ANNEX A
FORM OF
INVESTMENT ADVISORY AGREEMENT
THE EUROPE FUND, INC.
AGREEMENT dated as of December 11, 1997 between MERCURY
ASSET MANAGEMENT INTERNATIONAL CHANNEL ISLANDS LTD., a corporation
organized under the laws of Jersey, Channel Islands (the "Investment
Manager"), whose principal office is at Xxxxx Xxxxx, Xxxxxxxxx Xxxxxx, Xx.
Xxxxxx, Xxxxxx XX0 0XX, Channel Islands, and MERCURY ASSET MANAGEMENT
INTERNATIONAL LTD., a corporation organized under the laws of Great Britain
(the "Investment Adviser"), whose principal office is at 00 Xxxx Xxxxxxx
Xxxxxx, Xxxxxx XX0X 0XX, Xxxxxxx.
WHEREBY IT IS AGREED AND DECLARED as follows:
ARTICLE 1
Interpretation
Section 1.01. In this Agreement the following words and
expressions shall have the following meanings:
"Assignment Date" means the first date that Xxxxxxx Xxxxx &
Co., Inc. controls Mercury Asset Management Group plc.
"Charter" means the Articles of Incorporation and By-Laws of
the Company as in effect from time to time.
"Commission" means the Securities and Exchange Commission.
"Company" means The Europe Fund, Inc., a Maryland corporation,
whose principal office is c/o Mercury Asset Management International Ltd., 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
"Directors" means the Board of Directors of the Company,
including any duly appointed committee thereof.
"1940 Act" means the Investment Company Act of 1940, as
amended.
"Investments" means the assets and rights from time to time
of the Company.
"Investment Management Agreement" means the Investment
Management Agreement dated as of December 11, 1997 between the Company and
the Investment Manager, as amended.
"Issuance Date" means the date on which the Commission grants
the exemptive order application of Mercury Asset Management Group plc, Xxxxxxx
Xxxxx & Co., Inc., the Investment Manager and the Investment Adviser filed
with the Commission on December 10, 1997 seeking an exemption from compliance
with certain provisions of Section 15(a) of the 1940 Act.
"Laws" means the laws of the State of Maryland, the United
States of America and any other applicable laws and regulations for the time
being in force.
"Prospectus" means the prospectus included within the Company's
Registration Statement relating to the Company's offering of up to 7,250,000
Shares at the time the Registration Statement is declared effective by the
Commission, as amended.
"Shares" means shares of common stock of the Company ($.001 par
value).
Section 1.02. Any reference to the Company, the Investment
Manager or the Investment Adviser includes a reference to its or their
directors, officers and duly authorized agents.
Section 1.03. References to Articles and Sections are to
Articles and Sections, respectively, of this Agreement.
Section 1.04. The headings to the Articles and Sections of
this Agreement are for convenience only and shall not affect the construction
or interpretation hereof.
Section 1.05. The terms "interested person", "assignment",
"controls" and "vote of a majority of the outstanding voting securities" shall
have the same meanings as set forth in the 1940 Act.
ARTICLE 2
Appointment of the Investment Adviser
The Investment Manager hereby appoints the Investment Adviser
as its adviser with respect to the investment and reinvestment of the assets
of the Company in accordance with the provisions of the Investment Management
Agreement, the Charter, the Laws, the Company's investment objective and
policies as from time to time in effect, and overall supervision and direction
of, and guidelines established by, the Directors until its appointment shall
be terminated as hereinafter provided, and the Investment Adviser hereby
accepts such appointment and agrees to assume the obligations and duties set
forth herein. The Investment Manager agrees to keep the Investment Adviser
informed of the affairs of the Company and the performance of the Company's
business.
ARTICLE 3
Duties of the Investment Adviser
Section 3.01. Without prejudice to the generality of Article
2 (and in accordance with such procedures as may be agreed from time to time)
the Investment Adviser shall:
(a) advise the Investment Manager concerning all actions
that it appears to the Investment Adviser would be advantageous to the
Company in implementing the investment objective and policies of the
Company;
(b) evaluate opportunities for possible investment by the
Company and communicate its advice to the Investment Manager;
(c) keep under surveillance and review the Investments for
the time being and, as circumstances may require, recommend changes in such
Investments;
(d) provide such advice to the Investment Manager on matters
related to Investments as the Investment Manager may reasonably require
including, without limitation, research and statistical data in relation to
the Investments and other matters within the scope of the investment
objective and policies of the Company;
(e) advise whether and in what manner all rights conferred
by the Investments shall be exercised;
(f) if required by the Investment Manager, prepare material
for inclusion in reports of the Company;
(g) make recommendations concerning the desirability of
making use of, and, with the consent of the Investment Manager,
negotiating, loan facilities as part of the investment strategy of the
Company;
(h) provide such information and assistance as may be required
in connection with the valuation of the Investments by the Company;
(i) recommend brokers and dealers to execute Investment
transactions in the manner set forth in the Prospectus and, with the
authority of the Investment Manager, instruct such brokers or dealers as
agents of the Company to execute such transactions; and
(j) to the extent the Company's investment objective and
policies so permit, advise the Investment Manager concerning transactions
in (1) Options, Futures and Contracts for Differences (as such terms are
defined in the Financial Services Xxx 0000 of the United Kingdom) (or any
right or interest in any such investment) and (2) investments the prices of
which may be subject to stabilisation.
Section 3.02. The Investment Adviser will not carry on any
business for the account of the Company or the Investment Manager if by so
doing the Investment Adviser shall knowingly cause the Company or the
Investment Manager to become liable to pay any United Kingdom taxes that they
would not otherwise be liable to pay.
Section 3.03. The Investment Adviser shall for the purposes
of this Agreement be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act on behalf
of or to represent the Investment Manager or the Company in any way or
otherwise be deemed an agent of the Investment Manager or the Company or to
have any power to enter into any transaction or otherwise bind the Investment
Manager or the Company.
Section 3.04. The authorities herein contained are
continuing ones and shall remain in full force and effect until revoked by
termination of this Agreement as hereinafter provided, but such revocation
shall not affect any liability in any way resulting from transactions
initiated prior to such revocation.
Section 3.05. The Investment Adviser, in the performance of
its duties and obligations hereunder, shall act in conformity with the Laws
(including specifically the 0000 Xxx) and all other applicable laws,
regulations and requirements of regulatory authorities, the Charter, the
Prospectus, the Company's investment objective and policies as from time to
time in effect, and overall supervision and direction of, and guidelines
established by, the Directors.
Section 3.06. The Investment Adviser agrees that it will not
make a short sale of any Shares or purchase any Shares otherwise than for
investment.
Section 3.07. The Investment Adviser shall keep or cause to
be kept on behalf of the Company and the Investment Manager such books,
records, statements and accounts as may be required by the Laws and the
Charter and as otherwise may be necessary to give a complete record of all
transactions implemented by the Investment Adviser on behalf of the Company
and the Investment Manager; shall permit the Company, the Investment Manager
and their employees and agents to inspect such books, records and statements
at all reasonable times; and shall promptly surrender to the Company such
books, records and statements upon the Company's request.
Section 3.08. The Investment Adviser shall provide to the
Company and the Investment Manager at least once every six months a statement
of the contents and valuation of the Investments; such statement need not
include any evaluation of the performance of the Company during such period.
ARTICLE 4
Fees of the Investment Adviser
Section 4.01. As consideration for the services to be
provided hereunder, the Investment Manager shall pay to the Investment Adviser
a fee at the annual rate of .15% of the Company's average weekly net assets
based upon net asset value at the end of each week and payable on the last day
of each month.
Section 4.02. If the fees payable to the Investment Adviser
pursuant to Section 4.01 begin to accrue before the end of any month or if
this Agreement terminates before the end of any month, the fees for the
period from that date to the end of that month or from the beginning of
that month to the date of termination, as the case may be, shall be
prorated according to the proportion that the period bears to the full
month in which the effectiveness or termination occurs. For purposes of
calculating the monthly fees, the value of the net assets of the Fund shall
be computed in the manner specified in the Prospectus for the computation
of net asset value.
ARTICLE 5
Expenses
Section 5.01. In addition to the fee prescribed above, the
Investment Adviser shall be reimbursed by the Investment Manager for such
out-of-pocket expenses incurred in the proper performance of its duties
(including any Value Added Tax thereon) as may be agreed from time to time
between the Investment Manager and Investment Adviser. The Investment Adviser
shall at its own expense employ such staff and provide such services,
facilities and equipment as may be necessary for the proper performance of its
duties in accordance with this Agreement and shall bear the cost of all
traveling and out-of-pocket expenses of whatsoever nature incurred by it or
its staff in or in connection with the performance of its duties.
Section 5.02. The Investment Adviser shall discharge the
salaries and fees of the Directors and officers of the Company (in connection
with the performance of their duties as such) who are interested persons of
the Investment Adviser, but the Company shall discharge all out-of-pocket
traveling expenses incurred by such Directors and officers in attending
meetings of the Directors or committees thereof.
ARTICLE 6
Liability of the Investment Adviser
The Investment Manager and the Company agree that the
Investment Adviser may rely on information reasonably believed by the
Investment Adviser to be accurate and reliable. The Investment Manager and
the Company further agree that, except as may otherwise be provided by the
1940 Act, the Investment Adviser shall not be subject to any liability for any
act or omission in the course of, connected with or arising out of any
services to be rendered hereunder except by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement. In the
event of any failure, interruption or delay in the performance by the
Investment Adviser of its obligations hereunder resulting from acts, events or
circumstances not reasonably within its control, including, without
limitation, industrial disputes, acts or regulations of any governmental or
supranational bodies or authorities and the breakdown, failure or malfunction
of any telecommunications or computer service or systems, the Investment
Adviser shall not be liable for any loss or damage thereby incurred or
suffered by the Investment Manager or the Company except for any loss or
damage by reason of willful misfeasance, bad faith or gross negligence by the
Investment Adviser in the performance of its duties or by reason of the
reckless disregard by the Investment Adviser of its obligations and duties
under this Agreement.
ARTICLE 7
Services of the Investment Adviser Not to Be Exclusive
The services of the Investment Adviser to the Investment
Manager hereunder are not to be deemed exclusive and the Investment Adviser
shall be free to render similar services to others and to retain for its own
use and benefit fees or other monies payable thereby, and the Investment
Adviser shall not be deemed to be affected with notice of, or to be under any
duty to disclose to the Investment Manager or the Company, any fact or thing
that may come to the notice of the Investment Adviser or any employee or agent
of the Investment Adviser in the course of the Investment Adviser rendering
similar services to others or in the course of its business in any other
capacity or in any manner whatsoever otherwise than in the course of carrying
out its duties hereunder. Nothing in this Agreement shall limit or restrict
the right of any directors, officers or employees of the Investment Adviser to
engage in any other business or to devote time and attention in part to the
management or other aspects of any other business, whether of a similar or
dissimilar nature. The Investment Adviser may aggregate purchases or sales of
Investments by the Company with purchases or sales of the same securities by
other clients of the Investment Adviser or the Investment Manager. Subject to
Section 3.3 hereof, the Investment Adviser agrees that in the event that
purchases or sales of Investments by the Company shall coincide with purchases
or sales of the same securities by other clients of the Investment Adviser or
the Investment Manager, the Investment Adviser will recommend to the
Investment Manager such allocation as the Investment Adviser believes to be
equitable to each client.
Instructions to execute Investment transactions pursuant to
Section 3.1(i) may be placed by the Investment Adviser with brokers, dealers
and banks who supply research to the Company, the Investment Manager and the
Investment Adviser and such research may be used by the Investment Adviser in
advising other clients of the Investment Adviser. Attached as Schedule I
hereto is a list of research services currently provided to the Investment
Adviser and the names of the persons providing such research.
ARTICLE 8
Assignment Etc.
This Agreement shall terminate automatically in the event of
its assignment.
ARTICLE 9
Resignation, Termination and Term
Section 9.01. This Agreement shall remain in effect for a
period of two years from its effective date. If not sooner terminated, this
Agreement will continue in effect for successive periods of 12 months
thereafter, provided that each continuance is specifically approved annually
by (i) the vote of a majority of the Directors who are neither parties to this
Agreement nor are interested persons of the Company, the Investment Manager or
the Investment Adviser, cast in person at a meeting called for the purpose of
voting on such approval and (ii) either (a) the vote of a majority of the
outstanding voting securities of the Company or (b) the vote of a majority of
the Directors. This Agreement may be terminated by the Company at any time on
60 days written notice to the Investment Adviser without the payment of any
penalty, by (i) vote of a majority of the Directors or (ii) vote of a majority
of the outstanding voting securities of the Company. This Agreement may be
terminated by the Investment Manager at any time on 90 days written notice to
the Investment Adviser and the Company without the payment of any penalty.
This Agreement may be terminated by the Investment Adviser at any time on 90
days written notice to the Company and the Investment Manager.
Section 9.02. The Investment Manager shall immediately on
receipt or service of any notice given by or to the Company relative to the
termination of the Investment Manager's appointment forward a copy thereof to
the Investment Adviser and the Investment Adviser's appointment hereunder
shall terminate as at the date on which the termination of the appointment of
the Investment Manager is to become effective.
Section 9.03. The appointment of the Investment Adviser
shall automatically terminate forthwith if the Investment Manager shall
become or be deemed to become resident within the United Kingdom or if the
Investment Adviser shall carry on business in circumstances that cause the
Investment Manager or the Company to become liable to pay any United
Kingdom taxes that either such party would not otherwise be liable to pay.
Section 9.04. On termination of the appointment of the
Investment Adviser under the provisions of this Article, the Investment
Adviser shall be entitled to receive all fees and other monies accrued due up
to the date of such termination but shall not be entitled to compensation in
respect of such termination. The Investment Adviser shall take all necessary
steps to vest in the Company or in the Investment Manager or in any new
investment adviser any assets previously held in the name of or to the order
of the Company or the Investment Manager and shall not be entitled to any lien
in respect of any of the foregoing. In the event that on the date of such
termination a new investment adviser has not been selected by the Investment
Manager and approved by the Company and any necessary authorities, the
Investment Adviser will act hereunder solely to maintain the Company's assets
and will take only such action with respect to such assets as it is directed
to take by the Directors.
ARTICLE 10
Confidentiality
None of the parties hereto shall (except under compulsion of
any applicable law or any regulation made thereunder or as required by the
regulatory authorities of any jurisdiction in which transactions on behalf of
the Company are effected or regulated) either before or after the termination
of this Agreement disclose to any person not authorized by the relevant party
to receive the same any confidential information relating to such party or to
the affairs of such party of which the party disclosing the same shall have
become possessed during the period of this Agreement and each party shall use
all reasonable efforts to prevent any such disclosure as aforesaid.
ARTICLE 11
Notices
Any notice given hereunder shall be in writing and shall be
served by hand, by telex or facsimile transmission or by first class mail,
postage prepaid, to the principal office for the time being of the addressee.
Any such notice shall be deemed duly served at the time of delivery (if
delivered by hand), at the time of receipt of confirmed answerback (if served
by telex) or acknowledgment of receipt (if served by facsimile transmission),
or seven days after such notice is deposited in the mails. The Investment
Adviser may rely and shall be protected in acting upon any written instruction
or communication believed by the Investment Adviser to be genuine and to have
been signed by the proper party or parties.
ARTICLE 12
Miscellaneous
Section 12.01. The Investment Adviser represents that it is a
member of the Investment Management Regulatory Organisation Ltd. ("IMRO"), a
self regulating organisation recognized by the Securities and Investments
Board Ltd. established under the Financial Services Xxx 0000 of the United
Kingdom, and as such, the Investment Adviser is also regulated by IMRO in the
conduct of its investment business. The Investment Adviser has established
procedures in accordance with the requirements of IMRO for the effective
consideration of client complaints; a compliance officer of the Investment
Adviser is responsible for complaints procedures. Additionally, clients of
the Investment Adviser have a right of complaint direct to IMRO. A statement
describing the rights of clients of the Investment Adviser to compensation in
the event of the Investment Adviser's inability to satisfy its liabilities
hereunder can be obtained from the Investment Adviser upon request.
Section 12.02. In accordance with the requirements of IMRO,
the Investment Manager and the Company are hereby advised that, in the view of
IMRO:
(a) The market for Options, Futures or Contracts for
Differences (as such terms are defined in the Financial Services Act 1986)
can be highly volatile. Such investments are wasting assets and carry a
high risk of loss. In the case of Futures, Contracts for Differences and
the grant of Options, a relatively small adverse market movement may result
not only in loss of the original investment but also in unquantifiable
further loss exceeding any margin deposited. Accordingly such investments
will be made only on a covered basis or of a size that the Investment
Adviser believes appropriate to the Company as a whole. The Investment
Adviser may debit the Company at the discretion of the Investment Adviser
with any sums required to pay or supplement any deposit or margin in
support of a transaction. To the extent consistent with its duties and
obligations hereunder, the Investment Adviser may exercise its discretion
to settle or close out outstanding obligations without reference to the
Company or the Investment Manager.
(b) Where a liability in one currency is to be matched by
an asset in a different currency, or where an investment transaction
relates to an investment denominated in a currency other than the Company's
base currency, a movement of exchange rates may have a separate effect,
favorable or unfavorable, on the gain or loss that would otherwise be
experienced on the investment.
Section 12.03. The Investment Adviser may contact the
Investment Manager or the Company without express prior written invitation
whenever the Investment Adviser considers such contact appropriate for
purposes of discussing any matters relating to the Company, including, without
limitation, matters relating to the Company's investment objective and
policies as from time to time in effect.
Section 12.04. The Investment Manager has not delegated to
the Investment Adviser any authority with respect to the exercise of any
voting rights relating to the Investments.
Section 12.05. No failure on the part of any party to
exercise, and no delay on such party's part in exercising, any right or remedy
under this Agreement will operate as a waiver thereof, nor will any single or
partial exercise of any right or remedy preclude any other or further exercise
thereof or the exercise of any other right or remedy. The rights and remedies
provided in this Agreement are cumulative and not exclusive of any rights or
remedies provided by law.
Section 12.06. This Agreement may be amended by mutual
agreement, but only after authorization of such amendment by the affirmative
vote of (i) the holders of a majority of the outstanding voting securities of
the Company, and (ii) a majority of the Directors who are not interested
persons of the Company or of the Investment Manager or the Investment Adviser
or of any other entity regularly furnishing investment advisory services with
respect to the Company pursuant to an agreement with the Investment Manager,
cast in person at a meeting called for the purpose of voting on such approval.
Section 12.07. The illegality, invalidity or unenforceability
of any provision of this Agreement under the law of any jurisdiction shall not
affect its legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
Section 12.08. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
Section 12.09. The Investment Adviser shall perform its
duties and obligations hereunder on the basis that the Investment Manager and
the Company are "Professional Investors" as defined by IMRO.
Section 12.10. This Agreement will become effective on the
later of the Assignment Date and the Issuance Date.
Section 12.11. In addition to any restrictions or
limitations on the investment or reinvestment of the assets of the Company set
forth in the Investment Management Agreement, the Charter, the Laws, the
Company's investment objective and policies as from time to time in effect and
directions and guidelines established by the Directors, the Investment Adviser
shall not advise the Investment Manager concerning the acquisition or disposal
of (a) units in a collective investment scheme operated or advised by the
Investment Adviser or any of its Associates (as defined by IMRO), or (b)
securities of which an issue or offer for sale was underwritten, managed or
arranged by the Investment Adviser or any of its Associates during the
preceding 12 months.
Section 12.12. Except to the extent that the Company may
engage in borrowing transactions consistent with its investment objective and
policies, the Investment Adviser may not commit the Company to supplement the
funds in the Company's portfolio by borrowing or by committing the Company to
a contract, the performance of which may require the Company to supplement
such funds.
ARTICLE 13
Governing Law
Section 13.01. This Agreement shall be governed by and
construed in accordance with the laws of England; provided, however, that
nothing herein shall be construed as being inconsistent with the 1940 Act.
Section 13.02. The Investment Adviser irrevocably submits to
the jurisdiction of any New York State or Federal court sitting in the City of
New York or any court in Jersey, Channel Islands over any suit, action or
proceeding arising out of or relating to this Agreement. The Investment
Adviser irrevocably waives, to the fullest extent permitted by law, any
objection that it may have or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in such a court and any claim that any
such suit, action or proceeding brought in such a court has been brought in an
inconvenient forum. The Investment Adviser agrees that final judgment in any
such suit, action or proceeding brought in such a court shall be enforced in
any court to the jurisdiction of which the Investment Adviser is subject by a
suit upon such judgment. The Investment Adviser hereby consents to process
being served in any such suit, action or proceeding by (i) mailing a copy
thereof by registered or certified mail, postage prepaid, return receipt
requested, to its address set forth above or (ii) by serving a copy thereof in
any other manner permitted by law.
IN WITNESS WHEREOF this Agreement has been entered into the day
and year first above written.
MERCURY ASSET MANAGEMENT
INTERNATIONAL CHANNEL
ISLANDS LTD.
By:
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Name:
Title:
By:
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Name:
Title:
MERCURY ASSET MANAGEMENT
INTERNATIONAL LTD.
By:
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Name:
Title:
By:
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Name:
Title:
Accepted:
THE EUROPE FUND, INC.
By:
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Name:
Title:
