9
AMENDED AND RESTATED SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 25th day of April, 2006, by and
between XXXXXX XXXXXXX INVESTMENT MANAGEMENT INC., a Delaware
corporation (hereinafter referred to as "MSIM"), and XXXXXX
XXXXXXX INVESTMENT MANAGEMENT LIMITED, a company incorporated
under the laws of England (hereinafter referred to as the "Local
Manager").
W I T N E S S E T H:
WHEREAS, The Latin American Discovery Fund, Inc. (the
"Fund") is a Maryland corporation engaged in business as a closed-
end management investment company and is registered under the
Investment Company Act of 1940, as amended (hereinafter referred
to as the "Investment Company Act"); and
WHEREAS, MSIM and the Local Manager are engaged principally
in rendering investment advisory services and are registered as
investment advisers under the Investment Advisers Act of 1940, as
amended; and
WHEREAS, the Local Manager is regulated by the Financial
Services Authority in the United Kingdom; and
WHEREAS, MSIM has entered into an investment advisory
agreement (the "Advisory Agreement") with the Fund dated March
13, 1997, as amended from time to time, pursuant to which MSIM
provides management and investment and advisory services to the
Fund; and
WHEREAS, the Local Manager is willing to provide investment
management services to MSIM in connection with the Fund's
operations on the terms and conditions hereinafter set forth and
including the terms and conditions contained in Annex 1 to this
Agreement;
NOW THEREFORE, in consideration of the premises and the
covenants hereinafter contained, the Local Manager and MSIM
hereby agree as follows:
ARTICLE I
Duties of the Local Manager
MSIM hereby employs the Local Manager to act as
discretionary investment manager to MSIM and to furnish the
investment management services described below, subject to the
broad supervision of MSIM and the Fund, for the period and on the
terms and conditions set forth in this Agreement. The Local
Manager hereby accepts such employment and agrees during such
period, at its own expense, to render, or arrange for the
rendering of, such services and to assume the obligations herein
set forth for the compensation provided for herein. MSIM and its
affiliates shall for all purposes herein be deemed an
Intermediate Customer as defined under the rules and guidance
promulgated by the Financial Services Authority (hereinafter
referred to as the "FSA Rules"). The Local Manager and its
affiliates shall for all purposes herein be deemed to be
independent contractors and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent
the Fund in any way or otherwise be deemed agents of the Fund.
The Local Manager shall have full discretion, power and
authority on the Fund's behalf to buy, sell, retain, exchange or
otherwise deal in investments and other assets, make deposits,
subscribe to issues and offers for sale and accept placings of
any investments, enter into foreign currency transactions on a
spot or forward basis, effect transactions on any markets, take
all day-to-day decisions and otherwise act as the Local Manager
judges appropriate in relation to the investment and reinvestment
of the portfolio of assets of the Fund. This includes performing
all acts and executing all documents which the Local Manager
reasonably considers incidental thereto, including (without
limitation) power to execute and deliver all applications,
requests, or claims for refund, reduction, repayment or credit
of, or exemption or relief from, any withholding tax or similar
taxes in any jurisdiction in which such applications, requests or
claims may be made. Subject to guidelines adopted by the Fund,
the Local Manager shall also make recommendations or take action
as to the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the portfolio
of assets of the Fund shall be exercised. All of the foregoing
is subject always to the restrictions of the Articles of
Incorporation and By-Laws of the Fund, as they may be amended
and/or restated from time to time and as provided to the Local
Manager by MSIM, the provisions of the Investment Company Act and
the statements relating to the Fund's investment objective(s),
investment policies and investment restrictions as the same are
set forth in the currently effective prospectus and statement of
additional information relating to the shares of the Fund under
the Securities Act of 1933, as amended (the "Prospectus" and
"Statement of Additional Information", respectively), or such
other applicable disclosure document, as well as to the
supervision of MSIM and the Board of Directors of the Fund.
The Local Manager will not hold money on behalf of MSIM or
the Fund, nor will the Local Manager be the registered holder of
the registered investment of MSIM or the Fund or be the custodian
of documents or other evidence of title.
The Local Manager may, where reasonable, employ agents
(including affiliates) to perform any administrative, dealing or
ancillary services required to enable the Local Manager to
perform its services under this Agreement.
ARTICLE II
Allocation of Charges and Expenses
The Local Manager assumes and shall pay for maintaining the
staff and personnel necessary to perform its obligations under
this Agreement and shall at its own expense provide the office
space, equipment and facilities which it is obligated to provide
under Article I hereof.
ARTICLE III
Compensation of the Local Manager
For the services rendered, the facilities furnished and
expenses assumed by the Local Manager, MSIM shall pay to the
Local Manager a fee in an amount to be determined from time to
time by MSIM and the Local Manager but in no event in excess of
the amount that MSIM actually received for providing services to
the Fund pursuant to the Advisory Agreement.
ARTICLE IV
Limitation of Liability of the Local Manager
No warranty is given by the Local Manager as to the
performance or profitability of the Fund or any part of them.
If a percentage restriction contained in the Fund's
investment objective(s) or investment restrictions (as the same
are set forth in the Fund's currently effective Prospectus,
Statement of Additional Information or such other applicable
disclosure document) is adhered to at the time of investment, a
later change in percentage resulting from a change in values or
assets will not constitute a violation of such restriction.
The Local Manager will not be responsible to MSIM or the
Fund for the solvency, actions or omissions of any counterparty,
broker, dealer, market-maker, bank, custodian or sub-custodian,
with whom it transacts business on MSIM's behalf, other than
affiliates of the Local Manager.
Nothing in this Agreement will exclude or restrict any
liability which the Local Manager has under the Financial
Services and Markets Xxx 0000, FSA Rules or the Regulatory System
in relation to MSIM and which may not be excluded or restricted
thereunder.
The Local Manager shall not be liable for any error of
judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the performance of
investment management services rendered with respect to the Fund,
except for willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder. The exception in the
previous sentence shall apply to each limitation of the Local
Manager's liability contained in this Article IV. As used in
this Article IV, the Local Manager shall include any affiliates
of the Local Manager performing services for the Local Manager
contemplated hereby and directors, officers and employees of the
Local Manager and such affiliates.
ARTICLE V
Activities of the Local Manager
The services of the Local Manager to the Fund are not to be
deemed to be exclusive, the Local Manager and any person
controlled by or under common control with the Local Manager (for
purposes of this Article V referred to as "affiliates") being
free to render services to others. It is understood that
Directors, officers, employees and shareholders of the Fund are
or may become interested in the Local Manager and its affiliates,
as directors, officers, employees and shareholders or otherwise
and that directors, officers, employees and shareholders of the
Local Manager and its affiliates are or may become similarly
interested in the Fund, and that the Local Manager and directors,
officers, employees, partners and shareholders of its affiliates
may become interested in the Fund as shareholders or otherwise.
ARTICLE VI
Duration and Termination of this Agreement
This Agreement shall become effective as of the date first
above written and shall remain in force until the date of
termination of the Advisory Agreement (but not later than two
years after the date hereof) and thereafter, but only so long as
such continuance is specifically approved at least annually by
(i) the Directors of the Fund or by the vote of a majority of the
outstanding voting securities of the Fund and (ii) a majority of
those Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the
payment of any penalty, by MSIM, by the Board of Directors of the
Fund or by vote of a majority of the outstanding voting
securities of the Fund, or by the Local Manager, on sixty days'
written notice to the other party. This Agreement shall
automatically terminate in the event of its assignment or in the
event of the termination of the Advisory Agreement. Any
termination shall be without prejudice to the completion of
transactions already initiated.
ARTICLE VII
Amendments to this Agreement
This Agreement may be amended by the parties only if such
amendment is specifically approved by (i) the Directors of the
Fund or by the vote of a majority of outstanding voting
securities of the Fund and (ii) a majority of those Directors who
are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of
voting on such approval.
ARTICLE VIII
Definitions of Certain Terms
The terms "vote of a majority of the outstanding voting
securities", "assignment", "affiliated person" and "interested
person" used in this Agreement, shall have the respective
meanings specified in the Investment Company Act and the rules
and regulations thereunder, subject, however, to such exemptions
as may be granted by the Securities and Exchange Commission under
said Act.
ARTICLE IX
Governing Law
This Agreement shall be construed in accordance with the
laws of the State of New York and the applicable provisions of
the Investment Company Act. To the extent that the applicable
laws of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company
Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
XXXXXX XXXXXXX INVESTMENT
MANAGEMENT INC.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
XXXXXX XXXXXXX INVESTMENT
MANAGEMENT LIMITED
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Director
SUB-ADVISORY AGREEMENT
ANNEX 1
1. Dealing and Counterparties
1.1 The Local Manager will act in good faith and with due
diligence in its choice and use of counterparties. Unless
directed by MSIM or the Fund to use a specific counterparty,
the Local Manager undertakes to secure Best Execution (as
defined in the FSA Rules) of all the Fund's transactions.
In securing Best Execution, the Local Manager will take
reasonable care to obtain the best available price in
accordance with FSA Rules. Subject thereto, the Local
Manager may deal on such markets or exchanges and with such
counterparties (including any affiliate) as it thinks fit.
All transactions will be effected in accordance with the
rules and regulations of the relevant market or exchange,
and the Local Manager may take all such steps as may be
required or permitted by such rules and regulations and/or
by appropriate market practice.
1.2 If any counterparty should fail to deliver any necessary
documents or to complete any transaction, the Local Manager
will take all reasonable steps on behalf of MSIM or the Fund
to rectify such failure or obtain compensation. MSIM shall
procure that the Fund pay all reasonable costs and expenses
properly incurred by the Local Manager.
1.3 The Local Manager may aggregate the Fund's orders with
orders of other clients (whether or not connected with the
Local Manager). MSIM is aware and has made the Fund aware
that the aggregation of the Fund's orders with those of
other clients may result in the Fund obtaining on some
occasions a more favourable price and on others a less
favourable price, than if such orders had not been
aggregated.
2. Material Interests
2.1 The Local Manager and any affiliate may, subject to the
limitations of the U.S. Investment Company Act of 1940 (as
amended), and to the overriding principles of suitability
and Best Execution and without prior reference to MSIM or
the Fund, effect transactions in which the Local Manager or
affiliate has, directly or indirectly, a material interest
or a relationship of any description with another party,
which may involve a potential conflict with the Local
Manager's duty to MSIM or the Fund. Neither the Local
Manager nor any affiliate shall be liable to account to MSIM
or the Fund for any profit, commission or remuneration made
or received from or by reason of such transactions or any
connected transactions nor will the Local Manager's fees,
unless otherwise provided, be abated. For example, such
potential conflicting interests or duties may arise because:
(a)any of the Local Manager's or affiliate's directors or
employees is a director of, holds or deals in securities
of, or is otherwise interested in any company whose
securities are held or dealt in on behalf of the Fund;
(b)the transaction is in the securities of a company for
which an affiliate has provided corporate finance
advice, underwritten, managed or arranged an issue or
offer for sale;
(c)the Local Manager deals on behalf of the Fund with an
affiliate;
(e)the Local Manager may effect transactions involving
placings and/or new issues with an Affiliate who may be
acting as principal or receiving agent's commission.
Affiliates may retain any agent's commission or discount
or other benefit (including directors' fees) that
accrues to them; or
(f)the transaction is in units or shares of a collective
investment scheme (regulated or unregulated) of which
the Local Manager or any affiliate is the manager,
operator, banker, adviser, custodian or director.
2.2 Nothing in this Agreement shall oblige the Local Manager or
any affiliate to accept responsibilities more extensive than
those set out in this Agreement or shall give rise to any
fiduciary or equitable duties which would prevent or hinder
any affiliate acting both as market-maker and broker,
principal or agent, dealing with other affiliates and other
clients and generally effecting transactions as provided
above nor from retaining any remuneration received in
respect thereof.
3. Records and Reports
3.1 The Local Manager will keep accurate and detailed records
with respect to all receipts, investments, sales,
disbursements and other transactions carried out by the
Local Manager for MSIM or with the Fund.
3.2 All records held pursuant to this clause by the Local
Manager shall be open to inspection by MSIM or the Fund and
the Local Manager will provide MSIM and the Fund with such
access as it itself has to records held by any relevant
third party, in each case at reasonable times during
business hours and upon the giving of reasonable notice by
MSIM or the Fund.
3.3 The Local Manager shall, not later than 10 working days
following the end of each calendar month, furnish to MSIM a
statement showing all transactions that have occurred in the
Fund and a monthly listing of all investments and cash
balances held as of the end of such month.
3.4 The monthly statement will show the cost or amount realised
(in the case of any relevant new purchase or sale) and,
where available, the current value (where applicable) of
each investment held in the Fund and any income arising on
the Fund's account during the relevant calendar month, and
will also include a statement showing the measure of the
performance of the assets of the Fund. The basis of all
valuations will be as stated in the first monthly statement,
unless otherwise agreed.
3.5 The Local Manager will not provide MSIM with an individual
trade confirmation of each portfolio transaction unless MSIM
has specifically requested the Local Manager to do so.
4. Force Majeure
The Local Manager shall not be responsible or liable to MSIM
or the Fund for any failure or delay in the performance of
its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its
reasonable control, including, without limitation, acts of
God; earthquakes; fires; floods; wars; civil or military
disturbances; sabotage; epidemics; riots; interruptions,
loss or malfunctions of utilities; computer (hardware or
software) or communications services; accidents; labor
disputes; acts of civil or military authority or
governmental actions; it being understood that the Local
Manager shall use reasonable efforts which are consistent
with accepted practices in the investment management
industry to resume performance as soon as practicable under
the circumstances.
5. Complaints
The Local Manager maintains procedures in accordance with
FSA Rules for the effective consideration and handling of
client complaints. Complaints will be considered promptly by
the appropriate supervisory manager who is not personally
involved in the subject matter of the complaint. Where
appropriate, the complaint will be passed to the Compliance
Officer.
6. Confidentiality and Disclosure
The Local Manager and MSIM undertake to keep private and
confidential all information acquired in connection with
this Agreement, and not to disclose such information to any
person except to the extent that:
(a)the other party gives prior consent; or
(b)the Local Manager is required to disclose the
information by the FSA, the Bank of England, the London
Stock Exchange or any other recognised investment
exchange, the City Panel on Takeovers and Mergers or any
other regulatory authority having jurisdiction over the
Local Manager or the performance by it of its
obligations under this Agreement or by English Law; or
(c)disclosure to a counterparty to a transaction effected
for the Fund is required as a condition to such
transaction; or
(d)disclosure is necessary to enable the Local Manager to
perform its obligations under this Agreement.
7. Data Protection
7.1 The Local Manager will, in connection with the Sub-Advisory
Agreement, comply (where applicable) with the UK Data
Protection Xxx 0000 and other applicable data protection
laws and regulations (together, the "Data Protection Laws").
7.2 MSIM will comply (where applicable) with the Data Protection
Laws and (where applicable) take all reasonable steps to
ensure that it has obtained all necessary consents for the
Local Manager to process any personal data for the purposes
of the Agreement.
