RUSSIA AND EASTERN EUROPE PORTFOLIO
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 17th day of November, 1997 between Russia and Eastern
Europe Portfolio, a New York trust (the "Trust"), and ▇▇▇▇▇ ▇▇▇▇▇▇ Investment
Management (Bermuda) Limited, a Bermuda corporation (the "Adviser").
1. DUTIES OF THE ADVISER. The Trust hereby employs the Adviser to act as
investment adviser for and to manage the investment and reinvestment of the
assets of the Trust, subject to the supervision of the Trustees of the Trust,
for the period and on the terms set forth in this Agreement.
The Adviser hereby accepts such employment, and undertakes to afford to the
Trust the advice and assistance of the Adviser's organization in the choice of
investments and in the purchase and sale of securities for the Trust and to
furnish for the use of the Trust office space and all necessary office
facilities, equipment and personnel for servicing the investments of the Trust
and to pay the salaries and fees of all officers and Trustees of the Trust who
are members of the Adviser's organization and all personnel of the Adviser
performing services relating to research and investment activities. The Adviser
shall for all purposes herein be deemed to be an independent contractor and
shall, except as otherwise expressly provided or authorized, have no authority
to act for or represent the Trust in any way or otherwise be deemed an agent of
the Trust.
The Adviser shall provide the Trust with such investment management and
supervision as the Trust may from time to time consider necessary for the proper
supervision of the Trust's investments. As investment adviser to the Trust, the
Adviser shall furnish continuously an investment program and shall determine
from time to time what securities shall be acquired, disposed of or exchanged
and what portion of the Trust's assets shall be held uninvested, subject always
to the applicable restrictions of the Declaration of Trust, By-Laws and
registration statement of the Trust under the Investment Company Act of 1940,
all as from time to time amended. Should the Trustees of the Trust at any time,
however, make any specific determination as to investment policy for the Trust
and notify the Adviser thereof in writing, the Adviser shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The Adviser shall
take, on behalf of the Trust, all actions which it deems necessary or desirable
to implement the investment policies of the Trust.
The Adviser shall place all orders for the purchase or sale of portfolio
securities for the account of the Trust either directly with the issuer or with
brokers or dealers selected by the Adviser, and to that end the Adviser is
authorized as the agent of the Trust to give instructions to the custodian of
the Trust as to deliveries of securities and payments of cash for the account of
the Trust. In connection with the selection of such brokers or dealers and the
placing of such orders, the Adviser shall use its best efforts to seek to
execute security transactions at prices which are advantageous to the Trust and
(when a disclosed commission is being charged) at reasonably competitive
commission rates. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Adviser and the Adviser is expressly
authorized to pay any broker or dealer who provides such brokerage and research
services a commission for executing a security transaction which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser 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 or dealer, viewed in terms of either
that particular transaction or the overall responsibilities which the Adviser
and its affiliates have with respect to accounts over which they exercise
investment discretion. Subject to the requirement set forth in the second
sentence of this paragraph, the Adviser is authorized to consider, as a factor
in the selection of any broker or dealer with whom purchase or sale orders may
be placed, the fact that such broker or dealer has sold or is selling shares of
one or more investment companies sponsored by the Adviser or its affiliates or
shares of any other investment company or series thereof that invests
substantially all of its assets in the Trust.
The Adviser shall not be responsible for providing certain special
administrative services to the Trust under this Agreement. ▇▇▇▇▇ ▇▇▇▇▇
Management, in its capacity as Administrator of the Trust, shall be responsible
for providing such services to the Trust under the Trust's separate
Administration Agreement with the Administrator.
2. COMPENSATION OF THE ADVISER. For the services, payments and facilities
to be furnished hereunder by the Adviser, the Adviser shall be entitled to
receive from the Trust, a monthly advisory fee computed by applying the annual
asset rate applicable to that portion of the average daily net assets of the
Trust throughout the month in each Category as indicated below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
1 less than $500 million 0.75%
2 $500 million but less than $1 billion 0.70%
3 $1 billion but less than $1.5 billion 0.65%
4 $1.5 billion but less than $2 billion 0.60%
5 $2 billion but less than $3 billion 0.55%
6 $3 billion and over 0.50%
Such advisory fee shall be paid monthly in arrears on the last business day of
each month. The Trust's daily net assets shall be computed in accordance with
the Declaration of Trust of the Trust and any applicable votes and
determinations of the Trustees of the Trust. In case of initiation or
termination of the Agreement during any month, the fee for that month shall be
based on the number of calendar days during which it is in effect.
The Adviser may, from time to time, waive all or a part of the above
compensation.
3. ALLOCATION OF CHARGES AND EXPENSES. It is understood that the Trust will
pay all expenses other than those expressly stated to be payable by the Adviser
hereunder, which expenses payable by the Trust shall include, without implied
limitation, (i) expenses of maintaining the Trust and continuing its existence,
(ii) registration of the Trust under the Investment Company Act of 1940, (iii)
commissions, fees and other expenses connected with the acquisition, holding and
disposition of securities and other investments, (iv) auditing, accounting and
legal expenses, (v) taxes and interest, (vi) governmental fees, (vii) expenses
of issue, sale and redemption of Interests in the Trust, (viii) expenses of
registering and qualifying the Trust and Interests in the Trust under federal
and state securities laws and of preparing and printing registration statements
or other offering documents or memoranda for such purposes and for distributing
the same to Holders and investors, and fees and expenses of registering and
maintaining registrations of the Trust and of the Trust's placement agent as
broker-dealer or agent under state securities laws, (ix) expenses of reports and
notices to Holders and of meetings of Holders and proxy solicitations therefor,
(x) expenses of reports to governmental officers and commissions, (xi) insurance
expenses, (xii) association membership dues, (xiii) fees, expenses and
disbursements of custodians and subcustodians for all services to the Trust
(including without limitation safekeeping of funds, securities and other
investments, keeping of books, accounts and records, and determination of net
asset values, book capital account balances and tax capital account balances),
(xiv) fees, expenses and disbursements of transfer agents, dividend disbursing
agents, Holder servicing agents and registrars for all services to the Trust,
(xv) expenses for servicing the accounts of Holders, (xvi) any direct charges to
Holders approved by the Trustees of the Trust, (xvii) compensation and expenses
of Trustees of the Trust who are not members of the Adviser's organization,
(xviii) the administration fees payable by the Trust under any administration or
similar agreement to which the Trust is a party, and (xvix) such non-recurring
items as may arise, including expenses incurred in connection with litigation,
proceedings and claims and the obligation of the Trust to indemnify its
Trustees, officers and Holders with respect thereto.
4. OTHER INTERESTS. It is understood that Trustees and officers of the
Trust and Holders of Interests in the Trust are or may be or become interested
in the Adviser as directors, officers, employees, shareholders or otherwise and
that directors, officers, employees and shareholders of the Adviser are or may
be or become similarly interested in the Trust, and that the Adviser may be or
become interested in the Trust as a Holder or otherwise. It is also understood
that directors, officers, employees and shareholders of the Adviser may be or
become interested (as directors, trustees, officers, employees, shareholders or
otherwise) in other companies or entities (including, without limitation, other
investment companies) which the Adviser may organize, sponsor or acquire, or
with which it may merge or consolidate, and that the Adviser or its subsidiaries
or affiliates may enter into advisory or management agreements or other
contracts or relationships with such other companies or entities.
5. LIMITATION OF LIABILITY OF THE ADVISER. The services of the Adviser to
the Trust are not to be deemed to be exclusive, the Adviser being free to render
services to others and engage in other business activities. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Adviser, the Adviser shall
not be subject to liability to the Trust or to any Holder of Interests in the
Trust for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses which may be sustained in the acquisition,
holding or disposition of any security or other investment.
6. SUB-INVESTMENT ADVISERS. The Adviser may employ one or more
sub-investment advisers from time to time to perform such of the acts and
services of the Adviser, including the selection of brokers or dealers to
execute the Trust's portfolio security transactions, and upon such terms and
conditions as may be agreed upon between the Adviser and such investment adviser
and approved by the Trustees of the Trust, all as permitted by the Investment
Company Act of 1940.
7. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall become
effective upon the date of its execution, and, unless terminated as herein
provided, shall remain in full force and effect through and including February
28, 1999 and shall continue in full force and effect indefinitely thereafter,
but only so long as such continuance after February 28, 1999 is specifically
approved at least annually (i) by the Board of Trustees of the Trust or by vote
of a majority of the outstanding voting securities of the Trust and (ii) by the
vote of a majority of those Trustees of the Trust who are not interested persons
of the Adviser or the Trust cast in person at a meeting called for the purpose
of voting on such approval.
Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Agreement without the payment of any
penalty, by action of the Trustees of the Trust or the directors of the Adviser,
as the case may be, and the Trust may, at any time upon such written notice to
the Adviser, terminate this Agreement by vote of a majority of the outstanding
voting securities of the Trust. This Agreement shall terminate automatically in
the event of its assignment.
8. AMENDMENTS OF THE AGREEMENT. This Agreement may be amended by a writing
signed by both parties hereto, provided that no amendment to this Agreement
shall be effective until approved (i) by the vote of a majority of those
Trustees of the Trust who are not interested persons of the Adviser or the Trust
cast in person at a meeting called for the purpose of voting on such approval,
and (ii) by vote of a majority of the outstanding voting securities of the
Trust.
9. LIMITATION OF LIABILITY. The Adviser expressly acknowledges the
provision in the Declaration of Trust of the Trust (Sections 5.2 and 5.6)
limiting the personal liability of the Trustees and officers of the Trust, and
the Adviser hereby agrees that it shall have recourse to the Trust for payment
of claims or obligations as between the Trust and the Adviser arising out of
this Agreement and shall not seek satisfaction from any Trustee or officer of
the Trust.
10. CERTAIN DEFINITIONS. The terms "assignment" and "interested persons"
when used herein shall have the respective meanings specified in the Investment
Company Act of 1940 as now in effect or as hereafter amended subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
by any rule, regulation or order. The term "vote of a majority of the
outstanding voting securities" shall mean the vote, at a meeting of Holders, of
the lesser of (a) 67 per centum or more of the Interests in the Trust present or
represented by proxy at the meeting if the Holders of more than 50 per centum of
the outstanding Interests in the Trust are present or represented by proxy at
the meeting, or (b) more than 50 per centum of the outstanding Interests in the
Trust. The terms "Holders" and "Interests" when used herein shall have the
respective meanings specified in the Declaration of Trust of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
RUSSIA AND EASTERN EUROPE PORTFOLIO
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Vice President
▇▇▇▇▇ ▇▇▇▇▇▇ INVESTMENT MANAGEMENT
(BERMUDA) LIMITED
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
President