<PAGE>
As filed with the Securities and Exchange Commission on May 21, 1996.
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/
Check the appropriate box:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
THE FRANCE GROWTH FUND, INC.
(Name of Registrant as Specified in Its Charter)
THE FRANCE GROWTH FUND, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Rule 14a-6(h) and Item 22(a)(2) under the Securities Exchange Act
of 1934 (Previously transmitted by wire transfer)
<PAGE>
THE FRANCE GROWTH FUND, INC.
1211 Avenue of the Americas
New York, New York 10036
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
JUNE 28, 1996
------------
To our Stockholders:
Notice is hereby given that a Special Meeting of Stockholders of The France
Growth Fund, Inc. (the "Fund") will be held at 10:00 a.m., New York City time,
on Friday, June 28, 1996, at the offices of Banque Indosuez, 1211 Avenue of the
Americas, New York, New York 10036, for the following purposes:
1. To approve a new Investment Advisory Agreement between the Fund and
Indosuez International Investment Services, Inc.
Only holders of record of the Fund's common stock at the close of business
on May 21, 1996 are entitled to notice of and to vote at this meeting or any
adjournments thereof.
Steven M. Cancro
Secretary
Dated: May , 1996
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN THE ENVELOPE PROVIDED, WHICH
NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO AVOID THE
ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK FOR YOUR
COOPERATION IN MAILING IN YOUR PROXY PROMPTLY.
<PAGE>
THE FRANCE GROWTH FUND, INC.
1211 Avenue of the Americas
New York, New York 10036
------------
Special Meeting of Stockholders
June 28, 1996
------------
PROXY STATEMENT
------------
This proxy statement is furnished on behalf of the Board of Directors of
The France Growth Fund, Inc. (the "Fund") in connection with the solicitation of
proxies to be voted at the Special Meeting of Stockholders (the "Meeting") to be
held at 10:00 a.m., New York City time, on Friday, June 28, 1996, at the offices
of Banque Indosuez, 1211 Avenue of the Americas, New York, New York 10036, and
any adjournments thereof. As discussed in greater detail under Proposal 1, the
principal purpose of the meeting is to approve a new investment advisory
contract between the Fund and Indosuez International Investment Services (the
"Adviser"). The new agreement will permit the Adviser to continue to act as
investment advisor to the Fund following a change in control of a parent company
of the Adviser. No change in the management or investment approach of the
Adviser or the Fund is expected to result from such change in control and the
terms of the new investment advisory agreement, including the fee, are
identical to the current agreement. It is expected that this Proxy Statement and
form of proxy will first be mailed to stockholders on or about May __, 1996. The
Fund's Annual Report for the fiscal year ended December 31, 1995, was previously
mailed to stockholders on February 29, 1996. Copies of the Fund's such Annual
Report are available without charge upon request made in writing to PNC Bank,
National Association at P.O. Box 8905, Wilmington, Delaware 19809, or by
telephone to the Fund's transfer agent at 1-800-852-4750.
If the accompanying form of proxy is executed properly and returned, shares
of the Fund's common stock, par value $.01 per share (the "Common Stock"),
represented by such proxy will be voted at the Meeting in accordance with the
instructions on the form of proxy. However, if no instructions are specified,
shares will be voted FOR the approval of a new Investment Advisory Agreement
between the Fund and Indosuez International Investment Services. A stockholder
may revoke a proxy at any time prior to the time it is voted by written notice
to the Secretary of the Fund at the Fund's address set forth above or by signing
and returning another proxy of a later date or by personally casting a vote at
the Meeting. The vote of the lesser of (i) 67% or more of the shares of the Fund
represented at the Meeting, if at least 50% of all outstanding shares of the
Fund are represented at the Meeting, or (ii) more than 50% of the Fund's
outstanding shares, is required for the approval of the Investment Advisory
Agreement. Abstentions and broker non-votes will not be considered votes cast
for the foregoing purposes but are considered as present for the purpose of
determining whether a quorum has been achieved at the Meeting. Because broker
non-votes are considered outstanding shares, a broker non-vote has the same
effect as a vote against the proposal to approve a new Investment Advisory
Agreement.
The close of business on May 21, 1996 has been fixed as the record date for
the determination of stockholders entitled to notice of, and to vote at, the
Meeting. On this date, the Fund had ________ shares of Common stock outstanding
and entitled to vote. Each share will be entitled to one vote at the Meeting.
The Fund's Articles of Incorporation and Amended and Restated By-Laws (the
"By-Laws") provide that the presence in person or by proxy of 33 1/3% of the
shares of Common Stock issued and outstanding and entitled to vote at the
Meeting shall constitute a quorum for the transaction of business.
The cost of preparing, assembling and mailing materials in connection with
this solicitation will be borne by the Adviser or an affiliate. In addition to
the use of the mails, proxies may be solicited personally, or by telephone or
-2-
<PAGE>
telegraph, by officers of the Fund or by employees of Mitchell Hutchins Asset
Management, Inc., the Fund's Administrator, whose principal address is 1285
Avenue of the Americas, New York, New York 10019. In addition, the Fund has
retained Shareholder Communications Corporation to aid in the solicitation of
proxies, for whose services the Adviser will pay an estimated fee of $7,500
including reasonable out-of-pocket expenses. Brokerage houses, banks and other
fiduciaries may also be requested to forward proxy solicitation material to
their principals to obtain authorization for the execution of proxies and will
be reimbursed by the Fund for out-of-pocket expenses incurred in this
connection.
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
(Proposal 1)
Indosuez International Investment Services (the "Adviser"), with its
principal office at 44 rue de Courcelles, 75008 Paris, France, and an office at
1211 Avenue of the Americas, New York, New York 10036, serves as the Fund's
investment adviser pursuant to the terms of an Investment Advisory Agreement
between the Fund and the Adviser dated as of May 10, 1990 (the "Existing
Advisory Agreement"). The Existing Advisory Agreement was initially approved by
the Board of Directors of the Fund and the initial sole shareholder of the Fund
on May 7, 1990. The Existing Advisory Agreement was most recently approved by
the Directors on March 12, 1996.
Compagnie de Suez, through 100% ownership of Banque Indosuez (the "Bank"),
is currently the Adviser's parent company. Compagnie de Suez has agreed to sell
a 51% interest in the Bank to a French banking institution, the Caisse Nationale
de Credit Agricole ("Credit Agricole"), 91-93 boulevard Pasteur, 75015 Paris,
France. As a result of the transfer of a majority of the shares of the Bank, an
indirect change in control of the Adviser will occur. No change in the Fund's
portfolio managers or in the management of the Adviser are expected to occur.
Under the Investment Company Act of 1940 Act, as amended (the "1940 Act"),
the transfer of a 51% interest in the Bank (because it is an indirect parent
company of the Adviser) constitutes an assignment of the Existing Advisory
Agreement. The Existing Advisory Agreement automatically terminates upon
assignment according to its terms and the terms of the 1940 Act. In order for
the Adviser to continue providing advisory services to the Fund after the sale,
therefore, a new investment advisory agreement must be adopted by the Fund's
shareholders.
At a meeting of the Board of Directors held on May 21, 1996, a majority of
the Directors, including a majority of the Directors who are not "interested
persons" (as defined by the 1940 Act) of the Fund (the "Independent Directors"),
approved and voted to recommend to shareholders of the Fund that they approve a
new investment advisory agreement (the "Proposed Advisory Agreement") by and
between the Fund and the Adviser. The terms of the Proposed Advisory Agreement
are identical, including the fees payable to the Adviser, to the terms of the
Existing Advisory Agreement. A copy of the Proposed Advisory Agreement is
attached hereto as Exhibit A.
The Existing Advisory Agreement provides, as will the new advisory
agreement, that the Fund pay the Adviser an advisory fee at the annual rate of
0.90% of the Fund's average weekly net assets up to $100 million and 0.80% of
such assets in excess of $100 million, based upon the net asset value calculated
at the end of each month and payable at the end of each calendar month in French
Francs. During the last fiscal year of the Fund ended December 31, 1995, the
Fund paid the Adviser a total of $1,569,156 in advisory fees.
The Adviser is a wholly-owned subsidiary of Indosuez Asset Management
("IAM"), 44 rue de Courcelles, 75008, Paris, France, which is currently a
wholly-owned subsidiary of the Bank, 96 boulevard Haussmann, 75008, Paris,
France. The Bank is currently a wholly-owned subsidiary of Compagnie de Suez, 1
rue d'Astorg, 750008, Paris, France.
-3-
<PAGE>
The Sale
Compagnie de Suez and Credit Agricole have entered into an agreement
pursuant to which Compagnie de Suez will sell 51% of its ownership interest in
the Bank to Credit Agricole for a purchase price of approximately 6.3 billion
French Francs (approximately $1.22 billion U.S. Dollars)(1) subject to certain
adjustments. Although final terms have not been arranged, it is expected that
Credit Agricole will have the right to acquire, and Compagnie de Suez will have
the right to sell, an additional 29% ownership interest in the Bank as of July
1, 1997, which would bring Credit Agricole's ownership interest in the Bank to
80%. The completion of the transaction between Compagnie de Suez and Credit
Agricole is subject to a number of conditions, including necessary regulatory
approvals. The closing is expected to occur as soon as practicable after such
approvals are obtained. In the event that such transaction is not consummated,
the Existing Advisory Agreement will not terminate and the Adviser will continue
to act as Adviser to the Fund.
Credit Agricole acts as the central clearinghouse and coordinating body for
a group of 60 banks which operate throughout France. Credit Agricole is owned by
these banks, which in turn are mutually owned agricultural credit cooperatives.
Credit Agricole is responsible for the liquidity and solvency of the banks under
French law. Credit Agricole is the largest banking institution in France,
providing retail banking, asset and fund management, insurance and investment
banking services. Credit Agricole had as of December 31, 1994, assets of
approximately 1,754 billion French Francs (approximately $328 billion U.S.
Dollars).(2)
The Board of Directors recommends a vote FOR Proposal 1.
The Board of Directors believes that it will be beneficial to the Fund to
continue to receive the high quality of advisory services provided by the
Adviser on the same terms as they are currently provided. The Directors
considered the fact that the Proposed Advisory Agreement is identical to the
Existing Advisory Agreement and provision of advisory services to the Fund,
therefore, will not change as a result of the change in control of the Bank. The
Directors believe that the Proposed Advisory Agreement is reasonable, fair and
in the best interests of the Fund's shareholders.
Additional Information About the Adviser
The following table provides information with respect to the principal
executive officer and the directors of the Adviser:
Name and Address Principal Occupation
---------------- --------------------
Jean-Claude Kaltenbach Chairman and Chief Executive Officer, the
3 boulevard Emile Augier Adviser; Chief Investment Officer, Indosuez
Paris, France 75116 Asset Management (investment advisor) (since
February 1994).
- ----------
(1) Based on the exchange rate as of the close of business on May 8, 1996.
(2) Based on the exchange rate as of the close of business on December 31, 1994.
-4-
<PAGE>
Name and Address Principal Occupation
---------------- --------------------
Ian Gerald McEvatt Director, the Adviser; Director, Indosuez Asia
5 Pacific View, 22 Cape Road Advisers Ltd. (investment management) (since
Chung Hom Kok, Hong Kong January 1994); Chairman, Indosuez Asia
Strategic Growth Fund, Inc. (investment company)
(since January 1994); Managing Director and Chief
Investment Officer, Indosuez Asset Management
Asia Ltd. (investment management) (since October
1992); Chairman, Indosuez Asset Management
(Singapore) Ltd. (investment management) (since
October 1992); Director, Indosuez Asset
Management (Japan) Ltd. (investment management)
(since October 1992).
Rene Claude Dominic Director, the Adviser; Chairman, Societe de Port
48 rue Jacob de Tanger (investment company) (since June 1989).
Paris, France 75006
Pierre Armand Cardon Director, the Adviser; Member of Advisory
108 boulevard de Courcelles Committee, Banque Indosuez Luxemborg (since
Paris, France 75017 January 1987).
Charles Dennis Jules Vergnot Director, the Adviser; Chairman, Danubexsa
13 avenue Lulli (international trade) (since February 1986).
Sceaux, France 92300
Eric Harrison Jostrom Director, the Adviser; Chief Executive Officer
3 Brookwood Road and Chief Operating Officer, Constitution
Manchester-by-the-Sea, Management Company, Inc. (investment advisor)
MA 01944 (since October 1992); Director, Indosuez Asia
Advisers Ltd. (investment management); President,
Indosuez Asia Strategic Growth Fund, Inc.
(investment company) (since March 1994).
Information Regarding Ownership of the Common Stock
The following table sets forth information, as of May 21, 1996, regarding
the ownership of the Fund's Common Stock by (i) each Director of the Fund, (ii)
each officer of the Fund, (iii) all Directors and officers of the Fund as a
group and (iv) the only persons know by the Fund to own more than five percent
of the outstanding shares.
Shares of the Common
Stock of the Fund
Beneficially Owned Percentage of Common Stock
(directly or indirectly) Stock Outstanding
Name of Beneficial Owner on May 21, 1996 on May 21, 1996
- ------------------------ --------------- ---------------
Directors
Marc de F. de Logeres -0- -0-
Michel Longchampt 98 *
-5-
<PAGE>
Shares of the Common
Stock of the Fund
Beneficially Owned Percentage of Common Stock
(directly or indirectly) Stock Outstanding
Name of Beneficial Owner on May 21, 1996 on May 21, 1996
- ------------------------ --------------- ---------------
Michel A. Rapaccioli 1,914 *
Michel Somnolet -0- -0-
Jean A. Arvis 4,460 *
Thomas C. Barry 1,333 *
John A. Bult -0- -0-
Walter J.P. Curley 1,094 *
Pierre H.R. Daviron -0- -0-
Jacques Regniez -0- -0-
Bernard Simon-Barboux -0- -0-
John W. Spurdle, Jr. -0- -0-
Officers
Gerard Jeannin, President -0- -0-
Steven M. Cancro, Vice
President and Secretary 4,000 *
Frederick J. Schmidt, Vice
President and Treasurer -0- -0-
Officers and Directors
as a Group 12,749 *
5% Shareholder
Cede & Co., as nominee for
The Depository Trust Company
P.O. Box 20
Bowling Green Station
New York, NY 10004 [15,073,445] [98.2%]
- ---------
* Denotes ownership of less than 1% of the Fund's outstanding shares.
-6-
<PAGE>
OTHER MATTERS
No business other than as set forth herein is expected to come before the
Meeting, but should any other matter requiring a vote of stockholders arise,
including any question as to an adjournment of the Meeting, the persons named in
the enclosed proxy will vote thereon according to their best judgment in the
interests of the Fund.
For the year ended December 31, 1995, certain direct and indirect
subsidiaries of the Bank, CPR Actions (formerly Schelcher Prince), Cheuvreux de
Virieu and Indosuez Carr futures received $20,682, $76,223 and $275,529,
respectively, in brokerage commissions as a result of executing agency
transactions on portfolio securities and future contracts on behalf of the Fund.
In addition, the Bank earned fees of approximately $54,500 in its capacity as
subcustodian for the Fund of which approximately $13,300 was unpaid at December
31, 1995. For the year ended December 31, 1995, the Fund earned approximately
$722,297 in interest income from call account deposits held with the Bank. The
Fund had $14,165,087 of such deposits at December 31, 1995.
Mr. Arvis has indicated ownership of Directors' qualifying shares (less
than 1% of the outstanding shares) of Banque Indosuez. Messrs. Arvis and
Simon-Barboux have indicated ownership of ordinary shares and subscription
rights (less than 1% of the outstanding shares) of Compagnie de Suez. In
addition, Mr. Simon-Barboux has indicated ownership of one share of stock of
Indosuez Asset Management International, which is a subsidiary of Banque
Indosuez.
------------
Dated May __, 1996
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT TO THE FUND IN THE ENVELOPE
PROVIDED, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK FOR
YOUR COOPERATION IN MAILING IN YOUR PROXY PROMPTLY.
-7-
<PAGE>
THE FRANCE GROWTH FUND, INC.
1211 Avenue of the Americas, New York, New York 10036
SPECIAL MEETING OF SHAREHOLDERS
JUNE 28, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Frederick J. Schmidt and Steven M. Cancro
as proxies, each with full power of substitution, and hereby authorizes each of
them, with authority in each to act in the absence of the other, to represent
and to vote, as designated below, all the shares of Common Stock of The France
Growth Fund, Inc. (the "Fund") held of record by the undersigned on May 21, 1996
at the Special Meeting of Shareholders of the Fund to be held on June 28, 1996,
or any adjournments thereof.
The Board of Directors recommends a vote FOR Proposal 1.
1. TO APPROVE THE TERMS OF A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN THE
COMPANY AND INDOSUEZ INTERNATIONAL INVESTMENT SERVICES, INC.
FOR / / AGAINST / / ABSTAIN / /
2. In their discretion, the proxies are authorized to consider and act upon such
other business as may properly come before the meeting or any adjournments
thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL 1.
Please sign exactly as name appears below. If shares are held jointly, each
Shareholder named should sign. If only one signs, his or her signature will be
binding. If the Shareholder is a corporation, the President or a Vice President
should sign in his or her own name, indicating title. If the Shareholder is a
Partnership, a partner should sign in his or her own name, indicating that he or
she is a "Partner."
Dated: _______________________, 1996
Name of Corporation (if applicable):
____________________________________
(By)________________________________
Signature
(By)________________________________
Signature
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
EXHIBIT A
FORM OF
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
AGREEMENT dated as of between The France
Growth Fund, Inc., a Maryland corporation (the "Fund"), and
Indosuez International Investment Services, a French corporation
(the "Investment Adviser").
WHEREAS, the Fund is a diversified, closed-end management
investment company registered with the Securities and Exchange
Commission (the "SEC") under the Investment Company Act of 1940,
as amended (the "1940 Act");
WHEREAS, the Investment Adviser is a wholly owned subsidiary
of Banque Indosuez, a French financial institution ("BI"), and the
Investment Adviser has, pursuant to a Succession Agreement dated
April 16, 1990, succeeded to the rights, obligations and duties of
BI as a registered investment adviser under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), and is
thereby deemed to be registered under the Advisers Act subject to
its filing an application with the SEC for registration under the
Advisers Act within 30 days after such succession; and
WHEREAS, the Fund desires to retain the Investment Adviser to
render certain investment advisory and management services to the
Fund and the Investment Adviser is willing to furnish such
services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties as
follows:
1. Appointment of the Adviser. The Fund hereby appoints the
Investment Adviser to act as investment adviser and manager to the
Fund for the period and on the terms set forth in this Agreement.
The Investment Adviser hereby accepts such appointment and agrees
to furnish the services herein set forth for the compensation
provided.
2. Investment Advisory and Management Services. The
Investment Adviser undertakes and agrees:
2.1. To make investment decisions on behalf of the Fund as
to the structure of the Fund's investment portfolio and the
acquisition and disposition of securities by the Fund, all in
accordance with the Fund's stated investment objective and
policies and subject to the direction and control of the Board of
Directors of the Fund; to provide or obtain such research and
statistical data as may be necessary in connection with the
foregoing services; and to decide on the selection of, and to
<PAGE>
place purchase and sale orders with, brokers and dealers to
execute portfolio transactions on behalf of the Fund;
2.2. To provide office facilities and personnel adequate to
perform the services undertaken by the Investment Adviser pursuant
to this Agreement, together with those clerical and bookkeeping
services which are not being furnished by the Fund's
administrator, custodians or transfer, dividend paying agent and
registrar, and to arrange for the provision of administrative
services for the Fund;
2.3. To provide periodic reports to the Fund with respect to
portfolio transactions for the Fund; to provide to the Board of
Directors such other reports relating to the investments of the
Fund as are necessary for the members of the Board of Directors to
fulfill their fiduciary responsibilities; and to maintain the
books and records of the Fund required under Rule 31a-1 under the
1940 Act (other than those being maintained by the Fund's
administrator, custodians and transfer, dividend paying agent and
registrar); and
2.4. To comply with any and all provisions of the 1940 Act
and the Advisers Act and all provisions of any rules, regulations
and orders of the SEC which are now or may, from time to time, be
applicable to the Investment Adviser and to its directors,
officers, employees and interested persons (as such term is
defined in the 1940 Act) and to comply with any and all provisions
of French law which are now or may, from time to time, be
applicable to the Investment Adviser and to its directors, offices
and employees.
3. Fees. In consideration of the services described herein,
the Fund will pay to the Investment Adviser, at the end of each
calendar month and in French Francs, a management and advisory fee
computed at the annual rate of .90% of the Fund's average weekly
net assets up to U.S. $100 million and .80% of such assets in
excess of U.S. $100 million, based upon the net asset value of the
Fund calculated at the end of each week. For the month and year
in which this Agreement becomes effective or terminates, there
shall be an appropriate proration on the basis of the number of
days that the Agreement is in effect during the month and year,
respectively. The net asset value of the Fund shall be calculated
in accordance with the provisions of the Fund's prospectus or at
such other time or times as the Board of Directors of the Fund may
determine in accordance with the provisions of the 1940 Act. For
each day on which net asset value of the Fund is not calculated,
the net asset value of a share of the Fund's common stock shall be
deemed to be the net asset value per share as of the close of
business on the last day on which such calculation was made for
the purpose of the foregoing computations.
-2-
<PAGE>
4. Expenses.
4.1. The Investment Adviser shall bear all expenses of its
employees and overhead incurred in connection with its duties
under this Agreement and shall pay all salaries and fees of the
Fund's directors and officers who are also directors, officers or
employees of the Investment Adviser, except that the Fund will
bear travel and certain other expenses of directors and officers
of the Fund who are directors, officers or employees of the
Investment Adviser to the extent that such expenses relate to
attendance at meetings of the Fund's Board of Directors or any
committees thereof.
4.2. The Fund will bear all of its other expenses,
including, among others: directors' and officers' liability
insurance; organizational expenses (which shall include
out-of-pocket expenses and reasonable attorneys' fees, but not
overhead or employee costs of the Investment Adviser); legal
expenses; auditing and accounting expenses; taxes and governmental
fees; stock exchange listing fees; dues and expenses incurred in
connection with membership in investment company organizations;
fees and expenses of the Fund's custodians, transfer agent,
dividend paying agent and registrar; payment for portfolio pricing
services to a pricing agent, if any; expenses of preparing share
certificates and other expenses in connection with the issuance,
offering or underwriting of securities issued by the Fund;
expenses relating to investor relations; expenses of registering
or qualifying securities of the Fund for sale; freight, insurance
and other charges in connection with the shipment of the Fund's
portfolio securities, if any; brokerage commissions or other costs
of acquiring or disposing of any portfolio securities of the Fund;
expenses of preparing and distributing reports, notices and
dividends to shareholders; expenses of the Dividend Reinvestment
Plan (except for brokerage expenses paid by participants in such
plan); costs of stationery; any litigation expenses; and costs of
shareholders' and other meetings.
5. Liability.
5.1. Neither the Investment Adviser nor any of its
shareholders, officers, directors, employees or agents shall be
liable for any act or omission, error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, except (i) that the
Investment Adviser shall be under a fiduciary duty with respect to
receipt of compensation for services pursuant to Section 36 of
the 1940 Act and shall therefore be liable for a loss resulting
from a breach of such fiduciary duty (in which case any award of
damages shall be limited to the period and the amount set forth in
Section 36(b)(3) of the 1940 Act) or (ii) for any loss
-3-
<PAGE>
resulting from willful misfeasance, bad faith or gross negligence
in the performance of, or from reckless disregard of, the
Investment Adviser's obligations and duties under this Agreement.
5.2. To the extent permitted by the 1940 Act, the Advisers
Act and the rules and regulations promulgated thereunder and by
other applicable law, the Fund shall indemnify and hold harmless
the Investment Adviser and its shareholders, officers, directors,
employees or agents from and against any Liability for and any
damages, expenses or losses incurred in connection with 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
malfeasance, bad faith or gross negligence in the performance of,
or by reason of reckless disregard of, the Investment Adviser's
obligations and duties under this Agreement.
5.3. The Investment Adviser shall not be liable for any
losses caused by disturbances of its operations by virtue of force
majeure, riot or damage caused by nature or due to other events
for which it is not responsible (e.g., strikes, lock-outs or acts
of domestic or foreign authorities).
5.4. The Investment Adviser may rely on information
reasonably believed by it to be accurate and reliable.
5.5. The Investment Adviser does not assume responsibility
for the acts or omissions of any other person.
6. Services Not Exclusive. It is understood that the
services of the Investment Adviser are not deemed to be exclusive,
and nothing in this Agreement shall prevent the Investment Adviser
or any of its affiliates from providing investment advisory and
asset management services to other investment companies and other
clients (whether or not their investment objectives and policies
are similar to those of the Fund) or from engaging in other
activities. When other clients of the Investment Adviser desire
to purchase or sell a security at the same time such security is
purchased or sold for the Fund, it is understood that such
purchases and sales will, to the extent feasible, be allocated
among the Fund and such clients in a manner believed by the
Investment Adviser to be equitable to the Fund and such other
clients. If two or more of the Investment Adviser's clients
purchase or sell the same security on a given day from the same
broker-dealer, such transactions may be averaged as to price.
7. Further Agreements. The Investment Adviser further
undertakes and agrees:
7.1. To file or cause to be filed with the SEC on or before
May 16, 1990, a Form ADV and such other documents and information,
-4-
<PAGE>
and to take such other action, as may be necessary to effectuate
its registration as a successor investment adviser pursuant to
Section 203(g) of the Adviser's Act, to maintain such registration
under the Adviser Act in effect during the term hereof and any
continuation thereof, and to comply with the requirements of the
Advisers Act and the 1940 Act as they relate to the Investment
Adviser's services hereunder. The Investment Adviser hereby
represents and warrants to the Fund that, pending and subject to
the timely filing of such Form ADV, the Investment Adviser is
deemed to be a registered investment adviser under the Advisers
Act pursuant to Section 203(g) thereof;
7.2. Not to discuss investment decisions or positions of the
Fund with personnel of BI or its affiliates who are involved in
the securities underwriting or broker-dealer activities of BI,
except, as to broker-dealers, for discussions relating generally
to research provided to the Investment Adviser by such
broker-dealers;
7.3. Not to purchase securities for the Fund in any
primary public offering where, to the Investment Adviser's
knowledge, the proceeds will be used to retire indebtedness to BI
or its affiliates; nor to knowingly cause the Fund to make
investments which are designed to benefit the commercial interests
of BI or its affiliates; and
7.4. Not to permit its employees to obtain or use material
inside information in the possession of employees of BI or its
affiliates who are not employees of the Investment Adviser nor
disclose to such persons any material inside information.
8. Notices. Any notice or other communication required to
be given pursuant to this Agreement shall be in writing and shall
be deemed duly given if delivered or mailed by registered mail,
postage prepaid, (i) to the Fund, c/o Banque Indosuez, 1230 Avenue
of the Americas, New York, New York 10020, U.S.A., Attention:
Francine Marx, Esq., Secretary; and (ii) to the Investment
Adviser, at 65 rue d'Anjou, 75008, Paris, France, Attention:
Chairman and Chief Executive Officer; or to such other address, or
to the attention of such other person or officer, as either party
may from time to time designate to the other party by written
notice given in accordance with this Section 8.
9. Duration and Termination. This Agreement shall become
effective as of May 10, 1990 and shall, unless sooner terminated
pursuant hereto, continue in effect, until the first annual
meeting of the Fund's shareholders after the date hereof and, if
approved thereat by the vote of a majority of the outstanding
voting securities (as defined in the 1940 Act), for the remainder
of an initial term of two years ending May 9, 1992 and shall
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<PAGE>
continue in effect thereafter for successive periods of twelve
months each; provided that such continuance beyond the initial
two-year term shall be specifically approved, at least annually,
by a vote of a majority of the members of the Board of Directors
of the Fund who are not interested persons (as defined in the 1940
Act) of either party to the Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and by a vote
of either (i) the Fund's Board of Directors or (ii) a majority of
the outstanding voting securities of the Fund (as defined in the
1940 Act); provided, further, that if the continuation of this
Agreement is not so approved, the Investment Adviser may, at the
Fund's request, continue to serve in such capacity in the manner
and to the extent permitted by the 1940 Act and the rules and
regulations thereunder. The annual approval of the continuance of
this Agreement shall be confirmed to the Investment Adviser by the
Fund in writing. Notwithstanding any of the foregoing, this
Agreement may be terminated by the Fund in the manner prescribed
by the 1940 Act, without the payment of any penalty, at any time
upon no less than sixty days' prior written notice to the
Investment Adviser, or by the Investment Adviser upon not less
than sixty days' prior written notice to the Fund. This Agreement
shall automatically terminate in the event of its assignment (as
defined under the 1940 Act) by either party. Termination of this
Agreement shall not affect the right of the Investment Adviser to
receive payment of any unpaid balance of the compensation
described in Section 3 earned prior to such termination.
10. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, provided that
nothing herein shall be construed as being inconsistent with the
1940 Act, the Advisers Act, applicable French laws and any rules,
regulations and orders of the SEC.
11. Miscellaneous.
11.1. Subject to the policy of obtaining best execution and
to the other requirements of the 1940 Act and subject, further, to
the supervision and control of the Board of Directors of the Fund,
the Investment Adviser may place brokerage orders for the Fund
with, and obtain research from, affiliates of the Investment
Adviser and of BI; provided, however, that any commissions paid to
such affiliates shall be reasonable and fair in comparison to
commissions received by other brokers in connection with
comparable transactions involving similar securities. Any
research provided to the Investment Adviser by third parties shall
be in addition to and not in lieu of the services to be provided
herein and shall not reduce the Investment Adviser's fees
hereunder.
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<PAGE>
11.2. The captions in this Agreement are included for
convenience only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
11.3. If any provisions of this Agreement shall be held or
made invalid in whole or in part, the other provisions of this
Agreement shall remain in force. Invalid provisions shall, in
accordance with the intent and purpose of this Agreement, be
replaced by such valid provisions which in their economic effect
come as close as legally possible to such invalid provisions.
11.4. The Investment Adviser shall for all purposes herein
provided be deemed to be an independent contractor, and nothing
herein shall be construed as constituting the Investment Adviser
an agent of the Fund.
11.5. The Investment Adviser shall be entitled to rely on
any notice or communication believed by it to be genuine and
correct and to have been sent to it by or on behalf of the Fund.
11.6. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but both of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
THE FRANCE GROWTH FUND, INC.
BY: -------------------------------
Name:
Title:
INDOSUEZ INTERNATIONAL
INVESTMENT SERVICES
BY: -------------------------------
Name:
Title:
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