ABERDEEN AUSTRALIA EQUITY FUND, INC.
MANAGEMENT AGREEMENT
AGREEMENT dated as of Xxxxx 0, 0000, xxxxxxx Xxxxxxxx Xxxxxxxxx
Equity Fund, Inc. (the "Fund"), a Maryland corporation registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), and
Aberdeen Asset Management Asia Limited, a Singapore corporation
("AAMAL" or the "Investment Manager").
WHEREAS, the Fund is a closed-end management investment company;
WHEREAS, the Fund engages in the business of investing its
assets in the manner and in accordance with its stated investment
objective 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");
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 (the "Transfer");
WHEREAS, the Transfer would not be deemed an "assignment" of
the Former Management Agreement under the 1940 Act, based upon factors
including: (1) both before and after the Transfer, Aberdeen Asset
Management PLC will continue to indirectly own 100% of, and to
control, AAMCIL and AAMAL; (2) the persons providing day-to-day
portfolio management of the Fund prior to the Transfer will continue
to provide such services after the Transfer; (3) AAMAL and its
personnel have, since 2001, been providing portfolio management,
research and trading services to the Fund pursuant to a Memorandum
of Understanding, as amended, to which AAMAL, AAMCIL and Aberdeen
Asset Management Limited (the Fund's Investment Adviser) are parties;
(4) the Transfer will have no material impact on the investment
management of the Fund's portfolio; (5) the nature and quality of
the investment management services to be provided to the Fund by
AAMAL will not be materially different from those provided to the
Fund by AAMCIL; (6) the Transfer is not intended to, and will not
result in, any change in the fundamental investment processes,
investment strategies or investment techniques currently
employed by portfolio managers and investment professionals in
providing investment advisory services to the Fund; and (7) the
Transfer will not result in any change in the terms of the Former
Management Agreement, other than in the name of the investment
manager.
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 1.10% of the Fund's average weekly Managed Assets
(as hereinafter defined) up to $50 million; 0.90% of Managed Assets
between $50 million and $100 million; and 0.70% 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.
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.
2. Expenses. The Investment Manager shall bear all expenses
of its employees, except as provided in the following sentence, 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
expenses for all Directors and officers of the Fund, including expenses
incurred by the Investment Manager's employees who serve as Directors and
officers of the Fund, which may be reimbursed by the Fund under the Fund's
policy governing reimbursement of Fund-related expenses; and other expenses
incurred by the Fund in connection with meetings of Directors and
shareholders; 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 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 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 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
