INVESTMENT ADVISORY AGREEMENT
March 31, 1992
Salomon Brothers Asset Management Inc
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The Latin America Investment Fund, Inc. (the "Company"), a corporation
organized under the laws of the state of Maryland, herewith confirms its
agreement with Salomon Brothers Asset Management Inc (the "Adviser"), a
corporation organized under the laws of the state of Delaware, as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT. The Company desires to employ its
capital by investing 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, 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 on-going basis. The
Company desires to employ and hereby appoints the Adviser to act as investment
adviser to the Company with respect to external debt obligations of Latin
American governments or governmental entities ("Sovereign Debt"). The Adviser
accepts the appointment and agrees to furnish the services described herein for
the compensation set forth below.
2. SERVICES AS INVESTMENT ADVISER. 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, as the same may from time to time be amended, (b) manage
the Company's holdings of Sovereign Debt 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 Sovereign Debt for the Company, (d) place purchase and sale orders
on behalf of the Company with respect to Sovereign Debt, (e) monitor and
evaluate the services provided by the Company's investment sub-advisers under
its investment sub-advisory agreements, (f) supervise, monitor and evaluate the
services provided by the Company's Brazilian economic adviser and administrator
under the Brazilian economic advisory and administration agreement, (g) xxxxxxx
XXX Associates, a New York general partnership and the Company's adviser with
respect to all investments other than Sovereign Debt ("BEA"), with international
economic information and analysis with particular emphasis on macro-economic
issues that may affect the over-all economic development of Latin American
countries within the international economic community and (h) xxxxxxx XXX with
investment advice regarding global debt securities. 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.
3. BROKERAGE. 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
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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 Exchanges Act of 1934) provided to the Company
and/or other accounts over which the Adviser of an affiliate exercises
investment discretion.
4. INFORMATION PROVIDED TO THE COMPANY. 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.
5. STANDARD OF CARE. 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 indemnify 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 will
indemnify the Adviser against and hold it harmless from any and all losses,
claims, damages, liabilities or expenses (including reasonable counsel fees and
expenses) resulting from any claim, demand, action or suit 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 Adviser was not liable by reason of disabling
conduct or (ii) in the absence of such a decision, a reasonable determination,
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based upon a review of the facts, that the Adviser was not liable by reason of
disabling conduct by (a) the vote of a majority of a quorum of directors of the
Company who are neither "interested persons" of the Company nor parties to the
proceeding ("disinterested non-party directors") 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 a 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 Advisor will ultimately be found to be entitled to indemnification.
6. COMPENSATION. (a) In consideration of the services rendered pursuant
to this Agreement, the Company will pay the Adviser after the end of the
calendar quarter in which the date set forth above occurs and after the end of
each calendar quarter thereafter a fee for the previous quarter computed monthly
at an annual rate of .1875 of 1.00% of the first US$100 million of the Company's
average weekly net assets, .1725 of 1.00% of the next US$50 million and .1575 of
1.00% of amounts above US$150 million.
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The Adviser (or, as provided below, the Company) and BEA shall pay to the
sub-investment advisers of the Company (the "Sub-Advisers") the fees payable
under each Investment Sub-Advisory Agreement relating to the Company among the
Company, the Adviser, BEA and each such Sub-Adviser. The Adviser and BEA each
shall pay that portion of the fees payable to the Sub-Advisers in the same
proportion as its advisory fees received from the Company bears to the Company's
combined fees for investment advice. In the event that any one of the Investment
Sub-Advisory Agreements is terminated, the Adviser shall be responsible for
furnishing to the Company the services, required to be performed by such
Sub-Adviser under the respective Investment Sub-Advisory Agreement relating to
Sovereign Debt or arranging for a successor sub-investment adviser with respect
to such investments 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-Advisers directly in local currency the amounts payable to each of the
Sub-Advisers for sub-advisory services, provided that the fee payable to the
Adviser hereunder shall be reduced to the extent of amounts so paid to the
Sub-Adviser. The fee payable to the Adviser for the period from the date set
forth above to the end of the first calendar quarter thereafter shall be
prorated according to the proportion that such period bears to the full
quarterly period.
(b) 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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7. EXPENSES. 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 all 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, BEA, the Sub-Advisers, any U.S. or
foreign administrator; the Company's Brazilian economic adviser or any of their
affiliates; Securities and Exchange Commission fees; state Blue Sky
qualification 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
officers or 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.
8. SERVICES TO OTHER COMPANIES OR ACCOUNTS. The Company understands that
the Adviser now acts, will continue to act or may act in the future as
investment adviser to 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
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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.
9. TERM OF AGREEMENT. This Agreement shall become effective as of the date
set forth above 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 90 days' written notice, by the Adviser. This
Agreement will also terminate automatically in the event of its assignment (as
defined in said Act).
10. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto.
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11. GOVERNING LAW. 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.
12. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to produce or account for more
than one such counterpart. 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 INVESTMENT FUND, INC.
By /s/ illegible
-----------------------------------
Name:
Title:
Accepted:
SALOMON BROTHERS ASSET MANAGEMENT INC
By /s/ illegible
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Name:
Title:
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