JAPAN OTC EQUITY FUND, INC.
____________ Shares of Common Stock Issuable Upon Exercise
of Non-Transferable Rights to Subscribe for
Such Shares of Common Stock
DEALER MANAGER AGREEMENT
New York, New York
October 25, 1999
PaineWebber Incorporated
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Japan OTC Equity Fund, Inc., a Maryland corporation (the "Company")
and Nomura Asset Management U.S.A. Inc. (the "Manager") each confirms its
agreement with and appointment of PaineWebber Incorporated to act as dealer
manager (the "Dealer Manager") in connection with the issuance by the Company to
the holders of record at the close of business on October 25, 1999 or such other
date as is established as the record date for such purpose (the "Holders") of
the shares of common stock, par value $.10 per share, of the Company (the
"Common Stock"), of non-transferable rights entitling such Holders to subscribe
for an aggregate of ____________shares (each a "Share" and, collectively, the
"Shares") of Common Stock (the "Offer"). Pursuant to the over-subscription
privilege in connection with the Offer (the "Over-Subscription Privilege"), the
Company may, at the discretion of the Board of Directors, including a majority
of the independent directors, increase the number of Shares subject to
subscription by up to 25%. Pursuant to the terms of the Offer, the Company is
issuing each Holder one non-transferable right (each a "Right" and,
collectively, the "Rights") for each whole share of Common Stock held by such
Holder on the record date set forth in the Prospectus (as defined herein) (the
"Record Date"). The Rights entitle Holders to acquire during the subscription
period set forth in the Prospectus (as defined herein) (the "Subscription
Period"), at the price set forth in the Prospectus (the "Subscription Price"),
one Share for each three Rights exercised on the terms and conditions set forth
in such Prospectus. No fractional Shares will be issued.
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, on Form N-2 (Nos. 333-87159 and
811-05992) and a related preliminary prospectus for the registration of the
Shares under the Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations of the Commission thereunder (the "Securities Act
Rules and Regulations"), and has filed such amendments to such registration
statement on Form N-2, if any, and such amended preliminary prospectuses as may
have been required to the date hereof. The Company will prepare and file such
additional amendments thereto and such amended prospectuses as may hereafter be
required. The registration statement (as amended, if applicable) and the
prospectus 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 such prospectus is referred to herein as the
"Prospectus", except that if any revised prospectus shall be provided to the
Dealer Manager by the Company 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 is required to be filed by the Company pursuant to Rule
497(b) or Rule 497(h) of the Securities Act Rules and Regulations), the term
"Prospectus" shall refer to each such revised prospectus from and after the time
it is first provided to the Dealer Manager for such use. Any letters to
beneficial owners of the shares of Common Stock of the Company, forms used to
exercise rights, any letters from the Company to securities dealers, commercial
banks and other nominees and any newspaper announcements, press releases and
other offering materials and information that the Company may use, approve,
prepare or authorize in writing for use in connection with the Offer, are
collectively referred to hereinafter as the "Offering Materials."
1. Representations and Warranties.
(a) The Company and the Manager represent and warrant to, and agree
with, 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") and as of the Expiration Date (as defined below) that:
(i) The Company meets the requirements for use of Form N-2
under the Securities Act, the Securities Act Rules and Regulations,
the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and the rules and regulations of the Commission under
the Investment Company Act, (the "Investment Company Act Rules and
Regulations"). At the time the Registration Statement becomes
effective, the Registration Statement will contain all statements
required to be stated therein in accordance with and will comply in
all material respects with the requirements of the Securities Act,
the Investment Company Act, the Securities Act Rules and Regulations
and the Investment Company Act Rules and Regulations (the Securities
Act Rules and Regulations and the Investment Company Act Rules and
Regulations will together hereinafter be referred to as the "Rules
and Regulations") and will not include any 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.
From the time the Registration Statement becomes effective through
the expiration date of the Offer set forth in the Prospectus (the
"Expiration Date"), the Prospectus (unless the term "Prospectus"
refers to a prospectus which has been provided to the Dealer Manager
by the Company 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 is first provided to the Dealer Manager for such
use) and the Offering Materials then authorized by the Company for
use will not include 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 relating to the
Dealer Manager furnished to the Company in writing by the Dealer
Manager expressly for use in the Registration Statement or
Prospectus.
(ii) The Company is registered with the Commission under the
Investment Company Act as a closed-end, non-diversified, management
investment company, and no order of suspension or revocation of such
registration has been issued or proceedings therefor initiated or
threatened by the Commission, all required action has been taken
under the Securities Act, the Investment Company Act and any state
securities laws to make the public offering and consummate the
issuance of the Rights and the issuance and sale of the Shares by
the Company upon exercise of the Rights, and the provisions of the
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Company's articles of incorporation and bylaws comply as to form in
all material respects with the requirements of the Investment
Company Act and the Investment Company Act Rules and Regulations.
(iii) PricewaterhouseCoopers LLP, the accountants who audited
the financial statements of the Company set forth or incorporated by
reference in the Registration Statement and the Prospectus, are
independent public accountants as required by the Securities Act and
the Securities Act Rules and Regulations.
(iv) The financial statements of the Company set forth or
incorporated by reference in the Registration Statement and the
Prospectus fairly present in all material respects the financial
condition of the Company as of the dates indicated in conformity
with generally accepted accounting principles; and the information
set forth in the Prospectus under the headings "Fee Table" and
"Financial Highlights" each presents fairly in all material respects
the information stated therein.
(v) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Maryland, has full power and authority (corporate and
other) to conduct its business as described in the Registration
Statement and the Prospectus and is duly qualified to do business in
each jurisdiction in which the conduct of its business requires such
qualification, except where the failure to be so qualified would not
result in a material adverse effect upon the business, properties,
financial position or results of operations of the Company. The
Company has no subsidiaries.
(vi) The Company's authorized capitalization is as set forth
in the Prospectus; the outstanding shares of Common Stock have been
duly authorized and validly issued and are fully paid and
non-assessable and conform in all material respects to the
description thereof in the Prospectus under the heading "Capital
Stock"; the Rights have been duly authorized by all requisite action
on the part of the Company for issuance pursuant to the Offer; the
Shares have been or, with respect to the Shares to be issued
pursuant to the Over-Subscription Privilege, will be duly authorized
by all requisite action on the part of the Company for issuance and
sale pursuant to the terms of the Offer and, when issued and
delivered by the Company pursuant to the terms of the Offer against
payment of the consideration set forth in the Prospectus will be
validly issued and fully paid and non-assessable; the Shares and the
Rights conform in all material respects to all statements relating
thereto contained in the Registration Statement and the Prospectus;
and the issuance of each of the Rights and the Shares is not subject
to any preemptive rights.
(vii) Except as set forth in the Prospectus, subsequent to the
respective dates as of which information is given in the
Registration Statement and the Prospectus, (A) the Company has not
incurred any liabilities or obligations, direct or contingent, or
entered into any transactions, other than in the ordinary course of
business, that are material to the Company, (B) there has not been
any material change in the capital stock of the Company, or any
material adverse change, or to the Company's knowledge any
development involving a prospective material adverse change, in the
condition (financial or otherwise), business, prospects, net worth
or results of operations of the Company, (C) there has been no
dividend or distribution paid or declared in respect of the
Company's capital stock and (D) the Company has no outstanding
long-term debt.
(viii) Except as set forth in the Prospectus, there is not
pending or, to the knowledge of the Company or the Manager,
threatened, any action, suit or proceeding
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affecting the Company or to which the Company is a party before or
by any court or governmental agency or body, which might result in
any material adverse change in the condition (financial or
otherwise), business, prospects, net worth or results of operations
of the Company, or which might materially and adversely affect the
properties or assets thereof.
(ix) There are no contracts or other documents of the Company
that are required to be filed as exhibits to the Registration
Statement by the Securities Act or the Investment Company Act or by
the Rules and Regulations that have not been so filed or
incorporated by reference therein as permitted by the Rules and
Regulations.
(x) This Agreement, the Subscription Rights Agency Agreement
(the "Subscription Agency Agreement") between the Company and State
Street Bank and Trust Company (the "Subscription Agent"), the
Management Agreement between the Company and the Manager (the
"Management Agreement"), the Custodian Agreement between the Company
and State Street Bank and Trust Company (the "Custodian Agreement")
and the Registrar, Transfer Agency and Service Agreement between the
Company and State Street Bank and Trust Company (the "Transfer
Agency and Service Agreement") (collectively, all the foregoing are
the "Company Agreements") have been duly authorized, executed and
delivered by the Company; the Company Agreements are, assuming due
authorization, execution and delivery by the other parties thereto,
legal, valid, binding and enforceable obligations of the Company
subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general principles
of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law) and except as enforcement of rights
to indemnity and contribution hereunder may be limited by Federal or
state securities laws or principles of public policy, and the
performance of the Company's obligations under the Company
Agreements and the consummation of the transactions contemplated
therein or in the Registration Statement will not result in a
material breach or violation of any of the terms and provisions of,
constitute a default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any properties or assets of
the Company pursuant to any material agreement, indenture, mortgage,
lease or other instrument to which the Company is a party or by
which it may be bound or to which any of the property or assets of
the Company is subject, nor will such action result in any violation
of the Company's charter or bylaws, or any order, law, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its properties; no consent,
approval, authorization, notification or order of, or filing with,
any court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated by the
Company Agreements or the Registration Statement, except such as
have been obtained, or if the registration statement filed with
respect to the Shares is not effective under the Securities Act as
of the time of execution hereof, such as may be required (and shall
be obtained as provided in this Agreement) under the Investment
Company Act, the Securities Act, the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and state securities laws.
(xi) Each of the Company Agreements complies as to form in all
material respects with all applicable provisions of the Investment
Company Act.
(xii) The Common Stock has been duly listed on the New York
Stock Exchange and prior to their issuance the Shares will have been
approved for listing, subject to official notice of issuance.
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(xiii) The Company owns or possesses or has obtained all
material governmental licenses, permits, consents, orders or
approvals and other authorizations necessary to lease or own, as the
case may be, and to operate its properties and to carry on its
business as contemplated in the Prospectus; and there are no
Japanese governmental licenses, permits, consents, orders, approvals
or other authorizations required to be obtained by the Fund in order
for it to own its properties or to carry on its business as
contemplated in the Prospectus other than as disclosed in the
Prospectus.
(xiv) The Company (A) has not 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
Company to facilitate the issuance of the Rights or the sale or
resale of the Shares, (B) has not since the filing of the
Registration Statement sold, bid for or purchased, or paid anyone
any compensation for soliciting purchases of, shares of Common Stock
of the Company and (C) will not, until the later of the expiration
of the Rights or the completion of the distribution (within the
meaning of Regulation M under the Exchange Act) of the Shares, sell,
bid for or purchase, pay or agree to pay to any person any
compensation for soliciting another to purchase any other securities
of the Company (except for the solicitation of the exercises of
Rights pursuant to this Agreement); provided that any action in
connection with the Company's -------- ---- dividend reinvestment
plan will not be deemed to be within the terms of this Section
1(a)(xiv).
(xv) The Company has complied in all previous tax years, and
intends to direct the investment of the proceeds of the Offer
described in the Registration Statement and the Prospectus in such a
manner as to continue to comply with the requirements of Subchapter
M of the Internal Revenue Code of 1986, as amended ("Subchapter M of
the Code"), and is qualified and intends to continue to qualify as a
regulated investment company under Subchapter M of the Code.
(xvi) The Prospectus and the Offering Materials complied and
comply with the requirements of the Securities Act, the Investment
Company Act and the Rules and Regulations.
(xvii) There are no material restrictions, limitations or
regulations with respect to the ability of the Company to invest its
assets as described in the Prospectus other than as described
therein.
(xviii) 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 (except to the extent that the Dealer Manager may do
business in Japan) with respect to this Agreement or the purchase
and sale of the Shares hereunder.
(b) The Manager represents and warrants to, and agrees with, the
Dealer Manager as of the date hereof, as of the Representation Date and as
of the Expiration Date that:
(i) The Manager has been duly organized and is validly
existing as a corporation under the laws of the State of New York,
and has full corporate power and authority to own its properties and
conduct its business as described in the Prospectus, and is duly
licensed or qualified as a foreign corporation and in good standing
to do business in each other jurisdiction in which its ownership of
property or the conduct of its business requires such qualification
or license, except where the failure to be so qualified would not
have a material adverse effect on the Company or the Manager.
5
(ii) The Manager is duly registered as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and is not prohibited by the Advisers Act or the Investment
Company Act, or the rules and regulations under such Acts, from
acting under the Management Agreement and the Investment Advisory
Agreement for the Company as contemplated by the Prospectus.
(iii) Each of this Agreement, the Management Agreement and the
Investment Advisory Agreement has been duly authorized, executed and
delivered by the Manager; the Management Agreement and the
Investment Advisory Agreement are, assuming due authorization,
execution and delivery by the other parties thereto, legal, valid,
binding and enforceable obligations of the Manager, subject as to
enforcement to bankruptcy, insolvency, reorganization, moratorium
and other laws of general applicability relating to or affecting
creditors' rights, and to general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or
at law), and the performance by the Manager of its obligations under
such agreements and the consummation of the transactions therein
contemplated to be consummated by the Manager will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any material agreement or
instrument to which the Manager is a party or and by which it is
bound or to which any of the property of the Manager is subject, the
charter or bylaws of the Manager, or any order, rule or regulation
of any court or governmental agency or body, stock exchange or
securities association having jurisdiction over the Manager or any
of its properties or operations.
(iv) Except as set forth in the Prospectus, there is not
pending or, to the knowledge of the Manager, threatened, any action,
suit or proceeding to which the Manager is a party before or by any
court or governmental agency or body, which is likely to have a
material adverse effect upon the Company or upon the ability of the
Manager to perform its obligations under the Management Agreement
and the Investment Advisory Agreement.
(v) The Manager (i) has not 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 Company to
facilitate the issuance of the Rights or the sale or resale of the
Shares, (ii) has not since the filing of the Registration Statement
sold, bid for or purchased, or paid anyone any compensation for
soliciting purchases of, shares of Common Stock of the Company and
(iii) will not, until the later of the expiration of the Rights or
the completion of the distribution (within the meaning of Regulation
M under the Exchange Act) of the Shares, sell, bid for or purchase,
pay or agree to pay any person any compensation for soliciting
another to purchase any other securities of the Company (except for
the solicitation of exercises of Rights pursuant to this Agreement);
provided that any action in connection with the Company's dividend
reinvestment plan will not be deemed to be within the terms of this
Section 1(b)(v).
(vi) The Manager owns, possesses or has obtained and currently
maintains all material governmental licenses, permits, consents,
orders, approvals and other authorizations ("Authorizations") as are
necessary for it to carry on its business as set forth in and
contemplated by the Prospectus except where the failure to obtain
such Authorizations would not have a material adverse effect on the
ability of the Manager to perform its obligations under the
Management Agreement or the Investment Advisory Agreement.
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(vii) The description of the Manager and its business in the
Registration Statement and the Prospectus complies with the
requirements of the Securities Act, the Investment Company Act and
the Rules and Regulations and does not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading in light of the circumstances under which they were
made.
(viii) There are no material restrictions, limitations or
regulations with respect to the ability of the Company to invest its
assets as described in the Prospectus other than as may be described
therein.
(ix) The Shares have not been, and will not be, registered
under the Securities and Exchange Law of Japan; and accordingly the
Manager will not directly or indirectly offer or sell any Shares in
Japan or to, or for the benefit of, any resident of Japan, or
otherwise directly or indirectly reoffer or resell any Shares in
Japan or to, or for the benefit of, any resident of Japan (except in
compliance with the Securities and Exchange Law of Japan and all
other applicable laws and regulations of Japan).
(x) No consent, approval, authorization, notification or order
of, or filing with, any court or governmental agency or body is
required for the consummation by the Manager of the transactions
contemplated by this Agreement, the Management Agreement, the
Investment Advisory Agreement or any other Company Agreement to
which the Manager is a party, except where the failure to obtain
such consent, approval, authorization, notification, or order, or
make such filing would not have a material adverse effect on the
business, properties, financial position, or operations of the
Manager.
(xi) Nomura Asset Management Co., Ltd. (the "Investment
Adviser") has been duly organized and is validly existing as a
corporation under the laws of Japan, and has full corporate power
and authority to own its properties and conduct its business as
described in the Prospectus, and is duly licensed or qualified to do
business in each jurisdiction in which its ownership of property or
the conduct of its business requires such qualification or license,
except where the failure to be so qualified would not have a
material adverse effect on the Company or the Investment Adviser.
(xii) The Investment Adviser is duly registered as an
investment adviser under the Advisers Act, and is not prohibited by
the Advisers Act or the Investment Company Act, or the rules and
regulations under such Acts, from acting under the Investment
Advisory Agreement for the Company as contemplated by the
Prospectus.
(xiii) Each of this Agreement and the Investment Advisory
Agreement between the Manager and the Investment Adviser (the
"Investment Advisory Agreement") has been duly authorized, executed
and delivered by the Investment Adviser; the Investment Advisory
Agreement is, assuming due authorization, execution and delivery by
the other parties thereto, a legal, valid, binding and enforceable
obligation of the Investment Adviser, subject as to enforcement to
bankruptcy, insolvency, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors' rights,
and to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law),
and the performance by the Investment Adviser of its obligations
under such agreements and the consummation of the transactions
therein contemplated to be consummated by the Investment Adviser
will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any
material agreement or instrument to which the
7
Investment Adviser is a party or and by which it is bound or to
which any of the property of the Investment Adviser is subject, the
constitutive documents of the Investment Adviser, or any order, rule
or regulation of any court or governmental agency or body, stock
exchange or securities association having jurisdiction over the
Investment Adviser or any of its properties or operations.
(xiv) Except as set forth in the Prospectus, there is not
pending or, to the knowledge of the Manager, threatened, any action,
suit or proceeding to which the Investment Adviser is a party before
or by any court or governmental agency or body, which is likely to
have a material adverse effect upon the Company or upon the ability
of the Investment Adviser to perform its obligations under the
Investment Advisory Agreement.
(xv) The Investment Adviser (i) has not 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 Company to facilitate the issuance of the Rights or the sale or
resale of the Shares, (ii) has not since the filing of the
Registration Statement sold, bid for or purchased, or paid anyone
any compensation for soliciting purchases of, shares of Common Stock
of the Company and (iii) will not, until the later of the expiration
of the Rights or the completion of the distribution (within the
meaning of Regulation M under the Exchange Act) of the Shares, sell,
bid for or purchase, pay or agree to pay any person any compensation
for soliciting another to purchase any other securities of the
Company (except for the solicitation of exercises of Rights pursuant
to this Agreement); provided that any action in connection with the
Company's dividend reinvestment plan will not be deemed to be within
the terms of this Section 1(b)(v).
(xvi) The Investment Adviser owns, possesses or has obtained
and currently maintains all material Authorizations as are necessary
for it to carry on its business as set forth in and contemplated by
the Prospectus except where the failure to obtain such
Authorizations would not have a material adverse effect on the
ability of the Investment Adviser to perform its obligations under
the Investment Advisory Agreement.
(xvii) The description of the Investment Adviser and its
business in the Registration Statement and the Prospectus complies
with the requirements of the Securities Act, the Investment Company
Act and the Rules and Regulations and does not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading in light of the circumstances
under which they were made.
(xviii) No consent, approval, authorization, notification or
order of, or filing with, any court or governmental agency or body
is required for the consummation by the Investment Adviser of the
transactions contemplated by this Agreement, the Investment Advisory
Agreement or any other Company Agreement to which the Investment
Adviser is a party, except where the failure to obtain such consent,
approval, authorization, notification, or order, or make such filing
would not have a material adverse effect on the business,
properties, financial position, or operations of the Investment
Adviser.
(c) Any certificate required by this Agreement that is signed by any
officer of the Company, the Manager or the Investment Adviser and delivered to
the Dealer Manager or counsel for the Dealer Manager shall be deemed a
representation and warranty by the Company, the Manager or the Investment
Adviser, as the case may be, to the Dealer Manager, as to the matters covered
thereby.
8
2. Agreement to Act as Dealer Manager.
(a) On the basis of the representations and warranties contained
herein, and subject to the terms and conditions of the Offer:
(i) The Company hereby appoints the Dealer Manager and other
soliciting dealers entering into a Soliciting Dealer Agreement, in
the form attached hereto as Exhibit A, with the Dealer Manager (the
"Soliciting Dealers"), to solicit, in accordance with the Securities
Act, the Investment Company Act and the Exchange Act, and their
customary practice, the exercise of the Rights, subject to the terms
and conditions of this Agreement, the procedures described in the
Registration Statement and, where applicable, the terms and
conditions of such Soliciting Dealer Agreement; and
(ii) The Company agrees to furnish, or cause to be furnished,
to the Dealer Manager lists, or copies of those lists, showing the
names and addresses of, and number of shares of Common Stock held
by, Holders as of the Record Date, and the Dealer Manager agrees to
use such information only in connection with the Offer, and not to
furnish the information to any other person except for securities
brokers and dealers that have been requested by the Dealer Manager
to solicit exercises of Rights.
(b) The Dealer Manager agrees to provide to the Company, in addition
to the services described in paragraph (a) of this Section 2, financial advisory
and marketing services in connection with the Offer. No advisory fee, other than
the fees provided for in Section 3 of this Agreement and the reimbursement of
the Dealer Manager's out-of-pocket expenses as described in Section 5 of this
Agreement, will be payable by the Company to the Dealer Manager in connection
with the financial advisory and marketing services provided by the Dealer
Manager pursuant to this Section 2(b).
(c) The Company and the Dealer Manager agree that the Dealer Manager
is an independent contractor with respect to the solicitation of the exercise of
Rights and the performance of financial advisory and marketing services to the
Company contemplated by this Agreement.
(d) The Dealer Manager agrees to perform those services with respect
to the Offer as are customarily performed by the Dealer Manager in connection
with offers of a like nature, including (but not limited to) using its
reasonable best efforts to solicit the exercise of Rights pursuant to the Offer
and in communicating with the Soliciting Dealers. In soliciting the exercise of
Rights, (i) the Dealer Manager shall not be deemed to be acting as the agent of
the Company other than pursuant to this Agreement or as the agent of any
Soliciting Dealer and (ii) no Soliciting Dealer shall be deemed to be acting as
the agent of the Dealer Manager. It is understood that the Dealer Manager is
being engaged hereunder solely to provide the services described above on behalf
of the Company and that the Dealer Manager is not acting as an agent or
fiduciary of the equity holders of the Company or any other third party in
connection with its engagement hereunder.
(e) In rendering the services contemplated by this Agreement,
neither the Dealer Manager nor any affiliate thereof will be subject to any
liability to the Company, the Manager or the Investment Adviser or any of their
affiliates, for any losses, claims, damages, liabilities or expenses arising
from any act or omission on the part of any securities broker or dealer (except
with respect to the Dealer Manager acting in such capacity) or any other person
and the Dealer Manager will not be liable for acts or omissions in performing
its obligations under this Agreement or otherwise in connection with the Offer,
except for any losses, claims, damages, liabilities and expenses that are
finally judicially determined to have resulted primarily from the willful
misfeasance, bad faith or gross negligence of the Dealer Manager or by reason of
the reckless disregard of the obligations and duties of the Dealer Manager under
this Agreement.
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3. Dealer Manager and Solicitation Fees. In full payment for the financial
advisory, marketing, and soliciting services rendered and to be rendered
hereunder by the Dealer Manager, the Company agrees to pay the Dealer Manager a
fee (the "Dealer Manager Fee") equal to 3.75% of the aggregate Subscription
Price per Share for each Share issued pursuant to the exercise of Rights and the
Over-Subscription Privilege. In full payment for the soliciting efforts to be
rendered, the Dealer Manager agrees to reallow soliciting fees (the "Soliciting
Fees") to Soliciting Dealers equal to 2.50% of the Subscription Price per Share
for each Share issued pursuant to the exercise of Rights and the
Over-Subscription Privilege. The Dealer Manager agrees to pay the Soliciting
Fees to the broker dealers designated on the applicable portion of the form used
by the Holder to exercise Rights and the Over-Subscription Privilege, and if no
broker-dealer is so designated pursuant to the terms of the Soliciting Dealer
Agreement, then the Dealer Manager shall retain such Soliciting Fees for Shares
issued pursuant to the exercise of Rights and Over-Subscription Privilege.
Payment to the Dealer Manager by the Company will be in the form of a wire
transfer of same day funds to an account or accounts identified by the Dealer
Manager. Such payment will be made on each date on which the Company issues
Shares after the Expiration Date. Payment to a Soliciting Dealer will be made by
check to an address identified by such broker-dealer. Such payments shall be
made on or before the tenth business day following each date on which the
Company issues Shares after the Expiration Date.
4. Covenants of the Company and the Manager.
(a) The Company covenants with the Dealer Manager as follows:
(i) The Company 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.
(ii) The Company will notify the Dealer Manager immediately,
and confirm the notice in writing, (A) of the effectiveness of the
Registration Statement and any amendment thereto (including any
post-effective amendment), (B) of the receipt of any comments from
the Commission, (C) 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, (D) 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, (E) of the suspension of the
qualification of the Shares or the Rights for offering or sale in
any jurisdiction. The Company will make every reasonable effort to
prevent the issuance of any stop order described in subsection (D)
hereunder and, if any such stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(iii) The Company 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 which
the Company proposes for use by the Dealer Manager 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 is required to be filed pursuant to
Rule 497(b) or Rule 497(h) of the Securities Act Rules and
Regulations), whether pursuant to the Investment Company Act, the
Securities Act, 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.
10
(iv) The Company will, without charge, deliver to the Dealer
Manager, as soon as practicable, the number of copies (one of which
is manually executed) of the Registration Statement as originally
filed and of each amendment thereto as it may reasonably request, in
each case with the exhibits filed therewith.
(v) The Company will, without charge, furnish to the Dealer
Manager, from time to time during the period when the Prospectus is
required to be delivered under the Securities Act, such number of
copies of the Prospectus (as amended or supplemented) as the Dealer
Manager may reasonably request for the purposes contemplated by the
Securities Act or the Securities Act Rules and Regulations.
(vi) If any event shall occur as a result of which it is
necessary, in the reasonable opinion of counsel for the Dealer
Manager, to amend or supplement the Registration Statement or the
Prospectus in order to make the Prospectus not misleading in the
light of the circumstances existing at the time it is delivered to a
Holder, the Company will forthwith amend or supplement the
Prospectus by preparing and filing with the Commission (and
furnishing to the Dealer Manager a reasonable number of copies of)
an amendment or amendments of the Registration Statement or an
amendment or amendments of or a supplement or supplements to, the
Prospectus (in form and substance satisfactory to counsel for the
Dealer Manager), at the Company's expense, which will amend or
supplement the Registration Statement or the Prospectus so that the
Prospectus 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 existing at
the time the Prospectus is delivered to a Holder, not misleading.
(vii) The Company will endeavor, in cooperation with the
Dealer Manager and its counsel, to assist such counsel to qualify
the Rights and the Shares for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United
States as the Dealer Manager may designate and maintain such
qualifications in effect for the duration of the Offer; provided,
however, that the Company will not be obligated to file any general
consent to service of process, or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in
which it is not now so qualified. The Company will file such
statements and reports as may be required by the laws of each
jurisdiction in which the Rights and the Shares have been qualified
as above provided.
(viii) The Company will make generally available to its
security holders as soon as practicable, but no later than 60 days
after the close of the period covered thereby, an earnings statement
(in form complying with the provisions of Rule 158 of the Securities
Act Rules and Regulations) covering a twelve-month period beginning
not later than the first day of the Company's second fiscal quarter
following the "effective" date (as defined in said Rule 158) of the
Registration Statement.
(ix) For a period of 180 days from the date of this Agreement,
the Company will not, without the prior consent of the Dealer
Manager, directly or indirectly sell, offer to sell, enter into any
agreement to sell, or otherwise dispose of, any equity or equity
related securities of the Company or securities convertible into
such securities, other than the Shares and the Common Stock issued
in reinvestment of dividends or distributions.
(x) The Company will apply the net proceeds from the Offer as
set forth under "Use of Proceeds" in the Prospectus.
11
(xi) The Company will use its best efforts to cause the Shares
to be duly authorized for listing by the New York Stock Exchange
prior to the time the Shares are issued.
(xii) The Company will use its best efforts to maintain its
qualification as a regulated investment company under Subchapter M
of the Code.
(xiii) The Company will advise or cause the Subscription Agent
to advise the Dealer Manager and each Soliciting Dealer from day to
day during the period of, and promptly after the termination of, the
Offer, as to the names and addresses of all Holders exercising
Rights, the total number of Rights exercised by each Holder during
the immediately preceding day, indicating the total number of Rights
verified to be in proper form for exercise, rejected for exercise
and being processed and, for the Dealer Manager and each Soliciting
Dealer, the number of Rights exercised on exercise forms indicating
the Dealer Manager or such Soliciting Dealer, as the case may be, as
the broker-dealer with respect to such exercise, and as to such
other information as the Dealer Manager may reasonably request; and
will notify the Dealer Manager and each Soliciting Dealer, not later
than 5:00 P.M., New York City time, on the first business day
following the Expiration Date, of the total number of Rights
exercised and Shares related thereto, the total number of Rights
verified to be in proper form for exercise, rejected for exercise
and being processed and, for the Dealer Manager and each Soliciting
Dealer, the number of Rights exercised on exercise forms indicating
the Dealer Manager or such Soliciting Dealer, as the case may be, as
the broker-dealer with respect to such exercise, and as to such
other information as the Dealer Manager may reasonably request.
(b) The Company and the Manager 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 Company to
facilitate the issuance of the Rights or the sale or resale of the Shares;
provided that any action in connection with the Company's dividend reinvestment
plan will not be deemed to be within the meaning of this Section 4(b).
(c) The Company and the Manager agree that, except as required by
applicable law, any reference to the Dealer Manager in any Offering Materials or
any other document or communication prepared, approved or authorized by the
Company or the Manager in connection with the Offer is subject to the prior
approval of the Dealer Manager, provided that if such reference to the Dealer
Manager is required by applicable law, the Company or the Manager agree to
notify the Dealer Manager within a reasonable time prior to such use.
5. Payment of Expenses.
(a) The Company will pay all expenses incident to the performance of
its obligations under this Agreement, including, but not limited to, expenses
relating to (i) the printing and filing of the Registration Statement as
originally filed and of each amendment thereto, (ii) the preparation, issuance
and delivery of the certificates for the Shares and exercise forms relating to
the Rights, (iii) the fees and disbursements of the Company's counsel (including
the fees and disbursements of local counsel) and accountants, (iv) the
qualification of the Rights and the Shares under securities laws in accordance
with the provisions of Section 4(a)(vii) of this Agreement, including filing
fees and the preparation of the Blue Sky Letter by counsel to the Dealer Manager
(not to exceed $2,500), (v) the printing or other production and delivery to the
Dealer Manager of copies of the Registration Statement as originally filed and
of each amendment thereto and of the Prospectus and any amendments or
supplements thereto, (vi) the printing and other production and delivery of
copies of the Blue Sky Letter, (vii) the fees and expenses incurred with respect
to filing with the National Association of Securities Dealers, Inc., (viii) the
fees and expenses incurred in connection with the listing of the Shares on the
New York Stock Exchange, (ix) the printing or
12
other production, mailing and delivery expenses incurred in connection with the
Prospectus and the Offering Materials, (x) the fees and expenses incurred with
respect to the Subscription Agent and the Information Agent, (xi) all fees, if
any, payable to the Dealer Manager and Soliciting Dealers as reimbursement for
their customary mailing and handling expenses in forwarding materials related to
the Offer to their customers and (xii) all other fees and expenses (excluding
the announcement, if any, of the Offer in The Wall Street Journal) incurred in
connection with or relating to the Offer.
(b) In addition to any fees that may be payable to the Dealer
Manager under this Agreement, the Company agrees to reimburse the Dealer Manager
upon request made from time to time for its reasonable expenses incurred in
connection with its activities under this Agreement, including the reasonable
fees and disbursements of its legal counsel (excluding Blue Sky fees and
expenses which are paid directly by the Company), in an amount up to $100,000.
(c) If this Agreement is terminated by the Dealer Manager in
accordance with the provisions of Section 6 or Section 9(a)(i), 9(a)(ii) or
9(a)(iii), the Company agrees to reimburse the Dealer Manager for all of its
reasonable out-of-pocket expenses incurred in connection with its performance
hereunder, including the reasonable fees and disbursements of counsel for the
Dealer Manager. In the event the transactions contemplated hereunder are not
consummated, the Company agrees to pay all of the costs and expenses set forth
in paragraphs (a) and (b) of this Section 5 which the Company would have paid if
such transactions had been consummated.
6. Conditions of Dealer Manager's Obligations. The obligations of the
Dealer Manager hereunder are subject to the accuracy of the representations and
warranties of the Company and the Manager contained herein, to the performance
by the Company and the Manager of their respective obligations hereunder, and to
the following further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M., on the Representation Date, or at such later time and date as
may be approved by the Dealer Manager; the Prospectus and any amendment or
supplement thereto shall have been filed with the Commission in the manner and
within the time period required by Rule 497(b), (d) or (h), as the case may be,
under the Securities Act; no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto shall have been issued, and no
proceedings for that purpose shall have been instituted or threatened or, to the
knowledge of the Company, the Manager or the Dealer Manager, shall be
contemplated by the Commission; and the Company shall have complied with any
request of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise).
(b) On the Representation Date and the Expiration Date, the Dealer
Manager shall have received:
(1) The favorable opinion, dated the Representation Date and the
Expiration Date, of Brown & Wood LLP, counsel for the Company, the Manager
and the Investment Adviser, in form and substance satisfactory to counsel
for the Dealer Manager, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Maryland, the Manager has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of New York, and each has full corporate power and
authority to conduct its business as described in the Registration
Statement and the Prospectus, and is duly qualified to do business
as a foreign corporation in each jurisdiction wherein it owns or
leases material properties or conducts material business, except
where the failure to be so qualified, considering all such cases in
the aggregate, does not involve a material
13
adverse risk to the business, properties, financial position or
results of operations of the Company or the Manager;
(ii) the Company's authorized capitalization is as set forth
in the Prospectus under the heading "Capital Stock;" the outstanding
shares of Common Stock have been duly authorized and validly issued
and are fully paid and non-assessable and conform in all material
respects to the description thereof in the Prospectus under the
heading "Capital Stock"; the Rights have been duly authorized by all
requisite action on the part of the Company for issuance pursuant to
the Offer; the Shares have been or, with respect to the Shares to be
issued pursuant to the Over-Subscription Privilege, will be, duly
authorized by all requisite action on the part of the Company for
issuance and sale pursuant to the terms of the Offer and, when
issued and delivered by the Company pursuant to the terms of the
Offer against payment of the consideration set forth in the
Prospectus, will be validly issued and fully paid and
non-assessable; the Shares and the Rights conform in all material
respects to all statements relating thereto contained in the
Registration Statement and the Prospectus; and the issuance of each
of the Rights and the Shares is not subject to any preemptive rights
under the charter or bylaws of the Company or, to such counsel's
knowledge, otherwise. The outstanding Common Stock has been duly
listed on the New York Stock Exchange and the Shares have been duly
authorized for listing subject to official notice of issuance, on
the New York Stock Exchange;
(iii) to the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving
the Company of a character required to be disclosed in the
Registration Statement or the Prospectus which is not adequately
disclosed therein, and there is no contract or other document of a
character required to be described in the Registration Statement or
the Prospectus, or to be filed or incorporated by reference as an
exhibit which is not described or filed or incorporated by reference
as required; to the knowledge of such counsel, except as set forth
in the Prospectus, there is not pending or threatened, any action,
suit or proceeding to which the Manager is a party before or by any
court or governmental agency or body or any arbitrator, which might
result in any material adverse effect upon the Company or upon the
ability of the Manager to perform its obligations under the
Management Agreement;
(iv) the statements in the Prospectus under the heading
"Taxes", insofar as such statements describe or summarize United
States tax laws, treaties, doctrines or practices, provide an
accurate description thereof as of the date of the Prospectus;
(v) the Registration Statement has become effective under the
Securities Act; to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued, and no proceedings for that purpose have been instituted or
threatened; and the Registration Statement, the Prospectus and each
amendment thereof or supplement thereto (other than the financial
statements and other financial and statistical information contained
therein, as to which such counsel need express no opinion) comply as
to form in all material respects with the applicable requirements of
the Securities Act and the Investment Company Act and the Rules and
Regulations;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company and the Manager and, assuming due
authorization, execution and delivery by the other parties hereto,
is a legal, valid, binding and enforceable obligation of the Company
and the Manager, subject to the qualification that the
enforceability of the
14
obligations of the Company and the Manager hereunder may be limited
by bankruptcy, insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors'
rights, and to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law)
and subject to the qualification that the right to indemnity and
contribution hereunder may be limited by Federal or state laws; the
Subscription Agency Agreement, the Management Agreement, the
Custodian Agreement and the Transfer Agency and Service Agreement
have been duly authorized, executed and delivered by the Company and
the Manager, as the case may be, and comply in all material respects
with all applicable provisions of the Investment Company Act and the
Advisers Act, and assuming due authorization, execution and delivery
by the other parties thereto, are legal, valid, binding and
enforceable obligations, if any, of the Company and the Manager,
subject to the qualification that the enforceability of the
obligations, if any, of the Company and the Manager thereunder may
be limited by bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights, and to general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or
at law);
(vii) the Investment Advisory Agreement complies in all
material respects with all applicable provisions of the Investment
Company Act and the Advisers Act, and assuming due authorization,
execution and delivery by the parties thereto, and assuming it is
enforceable under Japanese law, is a legal, valid, binding and
enforceable obligation of the Manager and the Investment Adviser,
subject to the qualification that the enforceability of the
obligations of the Manager and the Investment Adviser thereunder may
be limited by bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights, and to general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or
at law);
(viii) no consent, approval, authorization or order of any
court or governmental agency or body is required under Maryland
corporate law, the laws of New York or Federal law or, to the best
of such counsel's knowledge, the laws of any other jurisdiction in
the United States, for the consummation by the Company of the
transactions contemplated in the Company Agreements, except (A) such
as have been obtained under the Securities Act, the Exchange Act,
the Investment Company Act, or from the New York Stock Exchange, (B)
such as may be required under the blue sky laws of any jurisdiction
in connection with the transactions contemplated hereby and (C) such
other approvals as have been obtained or the failure to have
obtained will not have a material adverse effect on the Company or
its ability to perform its obligations under the Company Agreements;
(ix) neither the issuance of the Rights, nor the issuance and
sale of the Shares by the Company, nor the consummation by the
Company and the Manager of any other of the transactions
contemplated in the Company Agreements or the Prospectus nor the
fulfillment by the Company and the Manager of the terms of the
Company Agreements will conflict with, 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 Company or the Manager pursuant to the charter or bylaws of the
Company or the Manager, to the knowledge of such counsel, the terms
of any material agreement, indenture, mortgage, lease or other
instrument to which the Company or the Manager is a party or bound
or to which any of the property or assets of the Company or the
Manager is subject, or any order of which such counsel has
knowledge, law, rule or regulation
15
applicable to the Company or the Manager of any United States court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company or the Manager or
any of their properties;
(x) neither the issuance of the Rights, nor the issuance and
sale of the Shares by the Company, nor the consummation by the
Investment Adviser of any other of the transactions contemplated in
the Investment Advisory Agreement or the Prospectus nor the
fulfillment by the Investment Adviser of the terms of the Investment
Advisory Agreement will conflict with, result in a breach of, or
constitute a default under any order of which such counsel has
knowledge, law, rule or regulation applicable to the Investment
Adviser of any United States court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over the
Investment Adviser or any of its properties;
(xi) the Company is registered with the Commission under the
Investment Company Act as a closed-end, non-diversified management
investment company, all required action has been taken under the
Securities Act and the Investment Company Act to make the Offer and
consummate the issuance of the Rights and the issuance and sale of
the Shares by the Company upon exercise of the Rights, and the
provisions of the Company's charter and bylaws comply as to form in
all material respects with the requirements of the Investment
Company Act and the Investment Company Act Rules and Regulations;
(xii) each of the Manager and the Investment Adviser is duly
registered as an investment adviser under the Advisers Act and is
not prohibited by the Advisers Act or the Investment Company Act, or
the rules and regulations under such Acts, from acting as a manager
or an investment adviser, as the case may be, for the Company as
contemplated in the Prospectus, the Management Agreement and the
Investment Advisory Agreement;
(xiii) to the knowledge of such counsel, each of the Manager
and the Investment Adviser owns, possesses or has obtained and
currently maintains all material Authorizations under New York or
United States law as are necessary for the Manager and the
Investment Adviser to perform their obligations, if any, under the
Management Agreement and the Investment Advisory Agreement as set
forth in and contemplated by the Prospectus except where the failure
to obtain such Authorizations would not have a material adverse
effect on the Manager or the Investment Advisor; and
(xiv) the Offering Materials comply as to form in all material
respects with the requirements of the Securities Act, the Investment
Company Act and the Rules and Regulations; for the purpose of this
paragraph, Offering Materials shall be those items that the Fund has
certified to Brown & Wood LLP constitute Offering Materials, such as
to include the Prospectus wrapper, the warning letter to beneficial
owners of the shares of Common Stock of the Company, and press
releases that the Company may use, approve, prepare or authorize in
writing for use in connection with the Offer.
In rendering such opinion, Xxxxx & Wood LLP may rely as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the
Company, the Manager and the Investment Adviser and public officials.
Any required filing of the Prospectus or any supplement thereto
pursuant to Rule 497(b), (d) or (h) required to be made to the date hereof has
been made in the manner and within the time period required by Rule 497(b), (d)
or (h), as the case may be. Such counsel shall also have stated that, while
16
they have not themselves checked the accuracy and completeness of or otherwise
verified, and are not passing upon and assume no responsibility for the accuracy
or completeness of, the statements contained in the Registration Statement or
the Prospectus, except to the limited extent stated in paragraphs (ii) and (iv)
above, in the course of their review and discussion of the contents of the
Registration Statement and Prospectus with certain officers and employees of the
Company and its independent accountants and others, no facts have come to their
attention which cause them to believe that the Registration Statement as of the
effective date thereof or the Prospectus, as of the effective date thereof and
as of the Representation Date and the Expiration Date, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements contained therein (and in the
case of the Prospectus, in the light of the circumstances under which they were
made) not misleading, or, if there has been any supplement to the Prospectus
made by the Company, that any such supplement, at the date of such supplement
and on the Representation Date and Expiration Date, contained an untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements contained therein, in the light of the circumstances under
which they were made, not misleading (except that such counsel need express no
opinion or belief as to financial statements, schedules or other financial data
included therein or excluded therefrom).
(2) The favorable opinion, dated the Representation Date and the
Expiration Date, of Xxxxxx & Matsumoto, Japanese counsel for the Company,
in form and substance satisfactory to counsel for the Dealer Manager, to
the effect that, under existing Japanese laws and regulations:
(i) the Investment Adviser has been duly organized and is
validly existing as a corporation under the laws of Japan, and has
full corporate power and authority to own its properties and conduct
its business as described in the Prospectus;
(ii) no consent, approval, authorization or order of any court
or governmental agency or body is required under the laws of Japan
for the issuance of the Rights, the issuance and sale of the Shares
by the Company or for the consummation by the Company of the
transactions contemplated in the Company Agreements based on the
representations and warranties contained herein;
(iii) such counsel does not know of any Japanese statutes,
regulations or legal or governmental proceedings materially
affecting the operation of the Company as contemplated in the
Prospectus and which would be material to an investor considering an
investment in the Company, except as are described in the
Prospectus;
(iv) the statements in the Prospectus, including, without
limitation, the statements under the headings "Taxes - Japanese
Taxes," "The Japanese OTC Market - Regulation of the Japanese OTC
Market," "Risk Factors and Special Considerations," "Japanese
Foreign Investment and Exchange Control Laws" and "Japanese Foreign
Exchange and Foreign Trade Law," insofar as such statements describe
or summarize Japanese laws, treaties, doctrines or practices,
provide an accurate description thereof as of the date of the
Prospectus;
(v) 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 the Company Agreements or for the issuance
of the Rights and the issuance and sale of the Shares by the Company
assuming all such agreements are signed outside of Japan and such
issuance of Rights and the issuance and sale of the Shares are made
outside of Japan;
(vi) to the best knowledge of such counsel (without making any
investigation), there is no pending or threatened action, suit or
proceeding in Japan before
17
any court or governmental agency, authority or body or any
arbitrator involving the Company, which questions the validity of
the Company Agreements.
(vii) the Investment Advisory Agreement has been duly
authorized, executed and delivered by the Investment Adviser;
(viii) neither the performance by the Investment Adviser of
its obligations under the Investment Advisory Agreement nor the
consummation of the transactions contemplated herein or therein nor
the fulfillment of the terms hereof or thereof will 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 constitutive documents of the Investment Adviser or, to the
knowledge of such counsel (based on such investigation as we have
deemed appropriate), the terms of any material agreement, indenture,
mortgage, lease or other instrument to which the Investment Adviser
is a party or is bound or to which any of its property or assets is
subject, which conflict, breach or default would have a material
adverse effect on the ability of the Investment Adviser to carry out
its obligations under such agreements, or any Japanese law, order of
which such counsel has knowledge, rule or regulation applicable to
the Investment Adviser of any Japanese court, regulatory body,
administrative agency, governmental body, stock exchange or
securities association having jurisdiction over the Investment
Adviser or its properties or operations; no consent, approval,
authorization or order of any court or governmental agency or body
is required under the laws of Japan in connection with the
execution, performance and delivery of the Investment Advisory
Agreement by the Investment Adviser; and
(ix) to the knowledge of such counsel (based on such
investigation as we have deemed appropriate), the Investment Adviser
owns, possesses or has obtained and currently maintains all material
Authorizations under Japanese law as are necessary for the
Investment Adviser to perform its obligation under the Investment
Advisory Agreement as set forth in and contemplated by the
Prospectus except where the failure to obtain such Authorizations
would not have a material adverse effect on the Investment Adviser.
In rendering such opinion, Xxxxxx & Xxxxxxxxx may rely (A) as to matters
involving the application of laws of any jurisdiction other than Japan to the
extent such counsel deems proper and specified in such opinion, upon the opinion
of other counsel of good standing whom such counsel believes to be reliable and
who are satisfactory to counsel for the Dealer Manager and (B) as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company, the Manager and the Investment Adviser and public
officials.
Such counsel shall also have stated that, while they have not
themselves checked the accuracy and completeness of or otherwise verified, and
are not passing upon and assume no responsibility for the accuracy or
completeness of, the statements contained in the Registration Statement or the
Prospectus, except to the limited extent stated in paragraph (iv) above, in the
course of their participation in the preparation of the contents of the
Registration Statement and Prospectus, no facts relating to Japanese laws,
treaties, legal doctrines or legal practices have come to their attention which
cause them to believe that the Registration Statement as of the effective date
thereof or the Prospectus, as of the effective date thereof and as of the
Representation Date and the Expiration Date, contained an untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements contained therein, in the light of the circumstances under which they
were made, not misleading (except that such counsel need express no opinion or
belief as to financial statements, schedules or other financial data included
therein or excluded therefrom).
18
(c) The Dealer Manager shall have received from Xxxxxx & Xxxxx LLP,
counsel for the Dealer Manager, such opinion or opinions, dated the
Representation Date and the Expiration Date, with respect to the offer, the
Registration Statement, the Prospectus and other related matters as the Dealer
Manager may reasonably require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling them to pass
upon such matters.
(d) The Company shall have furnished to the Dealer Manager a
certificate of the Company, signed by the President or a Vice President of the
Company, dated the Representation Date and the Expiration Date, to the effect
that the signer of such certificate has carefully examined the Registration
Statement, the Prospectus, any supplement to the Prospectus and this Agreement
and that, to the best of his knowledge:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Representation Date or the Expiration Date, as the case may be,
with the same effect as if made on the Representation Date or the
Expiration Date and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Representation Date or the Expiration
Date, as the case may be; and
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened.
(iii) since the date of the most recent balance sheet included
or incorporated by reference in the Prospectus, there has been no
material adverse change in the condition (financial or other),
earnings, business, prospects, net worth or results of operations of
the Company (excluding fluctuations in the Company's net asset value
due to investment activities in the ordinary course of business),
except as set forth in or contemplated in the Prospectus.
(e) The Manager shall have furnished to the Dealer Manager a
certificate, signed by its Chairman or other senior officer, dated the
Representation Date and the Expiration Date, to the effect that the signer of
such certificate has read the Registration Statement, the Prospectus, any
supplement to the Prospectus and this Agreement and, to the best knowledge of
such signer, (i) the representations and warranties of the Manager in this
Agreement are true and correct in all material respects on and as of the
Representation Date or the Expiration Date, as the case may be, with the same
effect as if made on the Representation Date or the Expiration Date, (ii) the
Manager has complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Representation Date or
the Expiration Date and (iii) as of the Representation Date or the Expiration
Date, as the case may be, the Registration Statement did not include any untrue
statement of a material fact and did not omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and on such Representation Date or the Expiration Date, the Prospectus and any
Offering Materials did not include any untrue statement of a material fact and
did not omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and, since the date of the
Prospectus, no event has occurred which should have been set forth in a
supplement to, or amendment of, the Prospectus which has not been set forth in
such a supplement or amendment.
(f) The Investment Adviser shall have furnished to the Dealer
Manager a certificate, signed by its Chairman or other senior officer, dated the
Representation Date and the Expiration Date, to the effect that the signer of
such certificate has read the Registration Statement, the Prospectus, any
supplement to the Prospectus and this Agreement and, to the best knowledge of
such signer, (i) the representations and warranties of the Manager as they
relate to the Investment Adviser in this Agreement are true and correct in all
material respects on and as of the Representation Date or the Expiration Date,
as
19
the case may be, with the same effect as if made on the Representation Date or
the Expiration Date, (ii) the Investment Adviser has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Representation Date or the Expiration Date and
(iii) as of the Representation Date or the Expiration Date, as the case may be,
the portions of the Prospectus relating to Japan, the Japanese OTC Market, the
description of the Investment Adviser and the statements under the heading
"Investment Objective and Policies" did not include any untrue statement of a
material fact and did not omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and, since
the date of the Prospectus, no event has occurred which should have been set
forth in a supplement to, or amendment of, the Prospectus which has not been set
forth in such a supplement or amendment.
(g) PricewaterhouseCoopers LLP shall have furnished to the Dealer
Manager a letter, dated the Representation Date and the Expiration Date, in form
and substance satisfactory to the Dealer Manager, and stating in effect that:
(i) they are independent accountants with respect to the
Company within the meaning of the Securities Act and the applicable
Rules and Regulations;
(ii) in their opinion, the audited financial statements
examined by them and included or incorporated by reference in the
Registration Statement comply as to form in all material respects
with the applicable accounting requirements of the Securities Act
and the Investment Company Act and the respective Rules and
Regulations;
(iii) they have performed specified procedures, not
constituting an audit, including a reading of the latest available
interim financial statements of the Company, a reading of the minute
books of the Company, inquiries of officials of the Company
responsible for financial or accounting matters and such other
inquiries and procedures as may be specified in such letter, and on
the basis of such inquiries and procedures nothing came to their
attention that caused them to believe that at the date of the latest
available financial statements read by such accountants, or at a
subsequent specified date not more than five days prior to the
Representation Date or the Expiration Date, as the case may be,
there was any change in the capital stock, net assets or absence of
long-term debt of the Company as compared with amounts shown on the
audited financial statements included or incorporated by reference
in the Prospectus, except as the Prospectus discloses has occurred
or may occur or as disclosed in their letter;
(iv) in addition to the procedures referred to in clause (iii)
above, they have performed other specified procedures, not
constituting an audit, with respect to certain amounts, percentages,
numerical data, financial information and financial statements
appearing in the Registration Statement, which have previously been
specified by the Dealer Manager and which shall be specified in such
letter, and have compared such items with, and have found such items
to be in agreement with, the accounting and financial records of the
Company.
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall not
have been (i) any change or decrease specified in the letter or letters
referred to in paragraph (f) of this Section 6, or (ii) any change, or any
development involving a prospective change, in or affecting the business
or properties of the Company, the effect of which, in any case referred to
in clause (i) or (ii) above, is, in the judgment of the Dealer Manager, so
material and adverse as to make it impractical or inadvisable to proceed
with the Offer as contemplated by the Registration Statement and the
Prospectus.
20
(i) Prior to the Representation Date and the Expiration Date, the
Company shall have furnished to the Dealer Manager such further information,
certificates and documents as the Dealer Manager may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Dealer Manager and its counsel, this Agreement and all
obligations of the Dealer Manager hereunder may be canceled at, or at any time
prior to, the Representation Date by the Dealer Manager. Notice of such
cancellation shall be given to the Company in writing or by telephone or
telegraph confirmed in writing.
7. Indemnification and Contribution.
(a) Each of the Company and the Manager, jointly and severally, will
indemnify and hold harmless the Dealer Manager, the directors, officers,
employees and agents of the Dealer Manager and each person, if any, who controls
the Dealer Manager within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act from and against any and all losses, claims,
liabilities, expenses and damages (including, but not limited to, any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any and all amounts paid in settlement of, any action, suit or proceeding
between any of the indemnified parties and any indemnifying parties or between
any indemnified party and any third party, or otherwise, or any claim asserted),
as and when incurred to which the Dealer Manager, or any such person, may become
subject under the Securities Act, the Exchange Act, the Investment Company Act,
the Advisers Act or other federal or state statutory law or regulation, at
common law or otherwise insofar as such losses, claims, liabilities, expenses or
damages arise out of or are based on (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Prospectus or Offering Materials, or any amendment or supplement to the
Registration Statement, the Prospectus or Offering Materials, or in any
documents filed under the Exchange Act and deemed to be incorporated by
reference into the Registration Statement, the Prospectus, or in any application
or other document executed by or on behalf of the Company or based on written
information furnished by or on behalf of the Company filed with the Commission,
(ii) the omission or alleged omission to state in such document a material fact
required to be stated in it or necessary to make the statements in it not
misleading or (iii) any act or failure to act or any alleged act or failure to
act by the Dealer Manager in connection with, or relating in any manner to, the
Rights or the Shares or the offering contemplated hereby, and which is included
as part of or referred to in any loss, claim, liability, expense or damage
arising out of or based upon matters covered by clause (i) or (ii) above
(provided that neither the Company nor the Manager shall be liable under this
clause (iii) to the extent it is finally judicially determined by a court of
competent jurisdiction that such loss, claim, liability, expense or damage
resulted directly from any such acts or failures to act undertaken or omitted to
be taken by such Dealer Manager through its bad faith, willful misconduct, gross
negligence or intentional failure to perform substantially the obligations and
duties of the Dealer Manager under this Agreement); provided that neither the
Company or the Manager will be liable to the extent that such loss, claim,
liability, expense or damage arises from the sale of the Shares in the public
offering to any person by the Dealer Manager and is based on an untrue statement
or omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to the Dealer Manager furnished in writing
to the Company by the Dealer Manager expressly for inclusion in the Registration
Statement or the Prospectus. Notwithstanding the foregoing, nothing in this
Section 7 shall be construed as to require the Company and the Manager to
indemnify the Dealer Manager solely for a violation by the Dealer Manager of any
applicable rules and regulations. This indemnity agreement will be in addition
to any liability that the Company or the Manager might otherwise have.
21
(b) The Dealer Manager will indemnify and hold harmless the Company
and the Manager, each person, if any, who controls the Company or the Manager
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, each director of the Company and each officer of the Company who
signs the Registration Statement to the same extent as the foregoing indemnity
from the Company or the Manager to the Dealer Manager, but only insofar as
losses, claims, liabilities, expenses or damages arise out of or are based on
any untrue statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information relating to the Dealer Manager
furnished in writing to the Company by the Dealer Manager expressly for use in
the Registration Statement or Prospectus, such information being as set forth in
Section 7(h) hereof. This indemnity will be in addition to any liability that
the Dealer Manager might otherwise have; provided, however, that in no case
shall the Dealer Manager be liable or responsible for any amount in excess of
the fees and commissions received by the Dealer Manager.
(c) Any party that proposes to assert the right to be indemnified
under this Section 7 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 7, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission to so notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provision of this Section 7 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel satisfactory to the indemnified party, and after notice
from the indemnifying party to the indemnified party of its election to assume
the defense, the indemnifying party will not be liable to the indemnified party
for any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense. The indemnified party will have the right to
employ its own counsel in any such action, but the fees, disbursements and other
charges of such counsel will be at the expense of such indemnified party unless
(1) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based on the advice of counsel) that there may be legal defenses
available to it or other indemnified parties that are different from or in
addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (4) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction (in addition to local counsel) at any one time for
all such indemnified party or parties. All such fees, disbursements and other
charges will be reimbursed by the indemnifying party promptly as they are
incurred. An indemnifying party will not be liable for any settlement of any
action or claim effected without its written consent (which consent will not be
unreasonably withheld). No indemnifying party shall, without the prior written
consent of each indemnified party, settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action or proceeding
relating to the matters contemplated by this Section 7 (whether or not any
indemnified party is a party thereto), unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising or that may arise out of such
22
claim, action or proceeding. Notwithstanding any other provision of this Section
7(c), if at any time an indemnified party shall have requested an indemnifying
party to reimburse the indemnified party for fees, disbursements and other
charges of counsel, such indemnifying party agrees that it shall be liable for
any settlement effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
terms of such settlement at least 30 days prior to such settlement being entered
into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraph of this Section 7 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company, the Manager or the Dealer
Manager, the Company, the Manager and the Dealer Manager will contribute to the
total losses, claims, liabilities, expenses and damages (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted, but after deducting any contribution received by the Company and
the Manager from persons other than the Dealer Manager, such as persons who
control the Company or the Manager within the meaning of the Securities Act or
the Exchange Act, officers of the Company who signed the Registration Statement
and directors of the Company, who may also be liable for contribution) to which
the Company, the Manager and the Dealer Manager may be subject in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company and the Manager on the one hand and the Dealer Manager on the other.
The relative benefits received by the Company and the Manager (treated jointly
for this purpose as one person) on the one hand and the Dealer Manager on the
other hand shall be deemed to be in the same proportion as the total net
proceeds from the Offering (before deducting expenses) received by the Company
bear to the total fees received by the Dealer Manager, in each case as set forth
on the cover page of the Prospectus. If, but only if, the allocation provided by
the foregoing sentence is not permitted by applicable law, the allocation of
contribution shall be made in such proportion as is appropriate to reflect not
only such relative benefits referred to in the foregoing sentence but also the
relative fault of the Company and the Manager (treated jointly for this purpose
as one person) on the one hand and the Dealer Manager on the other hand with
respect to the statements or omissions which resulted in such loss, claim,
liability, expense or damage in respect thereof, as well as any other relevant
equitable considerations with respect to the Offering. Such relative fault of
the parties shall be determined by reference to 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 Company, the Manager or
the Dealer Manager, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Manager and the Dealer Manager agree that it would
not be just and equitable if contributions pursuant to this Section 7(d) were to
be determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
liability, expense or damage, or action in respect thereof, referred to in this
Section 7(d) shall be deemed to include, for purposes of this Section 7(d) 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 Section 7(d), the Dealer Manager shall
not be required to contribute any amount in excess of the fees received by it
and no person found 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. For purposes
of this Section 7(d), any person who controls a party to this Agreement within
the meaning of the Securities Act will have the same rights to contribution as
that party, and each director of the Company and each officer of the Company who
signed the Registration Statement will have the same rights to contribution as
the Company, subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action
against such party in
23
respect of which a claim for contribution may be made under this Section 7(d),
will notify such party or parties from whom contribution may be sought, but the
omission so to notify will not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have under
this Section 7(d). Except for a settlement entered into pursuant to the last
sentence of Section 7(c) hereof, no party will be liable for contribution with
respect to any action or claim settled without its written consent (which
consent shall not be unreasonably withheld).
(e) The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company and the Manager
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of the Dealer Manager,
(ii) acceptance of Shares and payment therefor or (iii) any termination of this
Agreement.
(f) Notwithstanding any other provisions in this Section 7, no party
shall be entitled to indemnification or contribution under this Agreement
against any loss, claim, liability, expense or damage arising by reason of such
person's willful misfeasance, bad faith or gross negligence in the performance
of its duties hereunder, or by reason of such person's reckless disregard of
such person's obligations and duties hereunder.
(g) The Company and the Manager agree to indemnify each Soliciting
Dealer and controlling persons to the same extent and subject to the same
conditions and to the same agreements, including with respect to contribution,
provided for in subsections 7(a), 7(b), 7(c), 7(d), 7(e) and 7(f).
(h) The Company and the Manager acknowledge that the statements
under the caption "THE OFFER--Distribution Arrangements" in the Prospectus
constitute the only information furnished in writing to the Company by the
Dealer Manager expressly for use in such document, and the Dealer Manager
confirms that such statements are correct in all material respects.
8. Representations, Warranties and Agreements to Survive Delivery. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers, of the Manager and of the Dealer
Manager set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of Dealer
Manager, the Manager or the Company or any of the officers, directors or
controlling persons referred to in Section 7 hereof, and will survive delivery
of and payment for the Shares pursuant to the Offer; provided, however, that
following delivery and payment for the Shares, the remedies against the Manager
for breach of its representations and warranties shall, in the absence of
fraudulent misrepresentation by the Manager, be limited to those available
pursuant to Section 7 hereof. The provisions of Sections 5 and 7 hereof shall
survive the termination or cancellation of this Agreement.
9. Termination of Agreement.
(a) This Agreement shall be subject to termination in the absolute
discretion of the Dealer Manager, by notice given to the Company prior to the
expiration of the Offer, if prior to such time (i) financial, political,
economic, currency or banking conditions in the United States shall have
undergone any material change the effect of which on the financial markets makes
it, in the Dealer Manager's judgment, impracticable to proceed with the Offer,
(ii) there has occurred any outbreak or material escalation of hostilities or
other calamity or crisis the effect of which on the financial markets of the
United States is such as to make it, in the Dealer Manager's judgment,
impracticable to proceed with the Offer, (iii) trading in the shares of Common
Stock shall have been suspended by the Commission or the New York Stock
Exchange, (iv) trading in securities generally on the New York Stock Exchange
shall have been suspended or limited or (v) a banking moratorium shall have been
declared either by Federal, or New York State authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 5.
24
10. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Dealer Manager, will be mailed, delivered
or telegraphed and confirmed to PaineWebber Incorporated, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000; or if sent to the Company or the Manager,
will be mailed, delivered or telegraphed and confirmed to them at 000 Xxxxxx
Xxxx, Xxx Xxxx, Xxx Xxxx 00000.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and will inure to the
benefit of the officers and directors and controlling persons referred to in
Section 7 hereof, and no other person will have any right or obligation
hereunder.
12. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York without reference to choice of
law principles thereof.
13. Consent to Jurisdiction; Waiver of Jury Trial. The Company and the
Manager hereby irrevocably submit to the jurisdiction of any state or federal
court sitting in the borough of Manhattan, State of New York in respect of any
action, proceeding or counterclaim and irrevocably agree that all claims and
defenses in respect of any such suit, action or proceeding may be heard and
determined in any such court. The Company, the Manager and the Dealer Manager
each hereby irrevocably waive any right they may have to a trial by jury in
respect of any claim based upon or arising out of this Agreement.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
25
If the foregoing is in accordance with your understanding of our
agreement, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among the Company,
the Manager and the Dealer Manager.
Very truly yours,
Japan OTC Equity Fund, Inc.
By:
------------------------------------
Name:
Title:
Nomura Asset Management U.S.A. Inc.
------------------------------------
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
PaineWebber Incorporated
as Dealer Manager
By:
-------------------------------
Name:
Title:
26
R&W DRAFT
10/18/99
Exhibit A
JAPAN OTC EQUITY FUND, INC.
Rights Offering for Shares of Common Stock
SOLICITING DEALER AGREEMENT
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
NOVEMBER 19, 1999, UNLESS EXTENDED
To Securities Dealers and Brokers:
Japan OTC Equity Fund, Inc., a Maryland corporation (the "Fund"), is
issuing to its stockholders of record ("Holders") as of the close of business on
October 25, 1999 (the "Record Date") non-transferable rights ("Rights") to
subscribe for an aggregate of up to ____________ shares (the "Shares") of common
stock, par value $0.10 per share (the "Common Stock"), of the Fund upon the
terms and subject to the conditions set forth in the Fund's Prospectus (the
"Prospectus"), dated ____________, 1999 (the "Offer"). Each such Holder is being
issued one Right for each full share of Common Stock owned on the Record Date
(except that any Holder who owns fewer than three Rights will be able to
subscribe for one full Share pursuant to the primary subscription). Such Rights
entitle Holders to acquire during the Subscription Period (as hereinafter
defined) at the Subscription Price (as hereinafter defined), one Share for each
three Rights, on the terms and conditions set forth in such Prospectus. No
fractional shares will be issued. Any Holder who fully exercises all Rights
initially issued to such Holder (other than those Rights that cannot be
exercised because they represent the right to acquire less than one Share) will
be entitled to subscribe for, subject to allocation, additional Shares (the
"Over-Subscription Privilege") on the terms and conditions set forth in such
Prospectus. Pursuant to the Over-Subscription Privilege, the Fund may, at its
discretion, increase the number of Shares subject to subscription by up to 25%.
The Subscription Price will be 95% of the lower of (1) the average of the last
reported sales price per share on the New York Stock Exchange (the "NYSE") for
the five trading days ending with the day the offer expires and (2) the NAV as
of the close of trading on the NYSE on that day. The Subscription Period will
commence on October 25, 1999 and end at 5:00 p.m., New York City time on the
Expiration Date (the term "Expiration Date" means November 19, 1999 unless the
Fund shall, in its sole discretion, have extended the period for which the Offer
is open, in which event the term "Expiration Date" with respect to the Offer
will mean the latest time and date on which the Offer, as so extended by the
Fund, will expire).
For the duration of the Offer, the Fund has authorized and the
Dealer Manager has agreed to reallow a Solicitation Fee to any qualified broker
or dealer executing a Soliciting Dealer Agreement who solicits the exercise of
Rights and the Over-Subscription Privilege in connection with the Offer and who
complies with the procedures described below (a "Soliciting Dealer"). Upon
timely delivery to State Street Bank and Trust Company, the Fund's Subscription
Agent for the Offer, of payment for Shares purchased pursuant to the exercise of
Rights and the Over-Subscription Privilege and of properly completed and
executed documentation as set forth in this Soliciting Dealer Agreement, a
Soliciting Dealer will be entitled to receive the Solicitation Fee equal to
2.50% of the Subscription Price per Share so purchased; provided, however, that
no payment shall be due with respect to the issuance of any Shares
until payment therefor is actually received. A qualified broker or dealer is a
broker or dealer which is a member of a registered national securities exchange
in the United States or the National Association of Securities Dealers, Inc.
("NASD") or any foreign broker or dealer not eligible for membership who agrees
to conform to the Rules of Fair Practice of the NASD, including Sections 2730,
2740, 2420 and 2750 thereof, in making solicitations in the United States to the
same extent as if it were a member thereof.
The Fund has authorized the payment of, and the Dealer Manager has
agreed to pay, the Solicitation Fees payable to the undersigned Soliciting
Dealer, and the Fund has agreed to indemnify such Soliciting Dealer on the terms
set forth in the Dealer Manager Agreement, dated October 25, 1999, among
PaineWebber Incorporated ("PaineWebber") as the dealer manager (the "Dealer
Manager"), the Fund and Nomura Asset Management U.S.A. Inc. (the "Dealer Manager
Agreement"). Solicitation and other activities by Soliciting Dealers may be
undertaken only in accordance with the applicable rules and regulations of the
Securities and Exchange Commission and only in those states and other
jurisdictions where such solicitations and other activities may lawfully be
undertaken and in accordance with the laws thereof. Compensation will not be
paid for solicitations in any state or other jurisdiction in which the opinion
of counsel to the Fund or counsel to the Dealer Manager, such compensation may
not lawfully be paid. No Soliciting Dealer shall be paid Solicitation Fees with
respect to Shares purchased pursuant to an exercise of Rights and the
Over-Subscription Privilege for its own account or for the account of any
affiliate of the Soliciting Dealer. No Soliciting Dealer or any other person is
authorized by the Fund or the Dealer Manager to give any information or make any
representations in connection with the Offer other than those contained in the
Prospectus and other authorized solicitation material furnished by the Fund
through the Dealer Manager. No Soliciting Dealer is authorized to act as agent
of the Fund or the Dealer Manager in any connection or transaction. In addition,
nothing herein contained shall constitute the Soliciting Dealers partners with
the Dealer Manager or with one another, or agents of the Dealer Manager or of
the Fund, or create any association between such parties, or shall render the
Dealer Manager or the Fund liable for the obligations of any Soliciting Dealer.
Except as provided above with respect to Solicitation Fees, the Dealer Manager
shall be under no liability to make any payment to any Soliciting Dealer, and
shall be subject to no other liabilities to any Soliciting Dealer, and no
obligations of any sort shall be implied.
In order for a Soliciting Dealer to receive Solicitation Fees, the
Subscription Agent must have received from such Soliciting Dealer no later than
5:00 p.m., New York City time, on the Expiration Date, either (i) a properly
completed and duly executed Subscription Certificate with respect to Shares
purchased pursuant to the exercise of Rights and the Over-Subscription Privilege
designating the Soliciting Dealer in the applicable portion thereof and full
payment for such Shares; or (ii) a Notice of Guaranteed Delivery guaranteeing
delivery to the Subscription Agent of a properly completed and duly executed
Soliciting Dealer Agreement and a Subscription Certificate designating the
Soliciting Dealer in the applicable portion hereof. In the case of a Notice of
Guaranteed Delivery, Solicitation Fees will only be paid after delivery in
accordance with such Notice of Guaranteed Delivery has been effected.
Solicitation Fees will be paid by the Dealer Manager to the Soliciting Dealer by
check to an address designated by the Soliciting Dealer below by the tenth
business day following each date on which the Fund issues Shares after the
Expiration Date with respect to which such Subscription Certificates were
received.
All questions as to the form, validity and eligibility (including
time of receipt) of this Soliciting Dealer Agreement will be determined by the
Dealer Manager, in its sole discretion, which determination shall be final and
binding. Unless waived, any irregularities in connection with a Soliciting
Dealer Agreement or delivery thereof must be cured within such time as the Fund
shall determine. None of the Fund, the Dealer Manager, the Subscription Agent,
the Information Agent for the Offer, Corporate Investor Communications, Inc. or
any other person will be under any duty to give notification of any defects or
irregularities in any Soliciting Dealer Agreement or incur any liability for
failure to give such notification.
The acceptance of Solicitation Fees from the Dealer Manager by the
undersigned Soliciting Dealer shall constitute a representation by such
Soliciting Dealer to the Dealer Manager that: (i) it has received and reviewed
the Prospectus; (ii) in soliciting purchases of Shares pursuant to the exercise
of the Rights and the Over-Subscription Privilege, it has complied with the
applicable requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the applicable rules and regulations thereunder, any applicable
securities laws of any state or jurisdiction where such solicitations were made,
and the applicable rules and regulation of any self-regulatory organization or
registered national securities exchange; (iii) in soliciting purchases of Shares
pursuant to the exercise of the Rights and the Over-Subscription Privilege, it
has not published, circulated or used any soliciting materials other than the
Prospectus and any other authorized solicitation material furnished by the Fund
through the Dealer Manager; (iv) it has not purported to act as agent of the
Fund or the Dealer Manager in any connection or transaction relating to the
Offer; (v) the information contained in this Soliciting Dealer Agreement is, to
its best knowledge, true and complete; (vi) it is not affiliated with the Fund;
(vii) it will not accept Solicitation Fees paid by the Dealer Manager pursuant
to the terms hereof with respect to Shares purchased by the Soliciting Dealer
pursuant to an exercise of Rights and the Over-Subscription Privilege for its
own account; (viii) it will not remit, directly or indirectly, any part of
Solicitation Fees paid by the Fund pursuant to the terms hereof to any
beneficial owner of Shares purchased pursuant to the Offer; and (ix) it has
agreed to the amount of the Solicitation Fees and the terms and conditions set
forth herein with respect to receiving such Solicitation Fees. By returning a
Soliciting Dealer Agreement and accepting Solicitation Fees, a Soliciting Dealer
will be deemed to have agreed to indemnify and hold harmless, to the fullest
extent permitted by law, the Fund, the Dealer Manager, the directors, officers,
employees and agents of the Fund and the Dealer Manager and each person, if any,
who controls the Fund and the Dealer Manager within the meaning of Section 15 of
the Act and Section 20 of the Exchange Act (the "Indemnified Persons") against
losses, claims, damages and liabilities, joint or several (including, but not
limited to, any and all investigation, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or preceding or any claim asserted) to which the Indemnified Persons may
become subject to as a result of the breach of such Soliciting Dealer's
representations made herein and described above. In making the foregoing
representations, the Soliciting Dealer is reminded of the possible applicability
of the anti-manipulation rules under the Exchange Act if it has bought, sold,
dealt in or traded in any Shares for its own account since the commencement of
the Offer.
Upon expiration of the Offer, no Solicitation Fees will be payable
to Soliciting Dealers with respect to Xxxxxx purchased thereafter.
Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Dealer Manager Agreement or, if not defined
therein, in the Prospectus.
This Soliciting Dealer Agreement will be governed by the laws of the
State of New York.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY PROCEEDINGS.
Please execute this Soliciting Dealer Agreement below accepting the
terms and conditions hereof and confirming that you are a member firm of the
NASD or a foreign broker or dealer not eligible for membership who has conformed
to the Rules of Fair Practice of the NASD, including Sections 2730, 2740, 2420
and 2750 thereof, in making solicitations of the type being undertaken pursuant
to the Offer in the United States to the same extent as if you were a member
thereof, and certifying that you have solicited the purchase of the Shares
pursuant to exercise of the Rights, all as described above, in accordance with
the terms and conditions set forth in this Soliciting Dealer Agreement. Please
forward two executed copies of this Soliciting Dealer Agreement to PaineWebber
Incorporated, Attn: Xxxxxxxx Xxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000; Telephone No.: (000) 000-0000 and Facsimile No.: (000) 000-0000.
A signed copy of this Soliciting Dealer Agreement will be promptly
returned to the Soliciting Dealer at the address set forth below.
Very truly yours,
PaineWebber Incorporated
By:
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Name:
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Title:
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PLEASE COMPLETE THE INFORMATION BELOW
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Printed Firm Name Address
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Contact at Soliciting Dealer
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Authorized Signature Area Code and Telephone Number
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Name and Title Facsimile Number
Dated:
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Payment of the Solicitation Fee shall be mailed by check to the following
address:
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