INVESTMENT ADVISORY AGREEMENT THE LATIN AMERICA EQUITY FUND, INC.
THE LATIN
AMERICA EQUITY FUND, INC.
July 1,
2009
Aberdeen
Asset Management Investment Services Limited
Xxx Xxx
Xxxxxxxxxx
Xxxxxx,
Xxxxxx Xxxxxxx
XX0X
0XX
Dear
Sirs:
The Latin
America Equity Fund, Inc. (formerly known as The Latin America Investment Fund,
Inc.) (the “Company”), a corporation organized under the laws of the state of
Maryland, herewith confirms its agreement with Aberdeen Asset Management
Investment Services Limited (the “Adviser”), a corporation organized under the
laws of United Kingdom, as follows:
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1.
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Investment
Description; Appointment
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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 (including its Registration Statement on Form N-14 as
declared effective by the Securities and Exchange Commission on September 1,
2000), 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 ongoing basis. The
Company desires to employ and hereby appoints the Adviser to act as investment
adviser to the Company. The Adviser accepts the appointment and
agrees to furnish the services described herein for the compensation set forth
below.
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2.
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Services as Investment
Adviser
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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, all
applicable SEC rules and regulations and any other applicable provisions of law,
as the same may from time to time be amended, (b) manage the Company's assets 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 for the
Company, (d) place purchase and sale orders on behalf of the Company for all
investments and (e) monitor and evaluate the services provided by the Company's
investment sub-advisers under its investment sub-advisory
agreements. 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.
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3.
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Brokerage
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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.
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4.
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Confidentiality of
Information
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The Adviser will treat confidentially
and as proprietary information of the Company all records and other information
relative to the Company and the Company’s prior, current or potential
shareholders, and will not use such records and information for any purpose
other than performance of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by the Company, which
approval shall not be unreasonably withheld and may not be withheld where the
Adviser may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Company.
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5.
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Proxy
Voting
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The
Adviser will have the responsibility to vote proxies solicited with respect to
issuers of securities in which assets of the Company are invested in accordance
with the Company’s policies on proxy voting.
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6.
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Information Provided
to the Company
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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. The Adviser will furnish the Company with whatever
information, reports, valuations, analyses and opinions the Board of Directors
of the Company may reasonably request.
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7.
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Books and
Records
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The
Adviser agrees to preserve for the periods prescribed by Rule 31a-2 under the
Investment Company Act of 1940 the records required to be maintained by a
registered investment company pursuant to Rule 31a-1 thereunder. The
Adviser and the Company agree, in compliance with Rule 31a-3 under the
Investment Company Act of 1940, that all records which the Adviser maintains for
the Company are the property of the Company and further agrees to surrender
promptly to the Company any such records upon the Company’s
request.
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8.
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Standard of
Care
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(a) 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 its obligations and duties under this Agreement (“disabling
conduct”). The Company hereby agrees to indemnify the Adviser and each of the
Adviser’s partners, officers, employees, and agents (including any individual
who serves at the Adviser’s request as director, officer, partner, trustee or
the like of another corporation) against, and hold it harmless from, any and all
losses, claims, damages, liabilities or expenses, including reasonable counsel
fees and expenses, 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 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.
(b) The
Adviser shall indemnify the Company and its officers and trustees, for any
liability and expenses, including attorneys’ fees, which may be sustained as a
result of the Adviser’s willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties hereunder or violation of applicable law,
including, without limitation, the federal and state securities
laws.
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9.
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Compensation
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(a) In consideration of the services
rendered pursuant to this Agreement, the Company will pay the Adviser after the
end of each calendar quarter, a fee for the previous quarter computed monthly at
an annual rate of 1.00% of the first US$100 million of the Company’s “Average
Weekly Base Amount” (as defined below), 0.90% of the next US$50 million and
0.80% of amounts above US$150 million.
(b) (i) “Average
Weekly Base Amount” for any quarter is the average of the lesser of (A) “Market
Value” of the Company’s outstanding shares, and (B) the Company’s net assets, in
each case determined as the last trading day for each week during that
quarter.
(ii) “Market
Value” of the Company’s outstanding shares will be determined as
follows:
(A) if
the Company’s shares are listed or traded on any national securities exchange or
on the Nasdaq National Market, the shares shall be valued at the last sale price
on the exchange or market on which they are principally traded, on the valuation
date; if there is no sale on the valuation date, the shares shall be valued at
the mean between the closing bid and asked price;
(B) if the
Company’s shares are traded over-the-counter but are not listed or traded on any
national securities exchange or on the Nasdaq National Market, the
shares shall be valued at the last sale price on the valuation date or, if no
sale occurs on that date, at the last bid price; or
(C) if the
Company’s shares are not listed or traded on any recognized securities market or
over-the-counter, the shares shall be deemed to have the same value as the
underlying net assets of the Company as of the valuation date.
(c) The
Adviser (or, as provided below, the Company) shall pay to any investment
sub-adviser engaged by the Adviser and the Company (the “Sub-Adviser”) the fees
required under any applicable Investment Sub-Advisory Agreement relating to the
Company (the “Investment Sub-Advisory Agreement”) In the event that
the Investment Sub-Advisory Agreement is terminated, the Adviser shall be
responsible for furnishing to the Company the services required to be performed
by the Sub-Adviser under the Investment Sub-Advisory Agreement or arranging for
a successor sub-investment adviser 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-Adviser
directly the amounts payable to the Sub-Adviser for sub-advisory services
pursuant to the Investment Sub-Advisory Agreement, provided that the fee payable
to the Adviser hereunder shall be reduced to the extent of amounts so paid to
the Sub-Adviser.
(d) 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.
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10.
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Expenses
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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 any 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, the Sub-Advisers, any U.S. or foreign
administrator or any of their affiliates; U.S. Securities and Exchange
Commission fees; state Blue Sky qualification or offering 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 Board of Directors of the Company;
membership fees in trade associations; stock exchange listing fees and expenses;
litigation and other extraordinary or non-recurring expenses.
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11.
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Services to Other
Companies or Accounts
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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.
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12.
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Term of
Agreement
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This
Agreement shall become effective upon being approved in accordance with the
requirements of the Investment Company Act of 1940, and executed by the Adviser
and the Company 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 60 days' written notice, by the
Adviser. This Agreement will also terminate automatically in the
event of its assignment (as defined in said Act).
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13.
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Entire
Agreement
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This
Agreement constitutes the entire agreement between the parties
hereto.
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14.
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Governing
Law
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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.
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15.
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Independent Contractor
Status
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The
Adviser shall for all purposes herein be deemed to be an independent contractor
and shall, unless otherwise expressly provided herein or authorized by the Board
of Directors of the Company from time to time, have no authority to act for or
represent the Company in any way or otherwise be deemed an agent of the
Company.
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16.
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Counterparts
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This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same original.
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17.
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Notices
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Any
notice under this Agreement shall be in writing to the other party and shall be
delivered in person or by facsimile or electronic mail (followed by mailing such
notice, air mail postage prepaid, on the day on which such facsimile or
electronic mail is sent) to such address as the other party may designate from
time to time for the receipt of such notice and shall be deemed to have been
given, if by personal delivery, on the day of such delivery, and, if by
facsimile and mail or electronic mail and mail, on the date on which such
facsimile and confirmatory letter or electronic mail and confirmatory
letter are sent.
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 EQUITY FUND, INC.
By: /s/ Xxxx
Xxxxxxx
Name: Xxxx
Xxxxxxx
Title: Vice
President
Accepted:
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ABERDEEN
ASSET MANAGEMENT INVESTMENT SERVICES
LIMITED
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By: /s/ Xxxxxx
Xxxxx
Name: Xxxxxx
Xxxxx
Title: Director
