SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_|Confidential. For Use of the
Commission Only (as per-
mitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE EUROPE FUND, INC.
THE UNITED KINGDOM FUND INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant) Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials:
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|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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January 13, 1998
Dear Stockholder of The Europe Fund, Inc. and/or The United Kingdom Fund Inc.:
The enclosed notice and proxy statement relates to a joint special
meeting of the stockholders of The Europe Fund, Inc. ("The Europe Fund")
and The United Kingdom Fund Inc. ("The UK Fund") (each, a "Fund" and
collectively, the "Funds"). As you may know, on November 19, 1997, the
boards of directors of Merrill Lynch & Co., Inc. ("Merrill Lynch") and
Mercury Asset Management Group plc ("MAM") announced that they had agreed
on terms of a recommended cash offer (the "Offer") pursuant to which
Merrill Lynch, through its subsidiary ML Invest plc, would seek to acquire
all of the issued share capital of MAM (the "Transaction"). On December
22, 1997, Merrill Lynch acquired control of MAM. Both Mercury
Asset Management International Ltd., the Funds' investment adviser, and
Mercury Asset Management International Channel Islands Ltd., the Funds'
investment manager, are now subsidiaries of MAM.
The purpose of the joint special meeting of stockholders is to permit
each Fund's stockholders to consider new investment management and new
investment advisory agreements for their Fund to take effect on January 12,
1998, the issue date of a Securities and Exchange Commission exemptive
order relating to the Transaction. Approval of these new agreements is
necessary because without it the acquisition of control by Merrill Lynch of
MAM could be deemed to result in the automatic termination of the most
recent investment advisory and investment management agreements, pursuant
to the provisions of the Investment Company Act of 1940. The new
investment advisory and investment management agreements will be substantially
identical to that Fund's most recent investment advisory and investment
management agreements, respectively, except for the dates of execution,
effectiveness and termination and certain escrow arrangements. The
attached proxy statement therefore seeks your approval of your Fund's new
agreements.
It is important to keep in mind that Merrill Lynch and its
subsidiaries have acquired MAM and MAM's subsidiaries, but not the Funds.
YOUR FUND SHARES AND THE ADVISORY FEES CHARGED TO EACH FUND WILL NOT CHANGE
AS A RESULT OF THE TRANSACTION.
Your vote is important, and your participation in the governance of your
Fund does make a difference.
The proposals have been unanimously approved by the Board of Directors
of each Fund, who recommend that you vote "FOR" the proposal. STOCKHOLDERS
OF EACH FUND VOTE SEPARATELY.
We thought it would be helpful to provide the following questions and
answers regarding the Transaction and the related proposal. These are
designed to help answer questions you may have and are being provided as a
supplement to, and not a substitute for, the proxy statement, which we urge
you to review carefully.
If you have any questions or if you need further assistance in voting,
please feel free to call the proxy solicitor for your Fund. Tritech Services
is the proxy solicitor for The Europe Fund and can be reached at
1-800-955-8683. Corporate Investor Communications, Inc. is the proxy
solicitor for The UK Fund and can be reached at 1-800-252-1559. If we have
not received your proxy card(s) prior to the date of the joint special
meeting, you may receive a telephone call encouraging you to exercise your
right to vote.
PLEASE SIGN AND RETURN YOUR PROXY CARD(S) IN THE ENCLOSED POSTAGE-PAID
ENVELOPE
We thank you for your participation,
J. LOUGHLIN CALLAHAN
President of The Europe Fund and The UK
Fund
o January 1998 o
IMPORTANT NOTICE
TO THE STOCKHOLDERS OF THE EUROPE FUND, INC.
AND
THE UNITED KINGDOM FUND INC.
Questions
&
Answers
Although we recommend that you read the complete proxy statement, for your
convenience, we have provided a brief overview of the issues to be voted on.
Q Why am I receiving this proxy statement?
A A wholly-owned subsidiary of Merrill Lynch & Co. Inc. ("Merrill Lynch")
has acquired Mercury Asset Management Group plc ("MAM"), the corporate
parent of Mercury Asset Management International Channel Islands Ltd, your
Fund's investment manager (the "Investment Manager"), and Mercury Asset
Management International Ltd., your Fund's investment adviser (the
"Investment Adviser"). As a result, your Fund's investment advisory
agreement and investment management agreement have terminated and your Fund
is seeking stockholder approval for a new investment advisory agreement and
a new investment management agreement.
Q How will this affect my Fund?
A You can expect the same level of management expertise and high-quality
stockholder service to which you've grown accustomed. Both the new investment
management agreement between your Fund and the Investment Manager and the new
investment advisory agreement between the Investment Manager and the
Investment Adviser will be substantially identical to your Fund's most recent
investment management agreement and most recent investment advisory agreement,
respectively, except for the dates of execution, effectiveness and termination
and certain escrow provisions.
Q Will my vote make a difference?
A Your vote is needed to ensure that the proposals can be acted upon. We
encourage all stockholders to participate in the governance of their fund(s).
Q How do the directors of my Fund suggest that I vote?
A After careful consideration, the directors of your Fund unanimously
recommend that you vote "FOR" each of the items proposed on the enclosed
proxy card(s).
Q Who is paying for expenses related to the stockholders' meeting?
A Merrill Lynch and your Fund's Investment Manager and Investment Adviser
- -- not your Fund -- will pay for the expenses relating to the stockholders'
meeting.
Q Whom do I call if I have questions?
A The proxy solicitors for your Fund will be happy to answer your questions
about the proxy solicitation. Stockholders of The Europe Fund Inc. ("The
Europe Fund") should call Tritech Services at 1-800-955-8683 between 9 a.m.
and 5 p.m., Monday through Friday. Stockholders of The United Kingdom Fund
Inc. ("The UK Fund") should call Corporate Investor Communications, Inc.
at 1-800-252-1559 between 9 a.m. and 9 p.m., Monday through Friday.
Q Where do I mail my proxy card(s)?
A If you are a stockholder of The Europe Fund, you may use the enclosed
postage-paid envelope or mail your proxy card to:
Proxy Services
P.O. Box 43300
New Brunswick, NJ 08944-4300
If you are a stockholder of The UK Fund, you may use the enclosed postage-paid
envelope or mail your proxy card to:
Corporate Investor
Communications, Inc.
Proxy Tabulation Department
P.O. Box 5009
South Hackensack, NJ 07606-9951
THE EUROPE FUND, INC.
780 Third Avenue
Thirty-Fourth Floor
New York, NY 10017
and
THE UNITED KINGDOM FUND INC.
245 Park Avenue
Fifteenth Floor
New York, NY 10167
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Notice of Joint Special Meeting of Stockholders
To Be Held on February 25, 1998
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To the Stockholders of The Europe Fund, Inc. and The United Kingdom Fund Inc.:
A joint special meeting (the "Meeting") of the stockholders of
The Europe Fund, Inc. and The United Kingdom Fund Inc. (each, a "Fund" and
collectively, the "Funds"), will be held on February 25, 1998 at 10 a.m., New
York City time, at The Waldorf Astoria Hotel, 301 Park Avenue, 4th Floor, New
York, New York for the following purposes:
1. To approve a new investment advisory agreement and a new
investment management agreement for each Fund on substantially the same terms
as the most recent relevant agreement for that Fund;
2. To transact such other business as may properly come before
the Meeting or an adjournment thereof.
Stockholders of record for each Fund at the close of business
on December 29, 1997 will be entitled to vote separately at the Meeting on
matters related to their Fund.
By order of the Board of Directors of each Fund,
RITA J. KLEINMAN
Secretary of each Fund
New York, N.Y.
January 13, 1998
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YOUR VOTE IS IMPORTANT. HOLDERS OF MORE THAN 50% OF THE OUTSTANDING SHARES
OF EACH FUND MUST BE REPRESENTED IN PERSON OR BY PROXY AT THIS MEETING TO
TAKE THE PROPOSED ACTION. YOU ARE URGED TO SPECIFY YOUR CHOICE AND SIGN,
DATE AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. YOU MAY NEVERTHELESS VOTE
IN PERSON IF YOU DO ATTEND. NO POSTAGE NEED BE AFFIXED IF MAILED IN THE
UNITED STATES.
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THE EUROPE FUND, INC.
780 Third Avenue
Thirty-Fourth Floor
New York, NY 10017
and
THE UNITED KINGDOM FUND INC.
245 Park Avenue
Fifteenth Floor
New York, NY 10167
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JOINT PROXY STATEMENT
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This joint proxy statement is furnished to stockholders of The
Europe Fund, Inc. ("The Europe Fund") and the United Kingdom Fund Inc. ("The
UK Fund") (each, a "Fund" and collectively, the "Funds") in connection with
the solicitation of proxies for a Joint Special Meeting of Stockholders of the
Funds to be held at 10 a.m., New York City time, on February 25, 1998 at The
Waldorf Astoria Hotel, 301 Park Avenue, 4th Floor, New York, New York (the
"Meeting") in accordance with the attached notice of meeting. It is expected
that this proxy statement and the accompanying form of proxy will first be
mailed to stockholders of the Funds on January 13, 1998 or as soon as
possible thereafter.
The solicitation of the accompanying form of proxy is made on
behalf of the Board of Directors of each Fund (each, a "Board of Directors"
and collectively, the "Boards of Directors"). The Meeting is scheduled as a
joint special meeting of the stockholders of the respective Funds because the
stockholders of each Fund are expected to consider and vote on similar
matters. The Boards of Directors have determined that the use of a Joint Proxy
Statement for the Meeting is in the best interest of the stockholders of each
Fund. The stockholders of each Fund, however, will vote separately on matters
relating to their particular Fund. In the event that a stockholder of either
Fund present at the Meeting objects to the holding of a joint special meeting
and moves for an adjournment of the meeting of that Fund to a time immediately
after the Meeting so that that Fund's meeting may be held separately, all
persons named as proxies will vote in favor of the adjournment.
The purpose of the Meeting is to permit each Fund's
stockholders to consider for their Fund a new investment advisory and a new
investment management agreement (each, a "New Agreement" and collectively, the
"New Agreements") to take effect as of January 12, 1998, the issue date of an
exemptive order of the Securities and Exchange Commission (the "Commission")
relating to the Transaction (as discussed below). Pursuant to the
transaction contemplated by the Recommended Cash Offer (the "Offer") by
Merrill Lynch International on behalf of ML Invest plc, a wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("Merrill Lynch"), for Mercury
Asset Management Group plc ("MAM") dated November 24, 1997 (the
"Transaction"), Mercury Asset Management International Channel Islands Ltd.
(the "Investment Manager") and Mercury Asset Management International Ltd.
(the "Investment Adviser" and, collectively with the Investment Manager,
the "Advisers"), which act as investment manager and investment adviser,
respectively, to each Fund, have become indirect subsidiaries of Merrill
Lynch. The stockholder vote on the New Agreements is required under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a result of
Merrill Lynch's acquisition on December 22, 1997 (the "Assignment Date") of
the ultimate parent of the Advisers. Each Fund's new investment advisory
and investment management agreements are substantially identical to that
Fund's prior investment advisory and investment management agreements,
respectively, that terminated in connection with the Transaction (each, a
"Prior Agreement" and collectively, the "Prior Agreements"), except for the
dates of execution, effectiveness and termination and certain escrow
arrangements. See "1940 Act Considerations -- Exemptive Order".
Revocation of any proxy may be effected orally at the Meeting
prior to voting or by notice in writing to the Secretary of the relevant Fund,
provided that the notice is received by the Secretary prior to voting at the
Meeting. Each valid proxy received in time will be voted at the Meeting in
favor of the Proposal, or, if a contrary choice is specified on the proxy,
will be voted in accordance with that specification. It is required that
holders of more than 50% of the outstanding shares be represented in person or
by proxy at the Meeting for a quorum to be established.
Each New Agreement must be approved by the vote of a
majority of the outstanding voting securities of the respective Fund.
Under the 1940 Act, a majority of a Fund's outstanding voting securities is
defined as the lesser of (i) 67% of the outstanding shares represented at a
meeting at which more than 50% of the Fund's outstanding shares are present
in person or represented by proxy, or (ii) more than 50% of the Fund's
outstanding voting securities.
Each Fund intends to treat properly executed proxies that
are marked "abstain" as present for the purpose of determining whether a
quorum has been achieved. Neither Fund intends to treat a broker "non-
vote" (that is, a proxy from a broker or nominee indicating that such
person has not received instructions from the beneficial owner or other
person entitled to vote shares on a particular matter with respect to which
the broker or nominee does not have discretionary authority), as present
for quorum purposes. The effect of broker non-votes depends on whether
option (i) or (ii) described in the previous paragraph is used. If option
(i) is used, broker non-votes have no effect and abstentions effectively
count as votes against; if option (ii) is used, broker non-votes and
abstentions effectively count as votes against.
The close of business on December 29, 1997 has been fixed as
the record date (the "Record Date") for the determination of stockholders
of each Fund entitled to receive notice of, and to vote at, the Meeting.
There were 10,066,319 shares of common stock of The Europe Fund outstanding on
the Record Date. There were 4,011,655 shares of common stock of The UK Fund
outstanding on the Record Date. Each of these shares will be entitled to
one noncumulative vote. If a stockholder of The Europe Fund participates
in that Fund's Automatic Distribution Reinvestment and Cash Purchase Plan
("Plan I"), and if a stockholder of The UK Fund participates in that Fund's
Dividend Reinvestment and Cash Purchase Plan ("Plan II"), any proxy given
by the stockholder will also govern the voting of all shares held for the
stockholder's account under Plan I or Plan II, respectively, unless
contrary instructions are received by The Bank of New York, as agent under
both plans.
EACH FUND WILL FURNISH TO ITS STOCKHOLDERS UPON REQUEST AND
WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT AND ITS MOST RECENT SEMI-ANNUAL
REPORT SUCCEEDING THE ANNUAL REPORT. STOCKHOLDERS OF THE EUROPE FUND MAY
OBTAIN A COPY OF THEIR FUND'S ANNUAL REPORT OR MOST RECENT SEMI-ANNUAL
REPORT BY CALLING 1-800-543-6217 TOLL FREE OR BY WRITING TO PRINCETON
ADMINISTRATORS, L.P., P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011.
STOCKHOLDERS OF THE UK FUND MAY OBTAIN A COPY OF THEIR FUND'S ANNUAL REPORT
OR MOST RECENT SEMI-ANNUAL REPORT BY CALLING 1-800-766-4111 TOLL FREE OR BY
WRITING TO BEAR STEARNS FUNDS MANAGEMENT INC., C/O THE UNITED KINGDOM FUND
INC., 245 PARK AVENUE, FIFTEENTH FLOOR, NEW YORK, NEW YORK 10017.
As of the Record Date, the officers and directors of The
Europe Fund as a group owned beneficially 5,356 shares, or less than
1.0% of that Fund's outstanding shares. As of the Record Date, the
officers and directors of The UK Fund as a group owned beneficially 33,975
shares, or less than 1.0% of that Fund's outstanding shares.
As of the Record Date, no person or group was known to the
management of The Europe Fund to be the beneficial owner of more than 5% of
the common stock of The Europe Fund.
As of the Record Date, the following persons or groups were
known to the management of The UK Fund to be the beneficial owner of more
than 5% of the common stock of The UK Fund:
(1) (2) (3) (4)
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
- -------------- ------------------- -------------------- ----------------
Common Stock Stichting Philips 284,100 shares of 7.1% of the
Pension Funds, The UK Fund* outstanding
Transtraat 62 shares
5611 CR
Eindhoven,
Netherlands
Common Stock Lloyds Bank, as 692,200 shares of 17.25% of the
nominee for The UK Fund** outstanding
British Empire shares
Securities and
General Trust,
71 Lombard Street, 656,300 shares of 16.35% of the
London EC3P 3BS The UK Fund *** outstanding
United Kingdom shares
Common Stock Lazard Freres &
Co. LLC
30 Rockefeller
Plaza
New York, New York
10020
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* This information was derived from a statement on Schedule 13G, which
Stichting Philips Pension Funds filed with the Commission on December
31, 1991.
** This information was derived from a statement on Schedule 13G, which
Lloyds Bank filed with the Commission on August 6, 1996.
*** This information was derived from a statement on Schedule 13G, which
Lazard Freres & Co. LLC filed with the Commission on December 10, 1996.
INTRODUCTION
The Transaction
On November 19, 1997, the boards of directors of Merrill
Lynch and MAM announced that they had agreed on terms of a recommended cash
offer pursuant to which Merrill Lynch, through its newly formed wholly-
owned subsidiary ML Invest plc, would seek to acquire all of the issued
share capital of MAM. The Transaction has created one of the world's
largest asset management groups, with approximately $450 billion of assets
under management. It is intended that in connection with the Transaction,
the existing business of MAM will be combined with the worldwide
institutional business of Merrill Lynch Asset Management to form Merrill
Lynch Mercury Asset Management. Merrill Lynch Mercury Asset Management
will be headquartered in London and, within the United Kingdom, MAM's
business will continue to be conducted under its existing name.
The Offer, which commenced on November 24, 1997, is
being conducted in the United Kingdom in accordance with the City Code on
Takeovers and Mergers issued by the Panel on Takeovers and Mergers. The
Offer became unconditional on December 22, 1997.
Mercury Asset Management Group plc and its Affiliates
MAM is a holding company based in London that, through its
subsidiaries, provides investment and related services on a global basis,
operating in 19 offices around the world. MAM's shares are listed on the
London Stock Exchange, with a market capitalization of approximately
$3,828 million (Pounds Sterling 2,360 million)*, as of November 19,
1997.
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* All amounts denominated in pounds sterling have, for the purposes of
this background information, been converted into US dollars at an
exchange rate of l pounds sterling to $1.6223, the exchange rate on
January 12, 1998.
On September 30, 1997, MAM had approximately $169 billion (Pounds
Sterling 104 billion) of funds under management, of which over $113.5
billion (Pounds Sterling 70 billion) was for United Kingdom institutions
and the remainder was divided between international institutions and
private investors.
MAM manages funds for over one-half the companies that are
members of the FTSE-100 Index and for over one-half of the largest fifty
Japanese corporate pension funds. Its clients include approximately 900 UK
pension funds, including five of the ten largest pension funds in the
world. MAM is a market leader in the UK defined contribution pension
market.
The Investment Manager is a wholly-owned subsidiary of the
Investment Adviser, which in turn is a wholly-owned subsidiary of Mercury
Asset Management plc, one of the largest investment managers in Europe,
headquartered in London, England, at 33 King William Street, EC4R 9AS and a
wholly-owned subsidiary of MAM of the same address. As of January 6, 1998,
over 90% of MAM's stock was owned by ML Invest plc, headquartered in
London, England, at Ropemaker Place, 25 Ropemaker Street, EC2Y 9LY, and a
wholly-owned subsidiary of ML Invest Holdings Ltd. of the same
address. ML Invest Holdings Ltd., in turn, is a wholly-owned subsidiary of
ML Invest. Inc. of 250 Vesey Street, New York, New York 10281. ML Invest.
Inc. is a wholly-owned subsidiary of Merrill Lynch Group, Inc. of the same
address, which, in turn, is a wholly-owned subsidiary of Merrill Lynch of
the same address.
The Investment Manager is a corporation organized under the
laws of Jersey (Channel Islands), with its principal office at Forum House,
Grenville Street, St. Helier, Jersey JE4 8RL, Channel Islands. The Investment
Manager was formed in January, 1983 for the purposes of providing investment
advisory and investment management services for international portfolios
desiring to utilize the services of the Investment Adviser. The Investment
Manager is registered as an investment adviser with the Commission. The
Investment Manager's other clients include individuals and a charitable
organization.
The Investment Adviser is a corporation incorporated in 1981
under the Companies Act of Great Britain. Its registered office and principal
place of business is at 33 King William Street, London EC4R 9AS, England. The
Investment Adviser provides discretionary international investment portfolio
management services to individual and institutional clients wishing to
participate in particular markets outside North America or to maintain a
worldwide investment program. The Investment Adviser is registered as an
investment adviser with the Commission and is regulated by the United
Kingdom's Investment Management Regulatory Organisation Ltd. The
Investment Adviser's advisory clients include charitable organizations,
corporations and pension plans.
The Advisers also act as investment adviser or investment
manager for other persons and entities and may, under agreements with the
Funds, act as investment adviser or investment manager to other registered
investment companies.
Messrs. Peter J. Gibbs, John Gillespie, Frank P. Le
Feuvre and Robin E.R. Rumboll are the directors of the Investment Manager.
The principal occupation of each director is as follows: Mr. Gibbs is the
principal executive officer of the Investment Manager and a director of
Mercury Asset Management plc; Mr. Gillespie is secretary of the
Investment Manager and a director of Mercury Asset Management Channel
Islands Ltd.; Mr. Le Feuvre is a director of Mercury Assset Management
Channel Islands Ltd.; and Mr. Rumboll is an independent financial
consultant. The address of Mr. Gibbs is 33 King William Street, London,
EC4R 9AS, England. The address of Messrs. Gillespie and Le Feuvre is
Forum House, Grenville Street, St. Helier, Jersey JE4 8RL, Channel
Islands. The address of Mr. Rumboll is Windsor House, St. Lawrence,
Jersey, Channel Islands.
Mrs. C. Consuelo Brooke and Messrs. Peter Stormonth Darling,
Charles B. Farquharson, Peter J. Gibbs, Steven W. Golann, J. Eric
Nelson and David M.F. Scott are the directors of the Investment Adviser.
The principal occupation of each director is as follows: Mrs. Brooke and
Mr. Scott are fund managers of the Investment Adviser; Mr. Darling is
chairman of the Investment Adviser and a non-executive director of MAM;
Mr. Farquharson is secretary of the Investment Adviser and Company
Secretary of MAM; Mr. Gibbs is the principal executive officer of the
Investment Adviser and a director of Mercury Asset Management plc; and
Messrs. Golann and Nelson are directors of the Investment Adviser. The
address of Mrs. Brooke and Messrs. Darling, Farquharson, Gibbs and Scott
is 33 King William Street, London, EC4R 9AS, England. The address of
Messrs. Golann and Nelson is 780 Third Avenue, 34th Floor, New York, New
York 10017.
Merrill Lynch & Co., Inc. and its Affiliates
The information in this section has been provided by Merrill
Lynch.
Merrill Lynch, a Delaware corporation, is a holding company
formed in 1973 that, through its subsidiaries and affiliates, provides
investment, financing, insurance and related services on a global basis. Such
services include securities brokering, trading and underwriting; investment
banking and other corporate finance advisory activities, including loan
syndication; asset management and other investment advisory services; trading
of foreign exchange instruments, futures, commodities and derivatives;
securities clearance services; banking, trust and lending services; and
insurance sales. These services are provided to a large group of clients and
customers, including individual investors, corporations, governments and
governmental agencies and financial institutions.
Merrill Lynch conducts its business from its world headquarters
in New York City, New York, from additional principal locations in New Jersey,
London, Tokyo and Hong Kong, from various regional facilities located in the
United States and in other countries, and from numerous retail sales and other
offices throughout the world. As of December 27, 1996, Merrill Lynch employed
approximately 49,800 people.
Merrill Lynch conducts its worldwide business through a number
of highly integrated subsidiaries and affiliates that frequently participate
in the facilitation and consummation of a single transaction. Merrill Lynch,
Pierce, Fenner & Smith Incorporated, the principal subsidiary of Merrill Lynch
and one of the largest securities firms in the world, is a leading broker in
securities, options contracts, and commodity and financial futures contracts;
a leading dealer in options and in corporate and municipal securities; a
leading investment banking firm that provides advice to, and raises capital
for, its clients; and an underwriter of selected insurance products.
Merrill Lynch is also one of the largest asset managers in the
world, with approximately $273.9 billion of assets under management as of
November 30, 1997. Merrill Lynch's asset management activities are conducted
through, or managed by Merrill Lynch Asset Management, L.P., Fund Asset
Management, L.P. and Hotchkis and Wiley, and their affiliates (together
"MLAM"). MLAM constitutes the investment management unit of Merrill Lynch and
is one of the largest mutual fund managers in the world. MLAM acts as the
investment adviser for more than 140 registered investment companies as well
as for various individual and institutional investors. At the end of 1996,
MLAM managed 227 portfolios representing a wide variety of investment
objectives ranging from money market portfolios to long-term taxable and
tax-exempt fixed income portfolios, along a broad spectrum of quality ratings
and maturities, as well as a wide variety of equity portfolios that in the
aggregate invest in more than 48 markets globally. At the end of 1996, total
assets under management by MLAM approximated $234 billion, as compared with
$196 billion at year-end 1995.
1940 ACT CONSIDERATIONS
Section 15(a) of the 1940 Act prohibits any person from
serving as an investment adviser to a registered investment company except
pursuant to a written contract that has been approved by the stockholders
of the registered investment company. Section 15(a) also provides, as do
the Prior Agreements pursuant to section 15(a), for the automatic
termination of such agreements upon their assignment. An
assignment is deemed to include any change of control of the investment
adviser. In order for the Advisers to continue to provide investment
advisory services to the Funds, therefore, the stockholders of each Fund
must approve that Fund's New Agreements.
Exemptive Order
Due to insufficient time to obtain consent of the Funds'
stockholders prior to the Assignment Date, MAM, the Advisers and Merrill
Lynch applied for an order (the "Order") from the Commission exempting
them from compliance with Section 15(a) of the 1940 Act pending approval of
the New Agreements by each Fund's stockholders. The Order, which was issued
on January 12, 1998 (the "Issuance Date"), permits the New Agreements to go
into effect without stockholder approval and allows the Advisers to collect
fees with respect to each Fund at the rates specified in the New Agreements
commencing on the Issuance Date. Fees (and interest thereon) paid by the
Funds after the Issuance Date will be held in escrow with an unaffiliated
financial institution pending stockholder approval, which, pursuant to the
terms of the Order, must be obtained no later than June 10, 1998.
If the stockholders of either Fund do not approve that Fund's
New Agreements prior to June 10, 1998, the amount held in escrow under the
New Agreements of the relevant Fund will be returned to that Fund.
Accordingly, to ensure continuity in the management of the Funds,
stockholders of the Funds are being asked to approve the New Agreements for
their Fund.
EACH FUND'S NEW AGREEMENTS ARE SUBSTANTIALLY IDENTICAL TO
THAT FUND'S RESPECTIVE PRIOR AGREEMENTS EXCEPT FOR THE DATES OF
EXECUTION, EFFECTIVENESS AND TERMINATION AND THE ESCROW ARRANGEMENTS
DESCRIBED ABOVE. THE APPROVAL OF THE NEW AGREEMENTS RELATING TO A FUND BY
THAT FUND'S STOCKHOLDERS IS SEPARATE FROM, AND IS IN NO WAY CONDITIONED
UPON, THE APPROVAL OF THOSE NEW AGREEMENTS RELATING TO THE OTHER FUND BY
STOCKHOLDERS OF THAT FUND.
During the interim period between the Assignment Date and
the Issuance Date, the Advisers provided the Funds services substantially
similar to those provided under the Prior Agreements at fees not in excess
of the Advisers' actual cost of performing the services. Fees payable
during this interim period were paid directly to the Advisers and not held
in escrow.
THE PROPOSALS
APPROVAL OF THE NEW INVESTMENT MANAGEMENT AGREEMENT FOR
THE EUROPE FUND, INC.
APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT FOR
THE EUROPE FUND, INC.
APPROVAL OF THE NEW INVESTMENT MANAGEMENT AGREEMENT FOR
THE UNITED KINGDOM FUND INC.
APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT FOR
THE UNITED KINGDOM FUND INC.
As noted above, the acquisition of control of MAM by Merrill
Lynch may be deemed to constitute an "assignment" (as defined in the 1940
Act) of each Fund's Prior Agreements. As required by the 1940 Act, the Prior
Agreements provide for their automatic termination in the event of an
assignment. In connection with the Transaction, and in order to assure
that the Advisers can continue to serve as investment advisers to the
Funds, stockholders of each of the Funds are being asked to approve the New
Agreements for their Fund. A form of each New Agreement is attached hereto
as Annex A.
EACH FUND'S NEW AGREEMENTS ARE SUBSTANTIALLY IDENTICAL TO
THAT FUND'S RESPECTIVE PRIOR AGREEMENTS EXCEPT FOR THE DATES OF EXECUTION,
EFFECTIVENESS AND TERMINATION AND CERTAIN ESCROW ARRANGEMENTS. SEE "1940
ACT CONSIDERATIONS -- EXEMPTIVE ORDER". THE APPROVAL OF THE NEW AGREEMENTS
RELATING TO A FUND BY THAT FUND'S STOCKHOLDERS IS SEPARATE FROM, AND IS IN
NO WAY CONDITIONED UPON, THE APPROVAL OF THOSE NEW AGREEMENTS RELATING TO
THE OTHER FUND BY STOCKHOLDERS OF THAT FUND.
The Prior Investment Advisory and Investment Management Agreements
Pursuant to the Investment Management Agreement dated as of
April 26, 1990 between The Europe Fund and the Investment Manager, (the
"Prior Europe Fund Investment Management Agreement"), and the Investment
Management Agreement dated as of August 4, 1987 between The UK Fund and the
Investment Manager (the "Prior UK Fund Investment Management Agreement"), the
Investment Manager, on the basis of advice given by the Investment Adviser,
structured each Fund's portfolio, managed each Fund's investments and made
investment decisions on behalf of each Fund in accordance with that Fund's
stated investment objective, policies and limitations and subject to the
supervision, review and direction of that Fund's Board of Directors.
Pursuant to The Europe Fund's Investment Advisory Agreement
dated as of April 26, 1990 between the Investment Manager and the
Investment Adviser (the "Prior Europe Fund Investment Advisory Agreement"),
and The UK Fund's Investment Advisory Agreement dated as of August 4, 1987
between the Investment Manager and the Investment Adviser (the "Prior UK Fund
Investment Advisory Agreement"), the Investment Adviser advised the
Investment Manager with respect to the investment and reinvestment of the
assets of each Fund in accordance with each Fund's stated investment
objective, policies and limitations and subject to the supervision, review
and direction of each Fund's Board of Directors.
Under the Prior Agreements, the Investment Manager or the
Investment Adviser, with the consent of the Investment Manager, selected
and placed orders with brokers and dealers to execute portfolio
transactions on behalf of each Fund. The Advisers were obligated to
provide to the Board of Directors of The Europe Fund at least once every
six months a statement of the contents and valuation of that Fund's
investments (not necessarily including any evaluation of the performance of
that Fund during that period). The Advisers were obligated to furnish to
the Board of Directors of The UK Fund periodic reports on that Fund's
investment performance.
The Prior Europe Fund Investment Management Agreement
provided that The Europe Fund would pay the Investment Manager a fee at the
annual rate of 0.75% of the Fund's average weekly net assets up to $250
million and 0.65% of such assets in excess of $250 million based upon net
asset value at the end of each week and payable on the last day of each
month. For the fiscal year ended December 31, 1997, the Investment Manager
received from The Europe Fund investment management fees totaling
$1,469,629. The Prior UK Fund Investment Management Agreement provided that
The UK Fund would pay the Investment Manager a fee at the annual rate of
0.75% of the Fund's average weekly net assets up to $150 million and 0.65%
of such assets in excess of $150 million payable on the last day of each
month. For the fiscal year ended March 31, 1997, the Investment Manager
received from The UK Fund investment management fees totaling $487,653.
Pursuant to the Prior Europe Fund Investment Advisory Agreement, the
Investment Adviser was paid by the Investment Manager a fee at the annual
rate of 0.15% of the average weekly net assets of that Fund, based upon net
asset value at the end of each week and payable on the last day of each
month, which fee amounted to $293,926 for the fiscal year ended December
31, 1997. Pursuant to the Prior UK Fund Investment Advisory Agreement, the
Investment Adviser was paid by the Investment Manager a fee at the annual
rate of 0.1875% of the net assets of that Fund, which fee amounted to
$121,913 for the fiscal year ended March 31, 1997. The fee paid by each
Fund to the Investment Manager was higher than that paid by most investment
companies, although lower than the fee paid by most other closed-end
investment companies that invest primarily in the securities of companies
in foreign countries.
The Prior Agreements provided that neither the Investment
Manager nor the Investment Adviser would be liable for any error of
judgment or for any loss suffered by either Fund in connection with the
matters to which the investment management agreement or the investment
advisory agreement of each Fund, respectively, related, except a loss
resulting from willful misfeasance, bad faith or gross negligence on its
part in the performance, or from reckless disregard by it, of its
obligations and duties under the Prior Agreements.
Both the Prior Europe Fund Investment Management Agreement
and the Prior Europe Fund Investment Advisory Agreement were approved by the
stockholders of that Fund on June 5, 1991, the date on which these
agreements were last submitted for stockholder approval. Both the Prior UK
Fund Investment Management Agreement and the Prior UK Fund Investment
Advisory Agreement were approved by the stockholders of that Fund on
October 20, 1988, the date on which these agreements were last submitted
for stockholder approval. The continuation of each Fund's Prior Agreements
had been approved annually by that Fund's Board of Directors and, at the
same meetings, had been unanimously approved by each Fund's directors who
are not "interested persons" of the respective Fund. Each Prior Agreement
was terminable at any time by the respective Fund on 60 days' written
notice, without the payment of any penalty, upon the vote of a majority of
that Fund's Board of Directors or a majority of the outstanding voting
securities of that Fund. Each Prior Agreement was terminable automatically
in the event of its assignment, as defined in the 1940 Act, or upon 90 days'
written notice by the Investment Manager or Investment Adviser, as applicable.
The New Investment Advisory and Investment Management Agreements
Each New Agreement, as was true of each Prior Agreement,
provides that each Adviser will bear all expenses of its employees and
overhead incurred by it in connection with its duties under the Investment
Agreements. Each Adviser further agrees to pay all salaries and fees of the
Funds' directors and officers who are "interested persons" of that Adviser.
Each New Agreement, as was true of each Prior Agreement,
provides that each Fund will bear all of its own expenses, including but not
limited to: (i) expenses of organizing that Fund; (ii) fees of that Fund's
directors who are not "interested persons" of any other party; (iii)
out-of-pocket travel expenses for all directors and officers in connection
with their attendance at, and other expenses incurred by that Fund relating
to, directors' or committee meetings; (iv) interest expense; (v) taxes and
governmental fees; (vi) brokerage commissions and other expenses incurred in
acquiring or disposing of that Fund's portfolio securities; (vii) expenses of
preparing stock certificates; (viii) expenses in connection with the
issuance, offering, distribution, sale or underwriting of securities by that
Fund; (ix) expenses of registering and qualifying that Fund's shares for sale
with the Commission and in various states and foreign jurisdictions; (x)
auditing, accounting, insurance and legal costs; (xi) custodian, dividend
disbursing and transfer agent expenses; (xii) expenses of obtaining and
maintaining the listing of that Fund's shares on the New York Stock Exchange;
(xiii) membership dues to professional organizations; (xiv) expenses of
stockholders' meetings and preparing and distributing proxies and reports to
stockholders; and (xv) costs of information obtained from services other than
the Investment Manager or its affiliated persons relating to the valuation of
securities. Neither Fund, however, will bear any expenses associated either
with the Meeting or with the solicitation of proxies for the Meeting.
The Investment Manager will be responsible for the selection of
brokers to execute each Fund's portfolio transactions. In placing portfolio
transactions, the Investment Manager will seek to obtain best execution for
each Fund, taking into account factors such as price, commission, size of
order, difficulty of execution, research capabilities, skill required of the
broker and market and statistical information provided by the broker. In
seeking best execution of its transactions, each Fund may employ several
different brokers, including, subject to certain conditions, affiliated
brokers.
The Funds will not be able to engage in principal
transactions with the Investment Manager, the Investment Adviser or their
affiliates.
EACH FUND'S NEW AGREEMENTS ARE SUBSTANTIALLY IDENTICAL TO
THAT FUND'S RESPECTIVE PRIOR AGREEMENTS EXCEPT FOR THE DATES OF EXECUTION,
EFFECTIVENESS AND TERMINATION AND CERTAIN ESCROW ARRANGEMENTS. SEE "1940
ACT CONSIDERATIONS -- EXEMPTIVE ORDER". THE APPROVAL OF THE NEW AGREEMENTS
RELATING TO A FUND BY THAT FUND'S STOCKHOLDERS IS SEPARATE FROM, AND IS IN
NO WAY CONDITIONED UPON, THE APPROVAL OF THOSE NEW AGREEMENTS RELATING TO
THE OTHER FUND BY STOCKHOLDERS OF THAT FUND.
If approved by the Funds' stockholders, the New Agreements
will remain in effect for an initial two-year term after the Issuance
Date and will continue in effect thereafter for successive annual periods
as long as the continuance is approved in accordance with the 1940 Act.
Each New Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
Deliberation and Recommendation of Board of Directors
The Board of Directors of each Fund met on December 11,
1997, to consider the Transaction and its anticipated effects upon the
Advisers and the investment advisory and other services provided to that
Fund over which the respective Board of Directors presides. At this
meeting, the Board of Directors of each Fund -- including a majority of the
Directors who are neither parties to the Prior Agreements or to the
New Agreements nor are "interested persons", as that term is defined in the
1940 Act, of any parties to the Prior Agreements or the New Agreements
(the "Independent Directors")* -- voted to approve the New Agreements and
to recommend approval of the New Agreements by the stockholders of the Fund
for which they serve as directors.
- -----------
* Only one director, Mr. Peter Stormonth Darling, is an "interested person"
of both The Europe Fund and The UK Fund, as defined by the 1940 Act. As
of January 8, 1998, Mr. Darling owned beneficially 345,813 shares of
MAM, an affiliate of the Investment Manager and Investment Adviser,
with sole voting and investment power. Mr. Darling is also an
"interested" director because he is Chairman of the Investment Adviser
and a non-executive director of MAM.
The Board of Directors of each Fund believes that the terms
and conditions of the New Agreements are fair to, and in the best interest
of, their Fund and its stockholders. The Board of Directors of each Fund,
including the Independent Directors of each Fund, has approved the New
Agreements and unanimously recommends stockholder approval. The
Independent Directors of each Fund were counseled by the law firm of
Sullivan & Worcester LLP in connection with their deliberations concerning
the New Agreements.
The Boards of Directors, including the Independent Directors,
reviewed factors they deemed relevant, including, but not limited to, the
fees and expense ratios of comparable investment companies and the
differences between the Prior Agreements and the New Agreements.
In evaluating the New Agreements, the Boards of Directors took
into account that their respective Fund's Prior Agreements and New
Agreements, including the terms relating to the services to be provided
thereunder by the Advisers and the fees and expenses payable by that Fund, are
substantially identical, except for the dates of execution, effectiveness and
termination and certain escrow provisions.
The Boards of Directors also considered the possible effects of
the Transaction upon the Advisers' organization and upon the ability of the
Advisers to provide advisory services to each Fund. The Boards of Directors
considered the skills and capabilities of the Advisers and the representations
of Merrill Lynch that no material change is planned in the current management
of the Advisers. In this regard, a representative of Merrill Lynch met with
the Boards of Directors at which time the representative described the
resources that would be available to the Advisers, after giving effect to
the Transaction, to secure for each Fund quality investment research,
investment advice and other client services. The Boards of Directors also
considered the reputation and expertise of Merrill Lynch. The Boards of
Directors considered the continued employment of members of senior
management of the Advisers to be important to help to assure continuity of
the personnel primarily responsible for maintaining the quality of
investment advisory and other services for the Funds.
The Boards of Directors considered the effects on the Funds of
the Advisers becoming affiliated persons of Merrill Lynch. In connection with
the Transaction, the 1940 Act will prohibit or impose certain conditions on
the ability of the Funds to engage in certain transactions with Merrill Lynch
and its affiliates. For example, absent exemptive relief, the Funds will be
prohibited from purchasing securities in transactions in which any
broker-dealer subsidiary of Merrill Lynch (a "Merrill Lynch Broker-Dealer")
acts as principal, and the Funds will have to satisfy certain conditions in
order either to engage in securities transactions in which a Merrill Lynch
Broker-Dealer acts as broker or to purchase securities in an underwritten
offering in which a Merrill Lynch Broker-Dealer is acting as principal
underwriter. In this connection, management of each of the Advisers
represented to the Boards of Directors that it does not believe these
prohibitions or conditions will impose an unfair burden on the Funds, and, to
the extent permitted by applicable law, the Advisers anticipate that the Funds
will continue to use Merrill Lynch Broker-Dealers for brokerage services.
The Boards of Directors were advised that Section 15(f) of the
1940 Act is possibly applicable to the Transaction. Section 15(f) of the 1940
Act permits, in the context of a change in control of an investment adviser or
manager to a registered investment company, the receipt by such investment
adviser or manager, or any of its affiliated persons, of an amount of benefit
in connection with the sale, as long as two conditions are satisfied. First,
an "unfair burden" must not be imposed on the investment company for which the
investment adviser acts in such capacity as a result of the sale of an
interest, or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden," as defined in the 1940 Act,
includes any arrangement during the two-year period after the transaction
whereby the investment adviser or manager (or predecessor or successor adviser
or manager), or any interested person of any such adviser or manager, receives
or is entitled to receive any compensation, directly or indirectly, from the
investment company or its security holders (other than fees for bona fide
investment advisory and other services), or from any person in connection with
the purchase or sale of securities or other property to, from or on behalf of
the investment company (other than ordinary fees for bona fide principal
underwriting services).
Without necessarily agreeing with the need to comply with
Section 15(f), Merrill Lynch has represented to the Boards of Directors that
it would not seek an advisory fee increase for the next two years. Neither
Merrill Lynch nor the Advisers, after due inquiry, is aware of any express or
implied term, condition, arrangement or understanding that would impose an
"unfair burden" on either Fund as a result of the Transaction. Merrill Lynch
has agreed that it will take no action that would have the effect of imposing
an "unfair burden" on either Fund as a result of the Transaction.
Second, during the three-year period immediately following a
transaction to which Section 15(f) applies, at least 75% of the subject
investment company's board of directors must not be "interested persons" (as
defined in the 1940 Act) of the investment company's investment adviser or
manager or predecessor adviser or manager. The current composition of the
Boards of Directors would be in compliance with this condition subsequent to
the Transaction.
As a result of their review and consideration of the
Transaction and the New Agreements, at the meeting on December 11, 1997, the
Board of Directors of each Fund, including a majority of the Independent
Directors of each Fund, voted to approve and recommend the New Agreements for
approval by the stockholders of the relevant Fund.
If Stockholder Approval Not Obtained
In the event that stockholders of a Fund do not approve the
New Agreements with respect to that Fund, the amounts held in escrow for
that Fund will be delivered to that Fund, and the respective Board of
Directors would seek to obtain for that Fund interim investment advisory
services at the lesser of the current fee rate or cost either from the
Advisers or from another advisory organization. Thereafter, the respective
Board of Directors would either negotiate a new investment advisory
agreement with an advisory organization selected by the Board of Directors
or make other appropriate arrangements, in either event subject to approval
of the stockholders of that Fund.
Required Vote
As stated above, each New Agreement must be approved by the
vote of a majority of the outstanding voting securities of the respective
Fund. Under the 1940 Act, a majority of a Fund's outstanding voting
securities is defined as the lesser of (i) 67% of the outstanding shares
represented at a meeting at which more than 50% of the Fund's outstanding
shares are present in person or represented by proxy, or (ii) more than 50%
of the Fund's outstanding voting securities.
Administrators
Princeton Administrators, L.P. ("Princeton"), administrator for
The Europe Fund since that Fund's inception, is an affiliate of Merrill
Lynch. Princeton provides administrative services, including record-
keeping, preparation of reports, accounting services and legal support
services. Princeton currently provides third-party fund administration
services to four (4) open-end and twenty-four (24) closed-end investment
companies with more than $5.6 billion in net assets. Pursuant to the
Administration Agreement dated April 7, 1990, which terminated as a result
of the Transaction, by and between The Europe Fund and Princeton, The
Europe Fund had paid to Princeton on the first business day of each calendar
month a fee for the previous month at an annual rate equal to 0.25% of The
Europe Fund's average weekly net assets up to U.S. $200 million and 0.20%
in excess thereof subject to a minimum fee. For the fiscal year ending
December 31, 1997, the aggregate fee amounted to $496,061. In connection
with the Transaction, on December 11, 1997, the Board of Directors of The
Europe Fund approved a new administration agreement, the terms of which are
substantially similar to the Administration Agreement dated April 7, 1990
except for the dates of execution, effectiveness and termination.
The Administrator for The UK Fund is Bear Stearns Funds
Management Inc., which is headquartered at 245 Park Avenue, 15th Floor, New
York, New York 10167.
General
The management of each Fund does not intend to present to the
Meeting any business other than the matters stated in the related notice.
If any matter not referred to in the enclosed proxy should properly come
before the Meeting, including any proposal omitted from this proxy
statement and form of proxy pursuant to Rule 14a-8 of the Securities and
Exchange Act of 1934 and any question as to an adjournment of the Meeting,
the persons named in the enclosed proxy will have discretionary authority
to vote all proxies in accordance with their best judgment.
The cost of soliciting proxies for the Meeting will be borne
by Merrill Lynch and the Advisers. In addition to the solicitation by
mail, the Funds' officers may solicit proxies personally, for which they
will receive no special compensation. Merrill Lynch and the Advisers have
retained Tritech Services, an indirect affiliate of Merrill Lynch, for a
fee of $5,000 plus out-of-pocket expenses to assist in the solicitation of
proxies for The Europe Fund. Merrill Lynch and the Advisers have retained
Corporate Investor Communications, Inc. for a fee of $6,500 plus out-of-
pocket expenses to assist in the proxy solicitation for The UK Fund.
Merrill Lynch and the Advisers -- not the Funds -- will bear these
solicitation costs. Merrill Lynch and the Advisers may reimburse brokers
or persons holding stock in their names or in the name of their nominees
for their expenses in sending proxy material to the beneficial owners.
In the event that sufficient votes to approve each Proposal
are not received by the time scheduled for the Meeting, the persons named
as proxies may propose one or more adjournments of the Meeting to permit
further solicitation of proxies with respect to such Proposal. An
adjournment proposed in this fashion will require the affirmative vote of a
majority of those shares of the relevant Fund present in person at the
Meeting or represented by proxy. When voting on a proposed adjournment to
permit further solicitation with respect to any Proposal, the persons named
as proxies will vote for the proposed adjournment all the shares they are
entitled to vote with respect to each Proposal, unless directed to
disapprove such Proposal, in which case those shares will be voted against
the proposed adjournment. Broker non-votes and abstentions will have no
effect on the majority vote required for adjournment.
The Funds, the Investment Adviser and the Investment
Manager do not participate in soft-dollar arrangements.
THE BOARDS OF DIRECTORS, INCLUDING THE DIRECTORS WHO ARE NOT
"INTERESTED PERSONS" (AS DEFINED IN THE 1940 ACT) OF THEIR RESPECTIVE FUND,
RECOMMEND THAT THE STOCKHOLDERS OF EACH FUND VOTE "FOR" THAT FUND'S NEW
AGREEMENTS.
Stockholders who do not expect to be present at the Meeting and
who wish to have their shares voted are requested to date and sign the
enclosed proxy and return it in the enclosed envelope. No postage is required
if mailed in the United States.
By order of the Board of Directors of each Fund,
ANTHONY M. SOLOMON
Chairman of the Board of Directors of each Fund
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 Forum House, Grenville Street, St.
Helier, Jersey JE4 8RL, 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 33 King William
Street, London EC4R 9AS, England.
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 Merrill Lynch &
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., 780
Third Avenue, New York, New York 10017.
"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, Merrill
Lynch & 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 Act 1986 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 1940 Act) 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 Act 1986 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:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
MERCURY ASSET MANAGEMENT
INTERNATIONAL LTD.
By:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
Accepted:
THE EUROPE FUND, INC.
By:
----------------------
Name:
Title:
FORM OF
INVESTMENT MANAGEMENT AGREEMENT
THE EUROPE FUND, INC.
AGREEMENT dated as of December 11, 1997 between THE EUROPE
FUND, INC., a Maryland corporation (the "Company"), whose principal office is
c/o Mercury Asset Management International Ltd., 780 Third Avenue, New York,
New York 10017, and 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 Forum House, Grenville
Street, St. Helier, Jersey JE4 8RL, Channel Islands.
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 Merrill Lynch &
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.
"Custodian" means the Bank of New York, acting in the capacity
of Custodian of the Investments of the Company, or any other corporation for
the time being acting as Custodian of the Investments of the Company.
"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.
"Investment Adviser" means Mercury Asset Management
International Ltd., an English corporation.
"Investments" means the assets and rights from time to time of
the Company.
"Issuance Date" means the date on which the Commission grants
the exemptive order application of Mercury Asset Management Group plc, Merrill
Lynch & 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 Custodian 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 thereof.
Section 1.05. The terms "affiliated person", "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 Manager
The Company hereby appoints the Investment Manager as the
manager of the Investments of the Company from time to time upon the terms
hereinafter contained and in accordance with the Laws, the Charter, 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 Manager hereby accepts such appointment and agrees to
assume the obligations and duties set forth herein.
ARTICLE 3
Functions, Powers, Duties and Obligations of the Investment Manager
Section 3.01. During the continuance of its appointment the
Investment Manager shall, subject to the Laws, the Charter, 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,
have full power, authority and right to:
(a) manage the investment and reinvestment of the
Investments of the Company consistent with the Company's investment
objective and policies as from time to time in effect;
(b) provide or procure the provision of research and
statistical data in relation to the Investments and other matters within
the scope of the investment objective and policies of the Company as from
time to time in effect;
(c) prepare or procure the preparation of reports on the
Company's investment performance and such other matters as the Directors
may from time to time reasonably determine for consideration by the
Directors;
(d) select and place orders with brokers and dealers to
execute Investment transactions in the manner set forth in the Prospectus
under the heading "Portfolio Transactions and Brokerage"; and
(e) provide such other services in connection with the
business of the Company as the Directors may reasonably require.
Section 3.02. The Investment Manager shall keep or cause to
be kept on behalf of the Company 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 carried out by the
Investment Manager on behalf of the Company; shall permit the Company and its
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 3.03. The Investment Manager shall have and is hereby
granted the authority, power and right for the account and in the name of the
Company but subject to the Laws, the Charter, 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:
(a) to issue orders and instructions with respect to the
disposition of the Investments, moneys and other assets of the Company;
(b) to purchase or otherwise acquire, sell or otherwise
dispose of, and invest in, the Investments, moneys and other assets for the
account of the Company and effect foreign exchange transactions on behalf
of the Company and for the account of the Company in connection with any
such purchase or other acquisition, sale or other disposal or the
protection of the value of Investments;
(c) to enter into, make and perform all contracts,
agreements and other undertakings as may in the opinion of the Investment
Manager be necessary or advisable or incidental to the carrying out of the
objectives of this Agreement;
(d) to negotiate all borrowing arrangements of the Company
and to supervise the implementation of such arrangements; and
(e) to the extent the Company's investment objective and
policies so permit, enter into transactions in (1) Options, Futures and
Contracts for Differences (as such terms are defined in the Financial
Services Act 1986 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 3.04. In exercising its rights and carrying out its
duties hereunder the Investment Manager is authorized to act for the Company
and on the Company's behalf either itself or wholly or in part through its
authorized agents as it shall determine; provided, however, that the
appointment of any agent shall not relieve the Investment Manager of its
responsibilities or liabilities hereunder.
Section 3.05. The Investment Manager, in the performance of
its duties and obligations hereunder, shall act in conformity with the
Charter, the Prospectus, instructions and directions of the Directors, the
Laws (including specifically the 1940 Act) and all other applicable laws,
regulations and requirements of regulatory authorities.
Section 3.06. The Investment Manager agrees that it will not
make a short sale of any Shares or purchase any Shares otherwise than for
investment.
Section 3.07. Nothing herein shall be construed as
constituting the Investment Manager an agent of the Company.
Section 3.08. The Investment Manager shall provide to the
Company 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
Continuation and the Exercise of Investment Manager's Powers
Section 4.01. 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 4.02. The Investment Manager will perform its
powers, duties and obligations hereunder primarily within Jersey, Channel
Islands, but in no event within the United Kingdom unless it shall have
first delivered to the Company an opinion of English lawyers acceptable to
the Company to the effect that such performance will not cause the Company
to become liable to pay any United Kingdom taxes that it would not
otherwise be liable to pay; provided that nothing in this Section 4.2 shall
limit the activities of the Investment Adviser on behalf of the Investment
Manager and the Company pursuant to the Investment Advisory Agreement dated
as of December 11, 1997 (the "Investment Advisory Agreement") between the
Investment Manager and the Investment Adviser.
Section 4.03. In addition to any limitations set forth
above, all activities engaged in by the Investment Manager hereunder shall
at all times be subject to the control of and review by the Directors and,
without limiting the generality of the foregoing, the Directors may from to
time:
(a) prohibit the Investment Manager from investing in any
security or class of securities;
(b) require the Investment Manager to purchase or sell any
security or class of securities;
(c) consistent with the Laws and the Charter, define the
investment policy of the Company and specify the manner in which it wishes
the Investment Manager to give effect to such policy;
(d) require the Investment Manager to report to it from time
to time the manner in which the investment policy of the Company is being
implemented by the Investment Manager or the investment policy the
Investment Manager is recommending for implementation in relation to the
Company for approval by the Directors; and
(e) withdraw money or other assets managed by the Investment
Manager for the purpose of managing such money or other assets itself.
ARTICLE 5
Fees of the Investment Manager
Section 5.01. In consideration of the services to be
performed by the Investment Manager hereunder the Investment Manager shall be
entitled to receive from the Company a fee at the annual rate of .75% of the
Company's average weekly net assets up to $250 million and .65% of such assets
in excess of $250 million based upon net asset value at the end of each week
and payable on the last day of each month.
Section 5.02. If the fees payable to the Investment Manager
pursuant to Section 5.01 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.
Section 5.03. Any fees payable by the Company pursuant to
Section 5.01 during the period commencing on the later of the Assignment Date
and the Issuance Date and ending on the date of the initial approval of this
Agreement by a majority of the outstanding voting securities of the Company
shall be paid into an interest-bearing escrow account with an unaffiliated
financial institution, as the Company and Investment Manager may establish, to
be released to the Investment Manager only upon such initial approval of this
Agreement, or, if such approval shall not occur prior to the earlier of (i)
the 150th day following the later of the Assignment Date and the Issuance Date
and (ii) July 15, 1998, to the Company.
ARTICLE 6
Expenses
Section 6.01. The Investment Manager shall pay the expenses
incurred by it in connection with the performance of its services hereunder
but shall not be responsible for any of the Company's expenses other than as
herein provided. The Investment Manager shall pay the fees and expenses of
its authorized agents including, without limitation, the fees and expenses of
the Investment Adviser payable under the Investment Advisory Agreement and no
obligation shall be incurred on the Company's behalf in any such respect.
Section 6.02. The Investment Manager agrees to pay all
salaries and fees of Directors and officers of the Company (in connection with
the performance of their duties as such) who are interested persons of the
Investment Manager.
Section 6.03. Subject to the foregoing, the Company shall be
responsible for all of its expenses, including: (i) expenses of organizing the
Company; (ii) fees of the Directors who are not interested persons of the
Investment Manager or the Investment Adviser; (iii) out-of-pocket travel
expenses for all Directors and officers in connection with their attendance
at, and other expenses incurred by the Company relating to, meetings of the
Directors or committees thereof; (iv) interest expense; (v) taxes and
governmental fees; (vi) brokerage commissions, and other expenses incurred in
acquiring or disposing of Investments; (vii) expenses of preparing stock
certificates; (viii) expenses in connection with the issuance, offering,
distribution, sale or underwriting of securities issued by the Company (which
will be charged to capital); (ix) expenses of registering and qualifying
Shares for sale with the Commission and in various states and foreign
jurisdictions; (x) auditing, accounting, insurance and legal costs; (xi)
custodian, dividend disbursing and transfer agent expenses; (xii) expenses of
obtaining and maintaining stock exchange listings of the Shares; (xiii)
membership dues to professional organizations; (xiv) expenses of shareholders'
meetings and preparing and distributing proxies and reports to shareholders;
and (xv) costs of information obtained from sources other than the Investment
Manager or its affiliated persons relating to the valuation of securities.
ARTICLE 7
Services of the Investment Manager Not to Be Exclusive
The services of the Investment Manager to the Company hereunder
are not to be deemed exclusive and the Investment Manager shall be free to
render similar services to others and to retain for its own use and benefit
all fees or other moneys payable thereby and the Investment Manager shall not
be deemed to be affected with notice of or to be under any duty to disclose to
the Company any fact or thing that comes to the notice of the Investment
Manager or any employee or agent of the Investment Manager in the course of
the Investment Manager 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 Manager 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
Manager may aggregate purchases or sales of Investments by the Company with
purchases or sales of the same securities by other clients of the Investment
Manager. The Investment Manager 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 Manager, the Investment
Manager will make such allocation in a manner believed by the Investment
Manager on recommendations of the Investment Adviser to be equitable to each
client.
Instructions to execute Investment transactions may be placed
by the Investment Manager 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 Manager in advising other clients of
the Investment Manager. Attached as Schedule I hereto is a list of research
services currently provided to the Investment Manager and the names of the
persons providing such research.
ARTICLE 8
Investment Adviser
The Investment Manager is hereby authorized to obtain
investment advice from the Investment Adviser on the terms of the Investment
Advisory Agreement. In addition, the Investment Manager may contract or
consult with such banks, other securities firms or other parties in the United
Kingdom or elsewhere as it may deem appropriate regarding investment advice,
clerical assistance or otherwise.
ARTICLE 9
Liability of the Investment
The Investment Manager may rely on information reasonably
believed by the Investment Manager to be accurate and reliable. Except as may
otherwise be provided by the 1940 Act, the Investment Manager 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
the Investment Manager's obligations and duties or by reason of reckless
disregard of the Investment Manager's obligations and duties under this
Agreement. In the event of any failure, interruption or delay in the
performance by the Investment Manager 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 Manager shall not be liable for any loss or damage thereby incurred
or suffered by the Company except for any loss or damage by reason of willful
misfeasance, bad faith or gross negligence by the Investment Manager in the
performance of its duties or by reason of the reckless disregard by the
Investment Manager of its obligations and duties under this Agreement.
ARTICLE 10
Legal Action by the Investment Manager
The Investment Manager shall not be required to take any legal
action unless fully indemnified to the Investment Manager's reasonable
satisfaction for all costs and liabilities that may be incurred or suffered by
the Investment Manager and not attributable to its willful misfeasance, bad
faith or gross negligence in the performance of its obligations and duties
under this Agreement or to its reckless disregard of its obligations and
duties under this Agreement, and if the Company requires the Investment
Manager to take any action of whatever nature that in the reasonable opinion
of the Investment Manager might make the Investment Manager liable for the
payment of money or liable in any other way, the Investment Manager shall be
and be kept indemnified in any reasonable amount and form satisfactory to the
Investment Manager as a prerequisite to taking such action.
ARTICLE 11
Assignment
This Agreement shall terminate automatically in the event of
its assignment.
ARTICLE 12
Resignation, Termination and Term
Section 12.01. 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 any such party, 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
at any time on 60 days written notice by the Company, without the payment of
any penalty, by a vote of a majority of the Directors or a majority of the
outstanding voting securities of the Company. The Investment Manager may
terminate this Agreement on 90 days written notice to the Company.
Section 12.02. The appointment of the Investment Manager
shall automatically terminate forthwith if (a) the Investment Manager shall
become or be deemed to become resident for tax purposes or carry on business
within the United Kingdom in circumstances that cause the Company to become
liable to pay any United Kingdom taxes that it would not otherwise be liable
to pay, or (b) any functionary permits granted to the Investment Manager
pursuant to the provisions of the Collective Investment Funds (Jersey) Law
1988 in connection with the performance of the Investment Manager's
obligations hereunder as Investment Manager to the Company are revoked or
materially altered.
Section 12.03. On termination of the appointment of the
Investment Manager under the provisions of this Article 12, the Investment
Manager shall take all necessary steps to vest in the Company or in any new
investment manager any assets previously held in the name of or to the order
of the Investment Manager on behalf of the Company 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 manager has not been selected by the
Company and approved by any necessary authorities, the Investment Manager will
act hereunder solely to maintain the Company's assets and will take only such
action with respect to such assets as the Investment Manager is directed to
take by the Directors.
ARTICLE 13
Confidentiality
Neither of the parties hereto shall (except under compulsion of
any applicable law or 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 14
Miscellaneous Provisions
Section 14.01. The Company has not delegated to the
Investment Manager any authority with respect to the exercise of any voting
rights relating to the Investments. The Investment Manager shall not arrange
for the exercise of any voting rights relating to the Investments except
pursuant to prior written instructions from the Company. With respect to
voting matters that, in the opinion of the Investment Manager, may materially
affect the value of all or any part of the Investments, the Investment Manager
may make such recommendations to the Company with respect to the voting on
such matters as the Investment Adviser may determine, but any determination
whether, or in what manner, such voting rights shall be exercised shall be at
the discretion of the Company.
Section 14.02. No failure on the part of either party to
exercise, and no delay on its 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 14.03. 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 14.04. 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 14.05. 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 14.06. This Agreement will become effective on the
later of the Assignment Date and the Issuance Date.
ARTICLE 15
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
Manager may rely and shall be protected in acting upon any written instruction
or communication believed by the Investment Manager to be genuine and to have
been signed by the proper party or parties.
ARTICLE 16
Law of the Contract
Section 16.01. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York; provided,
however, that nothing herein shall be construed as being inconsistent with the
1940 Act.
Section 16.02. The Investment Manager irrevocably submits to
the jurisdiction of any New York State or Federal court sitting in the City of
New York over any suit, action or proceeding arising out of or relating to
this Agreement. The Investment Manager 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 Manager
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 Manager is subject by a suit upon such judgment. The Investment
Manager 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.
THE EUROPE FUND, INC.
By:
---------------------------
Name:
Title:
MERCURY ASSET MANAGEMENT
INTERNATIONAL CHANNEL
ISLANDS LTD.
By:
--------------------------
Name:
Title:
By:
--------------------------
Name:
Title:
FORM OF
INVESTMENT ADVISORY AGREEMENT
THE UNITED KINGDOM 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 Forum House, Grenville Street, St. Helier, Jersey JE4 8RL,
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 33 King William Street, London EC4R
9AS, England.
WHEREBY IT IS AGREED AND DECLARED as follows:
ARTICLE 1
Interpretation
Section 1.01. In this Agreement the first following words and
expressions shall have the following meanings:
"Assignment Date" means the first date that Merrill Lynch &
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 United Kingdom Fund Inc., a Maryland
corporation, whose principal office is c/o Mercury Asset Management
International Ltd., 245 Park Avenue, Fifteenth Floor, New York, New York 10167;
"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, Merrill
Lynch & 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 6,900,000
Shares at the time the Registration Statement is declared effective by the
Commission, as amended;
"Shares" means shares of common stock of the Company ($0.01 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; and
(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.
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 1940 Act) 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.
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
such fees as may be agreed from time to time between the Investment Manager
and the Investment Adviser together with any Value Added Tax thereon (if any).
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
travelling 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
travelling 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.
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. Subject to Section 3.03 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.
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 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.
ARTICLE 12
Miscellaneous Provisions
Section 12.01. 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 12.02. 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 12.03. 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 12.04. 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 12.05. This Agreement will become effective on the
later of the Assignment Date and the Issuance Date.
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:
--------------------------
Name:
Title:
MERCURY ASSET MANAGEMENT
INTERNATIONAL LTD.
By:
--------------------------
Name:
Title:
By:
--------------------------
Name:
Title:
Accepted:
THE UNITED KINGDOM FUND INC.
By:
--------------------------
Name:
Title:
FORM OF
THE INVESTMENT MANAGEMENT AGREEMENT
THE UNITED KINGDOM FUND INC.
AGREEMENT dated as of December 11, 1997 between THE UNITED
KINGDOM FUND INC., a Maryland corporation (the "Company"), whose principal
office is c/o Mercury Asset Management International Ltd., 245 Park Avenue,
Fifteenth Floor, New York, New York 10167, and 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 Forum House, Grenville Street, St. Helier, Jersey JE4 8RL, Channel Islands.
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 Merrill Lynch &
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;
"Custodian" means Custodial Trust Company acting in the
capacity of Custodian of the Investments of the Company, or any other
corporation for the time being acting as Custodian of the Investments of the
Company;
"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;
"Investment Adviser" means Mercury Asset Management
International Ltd., an English corporation.
"Investments" means the assets and rights from time to time of
the Company;
"Issuance Date" means the date on which the Commission grants
the exemptive order application of Mercury Asset Management Group plc, Merrill
Lynch & 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 6,900,000
Shares at the time the Registration Statement is declared effective by the
Commission, as amended;
"Shares" means shares of common stock of the Company ($0.01 par
value).
Section 1.02. Any reference to the Company, the Investment
Manager or the Custodian 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 thereof.
Section 1.05. The terms "affiliated person", "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 Manager
The Company hereby appoints the Investment Manager as the
manager of the Investments of the Company from time to time upon the terms
hereinafter contained and in accordance with the Laws, the Charter, 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 Manager hereby accepts such appointment and agrees to
assume the obligations and duties set forth herein.
ARTICLE 3
Functions, Powers, Duties and Obligations of the Investment Manager
Section 16.01. During the continuance of its appointment the
Investment Manager shall, subject to the Laws, the Charter, 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,
have full power, authority and right to:
(a) manage the investment and re-investment of the
Investments of the Company consistent with the Company's investment
objective and policies as from time to time in effect;
(b) provide or procure the provision of research and
statistical data in relation to the Investments and other matters within
the scope of the investment objective and policies of the Company as from
time to time in effect;
(c) prepare or procure the preparation of reports on the
Company's investment performance and such other matters as the Directors
may from time to time reasonably determine for consideration by the
Directors;
(d) select and place orders with brokers and dealers to
execute Investment transactions in the manner set forth in the Prospectus
under the heading "Portfolio Transactions and Brokerage", and
(e) provide such other services in connection with the
business of the Company as the Directors may reasonably require.
Section 3.02. The Investment Manager shall keep or cause to
be kept on behalf of the Company 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 carried out by the
Investment Manager on behalf of the Company; shall permit the Company and its
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 3.03. The Investment Manager shall have and is
hereby granted the authority, power and right for the account and in the name
of the Company but subject to the Laws, the Charter, 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:
(a) to issue orders and instructions with respect to the
disposition of the Investments, moneys and other assets of the Company;
(b) to purchase or otherwise acquire, sell or otherwise
dispose of, and invest in, the Investments, moneys and other assets for the
account of the Company and effect foreign exchange transactions on behalf
of the Company and for the account of the Company in connection with any
such purchase or other acquisition, sale or other disposal or the
protection of the value of Investments;
(c) to enter into, make and perform all contracts,
agreements and other undertakings as may in the opinion of the Investment
Manager be necessary or advisable or incidental to the carrying out of the
objectives of this Agreement; and
(d) to negotiate all borrowing arrangements of the Company
and to supervise the implementation of such arrangements.
Section 3.04. In exercising its rights and carrying out its
duties hereunder the Investment Manager is authorized to act for the Company
and on the Company's behalf either itself or wholly or in part through its
authorized agents as it shall determine; provided, however, that the
appointment of any agent shall not relieve the Investment Manager of its
responsibilities or liabilities hereunder.
Section 3.05. The Investment Manager, in the performance of
its duties and obligations hereunder, shall act in conformity with the
Charter, the Prospectus, instructions and directions of the Directors, the
Laws (including specifically the 1940 Act) and all other applicable laws,
regulations and requirements of regulatory authorities.
Section 3.06. The Investment Manager agrees that it will not
make a short sale of any Shares or purchase any Shares otherwise than for
investment.
Section 3.07. Nothing herein shall be construed as
constituting the Investment Manager an agent of the Company.
ARTICLE 4
Continuation and the Exercise of Investment Manager's Powers
Section 4.01. 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 4.02. The Investment Manager will perform its
powers, duties and obligations hereunder primarily within Jersey, Channel
Islands, but in no event within the United Kingdom unless it shall have first
delivered to the Company an opinion of English lawyers acceptable to the
Company to the effect that such performance will not cause the Company to
become liable to pay any United Kingdom taxes that it would not otherwise be
liable to pay; provided that nothing in this Section 4.02 shall limit the
activities of the Investment Adviser on behalf of the Investment Manager and
the Company pursuant to the Investment Advisory Agreement dated as of December
11, 1997 (the "Investment Advisory Agreement") between the Investment Manager
and the Investment Adviser.
Section 4.03. In addition to any limitations set forth
above, all activities engaged in by the Investment Manager hereunder shall at
all times be subject to the control of and review by the Directors and,
without limiting the generality of the foregoing, the Directors may from time
to time:
(a) prohibit the Investment Manager from investing in any
security or class of securities;
(b) require the Investment Manager to purchase or sell any
security or class of securities;
(c) consistent with the Laws and the Charter, define the
investment policy of the Company and specify the manner in which it wishes
the Investment Manager to give effect to such policy;
(d) require the Investment Manager to report to it from time
to time the manner in which the investment policy of the Company is being
implemented by the Investment Manager or the investment policy the
Investment Manager is recommending for implementation in relation to the
Company for approval by the Directors; and
(e) withdraw money or other assets managed by the Investment
Manager for the purpose of managing such money or other assets itself.
ARTICLE 5
Fees of the Investment Manager
Section 5.01. In consideration of the services to be
performed by the Investment Manager hereunder the Investment Manager shall be
entitled to receive from the Company a fee at the annual rate of .75% of the
Company's average weekly net assets up to $150 million and .65% of such assets
in excess of $150 million payable on the last day of each month.
Section 5.02. If the fees payable to the Investment Manager
pursuant to Section 5.01 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.
Section 5.03. Any fees payable by the Company pursuant to
Section 5.01 during the period commencing on the later of the Assignment Date
and the Issuance Date and ending on the date of the initial approval of this
Agreement by a majority of the outstanding voting securities of the Company
shall be paid into an interest-bearing escrow account with an unaffiliated
financial institution, as the Company and Investment Manager may establish, to
be released to the Investment Manager only upon such initial approval of this
Agreement, or, if such approval shall not occur prior to the earlier of (i)
the 150th day following the later of the Assignment Date and the Issuance Date
and (ii) July 15, 1998, to the Company.
ARTICLE 6
Expenses
Section 6.01. The Investment Manager shall pay the expenses
incurred by it in connection with the performance of its services hereunder
but shall not be responsible for any of the Company's expenses other than as
herein provided. The Investment Manager shall pay the fees and expenses of
its authorized agents including, without limitation, the fees and expenses of
the Investment Adviser payable under the Investment Advisory Agreement and no
obligation shall be incurred on the Company's behalf in any such respect.
Section 6.02. The Investment Manager agrees to pay all
salaries and fees of Directors and officers of the Company (in connection with
the performance of their duties as such) who are interested persons of the
Investment Manager.
Section 6.03. Subject to the foregoing, the Company shall
be responsible for all of its expenses, including: (i) expenses of
organizing the Company; (ii) fees of the Directors who are not interested
persons of the Investment Manager or the Investment Adviser; (iii) out-of-
pocket travel expenses for all Directors and officers in connection with
their attendance at, and other expenses incurred by the Company relating
to, meetings of the Directors or committees thereof; (iv) interest
expense; (v) taxes and governmental fees; (vi) brokerage commissions, and
other expenses incurred in acquiring or disposing of Investments; (vii)
expenses of preparing stock certificates; (viii) expenses in connection
with the issuance, offering, distribution, sale or underwriting of
securities issued by the Company (which will be charged to capital); (ix)
expenses of registering and qualifying Shares for sale with the Commission
and in various states and foreign jurisdictions; (x) auditing, accounting,
insurance and legal costs; (xi) custodian, dividend disbursing and
transfer agent expenses; (xii) expenses of obtaining and maintaining stock
exchange listings of the Shares; (xiii) expenses of shareholders' meetings
and preparing and distributing proxies and reports to shareholders; and
(xiv) costs of information obtained from sources other than the Investment
Manager or its affiliated persons relating to the valuation of securities.
ARTICLE 7
Services of the Investment Manager Not to Be Exclusive
The services of the Investment Manager to the Company hereunder
are not to be deemed exclusive and the Investment Manager shall be free to
render similar services to others and to retain for its own use and benefit
all fees or other moneys payable thereby and the Investment Manager shall not
be deemed to be affected with notice of or to be under any duty to disclose to
the Company any fact or thing that comes to the notice of the Investment
Manager or any employee or agent of the Investment Manager in the course of
the Investment Manager 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 Manager 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
Manager 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 Manager, the Investment Manager will make such
allocation in a manner believed by the Investment Manager on recommendations of
the Investment Adviser to be equitable to each client.
ARTICLE 8
Investment Adviser
The Investment Manager is hereby authorized to obtain
investment advice from the Investment Adviser on the terms of the Investment
Advisory Agreement. In addition, the Investment Manager may contract or
consult with such banks, other securities firms or other parties in the United
Kingdom or elsewhere as it may deem appropriate regarding investment advice,
clerical assistance or otherwise.
ARTICLE 9
Liability of the Investment Manager
The Investment Manager may rely on information reasonably
believed by the Investment Manager to be accurate and reliable. Except as may
otherwise be provided by the 1940 Act, the Investment Manager 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
the Investment Manager's obligations and duties or by reason of reckless
disregard of the Investment Manager's obligations and duties under this
Agreement.
ARTICLE 10
Legal Action by the Investment Manager
The Investment Manager shall not be required to take any legal
action unless fully indemnified to the Investment Manager's reasonable
satisfaction for all costs and liabilities that may be incurred or suffered by
the Investment Manager and not attributable to its willful misfeasance, bad
faith or gross negligence in the performance of its obligations and duties
under this Agreement or to its reckless disregard of its obligations and
duties under this Agreement, and if the Company requires the Investment
Manager to take any action of whatever nature that in the reasonable opinion
of the Investment Manager might make the Investment Manager liable for the
payment of money or liable in any other way, the Investment Manager shall be
and be kept indemnified in any reasonable amount and form satisfactory to the
Investment Manager as a prerequisite to taking such action.
ARTICLE 11
Assignment
This Agreement shall terminate automatically in the event of
its assignment.
ARTICLE 12
Resignation, Termination and Term
Section 12.01. 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 any such party, 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
at any time on 60 days' written notice by the Company, without the payment of
any penalty, by a vote of a majority of the Directors or a majority of the
outstanding voting securities of the Company. The Investment Manager may
terminate this Agreement on 90 days' written notice to the Company.
Section 12.02. The appointment of the Investment Manager
shall automatically terminate forthwith if the Investment Manager shall become
or be deemed to become resident for tax purposes or carry on business within
the United Kingdom in circumstances that cause the Company to become liable to
pay any United Kingdom taxes that it would not otherwise be liable to pay.
Section 12.03. On termination of the appointment of the
Investment Manager under the provisions of this Article 12, the Investment
Manager shall take all necessary steps to vest in the Company or in any new
investment manager any assets previously held in the name of or to the order
of the Investment Manager on behalf of the Company 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 manager has not been selected by the
Company and approved by any necessary authorities, the Investment Manager will
act hereunder solely to maintain the Company's assets and will take only such
action with respect to such assets as the Investment Manager is directed to
take by the Directors.
ARTICLE 13
Confidentiality
Neither of the parties hereto shall (except under compulsion of
any applicable law or 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 14
Miscellaneous Provisions
Section 14.01. No failure on the part of either party to
exercise, and no delay on its 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 14.02. 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 14.03. 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 14.04. 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 14.05. This Agreement will become effective on the
later of the Assignment Date and the Issuance Date.
ARTICLE 15
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.
ARTICLE 16
Law of the Contract
Section 16.01. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York; provided,
however, that nothing herein shall be construed as being inconsistent with the
1940 Act.
Section 16.02. The Investment Manager irrevocably submits to
the jurisdiction of any New York State or Federal court sitting in the City of
New York over any suit, action or proceeding arising out of or relating to
this Agreement. The Investment Manager 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 Manager
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 Manager is subject by a suit upon such judgment. The Investment
Manager 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.
THE UNITED KINGDOM FUND INC.
By:
--------------------------
Name:
Title:
MERCURY ASSET MANAGEMENT
INTERNATIONAL CHANNEL
ISLANDS LTD.
By:
--------------------------
Name:
Title:
By:
--------------------------
Name:
Title:
THE EUROPE FUND, INC.
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
JOINT SPECIAL MEETING OF STOCKHOLDERS -- FEBRUARY 25, 1998
The undersigned, revoking previous proxies, hereby appoints
Anthony M. Solomon, J. Loughlin Callahan and Thaddea M. Feldman, and each of
them, the proxies of the undersigned, with power of substitution to each of
them, to vote all shares of common stock of The Europe Fund, Inc. that the
undersigned is entitled to vote at the Joint Special Meeting of Stockholders
of The Europe Fund, Inc. and The United Kingdom Fund Inc., to be held at The
Waldorf-Astoria Hotel, 301 Park Avenue, 4th Floor, New York, New York, on
February 25, 1998 at 10:00 a.m., New York City time, and at any and all
adjournments thereof.
(Continued on reverse side)
Please mark boxes [ ] or X in blue or black ink
1. Approval of a new investment management agreement between The
Europe Fund, Inc. and Mercury Asset Management International
Channel Islands Ltd.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. Approval of a new investment advisory agreement between Mercury Asset
Management International Channel Islands Ltd. and Mercury
Asset Management International Ltd.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To transact such other business as may properly come before the
meeting.
Please mark, date and sign as your name
appears and return in the enclosed
envelope. If acting as executor,
administrator, trustee, guardian, etc.,
you should so indicate when signing.
If the signer is a corporation, please
sign the full corporate name, by duly
authorized officer. If shares are held
jointly, each stockholder named should
sign.
The undersigned, hereby acknowledges
receipt of a copy of the accompanying
notice of meeting and proxy statement
and hereby revokes any proxy or proxies
heretofore given.
Dated , 1998
----------------------
----------------------------------------
Signature
----------------------------------------
Signature
Please sign, date and return the proxy card promptly using the enclosed
envelope. No postage is required.
THE UNITED KINGDOM FUND INC.
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
JOINT SPECIAL MEETING OF STOCKHOLDERS -- FEBRUARY 25, 1998
The undersigned, revoking previous proxies, hereby appoints
Anthony M. Solomon, J. Loughlin Callahan and Thaddea M. Feldman, and
each of them, the proxies of the undersigned, with power of substitution to
each of them, to vote all shares of common stock of The United Kingdom Fund
Inc. that the undersigned is entitled to vote at the Joint Special Meeting
of Stockholders of The United Kingdom Fund Inc. and The Europe Fund, Inc.,
to be held at The Waldorf-Astoria Hotel, 301 Park Avenue, 4th Floor, New
York, New York, on February 25, 1998 at 10:00 a.m., New York City time,
and at any and all adjournments thereof.
(Continued and to be dated and signed on other side)
THE UNITED KINGDOM FUND INC.
P.O. BOX 11388
NEW YORK, N.Y. 10203-0388
Unless otherwise specified in the squares provided, the undersigned's vote
will be cast FOR Items 1 and 2 below.
1. Approval of a new investment management agreement between The
United Kingdom Fund Inc. and Mercury Asset Management
International Channel Islands Ltd.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. Approval of a new investment advisory agreement between Mercury Asset
Management International Channel Islands Ltd. and Mercury
Asset Management International Ltd.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF PROPOSALS 1 AND 2.
Address Change and/or Comments
Please mark, date and sign as your name
appears and return in the enclosed
envelope. If acting as executor,
administrator, trustee, guardian, etc.,
you should so indicate when signing.
If the signer is a corporation, please
sign the full corporate name, by duly
authorized officer. If shares are held
jointly, each stockholder named should
sign.
The undersigned, hereby acknowledges
receipt of a copy of the accompanying
notice of meeting and proxy statement
and hereby revokes any proxy or proxies
heretofore given.
Dated , 1998
----------------------
----------------------------------------
Signature
----------------------------------------
Signature
Votes MUST be indicated (X) in Black or
Blue ink. [X]
PLEASE SIGN, DATE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE - NO POSTAGE IS
REQUIRED
