INVESTMENT ADVISORY AGREEMENT
Exhibit 2(g)
AGREEMENT dated and effective as of July 1, 2003, between THE MEXICO EQUITY AND
INCOME FUND, INC., a Maryland corporation (herein referred to as the “Fund”) and XXXXXXXX ASSET
MANAGEMENT, S.A. DE C.V., a Mexican corporation (herein referred to as the “Investment
Adviser”).
WHEREAS, the Fund and the Investment Adviser desire to enter into an investment management
agreement whereby the terms of said agreement are set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, it is agreed by
the parties as follows:
1. Appointment of the Investment Adviser.
(a) The Investment Adviser hereby undertakes and agrees, upon the terms
and conditions herein set forth, (i) to make investment decisions for the Fund, to prepare and
make available to the Fund research and statistical data in connection therewith, and to
supervise the acquisition and disposition of securities by the Fund, including the selection
of
brokers or dealers to carry out the transactions, all in accordance with the Fund’s investment
objective and policies and in accordance with guidelines and directions from the Fund’s
Board of Directors; (ii) to assist the Fund as it may reasonably request in the conduct of the
Fund’s business, subject to the direction and control of the Fund’s Board of Directors; (iii)
to
maintain and furnish or cause to be maintained and furnished for the Fund all records, reports
and other information required under the U.S. Investment Company Act of 1940, as amended
(the “1940 Act”), to the extent that such records, reports and other information are not
maintained or furnished by the administrators, custodians or other agents of the Fund; (iv) to
furnish at the Investment Adviser’s expense for the use of the Fund such clerical services and
office space and facilities as the Fund may reasonably require for its needs in the United
States and Mexico related to research, statistical and investment work; and (v) to pay the
reasonable salaries and expenses of such of the Fund’s officers and employees (including,
where applicable, the Fund’s share of payroll taxes) and any fees and expenses of such of the
Fund’s directors as are directors, officers or employees of the Investment Adviser or any of
its
affiliates. The Investment Adviser shall bear all expenses arising out of its duties hereunder
but shall not be responsible for any expenses of the Fund other than those specifically
allocated to the Investment Adviser in this Section 1.
(b) In particular, but without limiting the generality of the foregoing, the
Investment Adviser shall not be responsible, except to the extent of the compensation of such
of the Fund’s employees as are directors, officers or employees of the Investment Adviser
whose services may be involved, for the following expenses of the Fund; organization
expenses (but not the overhead or employee costs of the Investment Adviser); legal fees and
expenses of counsel (United States and Mexican) to the Fund and, if counsel is retained by the
directors who are not “interested persons” of the Fund, of such counsel; auditing and accounting
expenses; taxes and governmental fees; New York Stock Exchange listing fees; dues and expenses
incurred in connection with membership in investment company organizations; fees and expenses of
the Fund’s custodians, transfer agents and registrars; fees and expenses with respect to
administration except as may be provided otherwise pursuant to administration agreements; expenses
for portfolio pricing services by a pricing agent, if any; expenses of preparing share certificates
and other expenses in connection with the issuance, offering and underwriting of shares issued by
the Fund; expenses relating to investor and public relations; fees and expenses involved in
registering and maintaining registration of the Fund and of its shares with the U.S. Securities and
Exchange Commission, and qualifying its shares under state securities laws, including the
preparation and printing of the Fund’s registration statements and prospectuses for such purposes;
freight, insurance and other charges in connection with the shipment of the Fund’s portfolio
securities; brokerage commissions, stamp duties or other costs of acquiring or disposing of any
portfolio holding of the Fund; expenses of preparation and distribution of reports, notices and
dividends to shareholders; expenses of the dividend reinvestment and share purchase plan; costs of
stationery; any litigation expenses; and costs of shareholders’ and other meetings.
(c) In selecting brokers or dealers to execute portfolio transactions on
behalf of the Fund, the Investment Adviser will seek the best overall terms available. In
assessing the best overall terms available for any transaction, the Investment Adviser must
consider the factors it deems relevant, including the breadth of the market in the security,
the
price of the security, the financial condition and execution capability of the broker or
dealer,
and the reasonableness of the commission, if any, for the specific transaction and on a
continuing basis. In addition, the Investment Adviser may, in selecting brokers or dealers to
execute a particular transaction and in evaluating the best overall terms available, consider
the
brokerage and research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) provided to the Fund.
(d) The Investment Adviser may contract with or consult with such banks,
other securities firms or other parties in Mexico or elsewhere as it may deem appropriate to
obtain additional advisory information and advice, including investment recommendations,
advice regarding economic factors and trends, advice as to currency exchange matters and
clerical and accounting services and other assistance. It is acknowledged and agreed that the
Investment Adviser will be responsible for the management of the Fund’s portfolio and
overall investment strategy, in accordance with the Fund’s investment policies, and for
making decisions to buy, sell or hold particular securities, including but not limited to all
investment decisions with respect to the Fund’s portfolio of equity, debt and convertible debt
securities.
2. Remuneration. The Fund agrees to pay to the Investment Adviser, in either
U.S. dollars, as may from time to time be agreed among the Fund and the Investment Adviser,
as full compensation for the services to be rendered and expenses to be borne by the
Investment Adviser hereunder, a monthly fee at an annual rate equal to 0.80% of the value of
the Fund’s average daily net assets. For purposes of computing the fee, the average monthly
net assets of the Fund are determined at the end of each month on the basis of the average net
assets of the Fund for each week during the month. The assets for each weekly period are
determined by averaging the net assets at the last business day of a week with the net assets
at
the last business day of the prior week. The value of the net assets of the Fund shall be
determined pursuant to the applicable provisions of the 1940 Act and the directions of the
Fund’s Board of Directors. Subject to the provisions of Section 6 of this Agreement, such fee
shall be computed beginning on July 1, 2003 (the “Effective Date”) until the termination, for
whatever reason, of this Agreement. The fee for the period from the end of the last month
ending prior to termination of this Agreement to the date of termination and the fee for the
period from the Effective Date through the end of the month in which the Effective Date
occurs shall be pro rated according to the proportion which such period bears to the full
monthly period. Except as provided below, each payment of a monthly fee to the Investment
Adviser shall be made within ten days of the first day of each month following the day as of
which such payment is computed. Upon the termination of this Agreement before, the end of
any month, such fee shall be payable on the date of termination of this Agreement.
3. Representations
and Warranties. The Investment Adviser represents and
warrants that it is duly registered and authorized as an investment adviser under the United
States Investment Advisers Act of 1940, as amended, and agrees to maintain effective all
requisite registrations, authorizations and licenses, as the case may be, until the
termination of
this Agreement.
4. Services
Not Deemed Exclusive. Nothing herein shall be construed as
prohibiting the Investment Adviser from providing investment management and advisory
services to, or entering into investment management and advisory agreements with, other
clients, including other registered investment companies and clients which may invest in
securities of Mexican issuers, or from utilizing (in providing such services) information
furnished to the Investment Adviser by others as contemplated by Section 1 of this
Agreement; nor, except as explicitly provided herein, shall anything herein be construed as
constituting the Investment Adviser as an agent of the Fund.
5. Limit
of Liability. The Investment Adviser may rely on information
reasonably believed by it to be accurate and reliable. Neither the Investment Adviser nor its
officers, directors, employees, agents or controlling persons as defined in the 1940 Act shall
be subject to any liability for any act or omission, error of judgment or mistake of law, or
for
any loss suffered by the Fund, in the course of, connected with or arising out of any services
to be rendered hereunder, except by reason of willful misfeasance, bad faith or gross
negligence on the part of the Investment Adviser in the performance of its duties or by
reason of reckless disregard on the part of the Investment Adviser of its obligations and duties
under this Agreement. Any person, even though also employed by the Investment Adviser, who may be
or become an employee of the Fund shall be deemed, when acting within the scope of his employment
by the Fund, to be acting in such employment solely for the Fund and not as an employee or agent
of the Investment Adviser.
6. Duration
and Termination. This Agreement shall continue in effect initially
for a two year period and will continue from year to year, provided, such continuance is
specifically approved at least annually by the affirmative vote of (i) a majority of the
members
of the Fund’s Board of Directors who are neither parties to this Agreement nor interested
persons of the Fund or of the Investment Adviser or of any entity regularly furnishing
investment advisory services with respect to the Fund pursuant to an agreement with the
Investment Adviser, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) a majority of the Fund’s Board of Directors or the holders of a majority of
the outstanding voting securities of the Fund.
Notwithstanding the above, this Agreement (a) may nevertheless be terminated at any time
without penalty, by the Fund’s Board of Directors, by vote of holders of a majority of the
outstanding voting securities of the Fund or by the Investment Adviser upon 60 days’ written
notice delivered or sent to the other party, and (b) shall automatically be terminated in the
event of its assignment; provided, however, that a transaction which does not, in accordance with
the 1940 Act, result in a change of actual control or management of the Investment Adviser’s
business shall not be deemed to be an assignment for the purposes of this Agreement. Any such
notice shall be deemed given when received by the addressee.
7. Non-Assignment
and Amendment. This Agreement may not be transferred,
assigned, sold or in any manner hypothecated or pledged by either party hereto other than
pursuant to Section 6. It may be amended by mutual agreement, but only after authorization
of such amendment by the affirmative vote of (i) the holders of a majority of the outstanding
voting securities of the Fund, and (ii) a majority of the members of the Fund’s Board of
Directors’ who are not interested persons of the Fund or of the Investment Adviser or of an
entity regularly furnishing investment advisory services with respect to the Fund pursuant to
any agreement with the Investment Adviser, cast in person at a meeting called for the purpose
of voting on such approval.
8. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York; provided, however, that nothing herein
shall be construed as being inconsistent with the 1940 Act. As used herein, the terms
“interested person,” “assignment” and “vote of a majority of the outstanding voting
securities” shall have the meanings set forth in the 1940 Act.
9. Notices. Any notice hereunder shall be in writing and shall be
delivered in person or by telex or facsimile followed by delivery in person to the parties
at the addresses set forth below:
If to the Fund: | ||||
THE MEXICO EQUITY AND INCOME FUND, INC. | ||||
000 X. Xxxxxxxx Xx., 0xx Xxxxx | ||||
Xxxxxxxxx, Xxxxxxxxx 00000 | ||||
Telephone: | (000)000-0000 | |||
Facsimile: | (000)000-0000 | |||
Attention: | Xxxxxx X. Xxxxx |
with a copy to: | ||||
XXXXXXX & XXXXXXX P.C. | ||||
000 Xxxx Xxxxxx | ||||
Xxx Xxxx, XX 00000 | ||||
Telephone: | (000) 000-0000 | |||
Facsimile: | (000) 000-0000 | |||
Attention: | Xxxxxx X. Xxxxxx, Esq. |
If to the Investment Adviser: | ||||
XXXXXXXX ASSET MANAGEMENT, S.A. DE X.X. | ||||
Xxxxxxxxxxx Xxxxxx #000 | ||||
0xx Xxxxx Xxxxxxx | ||||
Xxxxxxxxxx, Xxxxxx 00000 | ||||
Telephone: | 00 000 000 00 00 | |||
Fax: | 00 000 000 00 00 | |||
Attention: | Xx. Xxxxxxx Xxxxx Xxxxxxxx |
or to such other address as to which the recipient shall have informed the other parties in
writing.
Unless specifically provided elsewhere, notice given as provided above shall be
deemed to have been given, if by personal delivery, on the day of such delivery, and, if
by telex or facsimile and mail, on the date on which such telex or facsimile and
confirmatory letter are sent.
10. Consent
to Jurisdiction. Each party hereto irrevocably agrees that any
suit, action or proceeding against the Investment Adviser or the Fund arising out of or
relating to
this Agreement shall be subject exclusively to the jurisdiction of the United States
District Court for the Southern District of New York and the Supreme Court of the State of New
York, New York County, and each party hereto irrevocably submits to the jurisdiction of each such
court in connection with any such suit, action or proceeding. Each party hereto waives any
objection to the laying of venue of any such suit, action or proceeding in either such court, and
waives any claim that such suit, action or proceeding has been brought in an inconvenient forum.
Each party hereto irrevocably consents to service of process in connection with any such suit,
action or proceeding by mailing a copy thereof registered or certified mail, postage prepaid, to
their respective addresses as set forth in this Agreement.
11. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall constitute one and the
same instrument.
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IN WITNESS WHEREOF, the parties have caused their duly authorized signatories to execute
this Agreement as of the day and year first written above.
THE MEXICO EQUITY AND INCOME FUND, INC. | ||||||
By: | /s/ Xxxxxx Xxxxxxxxx | |||||
Name: Xxxxxx Xxxxxxxxx | ||||||
Title: President |
XXXXXXXX ASSET MANAGEMENT S.A. DE C.V. | ||||||
By: | /s/ Xxxxxxx Xxxxx Xxxxxxxx | |||||
Name: Xxxxxxx Xxxxx Xxxxxxxx | ||||||
Title: President |