ABERDEEN AUSTRALIA EQUITY FUND, INC.
AMENDED AND RESTATED MANAGEMENT AGREEMENT
AMENDED AND RESTATED AGREEMENT dated as of June 11, 2003, between
Aberdeen Australia Equity Fund, Inc. (the "Fund"),
a Maryland corporation registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), and
Aberdeen Asset Managers (C.I.) Limited, a Jersey,
Channel Islands corporation (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 (formerly known as The First Australia Fund, Inc.) and the
Investment Manager (formerly known as EquitiLink International Management
Limited ) entered into a management agreement executed December 22, 2000 (the
"Agreement") pursuant to which the Investment Manager manages the Fund's
investments and makes investment decisions on
behalf of the Fund, and for which the
Investment Manager receives a fee from the Fund as specified in the Agreement;
WHEREAS, on January 20, 2003, the Board of Directors of the Fund determined
that it was advisable and in the best interests of stockholders,
to seek stockholder
approval for an amendment to the Fund's fundamental
investment restrictions to permit
the Fund to borrow to the extent permitted by the 1940 Act,
and to seek stockholder
approval for charter amendments to permit the fund
to issue senior securities in the
form of preferred stock;
WHEREAS, on January 20, 2003, the independent directors of the Fund, and the
entire Board of Directors, voting separately, determined
that it was advisable and in the
best interests of stockholders, to approve an amendment
(the "Amendment") to the fee
calculation provision of the Agreement to clarify that the
fee payable thereunder to the
Investment Manager will be based on all assets under management, including the
proceeds of any borrowings used for investment and
the proceeds of any issuance of
senior securities;
WHEREAS, on January 20, 2003, the independent directors of the Fund, and the
entire Board of Directors, voting separately, approved the terms
of the Amendment to
the Agreement and determined to recommend that Fund stockholders approve the
Amendment to the Agreement at the Fund's 2003 Annual Meeting of Stockholders;
WHEREAS, on April 15, 2003, at the Fund's Annual Meeting of Stockholders, the
stockholders of the Fund approved an amendment to the Fund's fundamental
investment restrictions to permit the Fund to borrow,
charter amendments to permit the
Fund to issue preferred stock, and the Amendment to the Agreement;
WHEREAS, on June 11, 2003, at an in-person meeting of the Board of Directors,
the independent directors of the Fund, and the
entire Board of Directors, voting
separately, approved the Amendment to the Agreement; and
WHEREAS, the parties desire to amend and restate the Agreement to reflect the
changed names of the parties and the adoption of the Amendment to the Agreement.
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 become effective upon
shareholder approval thereof as required under the
1940 Act and shall continue in
effect for two (2) years from the date of its execution.
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:
____________________________
_______________
Name:
Title:
ABERDEEN ASSET MANAGERS
(C.I.) LIMITED
By:
____________________________
_______________
Name:
Title:
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