxxxxx Pacific Tiger Fund August 31, 2004
- Xxxxxxxx Asian Growth and Income Fund August 31, 2004
- Xxxxxxxx Korea Fund August 31, 2004
- Xxxxxxxx China Fund August 31, 2004
- Xxxxxxxx Japan Fund August 31, 2004
- Xxxxxxxx Asian Technology Fund August 31, 2004
- Xxxxxxxx Asia Pacific Fund August 31, 2004
XXXXXXXX INTERNATIONAL FUNDS XXXXXXXX INTERNATIONAL CAPITAL MANAGEMENT, LLC
By: _________________________ By: _______________________________________
G. Xxxx Xxxxxxxx G. Xxxx Xxxxxxxx
President Chairman and Co-Chief Executive Officer
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APPENDIX B
XXXXXXXX INTERNATIONAL FUNDS
INVESTMENT MANAGEMENT FEE SCHEDULE
The Investment Management Fee for the Fund Complex is as follows:
Portfolio Value of the Funds Investment Management Fee as a Percent of Portfolio Value of the Funds
---------------------------- ----------------------------------------------------------------------
(Not to Exceed)
$0 to $2 Billion 0.75% of average daily net assets
$2 Billion to $5 Billion 0.70% of average daily net assets
Over $5 Billion 0.65% of average daily net assets
XXXXXXXX INTERNATIONAL FUNDS XXXXXXXX INTERNATIONAL CAPITAL MANAGEMENT, LLC
By: _________________________ By: _______________________________________
G. Xxxx Xxxxxxxx G. Xxxx Xxxxxxxx
President Chairman and Co-Chief Executive Officer
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