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EXHIBIT (g)(3)
THE FIRST AUSTRALIA PRIME INCOME FUND, INC.
MANAGEMENT AGREEMENT
AGREEMENT dated as of this 1st day of June, 1996,
between The First Australia Prime Income Fund, Inc. (the "Fund"), a Maryland
corporation registered under the Investment Company Act of 1940 (the "1940
Act"), and EquitiLink International Management Limited, a Jersey, Channel
Islands corporation (the "Investment Manager").
WHEREAS, the Fund is a closed-end management
investment company; and
WHEREAS, the Fund engages in the business of
investing its assets in the manner and in accordance with its stated current
investment objective and restrictions;
NOW THEREFORE, in consideration of the premises and
mutual covenants herein contained, the parties agree as follows:
1. Obligations.
1.1 The Investment Manager will manage, in accordance with the Fund's
stated investment objective, policies and limitations and subject to the
supervision of the Fund's Board of Directors, the Fund's investments and will
make investment decisions on behalf of the Fund including the selection of and
placing of orders with brokers and dealers to execute portfolio transactions on
behalf of the Fund. The Investment Manager shall give the Fund the benefit of
the Investment Manager's best judgment and efforts in rendering services under
this Agreement.
1.2 The Fund will pay the Investment Manager a fee at the annual rate
of 0.65% of the Fund's average weekly net assets applicable to shares of common
stock and shares of preferred stock up to $200 million, 0.60% of such assets
between $200 million and $500 million, 0.55% of such assets between $500 million
and $900 million, 0.50% of such assets between $900 million and $1,750 million
and 0.45% of such assets in excess of $1,750 million, computed based upon net
asset value applicable to shares of common stock and shares of preferred stock
at the end of each week and payable at the end of each calendar month.
1.3 In rendering the services required under this Agreement, the
Investment Manager may, at its expense, employ, consult or associate with itself
such person or persons as it believes necessary to assist it in carrying out its
obligations under this Agreement. However, the Investment Manager may not retain
any person or company that would be an "investment adviser," as that term is
defined in the 1940 Act, to the Fund unless (i) the Fund is a party to the
contract with such person or company and (ii) such contract is approved by a
majority of the Fund's Board of Directors and a majority of Directors who are
not parties to any agreement or contract with such company and who are not
"interested persons," as defined in the 1940 Act, of the Fund, the Investment
Manager, or any such person or company retained by the Investment Manager, and
is approved by the vote of a majority of the outstanding voting securities of
the Fund to the extent required by the 1940 Act.
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2. Expenses. The Investment Manager shall bear all expenses of its
employees and overhead incurred in connection with its duties under this
Agreement and shall pay all salaries and fees of the Fund's Directors and
officers who are interested persons (as defined in the 0000 Xxx) of the
Investment Manager. The Fund will bear all of its own expenses, including:
expenses of organizing the Fund; fees of the Fund's Directors who are not
interested persons (as defined in the 0000 Xxx) of any other party;
out-of-pocket travel expenses for all Directors and other expenses incurred by
the Fund in connection with meetings of directors; interest expense; taxes and
governmental fees including any original issue taxes or transfer taxes
applicable to the sale or delivery of shares or certificates therefor; brokerage
commissions and other expenses incurred in acquiring or disposing of the Fund's
portfolio securities; expenses in connection with the issuance, offering,
distribution, sale or underwriting of securities issued by the Fund; expenses of
registering and qualifying the Fund's shares for sale with the Securities and
Exchange Commission and in various states and foreign jurisdictions; auditing,
accounting, insurance and legal costs; custodian, dividend disbursing and
transfer agent expenses; and the expenses of shareholders' meetings and of the
preparation and distribution of proxies and reports to shareholders.
3. Liability. The Investment Manager shall not be liable for any error
of judgment or for any loss suffered by the Fund in connection with the matters
to which this Agreement relates, except a loss resulting from a breach of
fiduciary duty with respect to receipt of compensation for services (in which
case any award of damages shall be limited to the period and the amount set
forth in Section 36(b)(3) of the 0000 Xxx) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of, or
from reckless disregard by it of its obligations and duties under, this
Agreement.
4. Services Not Exclusive. It is understood that the services of the
Investment Manager are not deemed to be exclusive, and nothing in this Agreement
shall prevent the Investment Manager or any affiliate, from providing similar
services to other investment companies and other clients (whether or not their
investment objectives and policies are similar to those of the Fund) or from
engaging in other activities. When other clients of the Investment Manager
desire to purchase or sell a security at the same time such security is
purchased or sold for the Fund, such purchases and sales will be allocated among
the Investment Manager's clients, including the Fund, in a manner that is fair
and equitable in the judgment of the Investment Manager in the exercise of its
fiduciary obligations to the Fund and to such other clients.
5. Duration and Termination. This Agreement shall become effective upon
shareholder approval thereof as required under the 1940 Act and shall continue
in effect for two (2) years from the date of its execution. If not sooner
terminated, this Agreement shall continue in effect with respect to the Fund for
successive periods of twelve months thereafter, provided that each such
continuance shall be specifically approved annually by the vote of a majority of
the Fund's Board of Directors who are not parties to this Agreement or
interested persons (as defined in the 0000 Xxx) of any such party, cast in
person at a meeting called for the purpose of voting on such approval and either
(a) the vote of a majority of the outstanding voting securities of the Fund, or
(b) the vote of a majority of the Fund's entire Board of Directors.
Notwithstanding the foregoing, this Agreement may be terminated with respect to
the Fund at any time, without the payment of any penalty, by a vote of a
majority of the Fund's Board of Directors or a majority of
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the outstanding voting securities of the Fund upon at least sixty (60) days'
written notice to the Investment Manager or by the Investment Manager upon at
least ninety (90) days' written notice to the Fund. This Agreement shall
automatically terminate in the event of its assignment (as defined in the 1940
Act).
6. Miscellaneous.
6.1 This Agreement shall be construed in accordance with the laws of
the State of New York, provided that nothing herein shall be construed as being
inconsistent with the 1940 Act and any rules, regulations and orders thereunder.
6.2 The captions in this Agreement are included for convenience only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect.
6.3 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby and, to that extent, the provisions of this
Agreement shall be deemed to be severable.
6.4 Nothing herein shall be construed as constituting the Investment
Manager an agent of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective as of the day and year first above written.
THE FIRST AUSTRALIA PRIME INCOME FUND, INC.
By: /s/ Xxxxx Xxxxx
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Title: Treasurer
EQUITILINK INTERNATIONAL MANAGEMENT LIMITED
By: /s/ Xxxxxxx Xxxxxxxxx
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Title: Director
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