Exhibit 99.h(1)
Shares of Common Stock
Issuable Upon Exercise of Rights
THE JAPAN EQUITY FUND, INC.
COMMON STOCK
PAR VALUE $.01 PER SHARE
DEALER MANAGER AGREEMENT
, 2003
TABLE OF CONTENTS
PAGE
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ARTICLE I.
Representations and Warranties of the Fund, the Investment Manager or the Investment Adviser 2
(a) Compliance with Registration Requirements 3
(b) Good Standing of the Fund 3
(c) No Subsidiaries 3
(d) Investment Company Act and Investment Advisers Act 3
(e) Authorization of Agreement 3
(f) No Contravention of Applicable Law, Governing Instruments, Agreements or Decrees 4
(g) Capitalization 4
(h) Charter, Bylaws and Fundamental Agreements 4
(i) Absence of Defaults 5
(j) Authorization and Description of Common Stock 5
(k) Authorization and Description of Shares 5
(l) NYSE Listing 5
(m) Subchapter M Compliance 5
(n) Accounting Controls 5
(o) No Material Adverse Change in Business 5
(p) Possession of Licenses and Permits 6
(q) Full Force of Government Licenses and Approvals 6
(r) No Manipulation of Market for Securities 6
(s) Financial Statements 6
(t) Reporting Requirements 7
(u) No Material Restrictions 7
(v) Advertisements 7
(w) Japanese Tax 7
(x) Absence of Proceedings 7
(y) Absence of Undisclosed Payments 7
(z) Directors and Officers/Errors and Omissions Insurance Policy and Fidelity Bond 8
(aa) Material Lending; Use of Proceeds 8
(bb) Xxxxxxxx-Xxxxx Act Compliance 8
(cc) Money Laundering Laws 8
(dd) OFAC 8
(ee) FCPA Compliance 9
ARTICLE II.
Representations of the Investment Manager 9
i
(a) Good Standing of the Investment Manager 9
(b) Investment Advisers Act Registration 9
(c) Authorization of Agreement 9
(d) No Contravention of Applicable Law, Governing Instruments, Agreements or Decrees 10
(e) Full Force of Investment Management Agreement; Absence of Violation or Default 10
(f) Availability of Financial Resources 10
(g) Compliance with Registration Requirements 10
(h) No Manipulation of Market for Securities 10
(i) Absence of Proceedings 11
(j) No Prohibition From Performance of Obligations 11
(k) No Material Adverse Change 11
ARTICLE III.
Representations of the Investment Adviser 11
(a) Good Standing of the Investment Adviser 11
(b) Investment Advisers Act Registration 11
(c) Authorization of Agreements 12
(d) No Contravention of Applicable Law, Governing Instruments, Agreements or Decrees 12
(e) Full Force of Investment Advisory Agreement; Absence of Violation or Default 12
(f) Availability of Financial Resources 13
(g) Compliance with Registration Requirements 13
(h) No Manipulation of Market for Securities 13
(i) Absence of Proceedings 13
(j) No Prohibition From Performance of Obligations 13
(k) No Material Adverse Change 13
ARTICLE IV.
Sale and Delivery to the Dealer Manager 14
ARTICLE V.
Payment to the Dealer Manager 15
ARTICLE VI.
Further Conditions of Dealer Manager's Obligations 16
(a) Representations and Warranties 16
(b) Not Impracticable to Distribute the Rights 16
(c) Certificates of the Fund, Investment Adviser and Investment Manager 16
ii
(d) Performance of Obligations 16
(e) Effectiveness of Registration Statement 16
(f) Opinion of Counsel for the Fund 17
(g) Opinion of Counsel for the Investment Manager 20
(h) Opinion of Counsel to the Investment Adviser 21
(i) Opinion of Japanese Counsel to the Fund and Dealer Manager 22
(j) Opinion of Counsel to the Dealer Manager 24
(k) Basis for Legal Opinions; Reliance on Opinion of Maryland Counsel 24
(l) Accountant's Comfort Letter 24
(m) Conditions at the Representation Date 24
(n) Satisfactory Form and Substance of Proceedings 25
(o) Absence of Proceedings 25
(p) NYSE Listing 25
ARTICLE VII.
Covenants of the Fund 25
(a) Effectiveness of Registration Statement 25
(b) Compliance with Securities Regulations and Commission Requests 25
(c) Filing of Amendments 26
(d) Delivery of Registration Statement 26
(e) Continued Compliance with Securities Laws 26
(f) Subchapter M Compliance 26
(g) Blue Sky Qualifications 26
(h) Provision of Earnings Statement 27
(i) Payment of Expenses 27
ARTICLE VIII.
Indemnification and Contribution 27
ARTICLE IX.
Termination 31
ARTICLE X.
Notices 32
iii
, 2003
Daiwa Securities America Inc.
Financial Square
00 Xxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
THE JAPAN EQUITY FUND, INC., a corporation formed under the laws
of the State of Maryland (the "Fund"), is a diversified, closed-end management
investment company registered under the Investment Company Act of 1940, as
amended (together with the rules and regulations thereunder, the "Investment
Company Act"). The Fund proposes to issue to its shareholders of record as of
, 2003 ("Record Date Shareholders") transferable rights ("Rights") entitling
their holders to subscribe for an aggregate of up to shares ("Shares") of
the Fund's Common Stock, par value $.01 per share ("Common Stock").
The Fund hereby appoints Daiwa Securities America Inc. (the
"Dealer Manager") as the exclusive dealer manager in connection with the offer
of Shares contemplated by the proposed issuance of Rights (the "Offer"), and the
Dealer Manager hereby accepts such appointment. The Dealer Manager represents
and warrants that it is a broker-dealer registered under the Securities Exchange
Act of 1934, as amended (together with the rules and regulations thereunder, the
"Exchange Act"). The Dealer Manager agrees to use its best efforts to encourage
the development of a trading market for the Rights. Daiwa SB Investments (USA)
Ltd., a registered investment adviser under the Investment Advisers Act of 1940,
as amended (together with the rules and regulations thereunder, the "Investment
Advisers Act"), acts as investment manager to the Fund (the "Investment
Manager"). Daiwa SB Investments Ltd., a registered investment adviser under the
Investment Advisers Act, acts as investment adviser to the Fund (the "Investment
Adviser").
The Fund and the Investment Manager have entered into an
investment management agreement (the "Investment Management Agreement").
Pursuant to the Investment Management Agreement, the Investment Manager
supervises the purchase and sale of securities on behalf of the Fund based on
the recommendations of the Investment Adviser, in accordance with the Fund's
investment objective and policies. The Investment Manager and the Investment
Adviser have entered into an investment advisory agreement (the "Investment
Advisory Agreement") whereby the Investment Adviser provides investment
recommendations to the Investment Manager.
In connection with the Offer, each Record Date Shareholder will
be issued one Right for each full share of Common Stock owned on , 2003.
Each Record Date Shareholder will be issued a whole number of Rights evenly
divisible by three. No fractional Rights will be issued. The Rights entitle
their holders to acquire one Share for each three Rights. The subscription price
per Share will be [ ] (the "Subscription Price"). The period of subscription
(the "Subscription Period") commences on , 2003 (the "Commencement Date") and
ends at 5:00 p.m., New York time, on , 2003 unless extended by the Fund and
the Dealer Manager (the
"Expiration Date"). Any Record Date Shareholder who fully exercises all Rights
held before or on the Expiration Date is entitled to subscribe for Shares that
were not otherwise subscribed for during the Subscription Period.
The Fund has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form N-2 (File Nos. 333- and
811-06142) and a related prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (together with the rules and regulations
thereunder, the "Securities Act" and, together with the Investment Company Act,
the "Acts"), and has filed such amendments to such registration statement on
Form N-2, if any, and such amended prospectuses as may have been required to the
date hereof. The Fund will prepare and file such additional amendments thereto
and such amended prospectuses as may hereafter be required. The Fund previously
filed a notification on Form N-8A of registration of the Fund as an investment
company under the Investment Company Act. The registration statement (as
amended, if applicable) and the prospectus/statement of additional information
constituting a part thereof, as from time to time amended or supplemented
pursuant to the Securities Act, are herein referred to as the "Registration
Statement" and the "Prospectus", respectively, except that if any revised
prospectus/statement of additional information shall be provided to the Dealer
Manager by the Fund for use in connection with the Offer which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective (whether such revised prospectus/statement of additional
information is required to be filed by the Fund pursuant to Rule 497 (c) or
Rule 497 (h) of the Securities Act), the term "Prospectus" shall refer to each
such revised prospectus/statement of additional information from and after the
time it is first provided to the Dealer Manager for such use. The Prospectus and
letters to beneficial owners of Common Stock, forms used to exercise rights, any
letters from the Fund to securities dealers, commercial banks, trust companies
and other nominees and any newspaper announcements, press releases and other
offering materials and information that the Fund may use, approve, prepare or
authorize for use in connection with the offer, are collectively referred to
hereinafter as the "Offering Materials." Additional terms and conditions of the
Offer are set out in the Registration Statement.
ARTICLE I.
REPRESENTATIONS AND WARRANTIES OF THE FUND,
THE INVESTMENT MANAGER OR THE INVESTMENT ADVISER
Any certificate signed by any officer of the Fund, the Investment
Manager, or the Investment Adviser and delivered to the Dealer Manager or
counsel to the Dealer Manager shall be deemed a representation and warranty by
the Fund, the Investment Manager or the Investment Adviser, as the case may be,
to the Dealer Manager, as to matters covered thereby.
The Fund, the Investment Manager and the Investment Adviser each
severally represents and warrants to the Dealer Manager as of the date hereof
and as of the date of the commencement of the Offer (such later date being
hereinafter referred to as the "Representation Date") that:
2
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. At the time the
Registration Statement becomes effective and at the Representation Date,
the Registration Statement will comply in all material respects with the
requirements of the Acts and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. At the
time the Registration Statement becomes effective through the Expiration
Date of the Offer, the Prospectus (unless the term "Prospectus" refers to a
prospectus/statement of additional information which has been provided to
the Dealer Manager by the Fund for use in connection with the Offer which
differs from the Prospectus on file with the Commission at the time the
Registration Statement becomes effective, in which case at the time such
prospectus/statement of additional information is first provided to the
Dealer Manager for such use) and the Offering Materials will not contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the representations and warranties in this subsection shall
not apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Fund in writing by the Dealer Manager or its agents
expressly for use in the Registration Statement or Prospectus.
(b) GOOD STANDING OF THE FUND. The Fund has been duly incorporated,
is validly existing as a corporation in good standing under the laws of the
State of Maryland, has the corporate power and authority to conduct its
business as described in the Registration Statement and is duly qualified
to transact business and is in good standing in each jurisdiction in which
the conduct of its business requires such qualification, except to the
extent that the failure to be so qualified or be in good standing, either
individually or in the aggregate, would not have a Material Adverse Effect
(as defined in (o) of this Article I) on the Fund.
(c) NO SUBSIDIARIES. The Fund has no subsidiaries.
(d) INVESTMENT COMPANY ACT AND INVESTMENT ADVISERS ACT. The Fund is
registered with the Commission as a diversified, closed-end management
investment company under the Investment Company Act and no order of
suspension or revocation of such registration has been issued or
proceedings initiated for that purpose or, to the knowledge of the Fund,
the Investment Manager or the Investment Adviser, threatened by the
Commission. No person is serving or acting as an officer or director of, or
investment adviser to, the Fund except in accordance with the provisions of
the Investment Company Act and the Investment Advisers Act. Except as
disclosed in the Registration Statement and the Prospectus, no director of
the Fund is an "interested person" (as defined in the Investment Company
Act) of the Fund or an "affiliated person" (as defined in the Investment
Company Act) of the Dealer Manager.
(e) AUTHORIZATION OF AGREEMENT. Each of this Agreement and the
subscription agent agreement, dated as of , 2003 (the "Subscription
Agent Agreement"), between the Fund and PFPC Global Fund Services (the
"Subscription Agent") has been duly authorized, executed and delivered by
the Fund. Each of this Agreement and the
3
Subscription Agent Agreement, assuming due authorization, execution and
delivery by the other parties thereto, constitutes the legal, valid and
binding obligation of the Fund, enforceable against the Fund in accordance
with its terms except as such enforceability may be limited by applicable
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
creditors' rights generally and by general principles of equity, regardless
of whether considered in a proceeding in equity or at law, and, except
further, as the enforceability of the indemnification and contribution
provisions contained in this Agreement may be limited by U.S. federal and
state securities laws.
(f) NO CONTRAVENTION OF APPLICABLE LAW, GOVERNING INSTRUMENTS,
AGREEMENTS OR DECREES. None of (i) the execution and delivery by the Fund
of, and the performance by the Fund of its obligations under, this
Agreement and the Subscription Agent Agreement, or (ii) the distribution of
the Rights and the allotment, issue and sale of the Shares, contravenes or
will contravene any provision of applicable U.S. law, the Blue Sky laws of
the various states or the articles of incorporation, as amended, (the
"Charter") or bylaws, as amended, (the "Bylaws") of the Fund or any
agreement or other instrument binding upon the Fund that is material to the
Fund, or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Fund, whether foreign or domestic. No
consent, approval, authorization, order or permit of, or qualification
with, any governmental body or agency, self-regulatory organization or
court or other tribunal, whether foreign or domestic, is required for the
performance by the Fund of its obligations under this Agreement and the
Subscription Agent Agreement, except as may be required by the Acts, the
Exchange Act, or the securities or Blue Sky laws of the various states and
foreign jurisdictions in connection with the distribution of the Rights and
the issue and sale of the Shares.
(g) CAPITALIZATION. The authorized, issued and outstanding capital
stock and the Charter and Bylaws of the Fund conform in all material
respects to the description thereof contained in the Prospectus, and the
Rights and Shares will conform in all material respects to the descriptions
thereof contained in the Prospectus.
(h) CHARTER, BYLAWS AND FUNDAMENTAL AGREEMENTS. The Charter and
Bylaws of the Fund and the Investment Management Agreement, the Investment
Advisory Agreement, the custodial services agreement between the Fund and
Daiwa Securities Trust Company, in its capacity as custodian (the "Custody
Agreement"), the sub-custody agreement between Daiwa Securities Trust
Company, in its capacity as custodian and Sumitomo Mitsui Banking
Corporation (the "Sub-Custody Agreement") and the administration agreement
between the Fund and Daiwa Securities Trust Company, in its capacity as
administrator (the "Administration Agreement" and, together with the
Investment Management Agreement, the Investment Advisory Agreement, the
Custody Agreement and the Sub-Custody Agreement, the "Fundamental
Agreements"), each as referred to in the Registration Statement, comply
with all applicable provisions of the Acts in all material respects, and
all approvals of such documents required under the Investment Company Act
by the Fund's shareholders and Board of Directors have been obtained and
are in full force and effect.
4
(i) ABSENCE OF DEFAULTS. The Fundamental Agreements are in full force
and effect and neither the Fund nor, to the knowledge of the Fund, the
Investment Manager or the Investment Adviser, any other party to any such
agreement is in default thereunder, except for such defaults that would not
result in a Material Adverse Effect, and, to the knowledge of the Fund, the
Investment Manager or the Investment Adviser, no event has occurred that
with the passage of time or the giving of notice or both would constitute a
default thereunder. The Fund is not currently in breach of, or in default
under, except for such breaches or defaults that would not result in a
Material Adverse Effect, any other written agreement or instrument to which
it or its property is bound or affected or in violation, except for such
violations that would not result in a Material Adverse Effect, of its
Charter or Bylaws.
(j) AUTHORIZATION AND DESCRIPTION OF COMMON STOCK. The shares of
Common Stock outstanding prior to the issuance of the Shares have been duly
authorized and are validly issued, fully paid and non-assessable, and the
form of certificates used to evidence such Shares is in due and proper form
and complies with all provisions of applicable laws.
(k) AUTHORIZATION AND DESCRIPTION OF SHARES. The Offer, the Rights
and the Shares have been duly authorized and, when issued, paid for and
delivered as described in the Registration Statement, the Shares will be
validly issued, fully paid and non-assessable and the issuance of the
Shares will not be subject to any preemptive or similar rights.
(l) NYSE LISTING. The Rights and the Shares have been duly authorized
for listing on the NYSE, subject to official notice of issuance.
(m) SUBCHAPTER M COMPLIANCE. The Fund is a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), and intends to continue to qualify thereunder.
(n) ACCOUNTING CONTROLS. The Fund maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or
specific authorization and with the applicable requirements of the
Investment Company Act and the Code; (B) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets and to maintain compliance with the books and records requirements
under the Investment Company Act; (C) access to assets is permitted only in
accordance with the management's general or specific authorization; and (D)
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(o) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, there has not been any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, of the Fund or in the
5
investment objective, investment policies, liabilities, business, prospects
or operations of the Fund, whether or not arising in the ordinary course of
business ("Material Adverse Effect") other than as set forth in the
Prospectus; there have been no transactions entered into by the Fund that
are material to the Fund other than those in the ordinary course of its
business or as described in the Prospectus; and except for regular annual
dividends on the outstanding shares of Common Stock, there has been no
dividend or distribution of any kind declared, paid or made by the Fund on
any class of its capital stock.
(p) POSSESSION OF LICENSES AND PERMITS. The Fund has all necessary
material governmental licenses, consents, authorizations, approvals, orders
(including exemptive orders), certificates and permits (collectively,
"Government Licenses") of and from, and has made all declarations and
filings with, all governmental authorities, self-regulatory organizations
and courts and other tribunals, whether foreign or domestic, to own and use
its assets and to conduct its business in the manner described in the
Prospectus, except to the extent that the failure to obtain or file the
foregoing would not have a Material Adverse Effect on the Fund, and the
Fund has not received any notice of proceedings relating to the revocation
or modification of any such licenses, consents, authorizations, approvals
or permits.
(q) FULL FORCE OF GOVERNMENT LICENSES AND APPROVALS. All Government
Licenses and all necessary authorizations, consents and approvals or orders
(collectively, "Approvals") required under U.S. law for and in connection
with the issue of the Shares and Rights and the execution and performance
of this Agreement by the respective parties thereto have been obtained and
are in full force and effect.
(r) NO MANIPULATION OF MARKET FOR SECURITIES. The Fund has not (i)
taken, directly or indirectly, any action designed to cause or to result
in, or that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security
of the Fund to facilitate the sale or resale of the Shares in violation of
federal or state securities laws or (ii) since the filing of the
Registration Statement (A) sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Common Stock or (B) paid or
agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Fund (except for the solicitation of
exercises of Rights pursuant to this Agreement).
(s) FINANCIAL STATEMENTS. The financial statements of the Fund,
together with related notes and schedules and the summary financial data
included in the Registration Statement and the Prospectus (or incorporated
by reference therein as permitted by the Acts), present fairly the
financial position and results of operations of the Fund as at the date and
for the period indicated and have been prepared in conformity with
generally accepted accounting principles and the information in the
Prospectus sets forth the composition of the investment portfolio of the
Fund as of its date. To the knowledge of the Fund, based on representations
made by PricewaterhouseCoopers LLP as of the date of the accountant's
report, which has been included in the Prospectus, PricewaterhouseCoopers
LLP are independent public accountants with respect to the Fund as required
by the Acts.
6
(t) REPORTING REQUIREMENTS. The Fund, during the period when the
Prospectus is required to be delivered under the Securities Act or the
Exchange Act, will file all documents required to be filed with the
Commission pursuant to the Investment Company Act and the Exchange Act
within the time periods required by the Investment Company Act and the
Exchange Act and the rules and regulations of the Commission thereunder,
respectively.
(u) NO MATERIAL RESTRICTIONS. There are no material restrictions,
limitations or regulations with respect to the ability of the Fund to
invest its assets as described in the Prospectus, other than as described
therein.
(v) ADVERTISEMENTS. Any advertising, sales literature or other
promotional material (including "prospectus wrappers," "broker kits," "road
show slides," "road show scripts" and "electronic road show presentations")
authorized in writing by or prepared by the Fund, the Investment Manager or
the Investment Adviser used in connection with the public offering of the
Shares (collectively, "sales material") does not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. Moreover, all sales material complied and will comply in all
material respects with the applicable requirements of the Securities Act,
the Investment Company Act, and the rules and interpretations of the NASD.
(w) JAPANESE TAX. No taxes or charges of any kind are or will be
payable in or to Japan, or any political subdivision thereof, by the Dealer
Manager with respect to this Agreement or the purchase and sale of the
Rights or Shares hereunder, and the Fund and the Investment Manager will
indemnify and hold the Dealer Manager harmless against any and all
liabilities with respect to any such Japanese tax or charges.
(x) ABSENCE OF PROCEEDINGS. There are no legal or governmental
proceedings of any kind, foreign or domestic, pending or, to the knowledge
of the Fund or the Investment Manager or the Investment Adviser, threatened
against or affecting the Fund that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement that are not described, filed or
incorporated by reference therein as required or which might reasonably be
expected to materially and adversely affect the properties or assets of the
Fund or the consummation of the transactions contemplated in this Agreement
or the performance by the Fund of its obligations hereunder. The aggregate
of all pending legal or governmental proceedings to which the Fund is a
party or of which any of its respective property or assets is the subject
which are not described in the Registration Statement, including ordinary
routine litigation incidental to the business, could not reasonably be
expected to result in a Material Adverse Effect.
(y) ABSENCE OF UNDISCLOSED PAYMENTS. To the Fund's knowledge, neither
the Fund nor any employee or agent of the Fund has made any payment of
funds of the Fund
7
or received or retained any funds, which payment, receipt or retention of
funds is of a character required to be disclosed in the Prospectus.
(z) DIRECTORS AND OFFICERS/ERRORS AND OMISSIONS INSURANCE POLICY AND
FIDELITY BOND. The Fund's directors and officers/errors and omissions
insurance policy and its fidelity bond required by Rule 17g-1 under the
Investment Company Act are in full force and effect; the Fund is in
compliance with the terms of such policy and fidelity bond in all material
respects; and there are no claims by the Fund under any such policy or
fidelity bond as to which any insurance company is denying liability or
defending under a reservation of rights clause; the Fund has not been
refused any insurance coverage sought or applied for; and the Fund has no
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business at a
cost that would not have a Material Adverse Effect on the condition
(financial or otherwise), prospects, earnings, business or properties of
the Fund, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(aa) MATERIAL LENDING; USE OF PROCEEDS. Except as disclosed in the
Registration Statement and the Prospectus, the Fund (i) does not have any
material lending or other relationship with any bank or lending affiliate
of the Investment Adviser or Investment Manager and (ii) does not intend to
use any of the proceeds from the distribution of the Rights and issue and
sale of the Shares to repay any outstanding debt owed to any affiliate of
the Investment Adviser or the Investment Manager.
(bb) XXXXXXXX-XXXXX ACT COMPLIANCE. There is and has been no failure
on the part of the Fund and any of the Fund's directors or officers, in
their capacities as such, to comply with any provision of the
Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations promulgated in
connection therewith (the "Xxxxxxxx-Xxxxx Act"), including Sections 302 and
906 related to certifications.
(cc) MONEY LAUNDERING LAWS. The operations of the Fund are and have
been conducted at all times in compliance with any applicable financial
recordkeeping and reporting requirements of The Bank Secrecy Act of 1970,
as amended (including amendments pursuant to the International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001), any
applicable money laundering statutes of any jurisdiction, the rules and
regulations thereunder and any applicable related or similar rules,
regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the "Money Laundering Laws") and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Fund with respect to the
Money Laundering Laws is pending or, to the best knowledge of the Fund,
threatened.
(dd) OFAC. Neither the Fund nor, to the knowledge of the Fund, any
director, officer, agent, employee or affiliate of the Fund is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department ("OFAC"); and the Fund will not
directly or indirectly use the proceeds of the offering, or
8
lend, contribute or otherwise make available such proceeds to any other
person or entity, for the purpose of financing the activities of any person
currently subject to any U.S. sanctions administered by OFAC.
(ee) FCPA COMPLIANCE. Neither the Fund nor, to the knowledge of the
Fund, any director, officer, agent, employee or affiliate of the Fund is
aware of or has taken any action, directly or indirectly, that would result
in a violation by such persons of the Foreign Corrupt Practices Act of
1977, as amended, and the rules and regulations thereunder (the "FCPA"),
including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an
offer, payment, promise to pay or authorization of the payment of any
money, or other property, gift, promise to give, or authorization of the
giving of anything of value to any "foreign official" (as such term is
defined in the FCPA) or any foreign political party or official thereof or
any candidate for foreign political office, in contravention of the FCPA
and the Fund, and, to the knowledge of the Fund, its affiliates have
conducted their businesses in compliance with the FCPA and have instituted
and maintain policies and procedures designed to ensure, and which are
reasonably expected to continue to ensure, continued compliance therewith.
ARTICLE II.
REPRESENTATIONS OF THE INVESTMENT MANAGER
The Investment Manager represents and warrants to the Dealer Manager
as of the date hereof and as of the Representation Date that:
(a) GOOD STANDING OF THE INVESTMENT MANAGER. The Investment Manager
has been duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with the corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and is duly qualified to conduct
business in, and is in good standing in, each jurisdiction in which the
nature of its activities or the character of its assets requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the Investment Manager.
(b) INVESTMENT ADVISERS ACT REGISTRATION. The Investment Manager is
duly registered as an investment adviser under the Investment Advisers Act,
and is not prohibited by the Investment Advisers Act or the Investment
Company Act from acting under the Investment Management Agreement as an
Investment Manager to the Fund, as contemplated by the Prospectus.
(c) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Investment Manager and, assuming
due authorization, execution and delivery by the other parties, constitutes
a legal, valid and binding obligation of the Investment Manager,
enforceable against the Investment Manager in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
9
transfers), reorganization, moratorium or similar laws affecting creditors'
rights generally and by general principles of equity, regardless of whether
considered in a proceeding in equity or at law, and, except further, as the
enforceability of the indemnification and contribution provisions contained
in this Agreement may be limited by U.S. federal and state securities laws.
(d) NO CONTRAVENTION OF APPLICABLE LAW, GOVERNING INSTRUMENTS,
AGREEMENTS OR DECREES. Neither the execution and delivery of this Agreement
nor the performance by the Investment Manager of its obligations hereunder
will conflict with, or result in a breach of, any of the terms and
conditions of, or constitute, with or without the giving of notice of lapse
of time or both, a default under, any agreement or instrument to which the
Investment Manager is a party or by which it is bound or to which any
property of the Investment Manager is subject, the documents constituting
the Investment Manager or any law, order, rule or regulation applicable to
it of any jurisdiction, court, federal or state regulatory body,
administrative agency or other governmental body, stock exchange or
securities association having jurisdiction over it or its properties or
operations; all necessary consents, approvals, authorizations or orders
required under U.S. law for the performance by the Investment Manager of
its obligations contemplated by this Agreement and the Registration
Statement and the Prospectus have been obtained and are in full force and
effect.
(e) FULL FORCE OF INVESTMENT MANAGEMENT AGREEMENT; ABSENCE OF
VIOLATION OR DEFAULT. The Investment Management Agreement is in full force
and effect and neither the Investment Manager nor, to the knowledge of the
Investment Manager, any other party to such agreement is in default
thereunder and, to the knowledge of the Investment Manager, no event has
occurred that with the passage of time or the giving of notice or both
would constitute a default thereunder. The Investment Manager is not
currently in breach of, or in default under, any other written agreement or
instrument to which it or its property is bound or affected, except where
such breach or default would not have a material adverse effect on the
condition, financial or otherwise, business affairs or business prospects
of the Investment Manager, or in violation of its articles of incorporation
or bylaws.
(f) AVAILABILITY OF FINANCIAL RESOURCES. The Investment Manager has
the financial resources available to it necessary for the performance of
its services and obligations as contemplated in the Prospectus.
(g) COMPLIANCE WITH REGISTRATION REQUIREMENTS. All information
furnished by the Investment Manager for use in the Registration Statement
and Prospectus, including, without limitation, the description of the
Investment Manager, does not, and on the Representation Date will not,
contain any untrue statement of a material fact or omit to state any
material fact necessary to make such information not misleading; and there
are no pending legal proceedings to which the Investment Manager is a party
that would be required to be disclosed in the Registration Statement.
(h) NO MANIPULATION OF MARKET FOR SECURITIES. The Investment Manager
has not (i) taken, directly or indirectly, any action designed to cause or
to result in, or that has
10
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Fund to
facilitate the sale or resale of the Shares or (ii) since the filing of the
Registration Statement (A) sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Common Stock or (B) paid or
agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Fund (except for the solicitation of
exercises of Rights pursuant to this Agreement).
(i) ABSENCE OF PROCEEDINGS. There is no litigation or governmental or
other proceeding or investigation before any court or before or by any
public body or board pending or, to the Investment Manager's knowledge,
threatened against, or involving the properties or business of, the
Investment Manager which is likely to have a Material Adverse Effect on the
Fund or likely to have a material adverse effect on the ability of the
Investment Manager to perform its obligations hereunder or under the
Investment Management Agreement.
(j) NO PROHIBITION FROM PERFORMANCE OF OBLIGATIONS. There has been no
government order, court decree, finding by a regulatory authority or other
governmental action that provides the basis for the Commission under
Section 9(b) of the Investment Company Act to prohibit, as provided in such
Section, the Investment Manager from performing its obligations hereunder
or under the Investment Management Agreement.
(k) NO MATERIAL ADVERSE CHANGE. There has not been any material
adverse change, or any development involving a prospective material adverse
change, in the condition, financial or otherwise, or in the business or
operations of the Investment Manager, whether or not arising in the
ordinary course of business, from that set forth in the Prospectus and the
Registration Statement.
ARTICLE III.
REPRESENTATIONS OF THE INVESTMENT ADVISER
The Investment Adviser represents and warrants to the Dealer Manager
as of the date hereof and as of the Representation Date that:
(a) GOOD STANDING OF THE INVESTMENT ADVISER. The Investment Adviser
has been duly organized and is validly existing as a corporation in good
standing under the laws of Japan, with the power and authority to own,
lease and operate its properties and to conduct its business as described
in the Prospectus and is duly qualified to conduct business in, and is in
good standing in, each jurisdiction in which the nature of its activities
or the character of its assets requires such qualification, except where
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Investment Adviser.
(b) INVESTMENT ADVISERS ACT REGISTRATION. The Investment Adviser is
duly registered as an investment adviser under the Investment Advisers Act,
and is not prohibited by the Investment Advisers Act or the Investment
Company Act from acting
11
under the Investment Advisory Agreement as an investment adviser to the
Investment Manager and the Fund, as contemplated by the Prospectus.
(c) AUTHORIZATION OF AGREEMENTS. Each of this Agreement, the
Investment Advisory Agreement, the Custody Agreement, the Sub-Custody
Agreement and the Administration Agreement, has been duly authorized,
executed and delivered by the Investment Adviser. Each of this Agreement,
the Investment Advisory Agreement, the Custody Agreement and the
Sub-Custody Agreement, assuming due authorization, execution and delivery
by the other parties, constitutes the legal, valid and binding obligation
of the Investment Adviser, enforceable against the Investment Adviser in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting creditors' rights generally and by general principles of
equity, regardless of whether considered in a proceeding in equity or at
law, and, except further, as the enforceability of the indemnification and
contribution provisions contained in this Agreement may be limited by U.S.
federal and state securities laws.
(d) NO CONTRAVENTION OF APPLICABLE LAW, GOVERNING INSTRUMENTS,
AGREEMENTS OR DECREES. The execution and delivery by the Investment Adviser
of, and the performance by the Investment Adviser of its obligations under,
this Agreement does not and will not contravene any provision of applicable
law or the organizational documents of the Investment Adviser or any
agreement or other instrument binding upon the Investment Adviser that is
material to the Investment Adviser, or any law, rule or regulation, or any
judgment, order or decree of any court or governmental agency,
administrative agency or other governmental body, stock exchange or
securities association having jurisdiction over the Investment Adviser or
its assets or operations. No consent, approval, authorization, order or
permit of, or qualification with, any governmental body or agency,
self-regulatory agency or court or other tribunal, whether foreign or
domestic, is required for the performance by the Investment Adviser of its
obligations under this Agreement except such as have been obtained and as
may be required by the Acts, the Exchange Act or the securities or Blue Sky
laws of the various states in connection with the distribution of the
Rights and the issue and sale of the Shares.
(e) FULL FORCE OF INVESTMENT ADVISORY AGREEMENT; ABSENCE OF VIOLATION
OR DEFAULT. The Investment Advisory Agreement is in full force and effect
and neither the Investment Adviser nor, to the knowledge of the Investment
Adviser, any other party to such agreement is in default thereunder and, to
the knowledge of the Investment Adviser, no event has occurred that with
the passage of time or the giving of notice or both would constitute a
default thereunder. The Investment Adviser is not currently in breach of,
or in default under, any other written agreement or instrument to which it
or its property is bound or affected, except where such breach or default
would not have a material adverse effect on the condition, financial or
otherwise, business affairs or business prospects of the Investment
Adviser, or in violation of its articles of incorporation, as amended, or
bylaws.
12
(f) AVAILABILITY OF FINANCIAL RESOURCES. The Investment Adviser has
the financial resources available to it necessary for the performance of
its services and obligations as contemplated in this Agreement, the
Registration Statement and the Prospectus.
(g) COMPLIANCE WITH REGISTRATION REQUIREMENTS. All information
furnished by the Investment Adviser for use in the Registration Statement
and Prospectus, including, without limitation, the description of the
Investment Adviser, does not, and on the Representation Date will not,
contain any untrue statement of a material fact or omit to state any
material fact necessary to make such information not misleading; and there
are no pending legal proceedings to which the Investment Adviser is a party
that would be required to be disclosed in the Registration Statement.
(h) NO MANIPULATION OF MARKET FOR SECURITIES. The Investment Adviser
has not (i) taken, directly or indirectly, any action designed to cause or
to result in, or that has constituted or which might reasonably be expected
to constitute, the stabilization or manipulation of the price of any
security of the Fund to facilitate the sale or resale of the Shares or (ii)
since the filing of the Registration Statement (A) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases of, the
Common Stock or (B) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Fund (except
for the solicitation of exercises of Rights pursuant to this Agreement).
(i) ABSENCE OF PROCEEDINGS. There is no litigation or governmental or
other proceeding or investigation before any court or before or by any
public body or board pending or, to the Investment Adviser's knowledge,
threatened against, or involving the properties or business of, the
Investment Adviser which is likely to have a Material Adverse Effect on the
Fund or likely to have a material adverse effect on the ability of the
Investment Adviser to perform its obligations hereunder or under the
Investment Advisory Agreement.
(j) NO PROHIBITION FROM PERFORMANCE OF OBLIGATIONS. There has been no
government order, court decree, finding by a regulatory authority or other
governmental action that provides the basis for the Commission under
Section 9(b) of the Investment Company Act to prohibit, as provided in such
Section, the Investment Adviser from performing its obligations hereunder
or under the Investment Advisory Agreement.
(k) NO MATERIAL ADVERSE CHANGE. There has not been any material
adverse change, or any development involving a prospective material adverse
change, in the condition, financial or otherwise, or in the business or
operations of the Investment Adviser, whether or not arising in the
ordinary course of business, from that set forth in the Prospectus and the
Registration Statement.
13
ARTICLE IV.
SALE AND DELIVERY TO THE DEALER MANAGER
On the basis of the representations and warranties, and subject to the
terms and conditions, set forth in this Agreement:
(a) The Dealer Manager agrees to solicit, in accordance with the
Acts, the Exchange Act and its customary practice, the exercise of the
Rights, subject to the terms and conditions of, this Agreement, the
Soliciting Dealer Agreement, the Subscription Agent Agreement and the
procedures described in the Registration Statement.
(b) (i) Daily, during the period commencing on the Record Date, until
termination of the period of the offer, the Fund will report or cause the
Subscription Agent to report by telephone or telecopier (by 12:00 Noon, New
York time), confirmed by letter, to a designated officer of the Fund, daily
data regarding Rights exercised, the selling price of Rights, the total
number of shares of new Common Stock subscribed for, payments received
therefor, the number of Rights sold and the net proceeds thereof, bringing
forward the figures from the previous day's report in each case so as to
also show the cumulative totals and any such other information as may be
reasonably requested by the Dealer Manager.
(ii) The Fund will inform or cause the Subscription Agent to
inform the Dealer Manager orally, on each business day during the period of
the Offer (to be followed by written confirmation), as to the number of
Rights that have been exercised, and the number of Rights to be sold on a
best efforts basis pursuant to Section 5(b) of the Subscription Agent
Agreement, since its previous daily report to the Dealer Manager and, not
later than 12:00 Noon (New York time) on , will provide the Dealer
Manager with a written statement as to the total number of Rights exercised
(separately setting forth the number of Rights exercised by Record Date
Shareholders).
(c) The Dealer Manager agrees to provide to the Fund, in addition to
the services described in paragraph (a) of this Article IV, financial
advisory and marketing services in connection with the offer and general
financial advisory services to the Fund. No advisory fee, other than the
fees provided for in Article V of this Agreement and reimbursement of the
Dealer Manager's out-of-pocket expenses as described in paragraph (i) of
Article VII of this Agreement, will be payable by the Fund to the Dealer
Manager in connection with the general financial advisory services provided
by the Dealer Manager in accordance with this paragraph unless the Fund
requests the Dealer Manager to provide additional services with respect to
a particular transaction involving the Fund, in which event the fees
payable to the Dealer Manager will be mutually agreed upon by the Fund and
the Dealer Manager.
(d) The Fund and the Dealer Manager agree that the Dealer Manager is
an independent contractor with respect to its solicitation of the exercise
of Rights contemplated by this Agreement and the performance of financial
advisory services to the Fund contemplated by this Agreement, and the
Dealer Manager represents and warrants
14
that it is not a partner or agent of any other securities broker, dealer or
other person soliciting the exercise of Rights contemplated by this
Agreement, or of the Fund or any of its affiliates, except that the Dealer
Manager is an affiliate of the Investment Manager and the Investment
Adviser.
(e) The Dealer Manager is authorized to buy and exercise Rights and
to sell Shares to the public at the offering price set by the Dealer
Manager from time to time in compliance with the requirements of
Regulation M under the Exchange Act.
(f) Certificates representing Shares purchased by the Dealer Manager
pursuant to the exercise of Rights shall be delivered to the Dealer Manager
as provided in the Subscription Agent Agreement.
(g) In rendering the services contemplated by this Agreement, the
Dealer Manager will not be subject to any liability to the Fund, the
Investment Adviser or the Investment Manager, or any of their affiliates,
for any act or omission on the part of any securities broker or dealer
(other than the Dealer Manager) or any other person, and the Dealer Manager
will not have any liability (whether direct or indirect, in contract or
tort or otherwise) for or in connection with the performance of its
obligations under this Agreement except for any such liability for losses,
claims, damages or liabilities incurred that are finally judicially
determined to have directly resulted from the willful malfeasance, bad
faith, gross negligence or reckless disregard of the Dealer Manager.
(h) The Fund, the Investment Manager and the Investment Adviser will
not take, directly, or indirectly, any action designed to cause or to
result in or that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security
of the Fund to facilitate the sale or resale of the Shares.
ARTICLE V.
PAYMENT TO THE DEALER MANAGER
The Fund agrees to pay in the form of a wire transfer of immediately
available funds within 13 business days after the Expiration Date of the offer,
and in the case where the Subscription Price is greater than the Estimated
Subscription Price (as defined in the Prospectus), within 19 business days after
such Expiration Date, to an account or accounts identified by the Dealer
Manager, as compensation for its services to the Fund as financial and marketing
adviser in connection with the Offer, a fee equal to an amount computed by
multiplying (A) [ %] by (B) the aggregate number of Shares purchased in the
Offer by (C) the Subscription Price.
The Fund agrees to pay within 13 business days after the Expiration
Date of the Offer, and in the case where the Subscription Price is greater than
the Estimated Subscription Price (as defined in the Prospectus), within 19
business days after such Expiration Date, (i) to each securities broker or
dealer, including, without limitation, the Dealer Manager, who has executed and
delivered a Soliciting Dealer Agreement (each, a "Soliciting Dealer Agreement")
and who is designated on any subscription form relating to the Rights (a
"Soliciting Dealer"),
15
including, without limitation, any subscription form relating to Rights
exercised by the Dealer Manager, a fee equal to an amount computed by
multiplying (A) [ ]% by (B) the number of Shares purchased pursuant to each
subscription form upon which the Soliciting Dealer is designated and further
multiplied by (C) the Subscription Price and (ii) to the Dealer Manager a fee
equal to an amount computed by multiplying (A) [ ]% by (B) the number of Shares
purchased pursuant to each subscription form upon which no Soliciting Dealer is
designated or when the securities broker designated therein has not executed and
delivered a Soliciting Dealer Agreement and further multiplied by (C) the
Subscription Price.
ARTICLE VI.
FURTHER CONDITIONS OF DEALER MANAGER'S OBLIGATIONS
The obligations of the Dealer Manager hereunder will at all times be
subject to the following further conditions:
(a) REPRESENTATIONS AND WARRANTIES. All representations, warranties
and other statements of the Fund, the Investment Manager and the Investment
Adviser contained herein or in certificates of any officer of the Fund, the
Investment Manager or the Investment Adviser delivered pursuant to this
Agreement are now, and at all times during the Subscription Period will be,
true and correct in all material respects as though expressly made at such
time.
(b) NOT IMPRACTICABLE TO DISTRIBUTE THE RIGHTS. There has not
occurred any change, or any development involving a prospective change, in
the condition, financial or otherwise, of the Fund, the Investment Manager
or the Investment Adviser, or in the investment objectives, investment
policies, liabilities, business affairs, business prospects or operations
of the Fund from those set forth in the Registration Statement, that, in
the Dealer Manager's reasonable judgment, is material and adverse and that
makes it, in the Dealer Manager's reasonable judgment, impracticable to
distribute the Rights and market the Shares on the terms and in the manner
contemplated in the Prospectus.
(c) CERTIFICATES OF THE FUND, INVESTMENT ADVISER AND INVESTMENT
MANAGER. The Dealer Manager has received separate certificates, dated as of
the Commencement Date and signed by the President or Vice President of the
Fund, the Investment Adviser and the Investment Manager, to the effect that
the respective representations and warranties of the Fund, the Investment
Manager and the Investment Adviser contained in this Agreement are true and
correct as of the Commencement Date.
(d) PERFORMANCE OF OBLIGATIONS. The Investment Manager, the
Investment Adviser and the Fund at all times during the Subscription Period
have each performed all of their respective obligations required to be
performed hereunder.
(e) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement shall have become effective not later than 5:30 P.M., New York
time, on the date of this Agreement, or at a later time and date not later,
however, than 5:30 P.M. on the first business day following the date
hereof, or at such later time and date as may be approved
16
by the Dealer Manager, and at the commencement of the offer no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the Securities Act or proceedings therefor initiated or
threatened by the Commission.
(f) OPINION OF COUNSEL FOR THE FUND. The Dealer Manager has received
the favorable opinion of Xxxxxxxx Chance US LLP, counsel for the Fund,
dated the Representation Date, in form and substance satisfactory to
counsel for the Dealer Manager, to the effect that:
(i) the Fund has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Maryland;
(ii) the Fund has the corporate power and authority to own, lease
and operate its properties and conduct its business as described in
the Registration Statement and the Prospectus;
(iii) the Fund is duly qualified as a foreign corporation to do
business as a foreign corporation in each jurisdiction within the
United States wherein it owns or leases material properties or
conducts material business;
(iv) the Registration Statement is effective under the Acts and,
to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement is in effect and no
proceedings for such purpose, or under Section 8(e) of the Investment
Company Act, are pending or threatened by the Commission;
(v) the Fund is registered with the Commission as a diversified,
closed-end management investment company under the Investment Company
Act and, to such counsel's knowledge, no order of suspension or
revocation of such registration has been issued or proceedings
initiated for that purpose or threatened by the Commission;
(vi) this Agreement and each Soliciting Dealer Agreement have
been duly authorized, executed and delivered by the Fund. Assuming due
authorization, execution and delivery by the other parties hereto and
thereto, this Agreement constitutes the legal, valid and binding
obligation of the Fund, enforceable against the Fund in accordance
with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting creditors' rights generally and by general
principles of equity, regardless of whether considered in a proceeding
in equity or at law, and, except further, as the enforceability of the
indemnification and contribution provisions contained in this
Agreement and the Soliciting Dealer Agreements may be limited by U.S.
federal and state securities laws;
(vii) none of (A) the execution and delivery by the Fund of, and
the performance by the Fund of its obligations under, this Agreement
and each Soliciting Dealer Agreement, or (B) the distribution of the
Rights and the issue
17
and sale of the Shares contravenes or will contravene any provision of
applicable U.S., State of New York or State of Maryland law or the
Charter or Bylaws of the Fund or any material agreement or instrument
binding upon the Fund that is known to such counsel, or constitutes a
breach of, or a default under, or results in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Fund pursuant to, any contract, indenture, mortgage,
loan agreement, note, lease or other instrument known to such counsel
to which the Fund is a party or by which it may be bound or to which
any of the property or assets of the Fund is subject, or any judgment,
order or decree of any U.S., State of New York or State of Maryland
governmental body, agency or court having jurisdiction over the Fund
that is known to such counsel. No consent, approval, authorization or
order of any court or governmental authority or agency in the United
States is required for the performance by the Fund of its obligations
under this Agreement and each Soliciting Dealer Agreement, except such
as has been obtained under the Acts, the Exchange Act or as may be
required by the securities or Blue Sky laws of the various states in
connection with the distribution of the Rights and the issue and sale
of the Shares;
(viii) the authorized capital stock and the Charter and Bylaws of
the Fund conform in all material respects to the description of them
contained in the Prospectus; and the Rights and Shares conform in all
material respects as to legal matters to the descriptions of them
contained in the Prospectus;
(ix) the Charter and Bylaws of the Fund, this Agreement, each
Soliciting Dealer Agreement and each of the Fundamental Agreements
comply with all applicable provisions of the Acts, and all approvals
of such documents required under the Investment Company Act by the
Fund's shareholders and Board of Directors have been obtained and are
in full force and effect;
(x) to such counsel's knowledge, the Fundamental Agreements are
in full force and effect and, to such counsel's knowledge, neither the
Fund nor any other party to any such agreement is in default
thereunder and, to such counsel's knowledge, no event has occurred
which with the passage of time or the giving of notice or both would
constitute a default thereunder. To such counsel's knowledge, the Fund
is not currently in breach of, or in default under, any other written
agreement or instrument to which it or its property is bound or
affected;
(xi) the shares of Common Stock outstanding prior to issuance of
the Shares have been duly authorized and are validly issued, fully
paid and non-assessable, and the form of certificate used to evidence
the Shares is in due and proper form and complies in all material
respects with all provisions of applicable law;
(xii) the offer, the Rights and the Shares have been duly
authorized and, when issued, paid for and delivered as described in
the Registration Statement, the Shares will be validly issued, fully
paid and non-assessable and the issuance of the Shares will not be
subject to any preemptive or similar rights;
18
(xiii) the statements in the Prospectus under "Taxation - U.S.
Federal Income Taxes" and "Description of Common Stock," insofar as
such statements constitute a summary of the law or legal conclusions,
documents or proceedings referred to therein, are accurate in all
material respects and fairly present the information called for with
respect to such legal matters, legal conclusions, documents and
proceedings and fairly summarize the matters referred to therein;
(xiv) there are no U.S. or State of New York statutes or
regulations, or, to such counsel's knowledge, contracts or other
documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required;
and, to such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened against the Fund that are required
to be described in the Registration Statement or the Prospectus and
are not so described;
(xv) the Registration Statement and the Prospectus and any
supplements or amendments thereto (except for financial statements and
schedules included or incorporated by reference therein as to which
such counsel need not express any opinion) comply as to form in all
material respects with the Acts;
(xvi) to such counsel's knowledge, no action by any governmental
authority is required under the Investment Company Act other than that
which has been obtained, in order for the Fund to operate its business
and conduct its operations as described in the Prospectus.
Such counsel shall also have stated that as counsel to the Fund and in
connection with the registration of the Rights and the Shares, they have advised
the Fund as to the requirements of the Acts and have rendered other legal advice
and assistance to the Fund in the course of its preparation of the Registration
Statement and the Prospectus; that rendering such assistance involved, among
other things, discussions and inquiries concerning various legal and related
subjects and reviews of certain corporate records, documents and proceedings;
and that they also participated in conferences with representatives of the Fund,
the Investment Adviser, the Investment Manager, and its accountants at which the
contents of the Registration Statement and Prospectus and related matters were
discussed.
In addition to the foregoing opinion, such counsel will advise the
Dealer Manager that, in the light of such counsel's understanding of the
applicable law and the experience it has gained through its practice thereunder,
nothing has come to its attention that has caused it to believe that (except for
financial statements, schedules and other financial or economic information
contained in the Registration Statement or the Prospectus or incorporated by
reference therein, as to which counsel need express no belief) the Registration
Statement, on the date it became effective, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus, on the date the Registration Statement became effective (unless the
term "Prospectus" refers to the Prospectus which has been provided to the Dealer
Manager by the Fund for use in connection with the Offer which differs from the
Prospectus on file at the Commission at the time the Registration Statement
became effective, in which case as
19
of the date of such Prospectus) and at the date hereof, contained or contains
any untrue statement of a material fact or omitted or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Counsel will also be
permitted to state that, because of the limitations inherent in the independent
verification of factual matters and the character of determinations involved in
the registration process, counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or Prospectus, except for those made under the captions,
"Management of the Fund -- Investment Management Agreement," "Management of the
Fund - Investment Advisory Agreement," Administration and Custodians" and
"Dividends and Distributions; Dividend Reinvestment and Cash Purchase Plan" in
the Prospectus insofar as they relate to provisions of documents therein
described.
(g) OPINION OF COUNSEL FOR THE INVESTMENT MANAGER. The Dealer Manager
has received an opinion of Xxxxxxx X. Xxxxxxxx Esq., counsel for the
Investment Manager, dated the Representation Date, in form and substance
satisfactory to counsel for the Dealer Manager, to the effect that:
(i) the Investment Manager is a corporation validly existing and
in good standing under the laws of Delaware and has all the requisite
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus;
(ii) the Investment Manager is duly qualified to do business and
is in good standing as a foreign corporation in each U.S. jurisdiction
in which the nature of its activities or the character of its assets
requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the Investment
Manager;
(iii) the Investment Manager (exclusive of affiliates) is
registered as an investment adviser under the Investment Advisers Act
and is not prohibited by the Investment Advisers Act or the Investment
Company Act from acting for the Fund under the Investment Management
Agreement, as contemplated therein and, to such counsel's current
actual knowledge, no order of suspension or revocation of such
registration has been issued or proceedings initiated for that purpose
or threatened by the Commission;
(iv) this Agreement and the Investment Management Agreement have
each been duly authorized, executed and delivered by the Investment
Manager. Assuming that each of the Investment Management Agreement and
the Investment Advisory Agreement has been duly authorized, executed
and delivered by the other party or parties thereto, each separate
agreement is a valid and legally binding obligation of the Investment
Manager, enforceable against the Investment Manager in accordance with
its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting creditors' rights generally and by general
principles of equity, regardless of whether considered in a proceeding
in equity or at law, and,
20
except further, as the enforceability of the indemnification and
contribution provisions contained in this Agreement may be limited by
U.S. federal and state securities laws;
(v) the performance by the Investment Manager of its obligations
under this Agreement, the Investment Advisory Agreement and the
Investment Management Agreement will not conflict with, or result in a
breach of, or constitute a default under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Investment Manager pursuant to the terms of any material
agreement, of which such counsel has current actual knowledge, to
which the Investment Manager is a party or is bound, or any U.S. law
or regulation or, based upon their current actual knowledge, any order
applicable to the Investment Manager of any U.S. court, regulatory
body, administrative agency, governmental body, stock exchange or
securities association having jurisdiction over the Investment Manager
or its properties or operations. No consent, approval or
authorization, or order of, or qualification with, any U.S. or State
of New York governmental body or agency is required for the
performance by the Investment manager of its obligations under this
Agreement, except such as may be required by the Acts, the Exchange
Act or the securities or Blue Sky laws of the various states in
connection with the distribution of the Rights and the issue and sale
of the Shares; and
(vi) to such counsel's current actual knowledge, there are no
governmental proceedings pending or threatened against the Investment
Manager.
(h) OPINION OF COUNSEL TO THE INVESTMENT ADVISER. The Dealer Manager
has received the favorable opinion of Xxxxxxx X. Xxxxxxxx Esq., counsel to
the Investment Adviser, dated as of the Representation Date, in form and
substance satisfactory to counsel for the Dealer Manager, to the effect
that:
(i) the Investment Adviser has been duly organized and is validly
existing as a corporation under the laws of Japan with the power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus;
(ii) the Investment Adviser is duly qualified to do business and
is in good standing as a foreign corporation in each U.S. jurisdiction
in which the nature of its activities or the character of its assets
requires qualification as a foreign corporation, except where the
failure to be so qualified would not have a material adverse effect on
the Investment Adviser;
(iii) the Investment Adviser is registered as an investment
adviser under the Investment Advisers Act and is not prohibited by the
Investment Advisers Act or the Investment Company Act, or the rules
and regulations under such Acts, from acting under the Investment
Advisory Agreement as contemplated therein and, to such counsel's
current actual knowledge, no order of suspension or
21
revocation has been issued or proceedings initiated for that purpose
or threatened by the Commission;
(iv) this Agreement, the Investment Advisory Agreement, the
Administration Agreement, the Custody Agreement and the Sub-Custody
Agreement have been duly authorized, executed and delivered by the
Investment Adviser. Assuming that each of this Agreement, the
Investment Advisory Agreement, the Administration Agreement, the
Custody Agreement and the Sub-Custody Agreement has been duly
authorized, executed and delivered by the other party or parties
thereto, each such agreement is a legal, valid and binding obligation
of the Investment Adviser, enforceable in accordance with its terms,
except to the extent such enforceability may be limited by applicable
bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting creditors' rights generally and by general
principles of equity, regardless of whether considered in a proceeding
in equity or at law, and, except further, as the enforceability of the
indemnification and contribution provisions contained in this
Agreement may be limited by U.S. federal and state securities laws;
(v) the performance by the Investment Adviser of its obligations
under this Agreement or the Investment Advisory Agreement will not
conflict with, or result in a breach of, or constitute a default under
or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Investment Adviser
pursuant to the terms of any material agreement or instrument of which
such counsel has current actual knowledge to which the Investment
Adviser is a party or is bound, or any U.S. law or regulation, or, to
such counsel's current actual knowledge, any order applicable to the
Investment Adviser of any court, regulatory body, administrative
agency, government body, stock exchange or securities association
having jurisdiction over the Investment Adviser or its properties or
operations; and
(vi) to such counsel's current actual knowledge, there are no
governmental proceedings pending or threatened against the Investment
Adviser.
Counsel to the Investment Adviser may state that their opinion and
belief expressed pursuant to this Article VI(h) is limited to New York law and
federal securities law, relies as to factual matters on officers' certificates
of the Investment Adviser and relies as to matters of Japanese law on an opinion
of Mori, Hamada & Matsumoto.
(i) OPINION OF JAPANESE COUNSEL TO THE FUND AND DEALER MANAGER. The
Dealer Manager shall have received the favorable opinion of Mori, Hamada &
Matsumoto, Japanese counsel to the Fund and the Dealer Manager, dated the
Representation Date, to the effect that:
(i) except for such consents, approvals, licenses and
authorizations as shall be specified in such counsel's opinion, there
are no other consents, approvals, licenses or authorizations required
by any party to any of this
22
Agreement, the Investment Advisory Agreement, the Investment
Management Agreement, the Custody Agreement, the Sub-Custody Agreement
or the Administration Agreement from any governmental or other
regulatory authorities, stock exchanges or securities business
associations in or of Japan in connection with the execution, delivery
or performance of any of this Agreement, the Investment Advisory
Agreement, the Investment Management Agreement, the Custody Agreement,
the Sub-Custody Agreement or the Administration Agreement in the
manner contemplated therein, or of the issue and sale of the Rights
and Shares in the manner contemplated in the Prospectus, or of the
conduct or the business of the Fund as described in the Prospectus;
(ii) the information in the Prospectus under the headings "Risk
Factors and Special Considerations --Japanese Government Regulation,"
"The Tokyo Stock Exchange," "Taxation -- Japanese Taxes," and "Legal
Matters," insofar as it relates to matters of Japanese law or
regulations or legal conclusions based thereon, is in all material
respects an accurate description of Japanese law or regulations or
legal conclusions based thereon as of the date thereof;
(iii) no stamp duty or other documentary tax is payable in Japan
in respect of the execution, delivery or performance of this Agreement
when executed and delivered outside of Japan; under current laws and
regulations, no stamp duty or other documentary tax will be charged
on, and no other deduction will be made by any court in Japan from,
the amount awarded in any judgment rendered in respect of any of the
agreements referred to in this paragraph, other than the revenue
stamps required for filing of complaints with such court;
(iv) the choice of the laws of the State of New York to govern
this Agreement is a valid choice of law under the laws of Japan, and
accordingly would be applied by the courts of Japan if this Agreement
or any claim made hereunder is or are brought before such court upon
proof of the relevant provisions of U.S. law and provided that such
provisions are not contrary to the public policy of Japan;
(v) to the best of such counsel's knowledge, there is in Japan no
pending or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving or
affecting the Fund or questioning the validity of any of this
Agreement, the Investment Advisory Agreement, the Investment
Management Agreement, the Custody Agreement, the Sub-Custody Agreement
or the Administration Agreement; and
(vi) it is not necessary, by reason of the entry into or
performance of this Agreement, that any of the parties hereto be
licensed or qualified or otherwise authorized to do business in Japan,
and the entry into or performance of this Agreement by any such party
will not, to the best of their knowledge, violate any applicable law,
rule or regulation of Japan or any government or any agency thereof,
in each case so long as such parties enter into and perform this
Agreement outside of Japan;
23
provided that, the opinions expressed by such counsel are limited to
questions arising under the laws of Japan and such counsel need not exercise any
factual investigation regarding the matters mentioned in this paragraph (i) of
Article VI.
(j) OPINION OF COUNSEL TO THE DEALER MANAGER. The Dealer Manager has
received on the Representation Date an opinion of Sidley Xxxxxx Xxxxx &
Wood LLP, counsel to the Dealer Manager, dated the date hereof, covering
the matters referred to in subparagraphs (vi) (but only as to the
authorization, execution, and delivery of this Agreement), (viii), (xii)
and (xiii) (but only as to the statements in the Prospectus under
"Description of Common Stock" and only with respect to matters of U.S. law
or legal conclusions involving U.S. law) of paragraph (f) above and the
last paragraph of (f) above.
(k) BASIS FOR LEGAL OPINIONS; RELIANCE ON OPINION OF MARYLAND
COUNSEL. Xxxxxxxx Chance US LLP and Sidley Xxxxxx Xxxxx & Xxxx LLP may,
with respect to the last paragraph of (f) above, state that their opinion
and belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements
thereto and review and discussion of the contents thereof, but are without
independent check or verification except as specified. Xxxxxxxx Chance US
LLP and Sidley Xxxxxx Xxxxx & Xxxx LLP may also, with respect to paragraphs
(f) and (j) above, rely as to matters governed by the laws of the State of
Maryland upon an opinion of Maryland counsel for the Fund, Xxxxx Xxxxxxx
LLP, and, to the extent any such counsel deems appropriate, upon the
representations of the Fund contained in this Agreement, so long as (A)
such Maryland counsel for the Fund is reasonably satisfactory to the Dealer
Manager and (B) a copy of the opinion so relied upon is delivered to the
Dealer Manager and Sidley Xxxxxx Xxxxx & Xxxx LLP and is in form and
substance satisfactory to the Dealer Manager and Sidley Xxxxxx Xxxxx & Xxxx
LLP.
(l) ACCOUNTANT'S COMFORT LETTER. The Dealer Manager has received on
the date hereof a letter dated the date hereof, in form and substance
satisfactory to the Dealer Manager, from PricewaterhouseCoopers LLP,
independent public accountants, containing statements and information of
the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information regarding the Fund contained in the Registration Statement and
the Prospectus.
(m) CONDITIONS AT THE REPRESENTATION DATE. At the Representation
Date, counsel for the Dealer Manager shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance of the Rights and the Shares and
the sale of the Shares as contemplated herein and in the Registration
Statement and to pass upon related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of
any of the conditions, herein contained; and all proceedings taken by the
Fund, the Investment Manager and the Investment Adviser in connection with
the issuance of the Rights and the Shares and sale of the Shares as
contemplated herein and in the Registration Statement shall be satisfactory
in form and substance to the Dealer Manager and counsel for the Dealer
Manager.
24
(n) SATISFACTORY FORM AND SUBSTANCE OF PROCEEDINGS. All proceedings
taken by the Fund and the Investment Manager in connection with the
distribution of Rights and the issue and sale of the Shares and
registration of the Shares under the Acts and the laws of any United States
jurisdiction will be satisfactory in form and substance to the Dealer
Manager and its counsel.
(o) ABSENCE OF PROCEEDINGS. No proceedings have been instituted or
threatened by the Commission that would adversely affect the Fund's
standing as a registered investment company under the Investment Company
Act or the standing of the Investment Manager as a registered investment
adviser under the Investment Advisers Act.
(p) NYSE LISTING. The Rights and the Shares have been duly authorized
for listing on the NYSE, subject only to official notice of issuance.
In the event that any of the foregoing conditions is at any time not
fulfilled, the Dealer Manager will be entitled to withdraw as dealer manager for
the Offer without any liability or penalty to the Dealer Manager or any
"controlling person" (as defined in Article VIII hereof) and without loss of any
right to the payment of expenses payable hereunder.
ARTICLE VII.
COVENANTS OF THE FUND
In further consideration of the agreements of the Dealer Manager
contained in this Agreement, the Fund covenants and agrees with the Dealer
Manager as follows:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Fund will use its
best efforts to cause the Registration Statement to become effective under
the Securities Act, and will advise the Dealer Manager promptly as to the
time at which the Registration Statement and any amendments thereto
(including any post-effective amendment) becomes so effective and, if
required, to cause the issuance of any orders exempting the Fund from any
provisions of the Investment Company Act and will advise the Dealer Manager
promptly as to the time at which any such orders are granted.
(b) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.
The Fund will notify the Dealer Manager immediately, and confirm the notice
in writing, (i) of the effectiveness of the Registration Statement and any
amendment thereto (including any post-effective amendment), (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings for that
purpose, (v) of the issuance by the Commission of an order of suspension or
revocation of the notification on Form N-8A of registration of the Fund as
an investment company under the Investment Company Act or the initiation of
any proceeding for that purpose, and (vi) of the happening of any event
during the period
25
described in paragraph (d) below that in the judgment of the Fund makes the
Registration Statement or the Prospectus untrue in any material respect or
that requires the making of any change in or addition to the Registration
Statement or the Prospectus in order to make the statements therein not
misleading in any material respect. The Fund will make every reasonable
effort to prevent the issuance of any stop order described in clause (iv)
above or any order of suspension or revocation described in clause (v)
above and, if any such stop order or order of suspension or revocation is
issued, to obtain the lifting thereof at the earliest possible moment.
(c) FILING OF AMENDMENTS. The Fund will give the Dealer Manager
notice of its intention to file any amendment to the Registration Statement
(including any post-effective amendment) or any amendment or supplement to
the Prospectus (including any revised prospectus/statement of additional
information which the Fund proposes for use by the Dealer Manager in
connection with the Offer, which differs from the prospectus/statement of
additional information on file at the Commission at the time the
Registration Statement becomes effective, whether such revised
prospectus/statement of additional information is required to be filed
pursuant to Rule 497(b) or Rule 497(h) under the Securities Act), whether
pursuant to the Acts, or otherwise, and will furnish the Dealer Manager
with copies of any such amendment or supplement a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not file
any such amendment or supplement to which the Dealer Manager or counsel for
the Dealer Manager shall reasonably object.
(d) DELIVERY OF REGISTRATION STATEMENT. To furnish the Dealer
Manager, without charge, two signed copies of the Registration Statement
including exhibits as originally filed and of each amendment thereto, as
soon as practicable, and, during the period described in paragraph (e)
below, as many copies of the Prospectus and any supplements and amendments
thereto as the Dealer Manager may reasonably request.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. If, during such period
as in the opinion of counsel to the Dealer Manager the Prospectus is
required by law to be delivered, any event occurs as a result of which it
is necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus
was delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Prospectus to comply with law, forthwith to prepare
and furnish, at the Fund's expense, to the Dealer Manager and to the
soliciting dealers (whose names and addresses the Dealer Manager will
furnish to the Fund) to which Rights and/or Shares may have been sold and
to any other dealers upon request, either amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus will comply with law.
(f) SUBCHAPTER M COMPLIANCE. To use its best efforts to maintain its
qualification as a regulated investment company under Subchapter M of the
Code.
(g) BLUE SKY QUALIFICATIONS. To endeavor to qualify the Rights and
the Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Dealer
26
Manager reasonably requests, and will maintain such qualifications in
effect for a period of not less than one year after the date hereof. The
Fund will pay all expenses (including reasonable fees and disbursements of
counsel) in connection therewith as well as all fees payable in connection
with the review (if any) of the distribution of the Rights and the issue
and sale of the Shares by the NASD. The Fund will file such statements and
reports as may be required by the laws of each jurisdiction in which the
Rights and Shares have been qualified as above provided.
(h) PROVISION OF EARNINGS STATEMENT. To make generally available to
the Fund's security holders as soon as practicable, but no later than 60
days after the close of the period covered thereby, an earning statement
covering the twelve-month period beginning the first day of the Fund's
fiscal quarter next following the "effective" date (as defined in Rule 158
under the Securities Act) that satisfies the provisions of Rule 158 under
the Securities Act.
(i) PAYMENT OF EXPENSES. To pay (A) all costs, expenses, fees and
taxes incident to (i) the preparation, printing and filing of the
Registration Statement and of each amendment thereto, and the Prospectus,
and any amendments or supplements thereto, (ii) the printing of this
Agreement and such other agreements as the Dealer Manager may reasonably
request, (iii) the preparation, issuance and delivery of the certificates
for the Rights and the Shares, including stock transfer taxes, if any,
payable upon the sale, issuance and delivery by the Fund of the Shares,
(iv) the fees and disbursements of the Fund's counsel and accountants, (v)
furnishing such copies of the Registration Statement, the Prospectus, and
all amendments and supplements thereto, as may be reasonably requested for
use in connection with the distribution of the Rights and the issue and
sale of the Shares, (vi) the printing and delivery to the Dealer Manager of
copies of the Blue Sky Survey, if any, and (vii) the fees and expenses
incurred with respect to the listing of the Rights and the Shares on the
NYSE including the listing fees of such Exchange and the preparation,
printing and the filing fees with respect to the distribution of documents
relating thereto, and (B) to the Dealer Manager up to $100,000 as
reimbursement of certain costs and expenses of the Dealer Manager incurred
in connection with the distribution of the Rights and the issue and sale of
the Shares.
If the issuance of the Rights and the sale of Shares is not
consummated because of any failure, refusal or inability on the part of the
Fund, the Investment Manager or the Investment Adviser to perform any agreement
on its part to be performed, because any other condition of the obligations of
the Dealer Manager under this Agreement is not fulfilled, or because this
Agreement is terminated in accordance with the provisions of clauses (a)(i) and
(a)(ii) of Article IX hereof, the Fund will reimburse the Dealer Manager for the
reasonable costs and expenses as have been incurred by the Dealer Manager,
including reasonable fees and disbursements of counsel for the Dealer Manager in
connection with this Agreement and the proposed offer, and upon demand, the Fund
will pay the full amount of those costs and expenses to the Dealer Manager.
ARTICLE VIII.
INDEMNIFICATION AND CONTRIBUTION
27
(a) Each of the Fund, the Investment Adviser and the Investment
Manager agrees to indemnify and hold harmless the Dealer Manager and each
Soliciting Dealer and each person, if any, who controls the Dealer Manager
and each Soliciting Dealer within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (a "controlling person")
from and against:
(i) any and all losses, claims, damages, expenses and liabilities
(including, without limitation, any legal or other expenses reasonably
incurred by the Dealer Manager and each Soliciting Dealer or any such
controlling person in connection with defending or investigating any
such action or claim) (a) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, the Prospectus (as amended or
supplemented if the Fund has furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue
statement or omission based upon information relating to the Dealer
Manager or a Soliciting Dealer furnished to the Fund in writing by the
Dealer Manager or a Soliciting Dealer, as the case may be, expressly
for use therein or (b) arising out of or based upon (1) any failure of
the Fund to consummate the Offer, including any failure of the Fund to
issue the Rights or issue and sell the Shares, (2) any action taken or
omitted to be taken by the Dealer Manager or a Soliciting Dealer with
the written consent of the Fund (it being understood that the
execution and delivery of this Agreement does not constitute any such
consent), (3) any action taken or omitted to be taken by the Fund, (4)
any breach by the Fund of any representation or warranty, or any
failure by the Fund to comply with any agreement or covenant contained
in this Agreement or the Soliciting Dealer Agreement or (5) any of the
other transactions contemplated by the Offer or by the Dealer
Manager's performance of its obligations under this Agreement or a
Soliciting Dealer's obligations under a Soliciting Dealer Agreement;
(ii) any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon the occurrence of any matter described in clause
(i) above, if such settlement is effected with the written consent of
the Fund, the Investment Adviser or the Investment Manager; and
(iii) any and all expense whatsoever, as incurred (including the
fees and disbursements of counsel chosen by the Dealer Manager or a
Soliciting Dealer), reasonably incurred in investigating, preparing or
defending against any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon the occurrence of any matter described in clause
(i) above, whether or not such indemnified party is a party and
whether or not such claim, action or proceeding is initiated or
brought by or on
28
behalf of the Fund, the Investment Adviser or the Investment Manager,
to the extent that any such expense is not paid under clause (i) or
(ii) above.
(b) The Dealer Manager agrees to indemnify and hold harmless the
Fund, its directors, and each officer of the Fund who signs the
Registration Statement and each person, if any, who controls the Fund
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act from and against any and all losses, claims, damages
and liabilities (including, without limitation, any legal or other expenses
reasonably incurred by the Fund, its directors and each officer of the Fund
who signed the Registration Statement or any such controlling person of the
Fund in connection with defending or investigating any such action or
claim) caused by any untrue statements or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Fund has furnished any amendments or
supplements thereto) or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, but only with reference to
information relating to the Dealer Manager furnished to the Fund in writing
by the Dealer Manager expressly for use in the Registration Statement, or
the Prospectus, any amendment or supplement thereto.
(c) In case any proceeding (including any governmental investigation)
is instituted involving any person in respect of which indemnity may be
sought pursuant to either of (a) or (b) above, such person (the
"indemnified party") will promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, will retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in
such proceeding and will pay the fees and expenses of such counsel related
to such proceeding. In any such proceeding, any indemnified party will have
the right to retain its own counsel, but the fees and expenses of such
counsel will be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and
the indemnified party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the indemnifying party will
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for (a) the fees and expenses of more than one
separate firm (in addition to any local counsel) for the Dealer Manager and
each Soliciting Dealer and all persons, if any, who control the Dealer
Manager and each Soliciting Dealer within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act and (b) the fees
and expenses of more than one separate firm (in addition to any local
counsel) for the Fund, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Fund
within the meaning of either such Section. The indemnifying party will pay
fees and expenses as they are incurred. The indemnifying party will not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing
29
sentence, if at any time an indemnified party will have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second and third sentences of this
paragraph, the indemnifying party agrees that it will be liable for any
settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying
party has not reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying party may,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(d) The Investment Manager and the Investment Adviser shall not be
required by the indemnification provisions of this Article VIII to make any
payment to any indemnified party, so long as and to the extent that the
Fund pays and performs its obligations to such indemnified party under the
indemnification provisions of this Article VIII.
(e) In no case shall the indemnification provided for in this Article
VIII be available to protect any person against any liability to which such
person would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its or his duties, or by
reason of its or his reckless disregard of its or his obligations and
duties under this Agreement.
(f) If the indemnification provided for in (a) or (b) of this Article
VIII is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then the
Fund, the Investment Manager and the Investment Adviser or the Dealer
Manager and/or the Soliciting Dealers, as applicable, in lieu of
indemnifying such indemnified party thereunder, will contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Fund, the
Investment Manager and the Investment Adviser on the one hand and the
Dealer Manager and/or the Soliciting Dealers on the other hand from the
distribution of the Rights and the issue and sale of the Shares or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Fund, the Investment Manager and the Investment Adviser on the one hand and
of the Dealer Manager and/or Soliciting Dealers on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Fund, the Investment
Manager and the Investment Adviser on the one hand and of the Dealer
Manager and/or Soliciting Dealers on the other hand will be deemed to be in
the same respective proportions as the net proceeds from the subscription
for the Shares (before deducting expenses) received by the Fund, the
Investment Manager and the Investment Adviser on the one hand bear to the
amounts received by the Dealer Manager
30
and/or by the Soliciting Dealers pursuant to Article V hereof on the other
hand. The relative fault of the parties will be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Fund, the Investment Manager and the
Investment Adviser on the one hand or by the Dealer Manager and/or the
Soliciting Dealers on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(g) The Fund, the Investment Manager, the Investment Adviser and the
Dealer Manager and Soliciting Dealers agree that it would not be just or
equitable if contribution pursuant to this Article VIII were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph will be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Article VIII, the Dealer Manager on the one hand and each Soliciting Dealer
on the other hand will not be required to contribute any amount in excess
of the amount by which the total fees received by the Dealer Manager and/or
Soliciting Dealer pursuant to Article V hereof exceeds the amount of any
damages that the Dealer Manager or a Soliciting Dealer has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11 (f) of the Securities
Act) will be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The remedies provided for in this
Article VIII are not exclusive and will not limit any rights or remedies
that may otherwise be available to any indemnified party at law or in
equity.
(h) In any proceeding relating to the Registration Statement, the
Prospectus, or any supplement or amendment thereto, each party against whom
contribution may be sought under this Article VIII hereby consents to the
jurisdiction of any court having jurisdiction over any other contributing
party, agrees that process issuing from such court may be served upon him
or it by any other contributing party and consents to the service of
process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other
contributing party is a party.
(i) The indemnity and contribution provisions contained in this
Article VIII and the representations, agreements and warranties of the
Fund, the Investment Adviser and the Investment Manager contained in this
Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement or (ii) any investigation made by or
on behalf of any indemnified party.
ARTICLE IX.
TERMINATION
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This Agreement will be subject to termination by notice given by the
Dealer Manager to the Fund, if (a) after the execution and delivery of this
Agreement (i) there has been, since the date of this Agreement or since the
respective dates as of which information is given in the Registration Statement
excluding any documents incorporated therein by reference pursuant to the
Exchange Act, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Fund, the Investment Manager or the Investment Adviser, whether or not arising
in the ordinary course of business, (ii) trading in the Common Stock has been
suspended on the NYSE, (iii) trading generally has been suspended or materially
limited by, as the case may be, either of the Commission, the NYSE or the Tokyo
Stock Exchange, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by either of said
exchanges or the Nasdaq National Market System or by order of the Commission,
the NASD or any other governmental authority, or if a general banking moratorium
has been declared by Federal, New York or Maryland authorities, or (iv) there
has occurred a material disruption in commercial banking or securities
settlement or clearance services; or (v) there has occurred any outbreak or
escalation of hostilities or any materially adverse change in financial markets
in the United States or in the international financial markets or any other
national or international calamity or crisis that, in the Dealer Manager's
judgment, is material and adverse and (b) in the case of any of the events
specified in clauses (a)(i) through (v), such event singly or together with any
other such events makes it impracticable or inadvisable in the Dealer Manager's
judgment to proceed with the solicitation of the exercise of the Rights or to
market the Shares on the terms and in the manner contemplated in the Prospectus.
Termination of this Agreement by the Dealer Manager shall not preclude the Fund
from consummating the Offer at its discretion.
If this Agreement is terminated pursuant to this Article, such
termination shall be without liability of any party to any other party except as
provided in Article VII hereof and in paragraph (i) of Article VIII hereof.
ARTICLE X.
NOTICES
Any notice by the Fund, the Investment Adviser or the Investment
Manager to the Dealer Manager will be sufficient if given in writing, by
telegraph or by facsimile addressed to the Dealer Manager at Financial Square,
00 Xxx Xxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 10005-3538, Attention: , and any
notice by the Dealer Manager to the Fund will be sufficient if given in writing,
by telegraph or by facsimile addressed to the Fund c/o Daiwa Securities Trust
Company, Xxx Xxxxxxxxx Xxxxx, 0xx Xxxxx, Xxxxxx Xxxx, Xxx Xxxxxx 00000,
Attention: . Notices to the Investment Manager shall be directed to Daiwa SB
Investments (USA) Ltd., Financial Square, 00 Xxx Xxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000-0000, Attention: . Notices to the Investment Adviser shall be
directed to Daiwa SB Investments Ltd., 7-9 Nihonbashi 2-chome, Xxxx-xx, Xxxxx,
000-0000, Xxxxx, Attention: .
This Agreement may be signed in two or more counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
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This Agreement will be governed by and construed in accordance with
the laws of the State of New York without giving effect to the conflict of law
provisions thereof; and each of the parties hereto submit to the jurisdiction of
the courts of the State of New York. Specified times of day refer to New York
time.
Very truly yours,
THE JAPAN EQUITY FUND, INC.
By
--------------------------------
Name:
Title:
DAIWA SB INVESTMENTS (USA) LTD.
By
--------------------------------
Name:
Title:
DAIWA SB INVESTMENTS LTD.
By
--------------------------------
Name:
Title:
Accepted, , 2003
DAIWA SECURITIES AMERICA INC.
By
----------------------------
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