INVESTMENT ADVISORY AGREEMENT
March 31, 1992
BEA Associates
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The Latin America Investment Fund, Inc. (the "Company"), a
corporation organized under the laws of the state of Maryland, herewith
confirms its agreement with BEA Associates (the "Adviser"), a general
partnership organized under the laws of the state of New York, as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Company desires to employ its capital by investing and
reinvesting in investments of the kind and in accordance with the limitations
specified in its Articles of Incorporation, as amended, and in its
Registration Statement as from time to time in effect, and in such manner and
to such extent as may from time to time be approved by the Board of Directors
of the Company. Copies of the Company's Registration Statement and Articles
of Incorporation, as amended, have been or will be submitted to the Adviser.
The Company agrees to provide copies of all amendments to the Company's
Registration Statement and Articles of Incorporation to the Adviser on an
on-going basis. The Company desires to employ and hereby appoints the Adviser
to act as investment adviser to the Company with respect to all investments
other than external debt obligations of Latin American governments or
governmental entities ("Sovereign Debt"), for which Salomon Brothers Asset
Management Inc. ("SBAM") will serve as investment adviser. The Adviser accepts
the appointment and agrees to furnish the services described herein for the
compensation set forth below.
2. SERVICES AS INVESTMENT ADVISER
Subject to the supervision and direction of the Board of Directors
of the Company, the Adviser will (a) act in accordance with the Company's
Articles of Incorporation, the Investment Company Act of 1940 and the
Investment Advisers Act of 1940, as the same may from time to time be
amended, (b) manage the Company's assets other than Sovereign Debt in
accordance with its investment objective and policies as stated in the
Company's Registration Statement as from time to time in effect, (c) make
investment decisions and
exercise voting rights in respect of portfolio securities other than
Sovereign Debt for the Company, (d) place purchase and sale orders on behalf
of the Company for all investments other than Sovereign Debt, (e) monitor and
evaluate the services provided by the Company's investment sub-advisers under
the investment sub-advisory agreements and (f) supervise, monitor and
evaluate the services provided by the Company's Brazilian economic adviser
and administrator under the Brazilian economic advisory and administration
agreement. In providing these services, the Adviser will provide investment
research and supervision of the Company's investments and conduct a continual
program of investment, evaluation and, if appropriate, sale and reinvestment
of the Company's assets. In addition, the Adviser will furnish the Company
with whatever statistical information the Company may reasonably request with
respect to the securities that the Company may hold or contemplate purchasing.
3. BROKERAGE
In executing transactions for the Company and selecting brokers or
dealers, the Adviser will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any Company
transaction, the Adviser will consider all factors it deems relevant including,
but not limited to, breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer and the reasonableness of any commission for the specific transaction and
on a continuing basis. In selecting brokers or dealers to execute a particular
transaction and in evaluating the best overall terms available, the Adviser may
consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) provided to the Company
and/or other accounts over which the Adviser or an affiliate exercises
investment discretion.
4. INFORMATION PROVIDED TO THE COMPANY
The Adviser will keep the Company informed of developments materially
affecting the Company, and will, on its own initiative, furnish the Company from
time to time with whatever information the Adviser believes is appropriate for
this purpose.
5. STANDARD OF CARE
The Adviser shall exercise its best judgment in rendering the services
described in paragraphs 2 and 3 above. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Company in
connection with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect the Adviser
against any liability to the Company or its shareholders to which the Adviser
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of
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its obligations and duties under this Agreement ("disabling conduct"). The
Company will indemnify the Adviser against, and hold it harmless from, any
and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand,
action or suit not resulting from disabling conduct by the Adviser.
Indemnification shall be made only following: (i) a final decision on the
merits by a court or other body before whom the proceeding was brought that
the person to be indemnified was not liable by reason of disabling conduct or
(ii) in the absence of such a decision, a reasonable determination, based
upon a review of the facts, that the person to be indemnified was not liable
by reason of disabling conduct by (a) the vote of a majority of a quorum of
non-party directors who are not "interested persons" of the Company or (b) an
independent legal counsel in a written opinion. The Adviser shall be entitled
to advances from the Company for payment of the reasonable expenses incurred
by it in connection with the matter as to which it is seeking indemnification
in the manner and to the fullest extent permissible under the Maryland
General Corporation Law. The Adviser shall provide to the Company a written
affirmation of its good faith belief that the standard of conduct necessary
for indemnification by the Company has been met and a written undertaking to
repay any such advance if it should ultimately be determined that the
standard of conduct has not been met. In addition, at least one of the
following additional conditions shall be met: (a) the Adviser shall provide a
security in form and amount acceptable to the Company for its undertaking;
(b) the Company is insured against losses arising by reason of the advance;
or (c) a majority of a quorum of disinterested non-party directors, or
independent legal counsel, in a written opinion, shall have determined, based
on a review of facts readily available to the Company at the time the advance
is proposed to be made, that there is reason to believe that the Adviser will
ultimately be found to be entitled to indemnification.
6. COMPENSATION
(a) In consideration of the services rendered pursuant to this
Agreement, the Company will pay the Adviser after the end of the calendar
quarter during which the date set forth above occurs and after the end of
each calendar quarter thereafter a fee for the previous quarter computed at
an annual rate of 1.0625% of the first US$100 million of the Company's
average weekly net assets, .9775% of the next US$50 million and .8925% of
amounts above US$150 million.
The Adviser (or, as provided below, the Company) and SBAM shall pay
to each of the sub-investment advisers of the Company (the "Sub-Advisers")
the fees payable under each investment Sub-Advisory Agreement relating to the
Company among the Company, the Adviser, SBAM and each such Sub-Adviser. The
Adviser and SBAM each shall pay that portion of the fees payable to the
Sub-Advisers in the same proportion as its advisory fees received from the
Company bears to the Company's combined fees for investment advice. In the
event that any one of the Investment Sub-Advisory Agreements is terminated,
the Adviser shall be
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responsible for furnishing to the Company the services required to be
performed by such Sub-Adviser under the respective Investment Sub-Advisory
Agreement relating to investments other than Sovereign Debt or arranging for
a successor sub-investment adviser with respect to such investments on terms
and conditions acceptable to the Company and subject to the requirements of
the Investment Company Act of 1940.
The Company agrees that, at the request of the Adviser, it will pay
the Sub-Advisers directly in local currency the amounts payable to each of
the Sub-Advisers for sub-advisory services, provided that the fee payable to
the Adviser hereunder shall be reduced to the extent of amounts so paid to
the Sub-Adviser. The fee payable to the Adviser for the period from the date
set forth above to the end of the first calendar quarter thereafter shall be
prorated according to the proportion that such period bears to the full
quarterly period.
(b) Upon any termination of this Agreement before the end of a quarter,
the fee for such part of that quarter shall be prorated according to the
proportion that such period bears to the full quarterly period and shall be
payable upon the date of termination of this Agreement. For the purpose of
determining fees payable to the Adviser, the value of the Company's net assets
shall be computed at the times and in the manner specified in the Company's
Registration Statement as from time to time in effect.
7. EXPENSES
The Adviser will bear all expenses in connection with the
performance of its services under this Agreement, including compensation of
and office space for its officers and employees connected with investment and
economic research, trading and investment management and administration of
the Company, except as otherwise may be provided in any separate agreement
between the Company and the Adviser, as well as the fees of all directors of
the Company who are affiliated with the Adviser or any of its affiliates. The
Company will bear certain other expenses to be incurred in its operation,
including: organizational expenses; taxes, interest, brokerage costs and
commissions and stock exchange fees; fees of directors of the Company who are
not officers, directors, or employees of the Adviser, SBAM, the Sub-Advisers,
any U.S. or foreign administrator, the Company's Brazilian economic adviser
or any of their affiliates; U.S. Securities and Exchange Commission fees;
state Blue Sky qualification fees; charges of custodians, sub-custodians and
transfer and dividend disbursing agents; expenses in connection with the
Company's Dividend Reinvestment and Cash Purchase Plan; insurance premiums;
outside auditing, pricing and legal expenses; costs of maintenance of the
Company's existence; costs attributable to investor services, including,
without limitation, telephone and personnel expenses; costs of printing stock
certificates; costs of shareholders' reports and meetings of the shareholders
of the Company and of the officers or Board of
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Directors of the Company; membership fees in trade associations; stock exchange
listing fees and expenses; litigation and other extraordinary or non-recurring
expenses.
8. SERVICES TO OTHER COMPANIES OR ACCOUNTS
The Company understands that the Adviser now acts, will continue to
act or may act in the future as investment adviser to investment fiduciary
and other managed accounts or as investment adviser to one or more other
investment companies, and the Company has no objection to the Adviser so
acting, provided that whenever the Company and one or more other accounts or
investment companies advised by the Adviser have available funds for
investment, investments suitable and appropriate for each will be allocated
in accordance with procedures believed to be equitable to each entity.
Similarly, opportunities to sell securities will be allocated in an equitable
manner. The Company recognizes that in some cases this procedure may
adversely affect the size of the position that may be acquired or disposed of
for the Company. In addition, the Company understands that the persons
employed by the Adviser to assist in the performance of the Adviser's duties
hereunder will not devote their full time to such service and nothing
contained herein shall be deemed to limit or restrict the right of the
Adviser or any affiliate of the Adviser to engage in and devote time and
attention to other businesses or to render services of whatever kind or
nature.
9. TERM OF AGREEMENT
This Agreement shall become effective as of the date set forth above
and shall continue for an initial two-year term and shall continue thereafter
so long as such continuance is specifically approved at least annually by (i)
the Board of Directors of the Company or (ii) a vote of a "majority" (as
defined in the Investment Company Act of 1940) of the Company's outstanding
voting securities, provided that in either event the continuance is also
approved by a majority of the Board of Directors who are not "interested
persons" (as defined in said Act) of any party to this Agreement, by vote
cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, on 60 days' written
notice, by the Board of Directors of the Company or by vote of holders of a
majority of the Company's shares, or upon 90 days' written notice, by the
Adviser. This Agreement will also terminate automatically in the event of its
assignment (as defined in said Act).
10. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto.
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11. CHANGES IN PARTNERSHIP
The Adviser shall notify the Company of any change in the membership of
the Adviser within a reasonable time after such change.
12. GOVERNING LAW
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the state of New York without giving effect to the
conflicts of laws principles thereof.
13. COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more
than one such counterpart.
If the foregoing accurately sets forth our agreement, kindly indicate
your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
THE LATIN AMERICA INVESTMENT FUND, INC.
By: /s/
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Name:
Title:
Accepted:
BEA ASSOCIATES
By: /s/
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Name:
Title:
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