ABERDEEN AUSTRALIA EQUITY FUND, INC.
AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT
AMENDED AND RESTATED AGREEMENT dated as of June 11, 2003, among
Aberdeen Australia Equity Fund, Inc. ( the "Fund"),
a Maryland corporation registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), Aberdeen
Asset Managers (C.I.) Limited, a Jersey, Channel Islands
corporation (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 (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
"Management 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
Management Agreement;
WHEREAS, in connection with rendering the services required under the
Management Agreement, the Investment Manager is permitted
to retain, at its expense
and in the manner set forth in the Management Agreement, investment advisers to
assist it in carrying out its obligations to the Fund under
the Management Agreement;
WHEREAS, pursuant to an investment advisory agreement executed December 22,
2000 (the "Advisory Agreement") among the Fund, the Investment Manager and the
Investment Adviser (formerly known as EquitiLink Australia Limited),
the Investment
Manager has retained the Investment Adviser to assist it
in carrying out its obligations
to the Fund under the Management Agreement in connection with the services
specified below with regard to the Fund, and the Fund
has appointed the Investment
Adviser to provide the investment advisory services specified
below with regard to the
Fund;
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 to the fee calculation
provisions of the Management Agreement and the
Advisory Agreement (collectively,
the "Amendments") to clarify that the fee payable under
the Management Agreement
to the Investment Manager and the fee payable under
the Advisory Agreement to the
Investment Adviser, respectively, 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 Amendments to
the Agreements and determined to recommend that Fund stockholders approve the
Amendments to the Agreements 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 Amendments to the Agreements;
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 Amendments to the Agreements; and
WHEREAS, the parties desire to amend and restate the Advisory Agreement to
reflect the changed names of the parties and the adoption of
the foregoing Amendment
to the Advisory 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 is 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 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:
____________________________
____
Title:
ABERDEEN ASSET MANAGERS
(C.I.) LIMITED
By:
____________________________
_____
Title:
ABERDEEN ASSET MANAGEMENT
LIMITED
By:
____________________________
____
Title:
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