<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)
DART GROUP CORPORATION
------------------------------------------------
(Name of Issuer)
Class A Common Stock, $1.00 par value
------------------------------------------------
(Title of Class of Securities)
237415 10 4
------------------------------------------------------
(CUSIP Number)
John P. Walsh, Esq.
101 South Hanley Road, Suite 1600
St. Louis, Missouri 63105
(314) 862-1200
------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 17, 1995
------------------------------------------------------------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule
13D, and is filing this schedule because of Rule 13d-1(b)(3) or
(4), check the following box: / /.
Check the following box if a fee is being paid with the statement:
/ /. (A fee is not required only if the reporting person: (1) has
a previous statement on file reporting beneficial ownership of more
than five percent of the class of securities described in Item 1;
and (2) has filed no amendment subsequent thereto reporting
beneficial ownership of five percent or less of such class.) (See
Rule 13d-7.)
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all
other provisions of the Act (however, see the Notes).
<PAGE> 2
CUSIP NO. 237415 10 4 13D Page 2
- --------------------------------------------------------------------
1) Name of Reporting Person: Peter Cundill & Associates
(Bermuda) Ltd.
I.R.S. Identification No.: N/A
- --------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group:
(a) / /
(b) /X/
- --------------------------------------------------------------------
3) SEC Use Only
- --------------------------------------------------------------------
4) Source of Funds: 00
- --------------------------------------------------------------------
5) Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e): / /
- --------------------------------------------------------------------
6) Citizenship or Place of Organization: Bermuda
- --------------------------------------------------------------------
Number of (7) Sole Voting Power: 70,500
Shares Bene- ------------------------------------------------
ficially (8) Shared Voting Power: 10,000
Owned by ------------------------------------------------
Each Report- (9) Sole Dispositive Power: 63,500
ing Person ------------------------------------------------
With (10) Shared Dispositive Power: 38,500
- --------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person:
102,000
- --------------------------------------------------------------------
12) Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares: / /
- --------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11): 7.0%
- --------------------------------------------------------------------
14) Type of Reporting Person: CO, IA (Canadian)
- --------------------------------------------------------------------
<PAGE> 3
CUSIP NO. 237415 10 4 13D Page 3
- --------------------------------------------------------------------
1) Name of Reporting Person: Peter Cundill Holdings
(Bermuda) Ltd.
I.R.S. Identification No.: N/A
- --------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group:
(a) / /
(b) /X/
- --------------------------------------------------------------------
3) SEC Use Only
- --------------------------------------------------------------------
4) Source of Funds: 00
- --------------------------------------------------------------------
5) Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e): / /
- --------------------------------------------------------------------
6) Citizenship or Place of Organization: Bermuda
- --------------------------------------------------------------------
Number of (7) Sole Voting Power: 0
Shares Bene- ------------------------------------------------
ficially (8) Shared Voting Power: 80,500
Owned by ------------------------------------------------
Each Report- (9) Sole Dispositive Power: 0
ing Person ------------------------------------------------
With (10) Shared Dispositive Power: 102,000
- --------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person:
102,000
- --------------------------------------------------------------------
12) Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares: / /
- --------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11): 7.0%
- --------------------------------------------------------------------
14) Type of Reporting Person: HC
- --------------------------------------------------------------------
<PAGE> 4
CUSIP NO. 237415 10 4 13D Page 4
- --------------------------------------------------------------------
1) Name of Reporting Person: F. Peter Cundill
I.R.S. Identification No.: N/A
- --------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group:
(a) / /
(b) /X/
- --------------------------------------------------------------------
3) SEC Use Only
- --------------------------------------------------------------------
4) Source of Funds: 00
- --------------------------------------------------------------------
5) Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e): / /
- --------------------------------------------------------------------
6) Citizenship or Place of Organization: Canada
- --------------------------------------------------------------------
Number of (7) Sole Voting Power: 5,000
Shares Bene- ------------------------------------------------
ficially (8) Shared Voting Power: 80,500
Owned by ------------------------------------------------
Each Report- (9) Sole Dispositive Power: 0
ing Person ------------------------------------------------
With (10) Shared Dispositive Power: 102,000
- --------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person:
102,000
- --------------------------------------------------------------------
12) Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares: / /
- --------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11): 7.0%
- --------------------------------------------------------------------
14) Type of Reporting Person: IN
- --------------------------------------------------------------------
<PAGE> 5
Page 5
This Amendment No. 2 to Statement on Schedule 13D
heretofore filed on October 22, 1993, as amended by Amendment No.
1 filed on January 30, 1995, is being filed by Peter Cundill &
Associates (Bermuda) Ltd., a Bermuda corporation ("PCB"), Peter
Cundill Holdings (Bermuda) Ltd., a Bermuda corporation
("Holdings"), and F. Peter Cundill, a Canadian citizen residing in
England ("Cundill") (PCB, Holdings and Cundill are sometimes also
referred to herein individually as a "Reporting Person" and
together as the "Reporting Persons") to reflect amendments to Items
3, 4, 5, 6 and 7 and to restate the Schedule 13D in its entirety.
In accordance with Item 101(a)(2)(ii) of Regulation S-T promulgated
by the Securities and Exchange Commission, this Amendment No. 2
amends and restates the entire text of the Schedule 13D, a
previously amended by Amendment No. 1 (other than Exhibits 1, 3, 4,
5 and 6 which were previously filed in paper, each of which is
incorporated herein by reference to the Schedule 13D and, pursuant
to Items 101(a)(2)(ii) and 102(a) of Regulation S-T, is not
required to be restated electronically).
Item 1. Security and Issuer.
- ------ -------------------
This Statement relates to the shares of Class A common
stock, $1.00 par value ("Shares"), of Dart Group Corporation (the
"Company"). The address of the principal executive offices of the
Company is 3300 75th Avenue, Landover, Maryland 20785.
Item 2. Identity and Background.
- ------ -----------------------
This Statement is filed by PCB, Holdings, and Cundill.
Further information regarding the identity and background of the
Reporting Persons is as follows:
A. PCB
---
(1) PCB is an investment advisor organized under the laws of
Bermuda. Its address is:
15 Alton Hill
Southampton SN 01
Bermuda
<TABLE>
The officers of PCB are:
<PAGE> 6
Page 6
<CAPTION>
Name Office
---- ------
<S> <C>
F. Peter Cundill President
John R. Talbot Vice President
and Secretary
Maureen Crocker Vice President
</TABLE>
<TABLE>
(2) The business or residence address, citizenship, and
present principal occupation of PCB's officers and directors are as
follows:
<S> <C>
Name: F. Peter Cundill
----------------
Position: President and Director
Business Address: Grosvenor House, Apt. 104
Park Lane
London, England
Citizenship: Canadian
Principal Occupation: Investment Advisor
Name: John R. Talbot
--------------
Position: Vice President, Secretary
and Director
Business Address: The Corner House
Church & Parliament Streets
Hamilton, Bermuda
Citizenship: British
Principal Occupation: Director & Manager, Roche
International Ltd.
Name: Maureen Crocker
---------------
Position: Vice President
Business Address: 1200 Sunlife Plaza
1100 Melville Street
Vancouver, B.C. V6E 4A6
Citizenship: Canadian
Principal occupation: Executive Assistant to
F. Peter Cundill
Name: Nicolas Trollope
----------------
Position: Director
Business Address: Clarendon House
Church Street
Hamilton, Bermuda
Citizenship: British
Principal Occupation: Partner in the law
firm of Conyers, Dill
& Pearman
<PAGE> 7
Page 7
Name: Stephen W. Kempe
----------------
Position: Director
Business Address: 65 Front Street
Hamilton, Bermuda
Citizenship: British
Principal Occupation: Executive Vice President,
Bank of N.T.
Butterfield & Son Ltd.
Name: Graham Collis
-------------
Position: Director
Business Address: Clarendon House
Church Street
Hamilton, Bermuda
Citizenship: British
Principal Occupation: Partner in the law
firm of Conyers, Dill &
Pearman
</TABLE>
(3) Holdings is a controlling person of PCB. Information as
required by this Item 2 is furnished in Part B of this Item 2.
B. Holdings.
--------
(1) Holdings is a Bermuda corporation. Its address is:
15 Alton Hill
Southampton SN 01
Bermuda
<TABLE>
The officers of Holdings are:
<CAPTION>
Name Office
---- ------
<S> <C>
F. Peter Cundill President
John R. Talbot Vice president and
Secretary
</TABLE>
<TABLE>
(2) The names of the officers and directors are as
follows (the business or residence address, citizenship and present
principal occupation of each individual as required by this Item 2
are provided in part A of this Item 2):
<CAPTION>
<S> <C>
Name: F. Peter Cundill
----------------
Office: President and Director
Name: John R. Talbot
--------------
Office: Vice President, Secretary
and Director
<PAGE> 8
Page 8
Name: Stephen W. Kempe
----------------
Office: Director
Name: Graham Collis
-------------
Office: Director
Name: Nicolas Trollope
----------------
Office: Director
</TABLE>
(3) Cundill is a controlling person of Holdings.
Information as required by this Item 2 is furnished in Part A of
this Item 2.
C. Cundill.
-------
The business or residence address, citizenship, and
present principal occupation of Cundill and other information as
required by this Item 2 are furnished in Part A of this Item 2.
D. Proceedings.
-----------
During the last five years none of the Reporting Persons
nor, to the best knowledge of the Reporting Persons, the executive
officers, directors or controlling persons of any Reporting Person
have been convicted in any criminal proceeding (excluding traffic
violations or similar misdemeanors) or have been parties to any
civil, judicial or administrative proceeding as a result of which
any Reporting Person or such executive officer, director or
controlling person was or is subject to any judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
- ------ -------------------------------------------------
The Shares herein reported as being beneficially owned by
the Reporting Persons were acquired as follows:
(1) Acting on behalf of investment advisory clients of
Peter Cundill & Associates, Inc., a Delaware corporation
registered under the Investment Advisers Act of 1940 ("PCA"),
PCB purchased a total of 24,500 Shares in open market
transactions for an aggregate consideration (exclusive of
brokers' commissions) of $1,941,150.00. To the best knowledge
of the Reporting Persons, the funds used in such purchases
were from existing available investment capital and none of
the consideration for such Shares was represented by borrowed
funds.
(2) Acting on behalf of Cundill Value Fund, an
unincorporated trust governed by the laws of British Columbia
<PAGE> 9
Page 9
(which is the continuation of and successor to Cundill Value
Fund Ltd.) ("Value Fund"), PCB purchased a total of 63,500
Shares in open market transactions for an aggregate
consideration (exclusive of brokers' commissions) of
$5,388,150.00. To the best knowledge of the Reporting
Persons, the funds used in such purchases were from Value
Fund's existing available investment capital, and none of the
consideration for such Shares was represented by borrowed
funds.
(3) Acting on behalf of Global Advisors Portfolio II
N.V., a corporation organized under the laws of Netherlands
Antilles ("Global Advisors"), PCB purchased a total of 2,000
Shares in open market transactions for an aggregate
consideration (exclusive of brokers' commissions) of
$146,675.00. To the best knowledge of the Reporting Persons,
the funds used in such purchases were from Global Advisor's
existing available investment capital, and none of the
consideration for such Shares was represented by borrowed
funds.
(4) Acting on behalf of Cundill International Company,
Ltd., a mutual fund corporation incorporated under the laws of
Bermuda ("International"), PCB purchased a total of 7,000
Shares in open market transactions for an aggregate
consideration (exclusive of brokers' commissions) of
$603,312.50. To the best knowledge of the Reporting Persons,
the funds used in such purchases were from existing available
investment capital and none of the consideration for such
Shares was represented by borrowed funds.
(5) Acting on behalf of Cundill Capital L.P., a limited
partnership formed under the laws of British Columbia
("Cundill Capital"), PCB purchased a total of 5,000 Shares in
open market transactions, for an aggregate consideration
(exclusive of brokers' commissions) of $435,312.50. To the
best knowledge of the Reporting Persons, the funds used in
such purchases were from existing available investment capital
and none of the consideration for such Shares was represented
by borrowed funds.
Individually PCB does not beneficially own 5% or more of
the Shares. Due to the investment management services provided by
PCB to PCA, Value Fund, Global Advisors, International and Cundill
Capital, PCB could be deemed a beneficial owner of all Shares
purchased in the transaction described in subitems (1), (2), (3),
(4) and (5) above.
All dollar amounts are in United States dollars.
<PAGE> 10
Page 10
Item 4. Purpose of Transactions.
- ------ -----------------------
The Shares were acquired with a view toward realizing a
profit. The Reporting Persons expect to monitor the Company's
performance by, among other things, having discussions from time to
time with management, employees and/or directors of the Company,
other shareholders, market and business analysts, and others.
Depending on various factors which they deem relevant, the
Reporting Persons may hold the Shares, buy more Shares or sell some
or all of the Shares from time to time.
The Reporting Persons previously supported a proposed
settlement filed in the Delaware Court of Chancery in the action
captioned Ronald S. Haft v. Dart Group Corporation, Alan Kahn and
-------------------------------------------------------
the Tudor Trust, C.A. No. 13736. However, as a result of the March
- ---------------
10, 1995, withdrawal from the putative settlement by certain
plaintiffs, the Reporting Persons no longer support the proposed
settlement.
<TABLE>
Item 5. Interest in Securities of the Issuer.
- ------ ------------------------------------
The number of Shares which may be deemed to be
beneficially owned by the Reporting Persons are as follows:
<CAPTION>
Shares Deemed to be Nature of Percentage
Beneficially Owned By: Ownership of Class
--------------------- --------- ----------
<C> <S> <C>
(A) PCB:
---
14,500 Shared Dispositive Power <F1> .99%
Shared Voting and Shared
10,000 Dispositive Power <F2> .69%
Sole Voting and Sole
63,500 Dispositive Power <F3> 4.35%
2,000 Shared Dispositive Power <F4> .14%
Sole Voting and Shared
7,000 Dispositive Power <F5> .48%
Shared Dispositive Power
5,000 Only <F6> .34%
------- ----
102,000 6.99%
======= ====
<PAGE> 11
Page 11
(B) Holdings:
--------
14,500 Shared Dispositive Power <F7> .99%
Shared Voting and Shared
10,000 Dispositive Power <F8> .69%
Shared Voting and Shared
63,500 Dispositive Power <F9> 4.35%
2,000 Shared Dispositive Power <F10> .14%
Shared Voting and Shared
7,000 Dispositive Power <F9> .48%
Shared Dispositive Power
5,000 Only <F10> .34%
------- ----
102,000 6.99%
======= ====
(C) Cundill:
-------
14,500 Shared Dispositive Power <F11> .99%
Shared Voting and Shared
10,000 Dispositive Power <F12> .69%
Shared Voting and Shared
63,500 Dispositive Power <F13> 4.35%
2,000 Shared Dispositive Power <F14> .14%
Shared Voting and Shared
7,000 Dispositive Power <F13> .48%
Sole Voting and Shared
5,000 Dispositive Power <F15> .34%
------- ----
102,000 6.99%
======= ====
<FN>
- --------------------
<F1> Such Shares are owned by an investment advisory client of PCA.
By reason of its investment advisory relationship with such
client, PCA (as between itself and its client) has no voting
power but sole dispositive power over such Shares. PCB,
because it provides investment advisory services to PCA, could
be deemed to share dispositive power over such Shares with
<PAGE> 12
Page 12
PCA. The economic interest in such Shares is held by the
aforementioned investment advisory client of PCA.
<F2> Such Shares are owned by investment advisory clients of PCA.
By reason of its investment advisory relationship with such
clients, PCA (as between itself and its clients) has shared
voting and shared dispositive power over such Shares. PCB,
because it provides investment advisory services to PCA, could
be deemed to share voting power and dispositive power over
such Shares with PCA. The economic interest in such Shares is
held by the aforementioned investment advisory clients of PCA.
<F3> Such Shares are owned by Value Fund, the investment portfolio
of which entity is managed by PCB. PCB has sole dispositive
power and sole voting power under an agreement dated as of
June 1, 1995. The economic interest in such Shares is held by
Value Fund.
<F4> Such Shares are owned by Global Advisors, a corporation
organized under the laws of Netherlands Antilles, the
investment portfolio of which is managed by PCB. PCB has
shared dispositive power over such Shares under an agreement
dated April 15, 1994. The economic interest in such Shares is
held by Global Advisors.
<F5> Such Shares are owned by International, which has shared
dispositive power over such Shares with PCB. PCB is the
investment manager of International and has sole voting and
shared dispositive power over such Shares. The economic
interest in such Shares is held by International.
<F6> Such Shares are owned by Cundill Capital. The general partner
of Cundill Capital has sole voting power over such Shares.
PCB is the investment advisor of Cundill Capital and has
shared dispositive power over such Shares. The economic
interest in such Shares is held by the limited partners of
Cundill Capital.
<F7> Holdings, because it owns a controlling portion of the
outstanding stock of PCB, which provides investment advisory
services to PCA, could be deemed to share the power to dispose
or direct the disposition of such Shares.
<F8> Holdings, because it owns a controlling portion of the
outstanding stock of PCB, which provides investment advisory
services to PCA, could be deemed to share the power to vote
and dispose or direct the disposition of such Shares.
<F9> Holdings, because it owns a controlling portion of the
outstanding stock of PCB, could be deemed to share the power
to vote and dispose or direct the disposition of such Shares.
<PAGE> 13
Page 13
<F10> Holdings, because it owns a controlling portion of the
outstanding stock of PCB, could be deemed to share the power
to dispose or direct the disposition of such Shares.
<F11> Cundill, because he owns a controlling portion of the
outstanding stock of Holdings, which owns a controlling
portion of the outstanding stock of PCB, which provides
investment advisory services to PCA, could be deemed to share
the power to dispose or direct the disposition of such Shares.
<F12> Cundill, because he owns a controlling portion of the
outstanding stock of Holdings, which owns a controlling
portion of the outstanding stock of PCB, which provides
investment advisory services to PCA, could be deemed to share
the power to vote and dispose or direct the disposition of
such Shares.
<F13> Cundill, because he owns a controlling portion of the
outstanding stock of Holdings, which owns a controlling
portion of the outstanding stock of PCB, could be deemed to
share the power to vote and dispose or direct the disposition
of such Shares.
<F14> Cundill, because he owns a controlling portion of the
outstanding stock of Holdings, which owns a controlling
portion of the outstanding stock of PCB, could be deemed to
share the power to dispose or direct the disposition of such
Shares.
<F15> Cundill, because he is a controlling person of the general
partner of Cundill Capital, could be deemed to have sole
voting power of such Shares. Cundill, because he owns a
controlling portion of the outstanding stock of Holdings,
which owns a controlling portion of the outstanding stock of
PCB, could be deemed to share the power to dispose or direct
the disposition of such Shares.
</TABLE>
<TABLE>
TRANSACTIONS
- ------------
No transactions in the Shares were effected since November 25,
1994 (the date of the filing of the Amendment No. 1 to Statement on
Schedule 13D) by the Reporting Persons or to the best knowledge of
the Reporting Persons, by any executive officer, director,
affiliate or subsidiary thereof, except the following transactions,
each of which was made in a broker's transaction in the open
market:
<CAPTION>
Reporting Sale/ No. of Price Per
Person Purchase Date Shares Share
--------- -------- ---- ------ ---------
<S> <C> <C> <C> <C>
PCB on behalf Purchase 08/17/95 1,000 $84.00
<PAGE> 14
Page 14
of PCA 08/21/95 1,000 $84.00
08/17/95 500 $84.00
08/21/95 500 $84.00
08/17/95 500 $84.00
08/17/95 500 $84.00
PCB on behalf Purchase 08/17/95 1,000 $84.00
of Value Fund 08/21/95 1,500 $84.00
08/28/95 1,000 $84.25
PCB on behalf Purchase 07/11/95 750 $85.50
of International 07/12/95 500 $87.625
07/13/95 3,000 $87.625
07/26/95 250 $86.00
08/02/95 250 $86.00
08/03/95 250 $86.00
08/17/95 1,000 $84.00
08/21/95 1,000 $84.00
PCB on behalf Purchase 07/11/95 750 $85.50
of Cundill 07/12/95 500 $87.625
Capital 07/13/95 3,000 $87.625
07/26/95 250 $86.00
08/02/95 250 $86.00
08/03/95 250 $86.00
</TABLE>
Item 6. Contracts, Arrangements, Understandings or Relationships
- ------ --------------------------------------------------------
With Respect to Securities of the Issuer.
----------------------------------------
PCB has entered into an agreement with PCA, a copy of
which is incorporated herein by reference, pursuant to which PCB is
required to provide the investment counselling and transaction
skills of Cundill which are required by PCA to fulfill its
portfolio management contracts with its clients.
PCB and Value Fund are parties to a Master Investment
Counsel Agreement, a copy of which is attached hereto as Exhibit 2,
---------
pursuant to which PCB is granted the exclusive right to supervise
the assets and securities portfolio of Value Fund.
PCB has entered into an agreement with Global Advisors,
a copy of which is incorporated herein by reference, pursuant to
which PCB is required to provide investment management services.
PCB has entered into a management agreement with
International, a copy of which is attached hereto as Exhibit 7,
---------
pursuant to which PCB has sole voting and shared dispositive power
over the investments of International.
<PAGE> 15
Page 15
Cundill Capital has arranged with PCB that PCB shall act
as investment counsel as shown on the Investment Counsel Agreement
which is attached hereto as Exhibit 8, pursuant to which PCB has
---------
shared dispositive power over the investments of Cundill Capital.
Item 7. Materials Filed as Exhibits.
- ------ ---------------------------
Exhibit 1 - Agreement dated December 28,
1984 between PCB and PCA filed with the Statement
on Schedule 13D dated October 21, 1993
Exhibit 2 - Master Investment Counsel
Agreement dated June 1, 1995 between PCB and
the Trustee of Value Fund attached hereto
Exhibit 3 - Special Power of Attorney from
PCB filed with the Statement on Schedule 13D
dated October 21, 1993
Exhibit 4 - Special Power of Attorney from
Holdings filed with the Statement on Schedule 13D
dated October 21, 1993
Exhibit 5 - Special Power of Attorney from
Cundill filed with the Statement on Schedule 13D
dated October 21, 1993
Exhibit 6 - Advisory Agreement dated
April 15, 1994 between PCB and Global Advisors
filed with Amendment No. 1 to the Statement on
Schedule 13D dated January 27, 1995
Exhibit 7 - Management Agreement dated
September 18, 185 between PCB and International attached
hereto.
Exhibit 8 - Investment Counsel Agreement
between Cundill Capital and PCB attached hereto.
<PAGE> 16
Page 16
SIGNATURES
----------
The undersigned certify, after reasonable inquiry and to the
best knowledge and belief of the undersigned, that the information
set forth in this Statement is true, complete and correct. The
undersigned agree to the filing of this single Amendment No. 2 to
Statement on Schedule 13D.
PETER CUNDILL & ASSOCIATES
(BERMUDA) LTD.
Date: September 1, 1995 By: /s/ John P. Walsh
----------------------------------
John P. Walsh, Attorney-in-Fact
PETER CUNDILL HOLDINGS
(BERMUDA) LTD.
Date: September 1, 1995 By: /s/ John P. Walsh
----------------------------------
John P. Walsh, Attorney-in-Fact
F. PETER CUNDILL
Date: September 1, 1995 By: /s/ John P. Walsh
----------------------------------
John P. Walsh, Attorney-in-Fact
<PAGE> 17
Exhibit 2
---------
MASTER
INVESTMENT COUNSEL AGREEMENT
THIS AGREEMENT made as of the 1st day of June, 1995.
BETWEEN:
THE TRUST COMPANY BANK OF MONTREAL, a trust
company incorporated under the laws of Canada,
having an office at 302 Bay Street, Toronto,
Ontario, M5X 1A1, in its capacity as Trustee
of the mutual funds listed in Schedule "A"
hereto
(the "Trustee")
OF THE FIRST PART
AND:
PETER CUNDILL & ASSOCIATES (BERMUDA) LTD., a
company duly incorporated under the laws of
Bermuda and extra-provincially registered
under the laws of the Province of British
Columbia
(the "Investment Counsel")
OF THE SECOND PART
WHEREAS:
A. Pursuant to a declaration of trust made as of the 1st day
of June, 1995 (the "Master Declaration of Trust"), the Trustee is
the sole trustee of the funds currently listed in Schedule "A" to
this Agreement, which Schedule may be amended from time to time to
add new funds or remove existing funds (each, a "Fund" and
collectively, the "Funds"), each an open-end mutual investment fund
created for the purpose of providing a convenient means for the
investment by investors in a professionally managed portfolio;
B. The Trustee desires to avail the Funds of the experience,
sources of information, advice, assistance, personnel and
facilities of and available to the Investment Counsel, and desires
to have the Investment Counsel provide advice and discretionary
portfolio management services to each of the Funds with respect to
the investment and reinvestment of the assets of the Funds in
securities; and
<PAGE> 18
C. The Investment Counsel is willing to perform such
services and to furnish such facilities and personnel on the terms
and subject to the conditions hereinafter and in the Master
Declaration of Trust set forth.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in
consideration of the respective covenants and agreements herein
contained, the parties covenant and agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.01 DEFINITIONS
Wherever used in this Agreement, unless there is
something in the subject matter or context inconsistent therewith,
the following words and terms will have the meanings respectively
ascribed to them as follows:
a) "BOARD OF GOVERNS" means the board of governors appointed
pursuant to the Master Declaration of Trust;
b) "BUSINESS DAY" means any day upon which the Toronto Stock
Exchange is open for trading;
c) "CUSTODIAN" means the custodian of the Securities
appointed pursuant to the Custodian Agreement;
d) "CUSTODIAN AGREEMENT" means the agreement made as of the
1st day of June, 1995, among the Trustee, the Manager and
the Custodian, as amended from time to time;
e) "DISCLOSURE DOCUMENTS" means the current preliminary
prospectus, prospectus, simplified prospectus, annual
information form, annual and interim financial
statements, any material change reports and any other
documents which may from time to time be filed as part of
the permanent information record of each Fund or required
in connection with the distribution of units of each
Series of a Fund by the securities regulatory authority
in each of the jurisdictions in which units of each
Series of a Fund are qualified for distribution;
f) "FUND" or "FUNDS" means the funds currently listed in
Schedule "A" to this Agreement, which Schedule may be
amended from time to time to add new funds or remove
existing funds;
g) "INVESTMENT COUNSEL" means Peter Cundill & Associates
(Bermuda) Ltd.;
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<PAGE> 19
h) "INVESTMENT COUNSEL FEE" means the fee payable to the
Investment Counsel pursuant to Section 3.01;
i) "MANAGER" means any person or corporation which, from
time to time, is appointed as manager of a Fund by the
Trustee;
j) "MASTER DECLARATION OF TRUST" means the Master
Declaration of Trust for the administration of each Fund
dated as of the 1st day of June, 1995;
k) "SECURITIES" means any securities or other property held
as investments of a Fund;
l) "SERIES" means any series of a class of Units of a Fund
which the Board of Governors may establish from time to
time in accordance with the Master Declaration of Trust;
m) "TRUSTEE" means the trustee named as such under the
Master Declaration of Trust;
n) "UNITS" means units in a Series of a Fund issued or to be
issued and for the time being outstanding and a "UNIT" in
reference to any particular Series means an undivided
interest in that Series' proportionate share of the
assets of the Fund as determined in accordance with the
Master Declaration of Trust.
o) "UNITHOLDER" means a unitholder of a Fund.
1.02 INTERNAL REFERENCE
The terms "HEREOF", "HERETO" and "HEREUNDER" and similar
expressions, mean and refer to this Agreement and not to any
particular Article or Section of this Agreement.
1.03 INCLUDING
The word "including", when following any general
statement, term or matter, shall not be construed to limit such
general statement, term or matter to the specific item or matters
set forth immediately following such word or to similar items or
matters, whether or not non-limiting language (such as "without
limitation" or "but not limited to" or words of similar import) is
used with reference thereto but rather shall be deemed to refer to
all other items or matters that could reasonably fall within the
broadest possible scope of such general statement, term or matter.
-3-
<PAGE> 20
1.04 COMPUTATION OF TIME PERIODS
In this Agreement and any other document delivered
hereunder, except where expressly otherwise provided, in the
computation of a period of time from a specified date to a later
specified date, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding".
1.05 CURRENCY
Unless otherwise indicated, all dollar amounts referred
to in this Agreement are in Canadian funds.
1.06 HEADINGS
The index to this Agreement and the headings of the
Articles of Sections hereof are included for convenience only and
do not form a part of this Agreement, nor are they intended to be
full or accurate descriptions of, or to interpret, define or limit
the scope, extent or intent of, this Agreement or any provision
hereof and they will not affect its construction.
1.07 ACCOUNTING TERMS
All accounting terms not defined in this Agreement will
have those meanings generally ascribed to them in accordance with
generally accepted accounting principles.
1.08 APPLICABLE LAWS AND ATTORNMENT
This Agreement will in all respects be governed by and be
construed in accordance with the laws of the Province of British
Columbia and the laws of Canada applicable in the Province of
British Columbia. Each of the parties hereto hereby irrevocably
attorns to the jurisdiction of the courts of the Province of
British Columbia.
1.09 NUMBER AND GENDER
Wherever the singular or the masculine is used herein the
same will be deemed to include the plural or the feminine or the
body politic or corporate where the context or the parties so
require.
-4-
<PAGE> 21
ARTICLE 2
APPOINTMENT AND GRANT OF POWERS
2.01 APPOINTMENT OF INVESTMENT COUNSEL
The Trustee hereby appoints the Investment Counsel as
investment counsel of each of the Funds and, subject to the
provisions of the Master Declaration of Trust, grants to the
Investment Counsel the exclusive right to provide investment advice
and discretionary portfolio management services in respect of the
assets and security portfolio of each of the Funds and to determine
what securities, deposits of money and other property shall be
purchased or sold by each of the Funds and whether, when and how
the Funds shall deal with their respective assets for the
enhancement and protection of their value and through what agencies
the Funds shall buy, sell or otherwise deal with their investments,
all in accordance with the provisions of the Master Declaration of
Trust and this Agreement. The Investment Counsel accepts such
appointment and hereby agrees to act as, and perform the functions
of, the investment counsel of each of the Funds in accordance with
the provisions of the Master Declaration of Trust and this
Agreement.
2.02 FUNCTIONS OF INVESTMENT COUNSEL
The Investment Counsel shall:
a) act as each of the Fund's investment counsel, conduct
necessary investigations and provide research, reports,
studies and other data in connection with the Funds'
proposed securities investments and investment policies;
b) make investment decisions relating to the acquisition and
disposition of Securities and other property for each of
the Funds, provided that investment in such Securities
and other property is not prohibited by the investment
policies and restrictions applicable to that Fund;
c) provide instructions to the Manager with respect to the
voting of Securities held by each of the Funds;
d) conduct day-to-day relations, on behalf of each of the
Funds, with other persons including consultants, lenders,
brokers, bankers and management of the issuers of the
Securities owned by the Funds from time to time;
e) make reports to the Board of Governors of the Investment
Counsel's performance of the foregoing in accordance with
the Master Declaration of Trust, and as and when
requested by the Board of Governors; and
-5-
<PAGE> 22
f) provide such information to the Trustee as the Trustee
may reasonably request from time to time.
2.03 DELEGATION OF RESPONSIBILITIES
Solely in connection with the duties of the Investment
Counsel herein specified, the Investment Counsel may, subject to
any limitation or delegation imposed by law or by the Trustee,
appoint or retain any persons as agents, representatives, employees
or independent contractors, including, without limitation, lawyers,
bankers, counsel, notaries, underwriters, accountants, brokers,
dealers, officers or servants in one or more capacities and any
other advisers which the Investment Counsel deems advisable;
provided that the Investment Counsel shall be fully liable to a
Fund for the selection of such persons and shall require such
persons to perform their services to a standard of care which is at
least as high as that imposed on the Investment Counselor
hereunder.
2.04 PERMITTED ACTIVITIES
Nothing in this Agreement will in any way limit or
restrict the Investment Counsel, or any of the directors, officers,
shareholders or employees of the Investment Counsel, from buying,
selling or trading in any securities for their own account. Each
Fund acknowledges that this appointment is non-exclusive and that
the Investment Counsel may act as an investment counsel,
distributor, registrar and/or transfer agent of any person, firm,
or corporation and may take any action or do anything in relation
to such services so long as the Investment Counsel is performing
its obligations under this Agreement. No such performance of other
services or the taking of any such action or the doing of any such
thing by the Investment Counsel shall be in any manner restricted
or otherwise affected by any aspect of the relationship of the
Investment Counsel to or with the Fund nor shall it be deemed to
violate or give rise to any duty or obligation of the Investment
Counsel to the Fund.
2.05 COMPLIANCE WITH LAW
The Investment Counsel agrees to comply with and be
subject to the provisions of all applicable legislation, regulatory
policy and guidelines relating to the services to be rendered by
the Investment Counsel hereunder and to provide to each Fund, the
Trustee and the Governors all such information and reports as may
be required pursuant to applicable legislation to enable the Fund
to comply with such legislation; and, in respect of any
transactions or security trading conducted on the instructions of
the Investment Counsel in the name of the Funds, the Investment
Counsel shall ensure that same does not cause the Funds to be in
contravention of any part of the Master Declaration of Trust, their
investment objectives or their investment policies.
-6-
<PAGE> 23
2.06 STANDARD OF CARE: LIABILITY OF THE INVESTMENT COUNSEL
The Investment Counsel shall exercise the powers granted
hereunder and discharge its duties to the Funds hereunder honestly,
in good faith and in the best interests of each of the Funds and,
in connection therewith, shall exercise the degree of care,
diligence and skill that a reasonably prudent person would exercise
in comparable circumstances. The Investment Counsel shall not
incur liability in respect of any action taken or thing suffered by
it in reliance upon any notice, resolution, direction, consent,
certificate, affidavit, statement or other paper or document
believed by it to be genuine and to have been passed, sealed or
signed by proper parties.
ARTICLE 3
FEES AND CHARGES
3.01 FEES PAYABLE TO INVESTMENT COUNSEL BY FUNDS
On the first business day of each and every month, each
of the Funds shall pay to the Investment Counsel a fee in respect
of the preceding month's services. The fee shall be calculated and
accrued daily at the rate of 1.15% per annum of the average daily
net asset value of the respective Fund. For such purpose, the
aggregate of the net asset value of the respective Funds as at any
particular time shall be the then current market value of the
Fund's assets, less the Fund's liabilities (all as defined in the
Master Declaration of Trust), and the value of the Securities,
other assets and liabilities of the respective Fund shall be
determined in accordance with the Master Declaration Trust in like
manner as then in effect for purposes of the redemption of Units.
3.02 EXPENSES PAYABLE BY FUNDS
For the avoidance of doubt, it is confirmed that the
Investment Counsel shall not be responsible for paying any of the
operating expenses of the Funds (whether incurred directly or by
the Investment Counsel on behalf of either of the Funds).
3.03 ASSIGNMENT OF INVESTMENT COUNSEL FEE
The Investment Counsel shall be entitled to assign all or
any part of the Investment Counsel Fee and each of the Funds agrees
to make payment of the Investment Counsel Fee or portions thereof
to such person or persons as the Investment Counsel may in writing
direct and payment of the Investment Counsel Fee as so directed
shall fully discharge the Fund's obligation to the Investment
Counsel in respect of the payment of the Investment Counsel Fee.
-7-
<PAGE> 24
3.04 ACCESS
The Investment Counsel agrees that the Trustee, the
Governors and each of the Funds shall be entitled to have access to
and to examine all records maintained by or on behalf of the
Investment Counsel with respect to the services provided by the
Investment Counsel under this Agreement. Each of the funds and the
Trustee authorizes the Investment Counsel to have full access to
the books, records, business premises and to whatever or other
information and material of the Fund that the Investment Counsel
requires to perform its services hereunder. The Investment Counsel
agrees to keep confidential all information concerning each of the
Fund's business and affairs which is not otherwise generally
disclosed to the public and shall not disclose the same except as
may be necessary or desirable to enable the Investment Counsel to
carry out its duties hereunder.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.01 REPRESENTATIONS AND WARRANTIES OF INVESTMENT COUNSEL
The Investment Counsel represents and warrants to the
Trustee that:
a) the Investment Counsel has been extra-provincially
registered under the laws of the Province of British
Columbia;
b) it is duly registered or exempt from registration in
accordance with applicable law and that it has completed
or obtained all other registrations, filings, appropriate
authorizations, consents or examinations required by any
governmental authority for the performance of its
services as Investment Counsel of each Fund and that it
will maintain such status during the term of this
Agreement;
c) the Investment Counsel, pursuant to the Master
Declaration of Trust and this Agreement, possesses proper
authority, and has taken all proper actions necessary, to
enter into this Agreement, and that this Agreement is and
shall be binding and enforceable upon the Investment
Counsel, the Funds and the Funds' property, in accordance
with its terms;
d) the Investment Counsel and the Funds are in compliance
and shall at all times continue to comply with the
material requirements imposed upon the Investment Counsel
-8-
<PAGE> 25
and the Funds applicable law and any securities
administrator having jurisdiction; and
e) this Agreement has been duly authorized, executed and
delivered by, and constitutes a valid, binding and
enforceable agreement of, the Investment Counsel.
4.02 SURVIVAL OF REPRESENTATION AND WARRANTIES
The representations and warranties of the Investment
Counsel contained in Section 4.01 shall survive the execution of
this Agreement and the Master Declaration of Trust and shall
continue in full force and effect following such time for the
benefit of the Trustee.
ARTICLE 5
LIMITATION OF LIABILITY AND INDEMNITY
5.01 LIMITATION OF LIABILITY
Subject to Section 2.03, neither the Investment Counsel
nor its directors, officers, employees and agents shall be liable
to any Fund or to any Unitholder for any act, omission, receipt,
neglect or default of any other person, firm or corporation
employed or engaged by the Investment Counsel as permitted in the
Master Declaration of Trust or this Agreement, or for any loss,
damage or expense caused to the respective Fund through the
insufficiency or deficiency of any Security in or upon which any of
the moneys of or belonging to the respective Fund shall be laid out
or invested, or for any loss or damage arising out of the act or
omission of any person with whom any funds, investment or property
of the respective Fund shall be deposited, or for any loss
occasioned by any error in judgment on the part of the Investment
Counsel, or for any other loss or damage to the respective Fund
which may occur during or in the course of the performance of its
obligations, responsibilities, powers, discretions or authorities
under the Master Declaration of Trust or this Agreement, unless the
particular loss, damage or expense shall be attributable to the
willful misfeasance, dishonesty, bad faith or negligence of the
Investment Counsel in the performance of such obligations,
responsibilities, powers, discretions or authorities under the
Master Declaration of Trust or this Agreement, or shall be
attributable to the Investment Counsel's reckless disregard of such
obligations and responsibilities, powers, discretions or
authorities.
5.02 INDEMNIFICATION OF INVESTMENT COUNSEL
The Investment Counsel and each of its directors,
officers, employees and agents shall be entitled to be indemnified
and reimbursed out of the assets of each of the Funds in respect
of:
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<PAGE> 26
a) any liability and all costs, charges and expenses
sustained or incurred in respect of any action, suit or
proceeding that is proposed or commenced against the
Investment Counsel, or against any such director,
officer, employee or agent, as the case may be, for or in
respect of anything done or permitted to be done in
respect of the execution of the obligations,
responsibilities, powers, discretions and authorities of
the Investment Counsel under the Master Declaration of
Trust or this Agreement in relation to the respective
Fund, unless any such liability, cost, charge or expense
arises from willful misfeasance, dishonesty, bad faith or
gross negligence of the Investment Counsel in the
performance of such obligations, responsibilities,
powers, discretions and authorities, or is attributable
to the Investment Counsel's reckless disregard of such
obligations, responsibilities, powers, discretions or
authorities; and
b) taxes of all kinds, interest and penalties in respect of
any unpaid taxes and any other amounts payable in respect
of any unpaid taxes, interest and penalties (excluding
any taxes, interest, penalties and other amounts that may
at any time be determined to be payable in respect of
fees paid or payable to the Investment Counsel by each of
the Funds) and, except as herein otherwise provided, all
other expenses and liabilities sustained or incurred by
the Investment Counsel in respect of the administration
of the respective Fund, provided that the Investment
Counsel, its directors, officers, employees and agents
shall not be entitled to satisfy any right of indemnity
or reimbursement granted herein, or otherwise existing
under law, except out of the assets of the respective
Fund, and no Unitholder shall e personally liable with
respect to any claim for such indemnity or reimbursement
as aforesaid.
5.03 NO LIABILITY OF TRUSTEE AND INDEMNIFICATION OF TRUSTEE
The Investment Counsel acknowledges and agrees that the
Trustee shall not be subject to any liability whatsoever to a
Unitholder or any other person, in tort, contract or otherwise, in
connection with any matter pertaining to a Fund arising from any
acts, omissions, receipts, neglects or defaults of a Fund before
the Trustee was named as a trustee of the Fund. The Investment
Counsel shall indemnify and save harmless the Trustee, its
directors, officers, employees and agents from and against any and
all claims, demands, liability, loss, costs, damages or expenses
that the Trustee and such persons may at any time hereafter sustain
or incur as a result of, or arising out of, the Investment
Counsel's failure to observe or perform its obligations hereunder
or under the Master Declaration of Trust, or as a result of the
-10-
<PAGE> 27
negligence of the Investment Counsel in the performance of its
duties hereunder or under the Master Declaration of Trust; any
breach of any of the representations or warranties of the
Investment Counsel herein contained; or any willful misfeasance on
the part of the Investment Counsel or any employee of the
Investment Counsel; or any act, omission, receipt, neglect or
default of the Fund before the Trustee was named as a trustee of
the Fund. The obligations of the Investment Counsel pursuant to
this Section 5.03 shall survive the termination of this Agreement
and shall not limit any indemnification of the Trustee under the
Master Declaration of Trust.
ARTICLE 6
TERM, RESIGNATION AND REMOVAL
6.01 TERM OF INVESTMENT COUNSEL AGREEMENT
The term of this Agreement shall be for ten (10) years
from the 1st day of June, 1995, subject to termination as
hereinafter provided.
6.02 CONDITIONS OF TERMINATION BY INVESTMENT COUNSEL
This Agreement may be terminated by the Investment
Counsel at any time upon six (6) months' notice in writing to the
Trustee of its intention to resign as Investment Counsel hereunder
and the fund shall thereupon have the right to appoint a new
Investment Counsel to take office upon the expiration of such
period of six (6) months or such shorter or longer period as the
parties may agree. At the expiration of such period of six (6)
months or such greater or lesser period as the parties may then
agree:
a) the Investment Counsel's resignation shall become
effective and, subject to Section 5.03, the Investment
Counsel shall be relieved and discharged of and from any
further duties or obligation hereunder;
b) after payment in full of all fees and receivables
hereunder, the Investment Counsel shall deliver up at its
own cost and expense to the Trustee, all records,
documents, information and papers owned by each of the
Funds which are in the possession of the Investment
Counsel.
6.03 CONDITIONS OF REMOVAL OF INVESTMENT COUNSEL
The Investment Counsel may be removed by the Trustee for
one or more of the following reasons, in which event this Agreement
shall terminate:
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<PAGE> 28
a) if the Investment Counsel shall be declared bankrupt or
adjudged insolvent or if the Investment Counsel shall
make an assignment for the benefit of its creditors or
resolves to wind up or liquidate or dissolves or has an
examiner appointed in relation to it or if a receiver of
any of its assets is appointed;
b) if the Investment Counsel otherwise becomes incapable of
performing its responsibilities under this Agreement;
c) in the event of the Investment Counsel's bad faith,
dishonesty, willful misfeasance, negligence or reckless
disregard of its obligations and duties or material
breach of this Agreement.
6.04 F. PETER CUNDILL
The parties hereto acknowledge that, as at the date
hereof, F. Peter Cundill is primarily responsible for the services
provided by the Investment Counsel to the Funds, and agree that
should F. Peter Cundill for any reason, including but not limited
to incompetency, death, unfitness or termination of his
relationship with the Investment Counsel, cease to be available to
provide investment advisory services to each of the Funds through
the Investment Counsel, then the Investment Counsel shall have the
right to propose a new individual or individuals to provide the
services previously provided by F. Peter Cundill, subject to the
approval of the Board of Governors, which approval shall not be
unreasonably withheld.
ARTICLE 7
GENERAL
7.01 AMENDMENTS TO THIS AGREEMENT
Any amendment to this Agreement must be in writing,
signed by the Trustee and the Manager.
7.02 INVESTMENT COUNSEL AGENT OF FUNDS ONLY
The Investment Counsel shall be, and shall act as, the
agent of each of the Funds for all purposes set out in this
Agreement. In the performance of their respective
responsibilities, obligations, powers, discretions and authorities,
neither the Trustee nor the Investment Counsel shall be, or shall
act as, the agent of the Unitholders or of any of the Unitholders.
7.03 INVESTMENT COUNSEL IS INDEPENDENT CONTRACTOR
The Investment Counsel is an independent contractor and
not an employee of the Funds for any purpose.
-12-
<PAGE> 29
7.04 MASTER DECLARATION OF TRUST TO PREVAIL
In the event that this Agreement is in conflict with any
provision of the Master Declaration of Trust, the provisions of the
Master Declaration of Trust shall prevail. Capitalized terms used
herein which are not otherwise defined herein shall have the same
meanings, respectively, herein as in the Master Declaration of
Trust.
7.05 NOTICES
In the event that a notice or payment is required or
permitted by this Agreement to be given, or a document delivered,
to either of the parties, the same shall be delivered or mailed to
such party at the following addresses:
a) if to the Investment Counsel:
Peter Cundill & Associates (Bermuda) Ltd.
15 Alton Hill
Southampton SN01
Bermuda
Attention: John R. Talbot
Telephone: (809) 292-8826
Facsimile: (809) 238-8404
b) if to the Trustee:
The Trust Company of Bank of Montreal
302 Bay Street
Toronto, Ontario
M5X 1A1
Attention: Senior Manager
or such other address as either party may hereafter designate by
notice to the other. Any notice which is delivered shall be deemed
to have been given on the date of delivery and any notice mailed as
aforesaid shall be deemed to have been given on the third Business
Day following the day upon which it is mailed; provided, however,
that if there shall be, between the time of mailing and the actual
date of receipt, a mail strike, slow down or other labour dispute
which might affect the delivery of such notice by mail, then such
notice shall be effective only if delivered as aforesaid. In all
cases, notice shall be given in writing.
7.06 NO ASSIGNMENT
This Agreement may not be assigned by either party
without the prior consent in writing of the other.
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<PAGE> 30
7.07 TIME OF THE ESSENCE
Time shall be of the essence hereof.
7.08 NOT PERSONALLY BINDING
The obligations of the Trustee and, subject to Section
5.03, the Investment Counsel are not personally binding upon the
Trustee or the Investment Counsel or any director, officer,
employee or agent of the Trustee or the Investment Counsel. Only
the Funds and Funds' property are bound by the obligations of the
Trustee and the Investment Counsel hereunder.
7.09 ENUREMENT
This Agreement shall be binding and shall enure to the
benefit of the parties and their respective successors and
permitted assigns.
IN WITNESS WHEREOF this Agreement has been executed by
the parties.
THE TRUST COMPANY OF BANK OF
MONTREAL, as Trustee of the
mutual funds listed in
Schedule "A" hereto
Per: /s/ Barbara M. Fedoryk
--------------------------
Authorized Signatory
/s/ Velma J. Jones
- -------------------------------
Authorized Signatory
THE CORPORATE SEAL OF PETER )
CUNDILL & ASSOCIATES (BERMUDA) )
LTD. was hereunto affixed )
in the presence of: )
)
)
)
)
/s/ John R. Talbot )
- ------------------------------- )
Authorized Signatory )
)
)
)
/s/ Stephen W. Kempe )
- ------------------------------- )
Authorized Signatory )
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<PAGE> 31
SCHEDULE "A"
FUNDS
1. Cundill Value Fund
2. Cundill Security Fund
<PAGE> 32
Exhibit 7
---------
MANAGEMENT AGREEMENT
--------------------
THIS AGREEMENT is made the ----- day of --------------------
One Thousand Nine Hundred and Eighty-five.
BETWEEN:
PETER CUNDILL ASSOCIATES (BERMUDA) LIMITED a Company
incorporated in and under the laws of the Islands of Bermuda whose
registered office is at Clarendon House, Church Street West,
Hamilton, Bermuda (hereinafter called the "Manager") of the one
part, and
CUNDILL INTERNATIONAL COMPANY LIMITED a Company incorporated
in and under the laws of the Islands of Bermuda whose registered
office is at Clarendon House, Church Street West, Hamilton, Bermuda
(hereinafter called the "Company") of the other part.
WHEREAS:
(1) The Manager has the power to manage the business and
affairs of the Company.
(2) The Company is desirous of delegating certain
administrative and management functions and duties to the Manager
and of being provided with administrative and management services
by the Manager and the Manager is desirous of providing those
services.
<PAGE> 33
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
--------------
Unless the context otherwise requires, words and
expressions contained in the Agreement shall bear the same
respective meanings as in the Memorandum of Association and Bye-
laws of the Company (the "Bye-laws"). The headings of this
Agreement are for convenience only and shall not be used in
construing this Agreement. References in the Agreement to Clauses
are to clauses of this Agreement.
2. APPOINTMENT OF MANAGERS
-----------------------
(a) The Company HEREBY APPOINTS the Manager to be and
the Manager HEREBY AGREES to act as its manager and, on its behalf,
to carry out certain of its administrative and management functions
and duties upon the terms and conditions hereinafter contained. It
is HEREBY FURTHER AGREED and acknowledged that the services
provided by the Manager hereunder to the Company are not exclusive
to the Company and that the Manager may provide similar or other
services to third parties.
(b) As managers of the Company the Managers shall
observe and comply with the Bye-laws of the Company in all respects
and shall well and faithfully serve the Company and use its best
endeavors to promote the interests thereof.
3. CONTROL OF DIRECTORS
--------------------
From time to time the Directors of the Company may give
to the Manager directions relating to the conduct of the business
of the Company both in regard to the general policy of the Company
-2-
<PAGE> 34
and in regard to specific matters and the Manager shall exercise
its powers and duties hereunder subject to and in accordance with
such directions and subject at all time to the control of and
review by the Directors of the Company.
4. MANAGEMENT OF INVESTMENTS
-------------------------
Subject to Clause 3 of this Agreement the Manager shall
manage the investment and reinvestment of the cash, securities and
other property comprising the assets of the Company with power on
behalf of and in the name of the Company at its discretion to
purchase, subscribe for or otherwise acquire investments and to
sell, redeem, exchange, vary or transpose the same PROVIDED THAT
(unless otherwise instructed):
(1) the purchase or sale of any investment for the
account of the Company, where such investment is listed on any
stock exchange or over-the-counter market or where a recognized
market is made in such investments by any bank of securities
dealer, shall be made on the stock exchange or market which is the
principal market for such investments, unless the Manager is
satisfied that it is possible to make such purchase or sale more
advantageously in some other manner;
(2) the Manager may cause such sums as it thinks fit to
be retained in cash on behalf of the Company or placed on deposit
in such currency or currencies;
(3) the Manager shall render to the Directors written
reports of the composition of the portfolio of the Company as often
as the Directors shall reasonably require.
-3-
<PAGE> 35
Any specific or general directions which the Board of the Directors
of the Company may give to the Manager with regard to the
acquisition, holding or disposal of investments shall, unless the
contrary is expressly stated therein, override the general
authorization hereby given, to the intent that the Directors may at
any time and from time to time take over, either generally or to a
limited extent and either in collaboration with or to the exclusion
of the Manager, the making, varying or disposal of any or all of
the investments of the Company.
5. ADMINISTRATION
--------------
Subject to Clause 3 of this Agreement and to the Bye-laws
of the Company the Manager shall be responsible for the supervision
of the general administration services required by the Company in
connection with its business and operation and shall be entitled to
exercise each of the powers, duties and discretions as are vested
in the Directors over the Company and otherwise as may be
customarily vested in and performed by managing directors. In
particular, but without prejudice to generality of the foregoing,
the Manager:
(1) shall be responsible for preparing and procuring the
preparation of periodic investment management reports in such form
as the Directors of the Company may prescribe;
(2) shall supply the Secretary with such information and
instructions as may be requisite to enable the Secretary to perform
his duties;
-4-
<PAGE> 36
(3) shall forthwith on receipt pay to or deposit with or
to the order of the Company all monies and securities received on
behalf of the Company;
(4) shall be responsible for the negotiation and
supervision of all the borrowings of the Company that may be made
or desired to be made from time to time;
(5) shall, if and for so long as the shares of the
Company shall be quoted, listed or traded in on a recognized stock
exchange, perform such duties as may be required by such recognised
stock exchange in connection with the quoting, trading or listing.
6. VOTING OF INVESTMENTS
---------------------
All rights of voting conferred by investments of the
Company shall be exercised in such manner as the Manager may
determine and the Manager may in its discretion refrain from the
exercise of such voting rights. The Company shall from time to
time execute and deliver to the Manager or procure the execution or
delivery of such powers of attorney or proxies as may reasonably be
required authorizing such attorneys or proxies to vote, consent or
otherwise act in respect of (or any part of) the investments of the
Company.
7. REMUNERATION OF MANAGER
-----------------------
(1) All expenses incurred by the Manager in managing and
conducting the business of the Company pursuant to this Agreement,
including all reasonable and necessary overhead and administration
expenses, shall be borne by the Manager.
-5-
<PAGE> 37
(2) Except as otherwise expressly provided herein, the
Company assumes and shall pay or cause to be paid all direct
expenses of the Company including, by way of illustration and
without limitation thereto:
(a) brokerage charges or commissions and custodian
fees;
(b) disbursements of a non-recurring and
exceptional nature and not incidental to the
day to day management of the Company,
including, without limiting the generality of
the foregoing, the costs and expenses of
actions or suits threatened or commenced by
third parties against the Company;
(c) audit and accounting fees for independent
certified public accountants;
(d) taxes and assessments, including property
taxes and assessments, securities issuance and
transfer taxes, stamp taxes and duties and
other taxes, fees and assessments payable by
the Company to any governmental agency;
(e) interest, fees, charges and all other costs
payable on borrowing by or for the purposes of
the Company;
(f) fees and expenses of the Company's legal
counsel and other independent contracts and
consultants engaged by or on behalf of the
Company;
(g) any other direct expenses incurred in the
business of the Company whether like or unlike
the foregoing.
(3) The Company shall pay to the Manager an annual
incentive fee (hereinafter referred to as the "Incentive Fee")
equal to 25% of the amount by which the aggregate of
(a) the increase in net asset value of the Company
for each quarter since the last quarter end,
as calculated at the close of business on each
quarter end, adjusted in respect of further
-6-
<PAGE> 38
issues of shares (hereinafter referred to as
the "Incentive Return"),
exceeds
(b) the return that would be generated quarterly
by the quarterly average of the average
monthly interest rate payable throughout the
quarter on 30 day certificates of deposit of
amounts of US$100,000 offered by the main
branch of the Bank of N.T. Butterfield & Son
Ltd. and applied to the net asset value of the
Company as calculated at the close of business
on the previous quarter-end of the Company,
adjusted in respect of further issues of
shares (hereinafter referred to as the "Base
Return"). If in any quarter the Incentive
Return is less than the Base Return no
Incentive Fee shall be paid for that quarter
and the difference between:
(i) the net asset value of the Company at the
end of the quarter in which this occurs,
and
(ii) the net asset value at the beginning of
such quarter plus the Base Return for
such quarter (the "shortfall")
shall be carried forward to the succeeding
quarter and deducted in the calculation of
future Incentive Returns and no further
Incentive Fee shall be payable until such
shortfall, adjusted in respect of further
issues of shares, has been completely
recovered.
(4) The Incentive Fees, if any, accrued in quarters
during a fiscal year, shall be paid to the Manager annually within
one month of the fiscal year-end of the Company by the allotment of
Class A shares in the Company. The Class A shares in the Company
shall be valued at their net asset value on the last day of the
fiscal year of the Company.
-7-
<PAGE> 39
8. RESPONSIBILITY OF MANAGER AND INDEMNITY BY THE COMPANY
------------------------------------------------------
(1) The Manager shall not, in the absence of negligence
and wilful breach of duty on the part of the Manager, be liable to
the Company or to any shareholder of the Company for any act or
omission in the course of or in connection with the services
rendered by it hereunder or for any loss of damage which the
Company may sustain or suffer as a result or in the course of the
discharge by the Manager of its duties hereunder or pursuant
hereto.
(2) The Company agrees to indemnify the Manager, or any
of its Directors, Officers, employees, or outside consultants from
and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (other than those
resulting from the wilful misconduct, negligence or wilful breach
of duty on the part of the Manager) which may be imposed or
incurred by or asserted against the Manager in performing its
functions or duties hereunder.
9. LEGAL PROCEEDINGS
-----------------
The Manager shall not be required to take any legal
action unless fully indemnified to its reasonable satisfaction for
all costs and liabilities likely to be incurred or suffered by the
Manager and if the Company requires the Manager in any capacity to
take any action which in the opinion of the Manager might make the
Manager as agent liable for the payment of money or liable in any
other way the Manager shall be and be kept indemnified by the
-8-
<PAGE> 40
Company in any reasonable amount and form satisfactory to it as a
prerequisite of taking such action.
10. DELEGATION
----------
In performing its duties hereunder the Manager may
appoint sub-agents and delegates (who shall be appointed at the
expense of the Manager) provided that the Manager will at all time
remain responsible to the Company for the proper performance of its
duties hereunder.
11. TERMINATION
-----------
(1) This Agreement and the appointment of the Manager
hereunder shall become effective on the date hereof and shall,
subject as hereinafter provided, continue and remain in force and
effect until determined by either party giving to the other not
less than ninety days written notice (or such shorter notice as the
other party may agree to accept) expiring at any time provided that
this Agreement may be determined forthwith by the Company and
Manager by notice taking immediate or subsequent effect if:
(a) the other one of them has broken or is in
breach of any of the terms of this Agreement
and shall not have remedied such breach within
30 (thirty) days after service or notice
requiring the same to be remedied;
(b) the other one of them shall become insolvent
or go into liquidation (except a voluntary
liquidation for the purposes of reconstruction
or amalgamation on terms previously approved
in writing by the other party).
(2) Upon termination of this Agreement the Manager shall
deliver to the Company or as it may direct all corporate records,
-9-
<PAGE> 41
registers, share certificates and other documents held by it in
relation to the Company.
12. NOTICES
-------
Any notice required to be given hereunder may be served
by being left at or sent by post to either party at its registered
office or such other address as may from time to time be notified
to the other party and any notice given by post shall be deemed to
have been served at the expiration of 72 (seventy-two) hours after
it is posted and in proving such service it shall be sufficient to
prove that the envelope containing the notice was properly
addressed and sent.
13. AMENDMENT
---------
This Agreement may not be amended without the consent of
the Company and the Manager.
14. PROPER LAW
----------
This Agreement shall be construed and governed in
accordance with the laws of Bermuda.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed on the day and year first above written.
SIGNED by /s/ John R. Talbot )
----------------------- )
duly authorized for and on behalf )
of PETER CUNDILL ASSOCIATES )
(BERMUDA) LIMITED )
SIGNED by /s/ F. Peter Cundill )
----------------------- )
duly authorized for and on behalf )
of CUNDILL INTERNATIONAL COMPANY )
LIMITED )
-10-
<PAGE> 42
Exhibit 8
---------
INVESTMENT COUNSEL AGREEMENT
BETWEEN:
CUNDILL CAPITAL LIMITED PARTNERSHIP
AND:
PETER CUNDILL & ASSOCIATES (BERMUDA) LTD.
OWEN, BIRD
P.O. Box 49130
Three Bentall Centre
2900 - 595 Burrard Street
Vancouver, British Columbia
V7X 1J5
(Tel: 688-0401)
<PAGE> 43
<TABLE>
INVESTMENT COUNSEL AGREEMENT
----------------------------
TABLE OF CONTENTS
-----------------
<C> <S> <C>
ARTICLE 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 2
1.01 Definitions. . . . . . . . . . . . . . . . 2
1.02 Internal Reference . . . . . . . . . . . . 3
1.03 Including. . . . . . . . . . . . . . . . . 3
1.04 Computation of Time Periods. . . . . . . . 3
1.05 Currency . . . . . . . . . . . . . . . . . 4
1.06 Headings . . . . . . . . . . . . . . . . . 4
1.07 Accounting Terms . . . . . . . . . . . . . 4
1.08 Applicable Laws and Attornment . . . . . . 4
1.09 Number and Gender. . . . . . . . . . . . . 4
ARTICLE 2
APPOINTMENT . . . . . . . . . . . . . . . . . . . . . . . 4
2.01 Appointment. . . . . . . . . . . . . . . . 4
2.02 Compliance with Laws . . . . . . . . . . . 5
2.03 Information. . . . . . . . . . . . . . . . 5
ARTICLE 3
FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . 5
3.01 Fees . . . . . . . . . . . . . . . . . . . 5
3.02 Payment of Incentive Fee . . . . . . . . . 6
3.03 Reduction of Incentive Fee . . . . . . . . 6
3.04 Determination of Net Asset Value . . . . . 6
ARTICLE 4
PROVISION OF SERVICES . . . . . . . . . . . . . . . . . . 7
4.01 Agents . . . . . . . . . . . . . . . . . . 7
4.02 F. Peter Cundill . . . . . . . . . . . . . 7
4.03 Devotion of Time . . . . . . . . . . . . . 8
ARTICLE 5
TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.01 Term . . . . . . . . . . . . . . . . . . . 8
5.02 Resignation of Investment Counsel. . . . . 8
5.03 Removal of Investment Counsel. . . . . . . 8
5.04 Consequences of Removal. . . . . . . . . . 9
ARTICLE 6
LIABILITY AND INDEMNITY . . . . . . . . . . . . . . . . . 9
6.01 Liability. . . . . . . . . . . . . . . . . 9
6.02 Indemnification. . . . . . . . . . . . . . 9
(i)
<PAGE> 44
ARTICLE 7
GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . 10
7.01 Amendments . . . . . . . . . . . . . . . . 10
7.02 Prior Agreement, Modification and
Waiver . . . . . . . . . . . . . . . . . . 10
7.03 No Partnership . . . . . . . . . . . . . . 10
7.04 Notices. . . . . . . . . . . . . . . . . . 10
7.05 Time . . . . . . . . . . . . . . . . . . . 11
7.06 Enurement. . . . . . . . . . . . . . . . . 12
7.07 Severability . . . . . . . . . . . . . . . 12
7.08 Assignment . . . . . . . . . . . . . . . . 12
7.09 Counterparts . . . . . . . . . . . . . . . 12
7.10 Further Assurances . . . . . . . . . . . . 12
</TABLE>
(ii)
<PAGE> 45
INVESTMENT COUNSEL AGREEMENT
----------------------------
THIS AGREEMENT made as of the 29th day of November, 1991.
BETWEEN:
CUNDILL CAPITAL LIMITED PARTNERSHIP, a limited
partnership under the laws of British Columbia
and having its principal place of business at
1200-1100 Melville Street, Vancouver, British
Columbia, V6E 4A6, by its general partner,
PETER CUNDILL CAPITAL LTD.
(the "Partnership")
OF THE FIRST PART
AND:
PETER CUNDILL & ASSOCIATES (BERMUDA) LTD.,
incorporated under the laws of Bermuda with
its registered office in the Parish of
Southampton, Bermuda,
(the "INVESTMENT COUNSEL")
OF THE SECOND PART
WHEREAS:
A. Peter Cundill Capital Ltd. (the "General Partner") is the
general partner of the Partnership and is authorized to enter into
this Agreement on behalf of the Partnership;
B. The Partnership is a limited partnership organized with
the objective of investing and reinvesting its assets in securities
for the benefit of its Limited Partners;
C. The Investment Counsel has extensive experience in the
investment and reinvestment of the assets of investment funds and
has the facilities to provide and perform services in relation
thereto;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in
consideration of the premises and the covenants and agreements
herein contained, the parties hereto agree:
<PAGE> 46
ARTICLE 1
DEFINITIONS
1.01 DEFINITIONS
-----------
For the purposes of this Agreement, the following terms
shall be deemed to have the following meanings:
(a) "AGREEMENT" means this agreement, as amended, modified or
supplemented from time to time;
(b) "BASE RETURN" means the return referred to as such in
Section 3.01;
(c) "GENERAL PARTNER" means Peter Cundill Capital Ltd., a
corporation incorporated under the laws of British
Columbia;
(d) "INCENTIVE FEE" means the fee referred to as such in
Section 3.01;
(e) "INCENTIVE RETURN" means the return referred to as such
in Section 3.01;
(f) "INVESTMENT COUNSEL" means Peter Cundill & Associates
(Bermuda) Ltd., a corporation incorporated under the laws
of Bermuda and registered extraprovincially under the
Company Act (British Columbia);
(g) "LIMITED PARTNER" means any person, firm or corporation
who subscribes for a Unit and whose subscription is
accepted by the General Partner and any person, firm or
corporation who acquires any one or more Units on a
subsequent transfer from a Limited Partner;
(h) "NET ASSET VALUE" means the total assets, less the total
liabilities of the Partnership, determined by the General
Partner in accordance with Section 3.04 and "PER UNIT"
Net Asset Value means the Net Asset Value divided by the
number of Units outstanding;
(i) "PARTNERSHIP" means Cundill Capital Limited Partnership,
formed and registered under the laws of the Province of
British Columbia;
(j) "PARTNERSHIP AGREEMENT" means the partnership agreement
made as of the 29th day of November, 1991, among the
General Partner, Peter Cundill Holdings Ltd., as initial
Limited Partner, and the Limited Partners;
(k) "SECURITIES" shall, without limiting the generality
thereof, include any privately or publicly distributed
(2)
<PAGE> 47
stocks, shares, mutual fund shares, mutual fund units,
partnership units, bonds, debentures and notes or other
evidences of indebtedness or ownership, and shall include
other certificates, receipts, options, forward exchange
contracts, futures, warrants and other instruments or
derivative instruments representing rights to receive,
purchase or subscribe for any of the foregoing or
representing any other rights or interests in such
evidences of indebtedness or ownership, and "SECURITY"
shall mean any one of such Securities;
(l) "SHORTFALL" means the difference between the Base Return
and the Incentive Return if in any fiscal year the
Incentive Return is less than the Base Return;
(m) "SPECIAL RESOLUTION" means a resolution approved by not
less than 66 2/3% of the votes cast by those Limited
Partners who vote in person or by proxy at a duly
convened meeting of Limited Partners or at any
adjournment thereof, called in accordance with the
Partnership Agreement or a written resolution in one or
more counterparts, signed by Limited Partners holding in
the aggregate not less than 66 2/3% of the Units
outstanding; and
(n) "UNIT" means an undivided beneficial ownership interest
in the Partnership.
1.02 INTERNAL REFERENCE
------------------
The terms "HEREOF", "HERETO" and "HEREUNDER" and similar
expressions, mean and refer to this Agreement and not to any
particular Article or paragraph of this Agreement.
1.03 INCLUDING
---------
The word including, when following any general statement,
term or matter, shall not be construed to limit such general
statement, term or matter to the specific item or matters set forth
immediately following such word or to similar items or matters,
whether or not non-limiting language (such as "without limitation"
or "but not limited to" or words of similar import) is used with
reference thereto but rather shall be deemed to refer to all other
items or matters that could reasonably fall within the broadest
possible scope of such general statement, term or matter.
1.04 COMPUTATION OF TIME PERIODS
---------------------------
In this Agreement and any other document delivered
hereunder, except where expressly otherwise provided, in the
computation of a period of time from a specified date to a later
(3)
<PAGE> 48
specified date, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding".
1.05 CURRENCY
--------
Unless otherwise indicated, all dollar amounts referred
to in this Agreement are in Canadian funds.
1.06 HEADINGS
--------
The index to this Agreement and the headings of the
Articles hereof are included for convenience only and do not form
a part of this Agreement, nor are they intended to be full or
accurate descriptions of, or to interpret, define or limit the
scope, extent or intent of this Agreement or any provision hereof
and they will not affect its construction.
1.07 ACCOUNTING TERMS
----------------
All accounting terms not defined in this Agreement will
have those meanings generally ascribed to them in accordance with
generally accepted accounting principles, applied consistently.
1.08 APPLICABLE LAWS AND ATTORNMENT
------------------------------
This Agreement will in all respects be governed by and be
construed in accordance with the laws of the Province of British
Columbia and the laws of Canada applicable in the Province of
British Columbia. Each of the parties hereto hereby irrevocably
attorns to the jurisdiction of the courts of the Province of
British Columbia.
1.09 NUMBER AND GENDER
-----------------
Wherever the singular or the masculine is used herein the
same will be deemed to include the plural or the feminine or the
body politic or corporate where the context or the parties so
require.
ARTICLE 2
APPOINTMENT
2.01 APPOINTMENT
-----------
The Partnership appoints the Investment Counsel to be the
Investment Counsel of the Partnership and to have the exclusive
right to provide investment advice in respect of the assets of the
Partnership and to determine what Securities and deposits of money
shall be held by the Partnership and whether, when and how the
Partnership shall deal with its assets for the enhancement and
(4)
<PAGE> 49
protection of their value and through what agencies the Partnership
shall buy, sell or otherwise deal with its investments.
2.02 COMPLIANCE WITH LAWS
--------------------
The Investment Counsel shall carry out its duties in
respect of the investment of the assets of the Partnership in
compliance with the laws of Canada or any jurisdiction having
authority over the Partnership or over any of its assets or
operations and in respect of any transactions or security trading
conducted by the Investment Counsel in the name of the Partnership,
the Investment Counsel shall ensure that the same does not cause
the Partnership to be in contravention of any part of the
Partnership Agreement.
2.03 INFORMATION
-----------
The General Partner shall from time to time furnish to
the Investment Counsel without cost to the Investment Counsel all
information relating to the operation of the Partnership which it
shall deem necessary for the performance of its duties and the
Investment Counsel shall make all documents and records pertaining
to the investments of the monies of the Partnership available to
the General Partner.
ARTICLE 3
FEES AND EXPENSES
3.01 FEES
----
The Partnership will pay to the Investment Counsel an
annual incentive fee (the "Incentive Fee") equal to 20% of the
amount by which:
(a) the increase in Net Asset Value of the Partnership for
each fiscal year since the last fiscal year-end, as
calculated at the close of business on each fiscal
year-end, adjusted for contributions and redemptions made
by the Limited Partners and for any Shortfall (as defined
below) from the previous fiscal year, (the "Incentive
Return"), exceeds
(b) the return that would be generated annually by the
average interest rate (the "Average Rate") applied to the
Net Asset Value of the Partnership as calculated at the
close of business of the previous fiscal year-end of the
Partnership, adjusted for contributions and redemptions
made by the Limited Partners (the "Base Return"). The
Average Rate shall be the average of the amount
calculated in respect of each month during the fiscal
period which is the average of the rate of interest
(5)
<PAGE> 50
payable on 30 day certificates of deposit of amounts of
$100,000 offered by the main branch of the Bank of
Montreal in Vancouver, British Columbia, on the first and
last days of that month.
If in any fiscal year the Incentive Return is less than
the Base Return, no Incentive Fee shall be paid for that fiscal
year and the difference between the Base Return and the Incentive
Return (the "Shortfall") shall be carried forward to the succeeding
fiscal year and, after adjustment for redemptions, deducted in the
calculation of the Incentive Return for that year. The Shortfall
deducted in any year shall be reduced by an amount such that the
proportion that the reduction bears to the Shortfall is equal to
the proportion that the number of Units which were outstanding at
the end of the previous fiscal year and which are redeemed during
the year bears to the total number of Units outstanding at the end
of the previous fiscal year.
3.02 PAYMENT OF INCENTIVE FEE
------------------------
The Incentive Fee, if any, shall be determined quarterly
during a fiscal year for the purposes of calculating the Net Asset
Value per Unit at the end of each fiscal quarter, but shall be paid
to the Investment Counsel annually within one month of the fiscal
year end of the Partnership from cash held in the Partnership.
3.03 REDUCTION OF INCENTIVE FEE
--------------------------
The Incentive Fee payable in respect of any fiscal year
shall be reduced by such amount as is required to avoid the
duplication of any fees paid to the Investment Counsel for that
year in respect of any Securities owned by the Partnership which
are Securities of other funds and portfolios advised by the
Investment Counsel. For the purposes of calculating the reduction,
such other fees shall be assumed to have accrued evenly over the
fiscal year and shall be pro-rated to reflect the period of
ownership of the Securities by the Partnership.
3.04 DETERMINATION OF NET ASSET VALUE
--------------------------------
The following principles shall apply to the determination
of Net Asset Value:
(a) marketable Securities listed and traded on securities
exchanges or in over-the-counter markets shall be
determined by the closing sale price thereon or, in the
absence of a sale on the valuation date, by the mean
between the last closing bid and asked prices of such
Security on such exchanges or as reported by other
recognized quotation services;
(6)
<PAGE> 51
(b) all other assets, including non-marketable Securities,
shall be valued at their respective fair value as
determined in good faith by the Investment Counsel in
consultation with the General Partner without independent
review or appraisal;
(c) the market value of Securities and other Partnership
Property denominated in foreign currencies shall be
valued in Canadian dollars at the spot rate of exchange
prevailing at the last business day of each month and
transactions denominated in foreign currencies occurring
during the month shall be valued at the spot rate of
exchange prevailing at the time each such transaction was
executed; and
(d) notwithstanding the foregoing, if the Investment Counsel,
in consultation with the General Partner, determines that
the fair value of any marketable Securities or
instruments would be better reflected by some other
method of valuation, then that method shall be used.
ARTICLE 4
PROVISION OF SERVICES
4.01 AGENTS
------
The Investment Counsel may execute or perform any of the
duties required of it hereunder either itself or by or through its
agents or employees, and the Investment Counsel shall not be liable
for any action taken by it in good faith and believed by it to be
within the discretion or power conferred upon it by this Agreement,
nor shall it be responsible for consequences of any error of
judgment on its part and shall be answerable only for its own
willful misconduct, bad faith or negligence.
4.02 F. PETER CUNDILL
----------------
F. Peter Cundill will be primarily responsible for the
services provided by the Investment Counsel hereunder and should F.
Peter Cundill for any reason, including but not limited to
incompetency, death, unfitness or termination of his relationship
with the Investment Counsel, cease to be available to provide
investment counsel services to the General Partner through the
Investment Counsel, then the Investment Counsel shall have the
right to propose a new individual or individuals to provide the
services previously provided by F. Peter Cundill, subject to the
approval of the Limited Partners by Special Resolution.
(7)
<PAGE> 52
4.03 DEVOTION OF TIME
----------------
Notwithstanding any other provision of this Agreement,
the Partnership acknowledges that the Investment Counsel and the
officers, directors and shareholders of the Investment Counsel
shall not be required to devote their efforts exclusively to the
business and affairs of the Partnership and may, subject to any
restriction at law or otherwise, acquire, engage in or hold an
interest (either alone or with others) in such other businesses,
ventures, investments and activities as they consider appropriate
whether or not similar to or competitive with the business of the
Partnership and that neither the Partnership nor any Limited
Partner shall have any right in or to such other business. Such
officers, directors and shareholders need not offer or make
available to the Partnership or any Limited Partner any opportunity
to acquire an interest in such other business.
ARTICLE 5
TERM
5.01 TERM
----
The term of this Agreement shall be for ten (10) years
from the 1st day of January, 1992, subject to termination as
hereinafter provided.
5.02 RESIGNATION OF INVESTMENT COUNSEL
---------------------------------
The Investment Counsel may resign at the end of any
fiscal quarter year on at least three months' written notice to the
Partnership or, with approval by Special Resolution proposed at the
request of the Investment Counsel, on 60 days' written notice to
all Limited Partners, or without notice upon the commencement of
bankruptcy or involuntary liquidation of the Investment Counsel or
upon the commencement of steps in connection therewith when such
steps are not contested in good faith by the Investment Counsel.
5.03 REMOVAL OF INVESTMENT COUNSEL
-----------------------------
The Investment Counsel may be removed as the investment
counsel of the Partnership and a new investment counsel appointed
by the Partnership by Special Resolution, if the Investment Counsel
is in default of any obligation or duty hereunder and such default
is not rectified within 30 days after the giving of notice thereof
to the Investment Counsel, provided that if the default is such
that more than 30 days are required for its cure, the Investment
Counsel may not be removed if it commences to cure the default
within such 30 day period and diligently pursues such curative
measures.
(8)
<PAGE> 53
5.04 CONSEQUENCES OF REMOVAL
-----------------------
In the event that at the time of any removal of the
Investment Counsel:
(a) the Investment Counsel could not have been dismissed for
cause if it were an employee, and
(b) there has been no change in control of the Investment
Counsel within one year prior to such removal,
then for the ensuing four full quarters, all amounts thereafter
payable pursuant to Section 3.0 and attributable to investments
made by the Investment Counsel while the investment counsel, using
as the Net Asset Value for calculating the Incentive Return and the
Base Return the value of such investments determined at the end of
the last concluded quarter of the Partnership, shall be paid to the
Investment Counsel so removed rather than to the substituted
investment counsel and the removed Investment Counsel shall have
the right to require by written notice to the new investment
counsel that such investments be sold or, for the purposes of
calculation under this section, be deemed to have been sold at the
market value thereof determined in accordance with Section 3.04
hereof on the second business day following receipt of the notice
aforesaid.
ARTICLE 6
LIABILITY AND INDEMNITY
6.01 LIABILITY
---------
The Investment Counsel hereby agrees to use its best
efforts and judgment and due care in exercising its duties and the
authority granted to it hereunder PROVIDED THAT it shall not, in
the absence of negligence or willful default on its part or on the
part of its servants or agents, be liable for any loss or damage
which the Partnership or the Limited Partners may sustain or suffer
as a result or in the course of the discharge by the Investment
Counsel of its duties hereunder.
6.02 INDEMNIFICATION
---------------
The Partnership shall indemnify and hold harmless the
Investment Counsel, its directors, officers, employees and agents
from and against any loss, expense, damage or injury suffered or
sustained by it or them by reason of any acts, omissions or alleged
acts or omissions arising out of its or their activities pursuant
to this Agreement (other than those expenses incurred in performing
its services hereunder), including but not limited to any judgment,
award, settlement, reasonable legal fees and other costs or
expenses incurred in connection with the defence of any actual or
(9)
<PAGE> 54
threatened action, proceeding or claim and including any payments
made by the Investment Counsel to any of its directors, officers,
employees or agents pursuant to an indemnification agreement no
broader than this Section 6.02 provided that the acts, omissions or
alleged acts or omissions upon which such actual or threatened
action, proceeding or claim are based were in good faith and were
not performed or omitted fraudulently or in bad faith or as a
result of wanton and willful misconduct or negligence by the
Investment Counsel, its directors, officers, employees and their
respective agents.
ARTICLE 7
GENERAL PROVISIONS
7.01 AMENDMENTS
----------
This Agreement may only be amended by the Investment
Counsel and the General Partner with the authorization and consent
of the Limited Partners given by Special Resolution and the General
Partner will forthwith provide written notice to the Investment
Counsel of any such Special Resolution.
7.02 PRIOR AGREEMENT, MODIFICATION AND WAIVER
----------------------------------------
This Agreement supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or
written, of the parties. There are no warranties, representations
or other agreements between the parties in connection with the
subject matter hereof except as specifically set forth herein. No
supplement, modification or waiver or termination of this Agreement
shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions (whether or not similar) nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
Any indulgence by or delay or omission by a party to exercise any
right arising from any default or omission will not affect or
impair the rights of that party as to any future default or
omission.
7.03 NO PARTNERSHIP
--------------
Nothing in this Agreement shall be deemed in any way or
for any purpose to constitute the Investment Counsel a partner or
a member of a joint venture or joint enterprise of or with the
Partnership.
7.04 NOTICES
-------
Unless otherwise specified herein, any notice or other
communication required to be given hereunder by any party pursuant
(10)
<PAGE> 55
to this Agreement shall be in writing and shall be given by letter
delivered by hand or sent by first class prepaid post or telecopy
followed by first class prepaid post and shall be addressed to the
recipient and sent to the address and telecopy number of the
recipient set out below, marked for the attention of the
representative set out below:
(a) if to the Partnership:
1200-1100 Melville Street
Vancouver, British Columbia, Canada
V6E 4A6
Attention: Corporate Secretary of the General
Partner
Telecopier: (604) 689-9532
(b) if to the Investment Counsel:
15 Alton Hill
Southampton, Bermuda
SN O1
Attention: Mr. John Talbot
Telecopier: (809) 238-8404
or to such other address and telecopy number or marked for such
other attention as such recipient may from time to time specify by
notice given in accordance with this Section 7.0 to the party
giving the relevant notice or other communication to it and shall
be deemed to have been received:
(a) in the case of delivery by hand, when delivered; or
(b) in the case of first class prepaid post, on the third day
following the day of posting; or
(c) in the case of telecopy, on acknowledgment by the
recipient facsimile receiving equipment on a business day
provided that such acknowledgment occurs before 1700
hours (local time) of the recipient on the business day
of acknowledgment and in any other case on the business
day next following the business day of acknowledgment.
7.05 TIME
----
Time will be of the essence hereof.
(11)
<PAGE> 56
7.06 ENUREMENT
---------
This Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective successors and
permitted assigns.
7.07 SEVERABILITY
------------
Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid
for any reason whatsoever, such illegality or invalidity shall not
affect the validity of the remainder of this Agreement.
7.08 ASSIGNMENT
----------
Except as may be expressly provided in this Agreement, no
party may assign its rights or obligations under this Agreement to
any third party without the consent in writing of each other party.
7.09 COUNTERPARTS
------------
This Agreement may be executed by the parties in separate
counterparts each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute
one and the same instrument.
7.10 FURTHER ASSURANCES
------------------
The parties hereto shall with reasonable diligence do all
such things and provide all such reasonable assurances as may be
required to consummate any transaction contemplated hereby, and
each party shall execute and deliver such further documents or
instruments required by any other party as may be reasonably
necessary or desirable to effect the purpose of this Agreement and
carry out its provisions.
(12)
<PAGE> 57
IN WITNESS WHEREOF the Corporate Seals of the parties
hereto were hereunto affixed in the presence of their respective
proper officers duly authorized in that behalf as of the day and
year first above written.
On behalf of CUNDILL CAPITAL )
LIMITED PARTNERSHIP )
the Corporate Seal of )
PETER CUNDILL CAPITAL LTD. )
was hereunto affixed in the )
presence of: )
)
)
/s/ Mark C. Stevens )
- ----------------------------- )
Authorized Signatory ) c/s
)
/s/ Margaret A. Vrabel )
- ----------------------------- )
Authorized Signatory )
The Corporate Seal of )
PETER CUNDILL & ASSOCIATES )
(BERMUDA) LTD. )
was hereunto affixed in the )
presence of: )
)
)
/s/ John R. Talbot )
- ----------------------------- )
Authorized Signatory ) c/s
)
/s/ Ursula Kummel )
- ----------------------------- )
Authorized Signatory )
(13)