ABERDEEN AUSTRALIA EQUITY FUND, INC.
INVESTMENT ADVISORY AGREEMENT
AGREEMENT dated as of Xxxxx 0, 0000, xxxxx Xxxxxxxx Xxxxxxxxx
Equity Fund, Inc. ( the "Fund"), a Maryland corporation registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), Aberdeen
Asset Management Asia Limited, a Singapore corporation ("AAMAL" or the
"Investment Manager"), and Aberdeen Asset Management Limited, a New South
Wales, Australia corporation (the "Investment Adviser").
WHEREAS, the Fund is a closed-end management investment company;
WHEREAS, the Fund engages in the business of investing and
reinvesting its assets in the manner and in accordance with its stated
investment objectives and restrictions;
WHEREAS, the Fund entered into a management agreement dated
December 22, 2000, as amended and restated dated as of June 11, 2003
(the " Former Management Agreement"), with Aberdeen Asset Managers (C.I.)
Limited, a Jersey, Channel Islands corporation ("AAMCIL"), pursuant to
which AAMCIL then managed the Fund's investments and made investment
decisions on behalf of the Fund, and for which AAMCIL received a monthly
fee from the Fund as specified in the Former Management Agreement;
WHEREAS, in connection with rendering the services required
under the Former Management Agreement, AAMCIL was permitted to retain,
at its expense and in the manner set forth in the Former Management
Agreement, investment advisers to assist it in carrying out its
obligations to the Fund under the Former Management Agreement;
WHEREAS, pursuant to an investment advisory agreement executed
December 22, 2000, as amended and restated dated as of June 11, 2003
(the "Former Advisory Agreement"), among the Fund, AAMCIL and the
Investment Adviser, AAMCIL retained the Investment Adviser to assist
it in carrying out its obligations to the Fund under the Former
Management Agreement;
WHEREAS, in December 2003, the Board of Directors of the Fund
approved the transfer by AAMCIL to AAMAL of the rights and obligations
of AAMCIL under the Former Management Agreement and the Former
Advisory Agreement (the "Transfer");
WHEREAS, the Fund entered into a management agreement dated as
of March 8, 2004 (the "Management Agreement") with AAMAL, pursuant to
which AAMAL will manage the Fund's investments and will make investment
decisions on behalf of the Fund, and for which AAMAL will receive a
monthly fee from the Fund as specified in the Management Agreement;
WHEREAS, the Fund desires to have AAMAL assume the rights and
obligations of AAMCIL under the Former Advisory Agreement, and AAMAL
is willing to assume such rights and obligations, by entering into
this investment advisory agreement (the "Agreement");
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:
1. Investment Adviser.
1.1 The Investment Adviser will make recommendations to the
Investment Manager as to specific portfolio securities, which are
denominated in Australian or New Zealand dollars, to be purchased,
retained or sold by the Fund and will provide or obtain such research
and statistical data as may be necessary in connection therewith. The
Investment Adviser shall give the Investment Manager (and the Fund) the
benefit of the Investment Adviser's best judgment and efforts in
rendering services under this Agreement.
1.2 The Investment Manager will pay the Investment Adviser a
fee computed at the annual rate of 0.30% of the Fund's average weekly
Managed Assets (as hereinafter defined) up to $50 million; 0.25% of
Managed Assets between $50 million and $100 million; and 0.15% of
Managed Assets in excess of $100 million; computed as of the end of
each week and payable at the end of each calendar month. As used in this
Agreement, "Managed Assets" shall mean net assets plus the amount of any
borrowings for investment purposes.
2. Expenses. The Investment Adviser shall bear all expenses of
its respective employees, except certain expenses incurred by the
Investment Adviser's employees who serve as officers and directors of the
Fund which are reimbursed by the Fund under the Fund's policy governing
reimbursement of Fund-related expenses. The Investment Adviser shall bear
all 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 Adviser but who are not interested persons of the Investment
Manager.
3. Liability. Neither the Investment Manager nor the Investment
Adviser shall 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 the part of the Investment Manager or the
Investment Adviser, as appropriate, in the performance of, or from reckless
disregard by such party of such party's obligations and duties under,
this Agreement.
4. Services Not Exclusive. It is understood that the services of
the Investment Manager and the Investment Adviser are not deemed to be
exclusive, and nothing in this Agreement shall prevent the Investment
Manager or the Investment Adviser, or any affiliate of either of them,
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 or the Investment Adviser
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 clients of each in a manner that is fair and equitable in the
judgment of the Investment Manager and the Investment Adviser in the
exercise of their fiduciary obligations to the Fund and to such other
clients.
5. Duration and Termination. This Agreement shall be effective
as of the date first above written, and shall continue in effect until
December 22, 2004. 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 the outstanding
voting securities of the Fund upon at least sixty (60) days' written notice
to the Investment Manager and the Investment Adviser, or by either the
Investment Manager or Investment Adviser upon at least ninety (90) days'
written notice to the Fund and the other party but any such termination
shall not affect continuance of this Agreement as to the remaining parties.
This Agreement shall automatically terminate as to any party 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 any
party an agent of the Fund or of any other party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day and year first above written.
ABERDEEN AUSTRALIA EQUITY FUND, INC.
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: President
ABERDEEN ASSET MANAGEMENT ASIA LIMITED
By: /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: Managing Director
ABERDEEN ASSET MANAGEMENT LIMITED
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Director
