ADVISORY AGREEMENT
ADVISORY
AGREEMENT, dated March 7, 2008, 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 Frontier 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 1.50% 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 to State Street Bank
and
Trust Company, 0 Xxxxxx Xxxxx, 0xx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
Attention: Xxxxxxxx Xxxxx. 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.
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ATTEST
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XXXXXXX,
XXXXXXX FUNDS, INC.
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By:
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/s/
Xxxx Xxxxxxxx
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By:
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/s/
Xxxxx X. Xxxxxxx
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ATTEST
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XXXXXXX,
LOEVNER MANAGEMENT L.P.
BY:
HLM HOLDINGS, INC., General Partner
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By:
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/s/
Xxxx Xxxxxxxx
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By:
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/s/
Xxxxx X. Xxxxxxx
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