1
SUBSCRIPTION AGENT AGREEMENT
This Subscription Agent Agreement (the "Agreement") is made
as of _____________, 1996 between The Czech Republic Fund, Inc., a Maryland
corporation (the "Fund") and State Street Bank and Trust Company, a national
banking association, as subscription agent (the "Subscription Agent"). All terms
not defined herein shall have the meaning given in the prospectus (the
"Prospectus") included in the Registration Statement on Form N-2 (File Nos.
33-63377 and 811-8878) filed by the Fund with the Securities and Exchange
Commission on September 12, 1995, as amended by any amendment filed with respect
thereto (the "Registration Statement").
WHEREAS, the Fund proposes to make a subscription offer by
issuing certificates or other evidences of subscription rights, in the form
designated by the Fund (the "Subscription Certificates"), to stockholders of
record (the "Stockholders") of its common stock, par value $.001 per share
("Common Stock"), as of a record date specified by the Fund (the "Record Date"),
pursuant to which each Stockholder will have certain rights (the "Rights") to
subscribe for shares of Common Stock (the "Shares"), as described in and upon
such terms as are set forth in the Prospectus, a final copy of which has been
or, upon availability promptly will be, delivered to the Subscription Agent; and
WHEREAS, the Fund wishes the Subscription Agent to perform
certain acts on behalf of the Fund, and the Subscription Agent is willing to
perform such acts, in connection with the distribution of the Subscription
Certificates and the issuance and exercise of the Rights to subscribe therein
set forth, all upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual agreements set forth herein, the parties agree as follows:
1. Appointment.
The Fund hereby appoints and authorizes the Subscription
Agent to act as subscription agent in connection with the distribution of
Subscription Certificates and the issuance and exercise of the Rights in
accordance with the terms set forth in this Agreement, and the Subscription
Agent hereby accepts such appointment.
2. Form and Execution of Subscription Certificates.
(a) Each Subscription Certificate shall be irrevocable and
fully transferable. The Subscription Agent shall, in its capacity as Transfer
Agent of the Fund, maintain a register of Subscription Certificates and the
holders of record thereof (the "Rights Holders"). Each Subscription Certificate
shall, subject
2
to the provisions thereof, entitle each Rights Holder to the following:
(1) The right to acquire during the Subscription Period, at
the Subscription Price, one Share for every three Rights held (the
"Primary Subscription"); and
(2) The right to subscribe for additional Shares, subject to
the availability of such Shares and to the allotment of such Shares as
may be available among Rights Holders who exercise over-subscription
Rights on the basis specified in the Prospectus (the "Over-Subscription
Privilege").
3. Rights and Issuance of Subscription Certificates.
(a) Each Subscription Certificate shall evidence the Rights
of the Stockholder therein named to purchase Shares upon the terms and
conditions therein and herein set forth.
(b) Upon the written advice of the Fund, signed by any of
its duly authorized officers, the Subscription Agent will, from a list of the
Fund's Stockholders, which list will be compiled by the Subscription Agent in
its capacity as Transfer Agent of the Fund, prepare and record Subscription
Certificates in the names of the Stockholders, setting forth the number of
Rights to subscribe for the Shares calculated on the basis of one Right for each
share of Common Stock recorded on the books of the Fund in the name of each such
Stockholder as of the Record Date. The number of Rights that are issued to
Stockholders will be rounded up, by the Subscription Agent, to the nearest whole
number of Rights evenly divisible by three. In the case of shares of Common
Stock held of record by Cede & Co., as nominee for The Depository Trust Company,
or by any other depository or nominee (a "Nominee Holder"), the number of Rights
issued to such Nominee Holder will be adjusted, by the Subscription Agent, to
permit rounding up (to the nearest whole number of Rights evenly divisible by
three) of the number of Rights to be received by beneficial holders for whom the
Nominee Holder is the holder of record only if the Nominee Holder provides to
the Subscription Agent on or before the close of business on the fifth business
day prior to the Expiration Date written representation of the number of Rights
required for such rounding. Each Subscription Certificate shall be dated as of
the Record Date and shall be executed manually or by facsimile signature of a
duly authorized officer of the Fund. No Subscription Certificate shall be valid
for any purpose unless so executed. Should any officer of the Fund whose
signature has been placed upon any Subscription Certificate cease to hold such
office at any time thereafter, such event shall have no effect on the validity
of such Subscription Certificate.
(c) Upon the written advice of the Fund, signed as by any of
its duly authorized officers, as to the effective date of
3
the Registration Statement, the Subscription Agent shall promptly countersign
and deliver the Subscription Certificates, together with a copy of the
Prospectus and any other document as the Fund deems necessary or appropriate, to
all Stockholders with record addresses in the United States (including its
territories and possessions and the District of Columbia). Delivery shall be by
first class mail (without registration or insurance). The Subscription Agent
will mail a copy of the Prospectus, a special notice and other documents as the
Fund deems necessary or appropriate, if any, but not Subscription Certificates,
to Stockholders whose record addresses are outside the United States (including
its territories and possessions and the District of Columbia) ("Foreign
Stockholders"). Delivery to Foreign Stockholders shall be by air mail (without
registration or insurance) or for those Foreign Stockholders having APO or FPO
addresses, by first class mail (without registration or insurance).
(d) The Subscription Agent shall hold the Rights issued by
the Fund to Foreign Stockholders for such Foreign Stockholders' accounts until
instructions are received to exercise, sell or transfer the Rights. If no
instructions have been received by 12:00 Noon, New York City time, three
Business Days prior to the Expiration Date, the Subscription Agent will use its
best efforts to sell the Rights of those registered Foreign Stockholders through
or to the Dealer Manager in accordance with Section 5(b) hereof. The proceeds
net of commissions, if any, from the sale of those Rights will be remitted to
the Foreign Stockholders.
4. Exercise.
(a) Exercising Rights Holders may acquire Shares in the
Primary Subscription and pursuant to the Over-Subscription Privilege by
delivering to the Subscription Agent as specified in the Prospectus (i) the
Subscription Certificate, duly executed by such Exercising Rights Holder in
accordance with and as provided by the terms and conditions of the Subscription
Certificate, together with (ii) the purchase price of $_____ for each Share
subscribed for by exercise of such Rights, in U.S. dollars by money order or
check drawn on a bank located in the United States, in each case payable to the
order of the Fund.
(b) Rights may be exercised at any time after the date of
issuance of the Subscription Certificates with respect thereto, but no later
than 5:00 P.M. New York City time, on the Expiration Date. For the purpose of
determining the time of the exercise of any Rights, delivery of any material to
the Subscription Agent shall be deemed to occur when such materials are received
at the address of the Subscription Agent as specified in the Prospectus.
(c) Notwithstanding the provisions of Section 4(a) and 4(b)
hereof regarding delivery of an executed Subscription
4
Certificate to the Subscription Agent prior to 5:00 p.m. New York City time on
the Expiration Date, if prior to such time the Subscription Agent receives a
Notice of Guaranteed Delivery by facsimile (telecopy) or otherwise from a bank,
a trust company or a New York Stock Exchange member guaranteeing delivery of (i)
payment of the full Subscription Price for the Shares subscribed for in the
Primary Subscription and any additional Shares subscribed for pursuant to the
Over-Subscription Privilege, and (ii) a properly completed and executed
Subscription Certificate, then such exercise of Rights in the Primary
Subscription and pursuant to the Over-Subscription Privilege shall be regarded
as timely, subject, however, to receipt of the duly executed Subscription
Certificate and full payment for the Shares by the Subscription Agent within
three Business Days after the Expiration Date (the "Protect Period").
(d) Within seven Business Days following the end of the
Protect Period, the Subscription Agent shall send to each Exercising Rights
Holder (or, if shares of Common Stock on the Record Date are held by a Nominee
Holder, to such Nominee Holder) the share certificates representing the Shares
acquired in the Primary Subscription, and, if applicable, pursuant to the Over-
Subscription Privilege, along with a letter explaining the allocation of shares
pursuant to the Over-Subscription Privilege. Any excess payment ("Excess
Payment") to be refunded by the Fund to an Exercising Rights Holder who is not
allocated the full amount of shares of Common Stock subscribed for pursuant to
the Over-Subscription Privilege, shall be mailed by the Subscription Agent to
such Exercising Rights Holder as described in Section 9(b) hereof.
5. Transfer of Rights.
(a) Rights Holders who do not wish to exercise any or all of
their Rights may instruct the Subscription Agent to sell any unexercised Rights
by delivering to the Subscription Agent at least three Business Days prior to
the Expiration Date Subscription Certificates representing the Rights to be sold
with the appropriate instructions to sell the Rights. Upon timely receipt by the
Subscription Agent of appropriate instructions to sell the Rights, the
Subscription Agent shall use its best efforts to complete the sale. The
Subscription Agent shall remit the proceeds of sale, net of any commissions to
the appropriate Rights Holder. The Subscription Agent shall also use its best
efforts to sell all Rights which remain unclaimed as a result of Subscription
Certificates being returned by the postal authorities to the Subscription Agent
as undeliverable as of the fourth Business Day prior to the Expiration Date and
Rights of Foreign Stockholders who do not respond to the Agent by 12:00 Noon,
New York City time, three Business Days prior to the Expiration Date. Such sales
will be made, net of any commissions, on behalf of such Stockholders. The
Subscription Agent will hold the proceeds from those sales for the benefit of
5
such Stockholders until such proceeds are either claimed or escheat.
(b) The Subscription Agent may retain Xxxxxxxxxxx & Co.,
Inc. ("Xxxxxxxxxxx") to act as its broker in carrying out the sale on a best
efforts basis of any Rights to be sold pursuant to Sections 3(c) and 5(a),
provided the brokerage fees charged by Xxxxxxxxxxx in connection with any such
sales are not in excess of the usual and customary brokerage fees for such
transactions. The Subscription Agent also may sell the Rights to Xxxxxxxxxxx as
principal provided that such sales are made at the then current market price for
the Rights less an amount not in excess of the usual and customary brokerage fee
that would have been payable had such sales been conducted through a broker.
(c) Rights Holders may transfer a portion of the Rights
evidenced by a single Subscription Certificate (but in a number evenly divisible
by three) by delivering to the Subscription Agent within at least one Business
Day prior to the Expiration Date a Subscription Certificate properly endorsed
for transfer, with instructions to register such portion of the Rights evidenced
thereby in the name of the transferee and to issue a new Subscription
Certificate to the transferee evidencing such transferred Rights. In such event,
the Subscription Agent shall issue a new Subscription Certificate evidencing the
balance of the Rights to the transferring Rights Holder or, if the transferring
Rights Holder so instructs, to an additional transferee.
6. Validity of Subscriptions.
Irregular subscriptions not otherwise covered by specific
instructions herein shall be submitted to an appropriate officer of the Fund and
handled in accordance with such officer's instructions. Such instructions will
be documented by the Subscription Agent indicating the instructing officer and
the date thereof.
7. Over-Subscription Privilege.
Shares not subscribed for in the Primary Subscription will be
offered, by means of the Primary Over-Subscription Privilege, to the
Stockholders who have exercised all exercisable Rights issued to them and who
wish to acquire more than the number of Shares for which the Rights issued to
them are exercisable. Stockholders should indicate, on the Subscription
Certificate submitted with respect to the exercise of the Rights issued to them,
how many Shares they are willing to acquire pursuant to the Primary
Over-Subscription Privilege. If a sufficient number of Shares remain, all
over-subscriptions will be honored in full.
If subscriptions for Shares pursuant to the Primary
Over-Subscription Privilege exceed the number of Shares
6
available, the available Shares will be allocated, pursuant to the terms of the
Prospectus, first among Stockholders who subscribe for an aggregate of 100 or
fewer Shares. Any Shares remaining thereafter will be allocated among all other
Stockholders. In each case, if insufficient Shares are available to permit such
allocation, Shares will be allocated pro rata among the Stockholders being
prorated, based on the number of Shares such Stockholders subscribed for in the
Primary Subscription relative to the aggregate number of Shares subscribed for
in the Primary Subscription by all such Stockholders then being prorated.
Any Exercising Rights Holder is entitled to subscribe for
Shares which are not otherwise subscribed for in the Primary Subscription or
pursuant to the Primary Over-Subscription Privilege. Exercising Rights Holders
should indicate, on the Subscription Certificate submitted with respect to the
exercise of any Rights, how many Shares they are willing to acquire pursuant to
the Secondary Over-Subscription Privilege. If sufficient Shares remain, all
over-subscriptions by Exercising Rights Holders will be honored in full. If
remaining Shares are insufficient to permit such allocation, such Shares will be
allocated pro rata among Exercising Rights Holders being prorated, based on the
number of Shares such Exercising Rights Holders subscribed for in the Primary
Subscription relative to the aggregate number of Shares subscribed for in the
Primary Subscription by all such Exercising Rights Holders then being prorated.
The percentage of Shares each over-subscribing Exercising
Rights Holder may acquire may be rounded up or down to result in delivery of
whole Shares. The Subscription Agent shall advise the Fund immediately upon the
completion of the allocation set forth above as to the total number of Shares
subscribed and distributable.
8. Delivery of Share Certificates.
The Subscription Agent will deliver (i) certificates
representing those Shares purchased pursuant to exercise of Primary Subscription
Rights as soon as practicable after the corresponding Rights have been validly
exercised and full payment for such Shares has been received and cleared and
(ii) certificates representing those Shares purchased pursuant to the exercise
of the Over-Subscription Privilege as soon as practicable after the Expiration
Date and after all allocations have been effected.
9. Holding Proceeds of Rights Offering in Escrow.
(a) All proceeds received by the Subscription Agent from
Rights Holders in respect of the exercise of Rights shall be held by the
Subscription Agent, on behalf of the Fund, in a segregated, interest-bearing
escrow account (the "Escrow
7
Account"). Pending disbursement in the manner described in Section 4(d) above,
funds held in the Escrow Account shall be invested by the Subscription Agent at
the direction of the Fund.
(b) The Subscription Agent shall deliver all proceeds
received in respect of the exercise of Rights (including interest earned
thereon) to the Fund as promptly as practicable, but in no event later than
seven Business Days after the end of the Protect Period. Proceeds held in
respect of any Excess Payment shall be refunded to the appropriate Exercising
Rights Holders within seven Business Days after the end of the Protect Period.
10. Reports.
(a) Daily, during the period commencing on the Record Date,
until termination of the Subscription Period, the Subscription Agent will report
by telephone or telecopier (by 12:00 Noon, New York City 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 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 show the cumulative totals and any such other information as may
be mutually determined by the Fund and the Subscription Agent.
(b) The Subscription Agent will inform the Dealer Manager
orally, on each Business Day during the Subscription Period (to be followed by
written confirmation), as to the number of Rights that have been exercised since
its previous daily report to the Dealer Manager and, not later than 12:00 Noon
(New York City time) on the third day after the end of the Protect Period, 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
Stockholders).
11. Loss or Mutilation.
If any Subscription Certificate is lost, stolen, mutilated or
destroyed, the Subscription Agent may, on such terms which will indemnify and
protect the Fund and the Subscription Agent as the Subscription Agent may in its
discretion impose (which shall, in the case of a mutilated Subscription
Certificate include the surrender and cancellation thereof), issue a new
Subscription Certificate of like denomination in substitution for the
Subscription Certificate so lost, stolen, mutilated or destroyed.
12. Compensation for Services.
The Fund agrees to pay to the Subscription Agent compensation
for its services as such in accordance with its Fee Schedule attached, dated
_____________, 1996, and attached hereto as Schedule A. The Subscription Agent
agrees that such
8
compensation shall include all services as Transfer Agent and Registrar provided
in connection with the offering of the Rights. The Fund further agrees that it
will reimburse the Subscription Agent for its reasonable out-of-pocket expenses
incurred in the performance of its duties as such.
13. Instructions and Indemnification.
The Subscription Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and conditions:
(a) The Subscription Agent shall be entitled to rely upon
any instructions or directions furnished to it by an appropriate officer of the
Fund, whether in conformity with the provisions of this Agreement or
constituting a modification hereof or a supplement hereto. Without limiting the
generality of the foregoing or any other provision of this Agreement, the
Subscription Agent, in connection with its duties hereunder, shall not be under
any duty or obligation to inquire into the validity or invalidity or authority
or lack thereof of any instruction or direction from an officer of the Fund
which conforms to the applicable requirements of this Agreement and which the
Subscription Agent reasonably believes to be genuine and shall not be liable for
any delays, errors or loss of data occurring by reason of circumstances beyond
the Subscription Agent's control, including, without limitation, acts of civil
or military authority, national emergencies, labor difficulties, fire, flood,
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
(b) The Fund will indemnify the Subscription Agent and its
nominees against, and hold it harmless from, all liability and expense which may
arise out of or in connection with the services described in this Agreement or
the instructions or directions furnished to the Subscription Agent relating to
this Agreement by an appropriate officer of the Fund, except for any liability
or expense which shall arise out of the negligence, bad faith or willful
misconduct of the Subscription Agent or such nominees.
14. Changes in Subscription Certificate.
The Subscription Agent may, without the consent or
concurrence of the Stockholders in whose names Subscription Certificates are
registered, by supplemental agreement or otherwise, concur with the Fund in
making any changes or corrections in a Subscription Certificate that it shall
have been advised by counsel (who may be counsel for the Fund) is appropriate to
cure any ambiguity or to correct any defective or inconsistent provisions or
clerical omission or mistake or manifest error therein or herein contained, and
which shall not be inconsistent with the provision of the Subscription
9
Certificate except insofar as any such change may confer additional rights upon
the Stockholders.
15. Assignment; Delegation.
(a) Except as provided in (c) below, neither this Agreement
nor any rights or obligations hereunder may be assigned or delegated by either
party without the written consent of the other party.
(b) This Agreement shall inure to the benefit of and be
binding upon the parties and their respective permitted successors and assigns.
Nothing in this Agreement is intended or shall be construed to confer upon any
other person any right, remedy or claim or to impose upon any other person any
duty, liability or obligation.
(c) The Subscription Agent may, without further consent on
the part of the Fund, subcontract for the performance hereof with (i) Boston
Financial Data Services, Inc., a Massachusetts corporation ("BFDS") which is
duly registered as a transfer agent pursuant to Section 17(c)(1) of the
Securities Exchange Act of 1934, as amended ("Section 17A(c)(1)"), or (ii) an
affiliate of BFDS duly registered as a transfer agent pursuant to Section
17A(c)(1); provided, however, that the Subscription Agent shall be as fully
responsible to the Fund for the acts and omissions of any subcontractor as it is
for its own acts and omissions.
16. Governing Law.
The validity, interpretation and performance of this
Agreement shall be governed by the laws of the State of New York.
17. Severability.
The parties hereto agree that, if any of the provisions
contained in this Agreement shall be determined invalid, unlawful or
unenforceable to any extent, such provisions shall be deemed modified to the
extent necessary to render such provisions enforceable. The parties hereto
further agree that this Agreement shall be deemed severable, and the invalidity,
unlawfulness or unenforceability of any term or provision thereof shall not
affect the validity, legality or enforceability of this Agreement or of any term
or provision hereof.
18. Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
10
19. Captions.
The captions and descriptive headings herein are for the
convenience of the parties only. They do not in any way modify, amplify, alter
or give full notice of the provisions hereof.
20. Facsimile Signatures.
Any facsimile signature of any party hereto shall constitute
a legal, valid and binding execution hereof by such party.
21. Further Actions.
Each party agrees to perform such further acts and execute
such further documents as are necessary to effect the purposes of this
Agreement.
22. Additional Provisions.
Except as specifically modified by this Agreement, the
Subscription Agent's rights and responsibilities set forth in the Transfer
Agency Services Agreement between the Fund and the Subscription Agent are hereby
ratified and confirmed and continue in effect.
11
THE CZECH REPUBLIC FUND, INC.
By:
------------------------------
Xxxx X. Xxxxxxxxx
Chairman of the Board
STATE STREET BANK AND TRUST COMPANY
By:
------------------------------
Name:
Title:
