Exhibit 99.2G(3)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made this 1st day of September, 2006, by and between NOMURA
ASSET MANAGEMENT CO., LTD., a Japanese corporation (hereinafter referred to as
the "Investment Adviser"), and NOMURA ASSET MANAGEMENT HONG KONG LIMITED, a Hong
Kong corporation (hereinafter referred to as the "Investment Sub-adviser").
W I T N E S S E T H :
WHEREAS, Korea Equity Fund, Inc. (the "Fund") is engaged in business as
a non-diversified, closed-end, management investment company registered under
the Investment Company Act of 1940, as amended (hereinafter referred to as the
"Investment Company Act"); and
WHEREAS, Nomura Asset Management U.S.A. Inc., a New York corporation
(hereinafter referred to as the "Manager"), has entered into a management
agreement with the Fund dated as of September 1, 2006 (the "Management
Agreement") and an investment advisory agreement relating to the Fund with the
Investment Adviser dated as of September 1, 2006 (the "Investment Advisory
Agreement"); and
WHEREAS, the Manager, the Investment Adviser and the Investment
Sub-adviser are engaged in business as registered investment advisers under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Investment Sub-adviser is willing to provide investment
advisory services to the Manager in connection with the Fund's operations on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
ARTICLE I
DUTIES OF THE INVESTMENT SUB-ADVISER
(a) Research Services. Subject to the broad supervision of the
Investment Adviser and the Fund, the Investment Sub-adviser shall provide the
Manager and the Investment Adviser with such economic research and securities
analysis as the Manager and the Investment Adviser may from time to time
consider necessary for the proper supervision of the Fund's assets.
(b) Investment Discretionary Services. To the extent that the
Investment Adviser, with the prior authorization of the Fund's Board of
Directors, delegates investment discretion in writing to the Investment
Sub-adviser, the Investment Sub-adviser shall provide the Fund with such
investment advice and supervision as the Fund may from time to time consider
necessary
for the proper supervision of those assets of the Fund for which the Investment
Sub-adviser has been delegated investment discretion. The Investment Sub-adviser
shall furnish continuously an investment program for such assets of the Fund and
shall determine from time to time which securities shall be purchased, sold or
exchanged and what portion of such assets of the Fund shall be held in the
various securities in which the Fund invests, options, futures, options on
futures or in cash, subject always to the restrictions of the Articles of
Incorporation and By-Laws of the Fund, as amended from time to time, the
provisions of the Investment Company Act and the statements relating to the
Fund's investment objective, investment policies and investment restrictions as
the same are set forth in filings made by the Fund under Federal securities
laws. The Investment Sub-adviser shall make decisions for the Fund as to foreign
currency matters and make determinations as to foreign exchange contracts. The
Investment Sub-adviser shall make recommendations as to the manner in which
voting rights, rights to consent to corporate action and any other rights
pertaining to such portfolio securities shall be exercised. Should the Board of
Directors of the Fund at any time, however, make any definite determination as
to investment policy and notify the Investment Sub-adviser thereof in writing,
the Investment Sub-adviser shall be bound by such determination for the period,
if any, specified in such notice or until similarly notified that such
determination has been revoked. The Investment Sub-adviser shall take, on behalf
of the Fund, all actions which it deems necessary to implement the investment
policies determined as provided above.
To the extent that the Investment Adviser delegates such authority in
writing to the Investment Sub-adviser, the Investment Sub-adviser shall place
all orders for the purchase or sale of portfolio securities for the Fund's
account with brokers or dealers selected by it, and to that end, the Investment
Sub-adviser is authorized as the agent of the Fund to give instructions to the
Custodian of the Fund as to deliveries of securities and payments of cash for
the account of the Fund. In connection with the selection of such brokers and
dealers and the placing of such orders, the Investment Sub-adviser is directed
at all times to seek to obtain execution and price within the policy guidelines
determined by the Board of Directors of the Fund and set forth in the filings
made by the Fund under Federal securities laws. Subject to this requirement and
the provisions of the Investment Company Act, the Securities Exchange Act of
1934, as amended, and other applicable provisions of law, the Investment
Sub-adviser may select brokers or dealers with which it, or the Fund, is
affiliated.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Investment Sub-adviser shall furnish, at its own expense, all
administrative services, office space, equipment and facilities, investment
advisory, statistical and research services, and executive, supervisory and
clerical personnel necessary to carry out its obligations under this Agreement.
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ARTICLE III
COMPENSATION OF THE INVESTMENT SUB-ADVISER
For the services described in Article I(a) hereof, the Investment
Adviser shall pay to the Investment Sub-adviser at the end of each calendar
month a fee at the annual rate of 0.045% of the Fund's average weekly net assets
(i.e., the average weekly value of the total assets of the Fund minus the sum of
accrued liabilities of the Fund), commencing on the day following effectiveness
hereof.
For purposes of this calculation, average weekly net assets is
determined at the end of each month on the basis of the average net assets of
the Fund for each week during the month. The assets for each weekly period are
determined by averaging the net assets at the last business day of the prior
week. If this Agreement becomes effective subsequent to the first day of a month
or shall terminate before the last day of a month, compensation for that part of
the month that this Agreement is in effect shall be prorated in a manner
consistent with the calculation of the fee as set forth above. During any period
when the determination of net asset value is suspended by the Board of Directors
of the Fund, the average net asset value of a share for the last week prior to
such suspension shall for this purpose be deemed to be the net asset value at
the close of each succeeding week until it is again determined.
ARTICLE IV
LIMITATION OF LIABILITY OF THE INVESTMENT SUB-ADVISER
The Investment Sub-adviser 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 execution and management of 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. As used in this Article IV, the term "Investment Sub-adviser" shall
include any affiliates of the Investment Sub-adviser performing services for the
Fund contemplated hereby and directors, officers, partners and employees of the
Investment Sub-adviser as well as that corporation itself.
ARTICLE V
ACTIVITIES OF THE INVESTMENT SUB-ADVISER
The services of the Investment Sub-adviser to the Fund are not to be
deemed to be exclusive, the Investment Sub-adviser and any person controlled by
or under common control with the Investment Sub-adviser (for the purpose 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
Manager and the Investment Adviser are or may become interested in the
Investment Sub-adviser and its affiliates, as directors, officers, employees,
partners and shareholders or otherwise and that directors, officers, employees,
partners and shareholders of the Investment Sub-adviser and its affiliates are
or may become similarly interested in the Manager, the Investment Adviser or the
Fund, and that the Investment Sub-adviser is or may
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become interested in the Manager, the Investment Adviser or the Fund as
shareholder 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 August 31, 2007 and thereafter, but only
so long as such continuance is specifically approved at least annually by (i)
the Board of 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 the Investment Adviser, by the Board of Directors of the Fund,
by vote of a majority of the outstanding voting securities of the Fund or by the
Investment Sub-adviser, on sixty days' written notice to the parties. This
Agreement shall automatically terminate in the event of its assignment or upon
the termination of the Management Agreement or the Investment Advisory
Agreement.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved in accordance with applicable requirements under the
Investment Company Act.
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
The terms "vote of a majority of the outstanding voting
securities," "assignment," "affiliated person" and "interested person," when
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 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.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
NOMURA ASSET MANAGEMENT CO., LTD.
By_____________________________________
NOMURA ASSET MANAGEMENT HONG KONG LIMITED
By_____________________________________
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