EXHIBIT 99.C
CHINA WORLD
Settlement Agreement
Settlement Agreement, dated as of March 20, 2003 (the "Agreement"), by and
among President and Fellows of Harvard College ("Harvard University"), Harvard
Management Company, Inc. ("Harvard Management"), Xxxxxx Xxxxxxx ("Xxxxxxx" and,
collectively with Harvard University and Harvard Management, the "Harvard
Parties"), and Xxxxxxxxx China World Fund, Inc. ("China World").
R E C I T A L S:
WHEREAS, China World is a closed-end management investment company
registered under the 1940 Act (as defined below);
WHEREAS, Harvard University is the Beneficial Owner (as defined below) of
approximately 30.3% of the outstanding shares of common stock of China World;
WHEREAS, Harvard Management is wholly controlled by Harvard University and
is the investment advisor to Harvard University's endowment, and Xxxxxxx is a
vice-president of Harvard Management and manages that portion of Harvard
University's endowment that is invested in China World; and
WHEREAS, the parties wish to set forth their understanding and agreement
with respect to the settlement of the Current Litigation (as defined below) and
related matters.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Certain Defined Terms. For purposes of this Agreement:
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"1940 Act" shall mean the Investment Company Act of 1940, as amended.
"Affiliate" and "Associate" shall have the respective meanings set
forth in Rule 12b-2 promulgated by the SEC (as defined below) under the
1934 Act.
"Beneficial Owner" and "Beneficially Own" shall have the meanings as
set forth in Rule 13d-3 promulgated by the SEC (as defined below) under the
1934 Act.
"Current Litigation" shall mean the matter pending in the United
States District Court for the District of Maryland, Northern Division (Case
No. JFM 03-CV-275), captioned "Xxxxxxxxx China World Fund, Inc., Xxxxxxxxx
Dragon Fund, Inc., and Xxxxxxxxx Asset Management Ltd., plaintiffs, v.
President and Fellows of Harvard
College, Harvard Management Company, Inc., and Xxxxxx Xxxxxxx, defendants",
including the claims, counterclaims and affirmative defenses that have been
asserted therein.
"Open-Ending Proposal" shall mean, collectively, proposals of the
Board of Directors of China World in substantially the form set forth as
proposals 2, 3 and 4 in Schedule I hereto.
"Other Settlement Agreements" shall mean, collectively, (i) that
certain settlement agreement dated the date hereof between the Harvard
Parties and Xxxxxxxxx Dragon Fund, Inc., as the same may be amended and in
effect from time to time (the "Dragon Settlement Agreement") and (ii) that
certain settlement agreement dated the date hereof between the Harvard
Parties and TAML, as the same may be amended and in effect from time to
time.
"Proposals" shall mean, collectively, proposals of the Board of
Directors of China World in substantially the form set forth as proposals 1
through 4 (inclusive) in Schedule I hereto.
"SEC" shall mean the United States Securities and Exchange Commission.
"TAML" shall mean Xxxxxxxxx Asset Management Ltd.
Section 2. Authority and Enforceability.
(a) Each of the Harvard Parties represents and warrants as follows:
(i) such party has all requisite power and authority to execute
and deliver the Agreement and to perform its obligations hereunder;
(ii) the execution, delivery and performance of the Agreement by
such party has been duly authorized by all necessary action on the
part of such party;
(iii) the Agreement has been duly and validly executed and
delivered by such party and (assuming the due authorization, execution
and delivery thereof by the other parties hereto) constitutes the
legal, valid and binding obligation of such party, enforceable against
such party in accordance with its terms, subject to general principles
of equity, statutory limitations and judicially-imposed public policy
constraints; and
(iv) the execution and delivery by such party of the Agreement
and the performance by such party of its obligations hereunder will
not conflict with, constitute a default under or violate (A) any of
the terms, conditions or provisions of the organizational documents of
such party (if such party is not a natural person), (B) any of the
terms, conditions or provisions of any material document, agreement or
other instrument to which such party is a party or by which it is
bound, or (C) any judgment,
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writ, injunction, decree, order or ruling of any court or governmental
authority binding on such party.
(b) China World represents and warrants as follows:
(i) it has all requisite power and authority to execute and
deliver the Agreement and to perform its obligations hereunder;
(ii) the execution, delivery and performance of the Agreement by
China World has been duly authorized by all necessary action on the
part of China World;
(iii) the Agreement has been duly and validly executed and
delivered by China World and (assuming the due authorization,
execution and delivery thereof by the other parties hereto)
constitutes the legal, valid and binding obligation of China World,
enforceable against China World in accordance with its terms, subject
to general principles of equity, statutory limitations and
judicially-imposed public policy constraints; and
(iv) the execution and delivery by China World of the Agreement
and the performance by China World of its obligations hereunder will
not conflict with, constitute a default under or violate (A) any of
the terms, conditions or provisions of the organizational documents of
China World, (B) any of the terms, conditions or provisions of any
material document, agreement or other instrument to which China World
is a party or by which it is bound, or (C) any judgment, writ,
injunction, decree, order or ruling of any court or governmental
authority binding on China World.
Section 3. China World.
(a) China World will submit the Proposals to the shareholders of China
World at the 2003 Annual Meeting of Shareholders of China World (the "2003 China
World Meeting"). China World represents and warrants that approval of the
Open-Ending Proposal constitutes the only action required to be taken by
shareholders of China World in order to effect the conversion of China World to
an open-end company as contemplated by this Agreement. China World agrees that
no matters other than the Proposals shall be presented to shareholders by or on
behalf of the Board of Directors of China World at the 0000 Xxxxx World Meeting,
except other matters required to be presented to shareholders under applicable
law. China World represents and warrants that, as of the date hereof, it has no
reason to believe that any other matter will be presented to shareholders at the
2003 China World Meeting or that applicable law will require the presentation of
any such matter to shareholders at the 2003 China World Meeting. China World
represents and warrants that the highest vote required by either the 1940 Act or
Maryland law for shareholders of China World to approve Proposal 2 on Schedule I
hereto ("Proposal 2"), including the aspect of the proposal to redomesticate
China World as a Delaware statutory trust (the "Redomestication Proposal"), as
well as to
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approve any proposal to open-end China World in accordance with the Article
ELEVENTH of the Charter of China World as contemplated by Section 3(d) hereof,
is the affirmative vote of a majority of the shares outstanding and entitled to
vote as of the record date, and that it is the same vote that would be required
if the Redomestication Proposal were not included as part of Proposal 2 but, if
instead, Proposal 2 provided for all requisite amendments to China World's
Maryland charter necessary to effectuate open-ending. If, for any reason, the
Redomestication Proposal is presented to shareholders for approval separately
from the open-ending aspect of Proposal 2, shareholder approval of the
Redomestication Proposal will not be a condition to any of China World's
obligations under this Agreement, including the open-ending of China World.
China World also represents and warrants that the redomestication will not have
any adverse effect on the ability of Harvard University to redeem its shares of
China World as contemplated by this Agreement as compared to the situation where
China World remained as a Maryland corporation upon open-ending. China World
also represents and warrants that the intended effect of each of the proposals
comprising Proposals 3 and 4 on Schedule I will be to modernize and bring the
fundamental investment restrictions of China World in line with the fundamental
investment restrictions of Franklin Xxxxxxxxx open-end funds generally. China
World will effect the open-ending within sixty (60) days following the date on
which Proposal 2 is approved by shareholders, or as soon thereafter as is
practicable.
(b) Representatives of China World will meet and confer (in person, by
telephone, by video conference or otherwise) with representatives of Harvard
Management within a reasonable period of time (and, in any event, not less than
45 days) prior to the anticipated closing date of the conversion of China World
to an open-end company in order to discuss steps China World might take to
minimize any adverse effect of the open-ending on the net asset value per share
of China World. For example, steps reflecting China World's and Harvard
Management's respective views as to the markets in which China World's portfolio
securities are traded will be discussed. China World will consider, but shall
not be under any obligation to implement or adopt, any steps proposed or
discussed at any such meeting. China World will request of TAML that
representatives of TAML attend such meeting.
(c) China World will take all reasonable steps that are not violative of
its fiduciary duties to obtain shareholder approval of the Open-Ending Proposal
that an investment company could reasonably be expected to take in order to
vigorously support the passage of proposals recommended by the investment
company's board of directors to its shareholders. These steps shall include,
without limitation, (i) adjournment of the 2003 China World Meeting for as long,
and/or on as many occasions, as may be necessary, consistent with applicable
law, if the requisite vote has not yet been obtained, up to the latest date
possible without the necessity of setting a new record date for the 2003 China
World Meeting; and (ii) engaging a major proxy solicitation firm at China
World's expense for the purpose of soliciting proxies for approval of the
Open-Ending Proposal by the shareholders at the 2003 China World Meeting, and,
if sufficient votes in favor of the Open-Ending Proposal are not promptly
obtained, instructing such proxy
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solicitation firm to diligently attempt to obtain sufficient votes for approval
of the Open-Ending Proposal at the 0000 Xxxxx World Meeting including, without
limitation, under appropriate circumstances, by contacting shareholders by
telephone and requesting that they consider granting their proxies by telephone.
(d) If the proposal set forth as Proposal 2 is not approved by shareholders
at the 2003 China World Meeting, the Board of Directors of China World will call
a special meeting of shareholders to be held not later than December 31, 2003 to
consider such proposal again; such proposal (and any other elements of the
Open-Ending Proposal that have not previously been approved by shareholders)
will be the only item to be considered at the special meeting, except other
matters required to be presented to shareholders under applicable law. If China
World holds a special meeting at which it proposes the open-ending of China
World in accordance with the Article ELEVENTH of the Charter of China World, as
amended, the holding of such meeting and the making of such proposal shall
satisfy the requirements of this Section 3(d) if the meeting and the conduct
thereof and the acts of China World in respect of the special meeting otherwise
comply in all respects with the requirements of this Agreement. China World will
take all reasonable steps that are not violative of its fiduciary duties to
obtain shareholder approval of Proposal 2 at such special meeting that an
investment company could reasonably be expected to take in order to vigorously
support the passage of proposals recommended by the investment company's board
of directors to its shareholders. These steps shall include, without limitation,
(i) adjournment of the special meeting for as long, or on as many occasions, as
may be necessary, consistent with applicable law, if the requisite vote has not
yet been obtained, up to the latest date possible without the necessity of
setting a new record date for the special meeting; and (ii) engaging a major
proxy solicitation firm at China World's expense for the purpose of soliciting
proxies for approval of Proposal 2 by the shareholders at the special meeting,
and, if sufficient votes in favor of such proposal are not promptly obtained,
instructing such proxy solicitation firm to diligently attempt to obtain
sufficient votes for approval of Proposal 2 at the special meeting including,
without limitation, under appropriate circumstances, by contacting shareholders
by telephone and requesting that they consider granting their proxies by
telephone.
(e) Each of the Harvard Parties hereby withdraws any and all of its
shareholder proposals for the 2003 China World Meeting, and promptly shall take
any and all actions reasonably requested by China World or its representatives,
or which the Harvard Parties reasonably consider are otherwise necessary, to
effectuate such withdrawal.
(f) Harvard University hereby withdraws its proxy statement dated January
16, 2003, for the 2003 China World Meeting and shall promptly send written
notification of withdrawal of its proxy statement in the form attached hereto as
Schedule IV to all shareholders from whom it had solicited proxies, and file
copies of such notification with the SEC. Each of the Harvard Parties and its
respective Affiliates and Associates and any "participants" in the solicitation
(as defined in Section 14 of the 1934 Act or the rules and regulations
thereunder) by Harvard University (i) shall immediately
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cease all proxy solicitation efforts in connection with the 2003 China World
Meeting, (ii) shall not vote any proxies which any of the Harvard Parties
heretofore obtained or hereafter receives in connection with the 2003 China
World Meeting, and (iii) shall promptly destroy all such proxies heretofore
obtained or hereafter received.
(g) Each of the Harvard Parties hereby withdraws any and all demands,
requests or notices that it has made to China World, including, without
limitation, the demands set forth in the letter from Cede & Co. to China
World, dated December 11, 2002, and any demands made by any of the Harvard
Parties pursuant to Section 2-513 of the Maryland General Corporation Law.
(h) Each of the Harvard Parties hereby represents and warrants to
China World that, as of the date hereof, such Harvard Party intends to vote
all of the shares of common stock of China World Beneficially Owned by it
in favor of each of the Proposals at the 2003 China World Meeting (and in
favor of Proposal 2 or the Open-Ending Proposal at any special meeting
contemplated in Section 3(d) hereof and at any subsequent meeting of
shareholders of China World at which either is submitted to a shareholder
vote with the affirmative recommendation of the Board of Directors of China
World) and that it is not aware, and has no reasonable suspicion, of any
fact, matter or thing that would require, cause or influence it to vote in
any contrary manner, including abstaining or refraining from voting such
shares. In the event that each of the Harvard Parties does not vote all of
the shares of common stock of China World Beneficially Owned by it in favor
of the Proposals at the 2003 China World Meeting (or in favor of Proposal 2
or the Open-Ending Proposal at any special meeting contemplated in Section
3(d) hereof and/or any subsequent meeting of shareholders of China World at
which either is submitted to a shareholder vote with the affirmative
recommendation of the Board of Directors of China World), and without
limiting any right or remedy to which China World may be entitled at law or
in equity arising out of any breach of the representation and warranty
contained in the immediately preceding sentence, China World, but not the
Harvard Parties, shall automatically (and without further action by any
party hereto) be released from any and all further obligations under this
Agreement (including, for the avoidance of doubt, those contained in
Section 7 hereof).
(i) Each of the parties hereto acknowledges and agrees that:
(i) the Board of Directors of China World has determined to
recommend to shareholders at the 2003 China World Meeting the approval
of the Open-Ending Proposal; and
(ii) if the Open-Ending Proposal is approved by shareholders, the
open-end China World will have, among other things, the following
features:
(A) shareholders of China World on the closing date of conversion who
redeem or exchange open-end shares received as a result of the conversion
within six months following the closing date will be assessed a redemption
fee of not in excess of two percent (2%);
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(B) the open-end China World will make an election pursuant to Rule
18f-1 under the 1940 Act, in order to permit redemptions in-kind and will
adopt any related procedures in order to effect redemptions in-kind; and
(C) the open-end China World will be in the form of a Delaware
statutory trust.
(j) Each of the parties hereto acknowledges and agrees that
redemptions by the Harvard Parties of shares of the open-end China World
Beneficially Owned by the Harvard Parties will be subject to the redemption
fees described in Section 3(i)(ii)(A) hereof, and China World agrees that,
upon redemption of such shares, China World will distribute to the Harvard
Parties, and the Harvard Parties agree to accept, a pro rata share of each
of China World's portfolio investments, including at a minimum, a pro rata
share of any cash held by China World. In order to effectuate such
distribution, China World will make an election under Rule 18f-1 under the
1940 Act in a timely fashion. Notwithstanding the foregoing, China World
shall not be required to distribute to the Harvard Parties, but will make
reasonable and appropriate adjustments for, (i) odd lots, (ii) fractional
shares and (iii) (A) securities that, if distributed, would be required to
be registered under the Securities Act of 1933, as amended, (B) securities
issued by entities in countries that restrict or prohibit the holdings of
securities by non-residents other than through qualified investment
vehicles, or whose distribution as contemplated herein is otherwise
contrary to applicable local laws, rules or regulations and (C) certain
portfolio assets, such as derivative instruments or repurchase agreements,
that involve the assumption of contractual obligations, require special
trading facilities, or can only be traded with the counterparty to the
transaction.
(k) Each of the Harvard Parties agrees that it shall not object to any
postponement of the 2003 China World Meeting approved by the Board of
Directors of China World to any date on or before June 13, 2003 (without
regard to adjournments). It is understood that all references in this
Agreement to the 2003 China World Meeting include any adjournments or
postponement thereof, except where specifically otherwise indicated herein.
(l) Each of the parties hereto acknowledges and agrees that if each of
the Harvard Parties does not request redemptions of all securities of China
World Beneficially Owned by such party within thirty (30) calendar days
following the closing date of the conversion of China World to an open-end
investment company, then, notwithstanding anything to the contrary
contained in Section 5 hereof, the obligations and restrictions imposed on
the Harvard Parties in Section 5 hereof shall survive and continue in full
force and effect in perpetuity.
(m) References in this Section 3 to shares of China World common stock
shall be taken to include any security into which such common stock is
exchanged for, converted into or replaced with in connection with any
reorganization whatsoever of China World, including any change of
organizational form.
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Section 4. No Share Acquisitions; Prohibited Transfers.
(a) Unless otherwise specifically agreed in writing between one or more of
the Harvard Parties, on the one hand, and China World, on the other hand, each
of the Harvard Parties agrees that from the date hereof and perpetually
thereafter it will not (and will not advise, assist or encourage others to),
directly or indirectly, acting individually or in concert with others, in any
manner, acquire, offer or propose to acquire, solicit an offer to sell or agree
to acquire, by purchase or otherwise, any direct or indirect beneficial interest
in any securities of China World (including, without limitation, any direct or
indirect interest in any rights, warrants or options to acquire, or in any
securities convertible into or exchangeable for, any securities of China World)
or any derivative instrument that provides the economic benefits or other
indicia of ownership of any such securities; provided, however, that it will not
be considered a violation of this Section 4(a) if (i) the Harvard Party acquires
an indirect interest in any securities of China World (not as a result of an
investment decision by the Harvard Party to acquire an interest in such
securities) but does not as a result become a Beneficial Owner of such
securities (and does not otherwise have investment discretion over such
securities), or (ii) securities of China World are acquired by an investment
adviser or other person acting in a similar capacity for a Harvard Party and (A)
the Harvard Party did not know of the planned acquisition in advance of its
occurrence, (B) the Harvard Party becomes a Beneficial Owner of the securities
as a result of such acquisition, and (C) the Harvard Party instructs the
investment adviser or other person to promptly dispose of such securities when
portfolio management personnel of such Harvard Party have actual knowledge that
the acquisition has occurred; provided, further, that each of the Harvard
Parties shall apprise any person or entity currently serving as an investment
adviser, or in any similar capacity, to it, and each person becoming an
investment adviser, or beginning to act in any similar capacity, to it during
the period of four years from the date hereof, of the obligations and
restrictions of such Harvard Party arising under this Section 4(a).
(b) Unless otherwise specifically agreed in writing between one or more of
the Harvard Parties, on the one hand, and China World, on the other hand, each
of the Harvard Parties agrees that from the date hereof and perpetually
thereafter it will not sell, transfer any interest in, or otherwise dispose of
(a "Transfer") any securities of China World to any transferee if, following
such Transfer, the transferee of such securities would, to the actual knowledge
of such Harvard Party (which, in the case of any Transfer where the identity of
the transferee is known to the Harvard Party, shall require such Harvard Party
to make inquiry of such transferee with respect thereto), Beneficially Own more
than five percent (5%) of the outstanding voting equity securities of China
World; provided, however, that the restrictions on Transfer contained in this
Section 4(b) shall not apply to Transfers of securities of China World if the
Harvard Parties collectively Beneficially Own less than two and one-half percent
(2.5%) of the outstanding voting equity securities of China World at the time of
such Transfer.
Section 5. Standstill. Subject to Section 3(l) hereof, each of the Harvard
Parties agrees that for a period of four years from and after the date hereof,
it will not (and will
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not advise, assist or encourage others to), directly or indirectly, acting
individually or in concert with others, in any manner:
(i) make, or in any way participate in, any shareholder proposal or
nomination with respect to China World, or seek to advise or influence in
any manner whatsoever any person or entity with respect to any shareholder
proposal or nomination with respect to China World, in each case,
including, but not limited to, any proposal relating to the election of
directors, the adoption or termination of any investment advisory contract,
any change in a fundamental policy, classification, or sub-classification,
any change in structure, any change in organizational documents, or any
matter that requires a stockholder vote, including, but not limited to,
pursuant to Section 13 of the 1940 Act, including any precatory or advisory
proposal with respect to any of the foregoing;
(ii) make, or in any way participate in, any "solicitation" of
"proxies" to vote (as such terms are used in the proxy rules of the SEC
promulgated pursuant to Section 14 of the 0000 Xxx) any securities of China
World, or advise or seek to influence in any manner whatsoever any person
or entity with respect to the voting of any securities of China World;
(iii) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the 0000 Xxx) with respect to any voting
securities of China World;
(iv) otherwise act to seek to propose to China World or to its
management, board of directors, officers or stockholders, any merger,
business combination, restructuring, recapitalization, charter amendment or
any other change to any other organizational document, change in policy,
change in classification or subclassification, change in investment
manager, or other transaction or similar matter, or otherwise seek to
control, change or influence the management, board of directors (or similar
body) or the policies of China World, including any precatory or advisory
proposal with respect to any of the foregoing;
(v) hold any securities of China World with the purpose or effect of
changing or influencing control of China World, or in connection with or as
a participant in any transaction having that purpose or effect, including
any transaction subject to Rule 13d-3(b) under the 1934 Act;
(vi) make any request or proposal to amend, waive or terminate any
provision of this Section 5;
(vii) provide any advice or enter into any discussions, negotiations,
arrangements or understandings with any third party with respect to any of
the foregoing; or
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(viii) announce an intention to take, or enter into any arrangement or
understanding with others to take, any of the actions restricted or
prohibited under clauses (i) through (vii) of this Section 5.
Section 6. Press Release; Public Statement. The Harvard Parties and China
World agree that immediately following the execution of this Agreement, Harvard
University, Harvard Management, and China World shall issue a joint press
release regarding the terms of this Agreement in the form attached as Schedule
II hereto. Except for such press release, no party hereto (or their agents,
representatives or designees) shall make any public statement (including any
statement to the media) regarding this Agreement or any of the Other Settlement
Agreements or the settlements contemplated hereby or thereby; provided, however,
that the foregoing shall not preclude (a) communications or disclosures required
of a party hereto by law, regulatory bodies with appropriate jurisdiction, or
stock exchange rules or regulations, or (b) the delivery by any party hereto (or
by TAML, on China World's behalf) of a copy of such press release, this
Agreement or any of the Other Settlement Agreements to any person. The parties
hereto acknowledge and agree that any communication or disclosure made pursuant
to clause (a) of the immediately preceding sentence shall not disparage any
other party hereto or this Agreement or any of the Other Settlement Agreements.
Notwithstanding the foregoing, the obligations and limitations on each of the
parties hereto arising under this Section 6 with respect to the Dragon
Settlement Agreement shall be terminated if, only to the extent that and for so
long as the corresponding obligations and limitations on the parties to the
Dragon Settlement Agreement arising under Section 6 thereof (or any successor
section thereto) are terminated pursuant to the terms of Section 3(d)(ii) - (iv)
of the Dragon Settlement Agreement (or any successor provisions thereto).
Section 7. Termination of Litigation; Covenant not to Xxx.
(a) Each of the Harvard Parties and China World hereby agrees to dismiss
the Current Litigation (including, for the avoidance of doubt, the claims
asserted pursuant to Section 16(b) of the 1934 Act) (the "Dismissed Claims")
without prejudice. Within three business days after the execution of this
Agreement, the parties hereto shall cause a Stipulation of Dismissal without
Prejudice (or such other appropriate document), substantially in the form
attached as Schedule III hereto, to be executed and filed with the court in the
Current Litigation.
(b) Subject to paragraph (d) of this Section 7, each of the Harvard Parties
hereby covenants that, for a period of four years after the date hereof, it will
not initiate or cause to be initiated (or encourage or aid in the initiation of)
against China World or its past, present or future directors or officers,
directly or indirectly, any suit, action, or proceeding of any kind, or
participate in any such action, individually, derivatively, or as a
representative or member of a class, under any contract (express or implied),
law, statute, or regulation, federal, state or local, pertaining in any manner
whatsoever to the Dismissed Claims, or to any other claims that could have been
asserted in the Current Litigation. This Covenant Not to Xxx shall be a complete
defense to any suit, action or proceeding brought in violation of this Covenant
Not to Xxx. Nothing herein limits the
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right of the Harvard Parties to bring an action to enforce this Agreement or
based on an alleged material breach of this Agreement.
(c) Subject to paragraph (d) of this Xxxxxxx 0, Xxxxx World hereby
covenants that it will not initiate or cause to be initiated (or encourage or
aid in the initiation of) against any of the Harvard Parties or their respective
past, present or future directors or officers, directly or indirectly, any suit,
action, or proceeding of any kind, under any contract (express or implied), law,
statute, or regulation, federal, state or local, pertaining in any manner
whatsoever to (i) the Dismissed Claims, or any other claims that could have been
asserted in the Current Litigation, for a period of four (4) years after the
date hereof, and (ii) the claims asserted pursuant to Section 16(b) of the 1934
Act included in the Dismissed Claims, beginning on the date which is four (4)
years after the date hereof and in perpetuity thereafter. This Covenant Not to
Xxx shall be a complete defense to any suit, action or proceeding brought in
violation of this Covenant Not to Xxx. Nothing herein limits the right of China
World to bring an action to enforce this Agreement or based on an alleged
material breach of this Agreement.
(d) In the event of a material breach of this Agreement, the Covenants Not
to Xxx set forth in paragraphs (b) and (c) of this Section 7, as applicable,
shall not be binding on the aggrieved party.
(e) The parties hereto agree that the period of time between the voluntary
dismissal of the Current Litigation (as contemplated by Section 7(a) hereof) and
the commencement of a new action by an aggrieved party asserting similar claims
(as contemplated by Section 7(d) hereof) will not be counted towards any defense
based on statute of limitations, laches, or similar time-based defenses.
Notwithstanding the foregoing, there shall be no tolling pursuant to this
Section 7(e) with respect to the claims asserted in the Current Litigation
pursuant to Section 16(b) of the 1934 Act; the Harvard Parties, however, waive
any right to assert any defense based on statute of limitations, laches or
similar time-based defenses in any action brought by China World in the next
four (4) years pursuant to Section 7(d) hereof.
(f) During the settlement discussions that arose following the institution
of the Current Litigation, the parties acknowledged that China World's claims
against Harvard University under Section 16(b) of the 1934 Act raised novel
legal questions and that therefore there were issues that would have to be
litigated including, but not limited to, defenses arising out of the
interpretive letter issued by the staff of the SEC to Harvard University
(Harvard University, pub. avail. July 8, 1992). Taking into account, among other
things, the uncertain outcome of the Section 16(b) claims, the benefits to be
realized by China World pursuant to this Agreement, and the roughly estimated
range of recoverable short-swing profits if the claims could be established, the
board of directors of China World, including a majority of the independent
directors, concluded that it was in the best interest of China World to resolve,
as set forth herein, the claims in the Current Litigation arising under Section
16(b) of the 1934 Act, subject to performance by the Harvard Parties of their
obligations under this Agreement.
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Section 8. Remedies; Consent to Jurisdiction.
(a) Each party hereto hereby acknowledges and agrees that irreparable harm
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that aggrieved parties shall be entitled to equitable
relief including, without limitation, an injunction or injunctions to prevent
and enjoin breaches of the provisions of this Agreement and specific enforcement
of the terms and provisions hereof, in addition to any other remedy to which
they may be entitled at law or in equity, including monetary damages. Any
requirements for the securing or posting of any bond with respect to any such
remedy are hereby waived.
(b) The parties hereto agree that any actions, suits or proceedings arising
out of or relating to this Agreement, the transactions contemplated hereby
(including the dismissal of the Current Litigation), or a new action by an
aggrieved party (as contemplated by Section 7(d) hereof), shall be brought
solely and exclusively in the United States District Court for the District of
Maryland, Northern Division (or if such federal court lacks subject matter
jurisdiction, in the courts of the State of Maryland located in Baltimore,
Maryland). The parties agree not to commence any such action, suit or proceeding
except in such courts and further agree that service of any process, summons,
notice or document by U.S. registered mail to the respective addresses set forth
in Section 11 hereof shall be effective service of process for any such action,
suit or proceeding brought against any party in any such court. The parties also
irrevocably and unconditionally waive any objection to the laying of venue of
any such action, suit or proceeding in the courts of the State of Maryland or
the United States of America located in the State of Maryland, and hereby
further irrevocably and unconditionally waive and agree not to plead or claim in
any such court that any such action, suit or proceeding brought in such court
pursuant hereto has been brought in an inconvenient forum.
Section 9. Fees, Costs and Expenses. Except as expressly provided herein,
each party hereto shall pay its own fees, costs and expenses incident to this
Agreement and the transactions contemplated herein. The Harvard Parties shall be
responsible for their own legal fees and expenses with respect to the Current
Litigation and their proxy contest relating to the 2003 China World Meeting.
China World agrees that TAML shall be responsible for the legal fees and
expenses incurred by China World and its directors with respect to this
Agreement and the Current Litigation. China World agrees that TAML shall also be
responsible for the legal fees and expenses incurred by China World through the
date hereof with respect to its proxy contest relating to the 2003 China World
Meeting.
Section 10. Entire Agreement; Amendments; Successors; Third Party
Beneficiaries.
(a) This Agreement and the Other Settlement Agreements contain the entire
understanding of the parties with respect to the subject matter hereof and
thereof. This Agreement and the Other Settlement Agreements supersede all
previous
12
negotiations, representations and discussions by the parties hereto and thereto
concerning the subject matter hereof and thereof, and integrate the whole of all
of their agreements and understanding concerning same. No prior oral
representations or undertakings concerning the subject matter hereof or thereof
shall operate to amend, supersede, or replace any of the terms or conditions set
forth in this Agreement or the Other Settlement Agreements, nor shall they be
relied upon.
(b) This Agreement may be amended only by an agreement in writing executed
by the party or parties against which it is sought to be enforced.
(c) No party hereto may assign any of its respective rights or delegate any
of its respective obligations under this Agreement without the prior written
consent of the other parties hereto; provided, however, that China World may
freely assign its rights and delegate its obligations to the transferee of all
or substantially all of its assets, so long as such transferee agrees to be
bound by all of the obligations of China World hereunder (at which point such
transferee shall be deemed to have all of the rights and obligations hereunder
of China World). This Agreement shall be binding upon, and shall inure to the
benefit of, the parties' successors and permitted assigns.
(d) Any material breach by any party other than the Harvard Parties under
any of the Other Settlement Agreements shall be deemed a material breach by
China World under this Agreement.
Section 11. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or mailed by certified or registered mail, postage prepaid,
return receipt requested, or delivered to a nationally recognized next business
day courier for delivery on the next business day, or by facsimile, with the
required copy also sent as aforesaid and in any instance addressed as follows:
if to any of the Harvard Parties:
c/o Harvard Management Company, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Telecopy: (000) 000 0000
Attention: Xxxxxx X. Xxxxxxx/Xxxxxxx X. Xxxxxxx
13
if to China World:
Broward Financial Centre
000 X. Xxxxxxx Xxxx., Xxxxx 0000
Xxxx Xxxxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Secretary
with a copy to:
Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxx
and
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx/Xxxxxx X. Xxxxxx
or such other address as shall be furnished in writing by any of the parties,
and any such notice or communication shall be deemed to have been given as of
the date so delivered personally, so mailed, so delivered to the courier
service, or so transmitted by telecopy (except that a notice of change of
address shall not be deemed to have been given until received by the addressee).
Section 12. Law Governing. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Maryland,
without regard to any conflict of laws provisions thereof.
Section 13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. For purposes of this
Agreement, a signature page signed and transmitted by electronic mail in pdf
form, facsimile machine or telecopier is to be treated as an original signature
and document. The signature of any party thereon, for purposes hereof, is to be
considered as an original signature, and the document transmitted is to be
considered to have the same binding effect as an original signature on an
original document.
Section 14. No Presumption Against Draftsperson. Each of the undersigned
hereby acknowledges that the undersigned fully negotiated the terms of this
Agreement,
14
that each such party had an equal opportunity to influence the drafting of the
language contained in this Agreement and that there shall be no presumption
against any such party on the ground that such party was responsible for
preparing this Agreement or any part hereof. All prior working drafts of this
Agreement, and any notes and communications prepared in connection therewith,
shall be disregarded for purposes of interpreting the meaning of any provision
contained herein.
Section 15. Enforceability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that the parties would have executed
the remaining terms, provisions, covenants and restrictions without including
any of such which may be hereafter declared invalid, void or unenforceable. In
addition, the parties agree to use their best efforts to agree upon and
substitute a valid and enforceable term, provision, covenant or restriction for
any such term, provision, covenant or restriction that is held invalid, void or
unenforceable by a court of competent jurisdiction.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement, or caused the same to be executed by its duly authorized
representative, as of the date first above written.
PRESIDENT AND FELLOWS OF HARVARD COLLEGE
By: /s/ Xxxx X. Xxxxx
-----------------------------------------
Name: Xxxx X. Xxxxx
Title: Deputy Treasurer
HARVARD MANAGEMENT COMPANY, INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------------------
Name: Xxxx X. Xxxxx
Title: Authorized Signatory
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Authorized Signatory
/s/ Xxxxxx Xxxxxxx
-----------------------------------------
Xxxxxx Xxxxxxx
16
XXXXXXXXX CHINA WORLD FUND, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
17
SCHEDULE I
MATTERS TO BE CONSIDERED AT 0000 XXXXX WORLD MEETING
MATTERS TO BE CONSIDERED AT 0000 XXXXX WORLD MEETING
Election of Directors
Proposal 1: To elect three Directors of the Fund.
Open-Ending Proposals
Proposal 2: To approve the conversion of the Fund from a closed-end
fund organized as a Maryland corporation to an open-end fund
organized as a Delaware statutory trust.
Proposal 3: To approve amendments to certain of the Fund's fundamental
investment restrictions (this proposal involves separate votes
on Sub-Proposals 3a-3f):
Sub-Proposal 3a: To amend the Fund's fundamental investment
restriction regarding borrowing and senior securities;
Sub-Proposal 3b: To amend the Fund's fundamental investment
restriction regarding underwriting;
Sub-Proposal 3c: To amend the Fund's fundamental investment
restriction regarding lending;
Sub-Proposal 3d: To amend the Fund's fundamental investment
restriction regarding investments in commodities;
Sub-Proposal 3e: To amend the Fund's fundamental investment
restriction regarding investments in real estate; and
Sub-Proposal 3f: To amend the Fund's fundamental investment restriction
regarding industry concentration.
Proposal 4: To approve the elimination of certain of the Fund's
fundamental investment restrictions.
SCHEDULE II
FORM OF PRESS RELEASE
FORM OF PRESS RELEASE
FOR IMMEDIATE RELEASE
Media Contacts: Xxxx Xxxxxxxx, Xxxxxxxx Xxxxxxxxx Investments, Tel: (000) 000-0000
Xxxxxx Xxxxxxx, Harvard Management, Tel: (000) 000-0000
-----------------------------------------------------------------------------------
HARVARD UNIVERSITY, XXXXXXXXX CHINA WORLD FUND, INC.,
XXXXXXXXX DRAGON FUND, INC. AND
XXXXXXXXX ASSET MANAGEMENT LTD.
SETTLE LAWSUIT
HARVARD UNIVERSITY WITHDRAWS
ITS XXXXXXXXX CHINA WORLD SHAREHOLDER PROPOSALS
AND SUPPORTS XXXXXXXXX CHINA WORLD'S
OPEN-ENDING PROPOSAL WITH AN IN-KIND DISTRIBUTION FEATURE
HARVARD UNIVERSITY WITHDRAWS
ITS XXXXXXXXX DRAGON SHAREHOLDER PROPOSALS;
XXXXXXXXX DRAGON TO MAKE CASH TENDER OFFER FOR
15% OF ITS OUTSTANDING SHARES AT 92.5% OF NET ASSET VALUE PER SHARE
XXXXXXXXX DRAGON
TO SEEK AUTHORITY TO MAKE IN-KIND TENDER OFFERS
Fort Lauderdale, Florida and Boston, Massachusetts, March [__], 2003 - Xxxxxxxxx
China World Fund, Inc. (NYSE: TCH), a closed-end management investment company
("China World"), Xxxxxxxxx Dragon Fund, Inc. (NYSE: TDF), a closed-end
management investment company ("Dragon"), Xxxxxxxxx Asset Management Ltd., the
investment advisor to each of the funds ("Templeton"), and President and Fellows
of Harvard College ("Harvard University") announced today that they had reached
agreements that will result in, among other things, the dismissal of their
litigation claims against each other and the withdrawal of Harvard University's
shareholder proposals for the funds' upcoming annual meetings. Also, Harvard
will now support the Board's proposal to open-end China World with an in-kind
distribution feature, and Dragon will make a tender offer to be commenced on or
prior to April 30, 2003, and may, pursuant to its settlement with Harvard, make
additional tender offers in the future.
DISMISSAL OF LAWSUIT
The three settlement agreements announced today (between China World and
Harvard, Dragon and Harvard, and Templeton and Harvard, respectively) will
result in the dismissal without prejudice of the lawsuit originally brought in
January 2003 by China World, Dragon and Templeton in the United States District
Court for the District of Maryland, Northern Division,
against Harvard University, Harvard Management Company, Inc., which is an
investment advisor to Harvard University, and Xxxxxx Xxxxxxx, an officer of
Harvard Management (collectively, "Harvard"), as well as the dismissal without
prejudice of the counterclaims brought by Harvard against the funds, their
respective directors and Templeton. The parties have also entered into covenants
not to xxx each other with respect to the claims that were made or could have
been made in the litigation absent a breach of the settlement agreements.
END OF PROXY CONTEST
As part of the settlements, Harvard has agreed to withdraw all of its
shareholder proposals for the respective upcoming 2003 Annual Meetings of
Shareholders of China World and Dragon. Harvard also will not solicit proxies
from shareholders for the China World 2003 Annual Meeting and will not vote any
proxies previously received.
CONVERSION OF CHINA WORLD TO AN OPEN-END FUND
Harvard announced that it intends to support the Board of Directors' proposal at
the 2003 Annual Meeting calling for the open-ending of China World, with an
in-kind distribution feature described below.
If shareholders approve the open-ending proposal, the in-kind distribution
feature will provide the fund the option of meeting large redemption requests
through a pro rata, in-kind distribution of its portfolio investments by making
an election pursuant to Rule 18f-1 under the Investment Company Act of 1940 and
adopting related procedures. This will allow the fund to minimize the potential
adverse impact of large redemption requests on the fund's net asset value per
share. Small redemption requests (generally in amounts less than $250,000 in any
ninety-day period) will be paid in cash by the fund.
Harvard also announced that, if and when China World open-ends, Harvard will
redeem all of its shares of the fund within 30 days after conversion, and that
under the settlement it will take its redemption proceeds through a pro rata,
in-kind distribution of portfolio investments. As a result, the fund will avoid
having to sell significant portfolio assets to raise cash to meet Harvard's
redemption request - thus limiting the potential adverse effect on the fund's
net asset value per share.
China World announced that if conversion to an open-end fund is approved by
shareholders, the open-end fund would assess a redemption fee, not in excess of
two percent, on all redemptions or exchanges of shares made within six months
following the effective date of the conversion except on any redemptions of
shares purchased after the conversion.
Representatives of Harvard and China World also have agreed to discuss, prior to
conversion, steps China World might take to minimize any adverse effect on the
net asset value per share of the fund resulting from a need to sell portfolio
securities of the fund to raise cash to satisfy redemption requests.
2
DRAGON TENDER OFFERS
Dragon announced that as part of its settlement with Harvard, it has agreed to
take the following actions:
o April 2003 cash tender offer - The Board of Directors of Dragon approved
the making of a cash tender offer to be commenced on or prior to April 30,
2003, for 15% of the fund's outstanding shares at 92.5% of net asset value
per share as of the date the offer expires. Previously, the Board of
Directors had approved an April 2003 cash tender offer for not less than
10% of the fund's outstanding shares at not less than 90% of net asset
value per share.
o In-kind tender offers - Dragon also will apply to the Securities and
Exchange Commission ("SEC") for an exemption allowing the fund to make
occasional, non-periodic tender offers, each for up to 20% of Dragon's
outstanding shares at a price equal to 95% of net asset value per share as
of the date the offer expires, to be paid entirely in kind through a pro
rata distribution of marketable portfolio securities. The fund will not
apply, however, for interval fund status. Subject to certain conditions,
the settlement requires the fund to commence such an in-kind tender offer
for 20% of the fund's shares within three months after obtaining the SEC
exemption. Dragon may also be required under the settlement to conduct, on
substantially identical terms, up to two additional in-kind tender offers
under certain circumstances. There is no assurance that the SEC will grant
the exemption, nor is it possible to predict the date when an exemption
might be granted.
o Additional cash tender offers - If the SEC does not grant the exemption for
in-kind tender offers by May 26, 2004, the settlement provides that Dragon
may, but is not obligated to, conduct an additional cash tender offer, and
possibly later follow-on cash tender offers, each for 15% of the fund's
outstanding shares at a price of 92.5% of net asset value per share as of
the date the offer expires. Under certain circumstances, if Dragon does not
conduct these tender offers, Harvard will be relieved of its obligation to
refrain from making shareholder proposals and taking other actions with
respect to the fund, as described below.
Harvard announced that it intends to tender all of the shares it then owns into
each tender offer described above that is commenced.
The Dragon settlement agreement provides that Dragon will not be obligated to
commence in-kind tender offers or additional cash tender offers under certain
circumstances or conditions. These relate to, among other things, the number of
shares tendered by shareholders into preceding tender offers as well as the
beneficial ownership percentages of the fund's shareholders.
STANDSTILL
As part of the three settlements, Harvard agreed not to submit any proposals for
consideration by shareholders of China World or Dragon , or any other closed-end
fund or similar investment vehicle managed by Templeton or its affiliates, or
for consideration by shareholders of Franklin Resources, Inc. (NYSE: BEN), the
parent company of Templeton, nor to encourage others to do
3
so, for a period of four years. Harvard also has agreed not at any time to
acquire additional shares of China World, Dragon or any other closed-end fund or
similar investment vehicle managed by Templeton or its affiliates.
* * * * *
The summaries of the settlements reached by Harvard and China World, Harvard and
Dragon, and Harvard and Templeton included in this press release are qualified
in their entirety by reference to the full text of the three separate settlement
agreements. Copies of the settlement agreements will be filed by China World and
Dragon with the U.S. Securities and Exchange Commission and will be available
for free at the SEC's website, xxx.xxx.xxx. The parties have agreed not to make
public statements (including to the media) regarding the settlements.
* * * * *
In connection with their 2003 annual meetings of shareholders, China World and
Dragon intend to file relevant materials with the U.S. Securities and Exchange
Commission ("SEC"), including their respective proxy statements. Because those
documents contain important information, shareholders of China World and Dragon
are urged to read them when they become available. When filed with the SEC, they
will be available for free at the SEC's website, xxx.xxx.xxx. Shareholders also
can obtain copies of these documents, when available, for free by calling China
World or Dragon at 0-000-000-0000.
China World, its directors and executive officers and certain other persons may
be deemed to be participants in China World's solicitation of proxies from its
shareholders in connection with its 2003 annual meeting of shareholders. Dragon,
its directors and executive officers and certain other persons may be deemed to
be participants in Dragon's solicitation of proxies from its shareholders in
connection with its 2003 annual meeting of shareholders. Information about their
respective directors is set forth in the proxy statement for China World's 2002
annual meeting of shareholders and for Dragon's 2002 annual meeting of
shareholders, respectively. Participants in China World's and Dragon's
respective solicitations may also be deemed to include the following executive
officers or other persons whose interests in China World or Dragon may not be
described in their respective proxy statements for China World's and Dragon's
2002 annual meetings: Xxxx Xxxxxx (President and C.E.O. - Investment
Management); Xxxxx X. Xxxxxxx (Senior Vice President and C.E.O. - Finance and
Administration); Xxxxxxx X. Xxxxxxx (Vice President); Xxxxxx X. Xxxxxxx, Xx.
(Vice President); Xxxxxx X. Xxxxx (Vice President); Xxxxxx X. Xxxxxxxx (Vice
President); Xxxxxxx X. Xxxxxxx (Vice President); Xxxxxxx X. Xxxxxxx (President,
Franklin Resources, Inc.); Xxxx X. Xxx (Vice President); Xxxxxx X. Xxxxxxx (Vice
President and Asst. Secretary); Xxxxx X. Xxxx (Vice President and Asst.
Secretary); Xxxxxxx X. Xxxxx (Vice President and Secretary); Xxxxxxx X. Xxxxxx
(Vice President - AML Compliance); Xxxxx X. Xxxxxxxxx (Treasurer and Chief
Financial Officer); and Xxxxx Xxxxxx Xxxxx (Director of Corporate Communications
- Franklin Resources, Inc.).
As of the date of this communication, none of the foregoing participants
individually, or as a group, beneficially owns in excess of 1% of China World's
common stock or 1% of Dragon's
4
common stock. Except as disclosed above, to the knowledge of China World and
Dragon, none of their respective directors or executive officers has any
interest, direct or indirect, by security holdings or otherwise, in China World
or Dragon.
Shareholders of China World or Dragon may obtain additional information
regarding the interests of the participants by reading the proxy statements of
China World and Dragon when they become available.
------------
Dragon has not commenced any tender offer referred to in this communication.
Upon commencement of any such offer, Dragon will file with the SEC a Schedule TO
and related exhibits, including the offer to purchase, letter of transmittal and
other related documents. Dragon shareholders are strongly encouraged to read
these documents when they become available because they will contain important
information about any offer. When filed with the SEC, the Schedule TO and
related exhibits will be available without charge at the SEC's website at
xxx.xxx.xxx. Any offer to purchase and related letter of transmittal, when
available, will be delivered without charge to all of Dragon's shareholders.
Dragon shareholders may also obtain copies of these documents without charge by
calling Dragon at 0-000-000-0000.
This communication is not an offer to purchase or the solicitation of an offer
to sell shares of Dragon. Any tender offer will be made only by an offer to
purchase and the related letter of transmittal. Neither the offer to purchase
shares will be made to, nor will tenders pursuant to the offer to purchase be
accepted from or on behalf of, holders of shares in any jurisdiction in which
making or accepting the offer to purchase would violate that jurisdiction's
laws.
5
SCHEDULE III
FORM OF STIPULATION OF DISMISSAL WITHOUT PREJUDICE
Form of Stipulation of Dismissal Without Prejudice
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
(Northern Division)
-------------------------------------
)
XXXXXXXXX CHINA WORLD FUND, INC., )
XXXXXXXXX DRAGON FUND, INC. and )
XXXXXXXXX ASSET MANAGEMENT LTD., )
)
Plaintiffs, )
)
) Civil Action No.JFM 03-CV-275
v. )
)
PRESIDENT AND FELLOWS OF HARVARD )
COLLEGE, HARVARD MANAGEMENT )
COMPANY, INC. and XXXXXX XXXXXXX, )
)
)
Defendants.)
----------------------------------- )
STIPULATION OF DISMISSAL
It is hereby stipulated and agreed, pursuant to Fed. R. Civ. P. 41(a)(1),
by and between Plaintiffs Xxxxxxxxx China World Fund, Inc., Xxxxxxxxx Dragon
Fund, Inc. and Xxxxxxxxx Asset Management Ltd., and Defendants President and
Fellows of Harvard College, Harvard Management Company, Inc. and Xxxxxx Xxxxxxx,
through their undersigned counsel, that this action, including all claims,
counterclaims and third-party claims, is dismissed, without prejudice and with
each party to bear its own costs.
Dated: __________________
---------------------------------------
Xxxxxxxx Xxxxxxxxx,
Federal Bar No. 00263
Xxxxxxx X. Xxxxxxx,
Federal Bar No. 04588
Xxxxx X. XxXxxxxxxx
Bar No. 015005
XXXXXXXXX XXXXXX XXXX
& XXXXXXXXX, LLP 00
Xxxxx Xxxxxxx Xxxxxx, Xxxxx
0000 Xxxxxxxxx, XX
00000-0000 (000) 000-0000
(000) 000-0000 (fax)
-and-
----------------------------------
Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxxxxxx Xxxxxxxx
WEIL, GOTSHAL & XXXXXX LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
(000) 000-0000 (fax)
Attorneys for Plaintiffs Xxxxxxxxx
China World Fund, Inc. and Xxxxxxxxx
Dragon Fund, Inc.
-----------------------------------
Xxxxxx X. Xxxxxxx Xx.
Xxxxxxx Xxx Xx. 0000
XXXXXXXXX XXXXXXX LLP
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000
Attorneys for Plaintiff Xxxxxxxxx
Asset Management Ltd.
2
----------------------------------
Xxxxx Xxxxxx, Jr.
XXXXX XXXXXXX LLP
0000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
(000) 000-0000
(000) 000-0000 (fax)
-and-
Xxxxxx X. Xxxxxxx
Xxxx X. Xxxxxx
Xxxxxx X. Xxxxx
ROPES & XXXX
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
(000) 000-0000
(000) 000-0000 (fax)
Attorneys for Defendants President And
Fellows Of Harvard College, Harvard
Management Company, Inc. and Xxxxxx
Xxxxxxx
3
SCHEDULE IV
FORM OF HARVARD NOTICE TO CHINA WORLD SHAREHOLDERS
[Harvard Management Company, Inc. logo and letterhead]
Dear Fellow Shareholder of Xxxxxxxxx China World Fund, Inc.:
As you may be aware, we recently have reached agreement with Xxxxxxxxx China
World Fund with regard to the open-ending of the Fund and other issues. After
much hard work, the parties have agreed on a settlement that we feel will
benefit all shareholders.
The joint press release enclosed describes the open-ending proposal and the
settlement. In our opinion, the open-ending proposal with the in-kind
distribution feature should minimize the potential adverse impact on net asset
value per share from open-ending. We and the Fund also have agreed to discuss,
prior to the open-ending, other steps the Fund might take to that end. To
support this effort further, we have agreed that, when we redeem our shares in
the open-end Fund, we will take our redemption proceeds through a pro rata,
in-kind distribution of portfolio investments. As a result, the Fund will avoid
having to sell significant portfolio assets to raise cash to meet Harvard's
redemption request.
You may already have returned the white proxy card we sent to you in connection
with the 2003 China World annual meeting. In light of our agreement with the
Fund, we will be supporting the open-ending proposal at the meeting and have
withdrawn the proposals we had planned to present at the meeting. We will not be
voting any shares for which we received proxies. If you would like to be
represented at the annual meeting, you will need to return the proxy you will
receive from the Fund. We urge you to vote FOR the Fund's proposed open-ending.
Thank you for your support,