EXHIBIT (d)(5)
SUBSCRIPTION RIGHTS AGENCY AGREEMENT
This Subscription Rights Agency Agreement (the "Agreement") is made as of
October ____, 1999 between Japan OTC Equity Fund, Inc., a Maryland Corporation
("the Fund"), and State Street Bank and Trust Company, a Massachusetts trust
company, as subscription and distribution agent ("Agent").
WHEREAS, the Fund proposes to make a subscription offer by issuing certificates
or other evidences of subscription rights, in the form designated by the Fund
("Subscription Rights"), to shareholders of record ("Shareholders") of its
Common Stock as of a record date specified by the Fund (the "Record Date"),
pursuant to which each Shareholder will have certain rights (the "Rights") to
subscribe to shares of the Fund's Common Stock, par value $0.01 ("Common
Stock"), as described in and upon such terms as are set forth in the final
prospectus (the "Prospectus") for the Form N-2 Registration Statement that was
filed by the Fund with the Securities and Exchange Commission on September 15,
1999, as amended from time to time, (the "Registration Statement");
WHEREAS, the Fund wishes the Agent to perform certain acts on its behalf and the
Agent is willing to so act, in connection with the distribution of the
Subscription Rights and the issuance and exercise of the Rights to subscribe
therein set forth, all upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual agreements
set forth herein, the parties agree as follows:
1. Pursuant to resolution of its Board of Directors, The First Australia
Prime Income Fund, Inc. hereby appoints and authorizes the Agent to act on
its behalf in accordance with the provisions hereof, and the Agent hereby
accepts such appointment and agrees to so act.
2. (a) Each Subscription Right shall evidence the Rights of the Rights Holder
to purchase Common Stock upon the terms and conditions therein and herein
set forth.
(b) Upon the written advice of the Fund signed by its President, Vice
President, Treasurer, Secretary or Assistant Secretary, as to the Record
Date, the Agent shall, from a list of Shareholders as of the Record Date
to be prepared by the Agent in its capacity as Transfer Agent prepare and
record Subscription Rights in the names of the Shareholders, setting forth
the number of Rights to subscribe to the Fund's Common Stock calculated on
the basis of one Right for each whole share of Common Stock recorded on
the Fund's books in the name of each such Shareholder as of the Record
Date. Fractional Rights shall not be issued and entitlement to Rights
shall be rounded down. In the case of shares held of record by Cede & Co.
or any other depositary or nominee (a "Nominee Holder"), we will issue a
subscription certificate to the Depository on behalf of the underlying
shareowners (a "Subscription Certificate"). Each subscription certificate
shall be dated as of the Record Date and shall be executed manually or by
facsimile signature of a duly authorized Officer of the Fund. Upon the
written advice, signed as provided above, as to the effective date of the
Registration Statement, the Agent shall as promptly as practicable deliver
the Subscription Certificates, together with a copy of the Prospectus, to
all Record Date Shareholders.
3. (a) Each Subscription Right shall, its having been exercised by the holder
thereof in the manner set forth in the Prospectus, become irrevocable upon
a completed subscription certificate having been delivered to the Agent.
The Agent shall, in its capacity as Transfer Agent for the Fund maintain a
register of Subscription Rights and the holders of record thereof (each of
whom shall be deemed a "Shareholder" hereunder for purposes of determining
the rights of holders of Subscription Rights). Each Subscription Right
shall, subject to the provisions thereof, entitle the Shareholder in whose
name it is recorded to the following:
(1) The right (the "Basic Subscription Right") to purchase one-third of
one share of Common Stock for each whole Subscription Right (i.e., three
rights entitle the holder to subscribe for one share of Common Stock;
fractional shares will not be issued and entitlement to shares shall be
rounded down, except that a Record Date Shareholder holding fewer than
three shares will be entitled to subscribe for one share pursuant to the
Basic Subscription Right); and
(2) The right (the "Over-Subscription Right") to purchase from the Fund
additional shares of Common Stock, subject to the availability of such
shares and to allotment of such shares as may be available among
Rightsholders who exercise Over-Subscription Rights on the basis specified
in the Prospectus; provided, however, that a Rightsholder who has not
exercised his Basic Subscription Rights with respect to the full number of
Rights that such Rightsholder owns as of the Expiration Date, if any,
shall not be entitled to any Over-Subscription Rights.
(b) A Rightsholder may exercise his Basic Subscription Rights and Over
subscription Rights by delivery to the Agent at its corporate office
specified in the Prospectus of (i) the Subscription Certificate with
respect thereto, duly executed by such Rightsholder in accordance with and
as provided by the terms and conditions of the Subscription Certificate,
together with (ii) the Estimated Subscription Price for each share of
Common Stock subscribed for by exercise of such Rights, in United States
dollars by money order or check drawn on a bank located in the United
States and in each case payable to the order of the Fund.
(c) Rights may be exercised at any time after the date of issuance of the
Subscription Certificates with respect thereto but no later than 5:00
p.m., New York City time, on such date as the Fund shall designate to the
Agent in writing (the "Expiration Date"). For the purpose of determining
the time of the exercise of any Rights, delivery of any material to the
Agent shall be deemed to occur when such materials are received at the
corporate office of the Agent specified in the Prospectus.
(d) Notwithstanding the provisions of Section 3(b) and 3(c) regarding
Delivery of an executed Subscription Certificate to the Agent prior to
5:00 p.m., New York City time, on the Expiration Date, if prior to such
time the Agent receives notice of guaranteed delivery by mail or otherwise
from a bank, trust company or a New York Stock Exchange member
guaranteeing delivery by facsimile or otherwise from a bank, trust company
or a New York Stock Exchange member guaranteeing delivery of (i) payment
of the aggregate estimated subscription price for the shares subscribed
for pursuant to the Basic Subscription Right and any additional shares
requested pursuant to the Over-Subscription Right, and (ii) a properly
completed and executed Subscription Certificate, then such exercise of
Basic Subscription Rights and Over-Subscription Rights shall be regarded
as timely, subject, however, to receipt of the duly completed and executed
Subscription Certificate and full payment for the shares by the Agent by
the close of business on the third business day after the Expiration Date.
(e) Within eight business days following the Expiration Date (the
"Confirmation Date"), the Agent shall send a confirmation to each
exercising Rightsholder (or, for shares of Common Stock on the Record Date
held by Cede & Co. or any other depository or nominee, directly to the
depository or nominee), showing (i) the number of shares acquired pursuant
to the Basic Subscription Rights, (ii) the number of shares, if any,
acquired pursuant to the Over-Subscription Rights, (iii) the per share and
total purchase price for the shares, and (iv) any additional amount
payable by such Rightsholder to the Fund or any excess to be refunded by
the Fund to such Rightsholder, in each case based on the Subscription
Price as determined on the Pricing Date. Any additional payment required
from a Rightsholder must be received by the Agent within ten business days
after the Confirmation Date. Any excess payment to be refunded by the Fund
to a Rightsholder, shall be mailed by the Agent to the Rightsholder as
promptly as possible, as provided in Section 6 below.
4. If, after allocation of shares of Common Stock to persons exercising Basic
Subscription Rights, there remain unexercised Rights, then the Agent shall
allot the shares issuable upon exercise of such unexercised Rights (the
"Remaining Shares") to persons exercising Over-Subscription Rights, in the
amounts of such over-subscriptions. If the number of shares for which
Over-Subscription Rights have been exercised is greater than the Remaining
Shares, the Agent shall allot the Remaining Shares to the persons
exercising Over-Subscription Rights pro rata based solely on the number of
shares held on the Record date.
5. All proceeds from the exercise of Rights shall be held by the Agent in a
segregated, interest-bearing account in the name of the Fund. The Agent
shall advise the Fund immediately upon the completion of the allocation
set forth above as to the total number of shares subscribed and
distributable.
6. (a) The Agent shall mail to the Rightsholders within fifteen business days
after the Confirmation Date and after full payment for the Shares
subscribed for has cleared: (i) certificates representing those shares
purchased pursuant to exercise of Basic Subscription Rights and those
shares purchased pursuant to the exercise of Over-Subscription Rights or a
confirmation of an account credit to Dividend Reinvestment participants;
and (ii) in the case of each Rightsholder who subscribed and paid for
shares at an assumed purchase price greater than the actual per share
purchase price, a refund in the amount of the difference between the
assumed purchase price and the actual purchase price.
(b) The Agent shall deliver the proceeds of the exercise of Primary Rights
to the Fund one business day after the expiration of the guarantee period
and deliver the proceeds of the exercise of rights pursuant to the Over
Subscription Privilege two business days after the expiration of the
guarantee period.
7 (a) The Agent shall account promptly to the Fund with respect to Rights
exercised and concurrently account for all monies received and returned by
the Agent with respect to the purchase of shares of Common Stock upon the
exercise of Rights.
(b) The Agent will advise the Fund and Xxxxx Xxxxxx Incorporated (the
"Dealer Manager") from day to day during the period of, and promptly after
the termination of, the Offer the total number of Rights exercised by each
Rightsholders 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 the number of Rights exercised on
Subscription Certificates indicating the Dealer Manager or such soliciting
broker as the broker-dealer with respect to such exercise and such other
information as the Fund or the Dealer Manager may reasonably request.
(c) The Agent shall notify the Fund and the Dealer Manager no later than
5:00 p.m., New York City time, on the first business day following the
Expiration Date, of the number of Rights exercised, the total number of
Rights verified to be in proper form for exercise, rejected for exercise
and being processed, and such other information as the Fund or the Dealer
Manager may reasonably request.
(d) Upon request of the Fund after the Confirmation Date, the Agent shall
notify the Fund, and at the Fund's request the Dealer Manager of any Right
with respect of which the full amount due upon the exercise thereof has
not been received and the soliciting broker, if any, specified as the
broker-dealer with respect to such right.
8. In the event the Agent does not receive, within ten business days after
the Confirmation Date, any amount due from a Shareholder as specified in
Section 3(e), then it shall take such action with respect to such
Shareholder's Subscription Rights as may be instructed in writing by the
Fund, including, without limitation, (i) selling such subscribed and
unpaid-for shares to other Record Date Shareholders, (ii) applying any
payment actually received toward the purchase of the greatest whole number
of shares that could be acquired by such Record Date Shareholder upon the
exercise of the Basic Subscription Right and/or Over-Subscription Right,
and (iii) exercising any and all other rights or remedies to which the
Fund may be entitled.
9. No Subscription Right shall entitle a Shareholder to vote or receive
dividends or be deemed the holder of shares of Common Stock for any
purpose, nor shall anything contained in any Subscription Right be
construed to confer upon any Rightsholder any of the rights of a
shareholder of the Fund or any right to vote, give or withhold consent to
any action by the Fund (whether upon any recapitalization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meeting or other action affecting
shareholders or receive dividends or otherwise, until the Rights evidenced
thereby shall have been exercised and the shares of Common Stock
purchasable upon the exercise thereof shall have become deliverable as
provided in this Agreement and in the Prospectus.
10. (a) The Fund covenants that all shares of Common Stock issued on exercise
of Rights will be validly issued, fully paid, non assessable and free of
preemptive rights.
(b) The Fund shall furnish to the Agent, upon request, evidence
satisfactory to the Agent to the effect that a registration statement
under the Securities Act of 1933, as amended (the "Act"), is then in
effect with respect to its shares of Common Stock issuable upon exercise
of the Rights set forth in the Subscription Rights. Upon written advice to
the Agent that the Securities and Exchange Commission shall have issued or
threatened to have issued any order preventing or suspending the use of
the Prospectus, or if for any reason it shall be necessary to amend or
supplement the Prospectus in order to comply with the Act, the Agent shall
cease acting hereunder until receipt of written instructions from the Fund
and such assurances as it may reasonably request that it may comply with
such instruction without violations of the Act.
11. (a) Any corporation into which the Agent may be merged or converted or
with which it may be consolidated, or any corporation resulting from and
merger, conversion or consolidation to which the Agent shall be a party,
or any corporation succeeding to the corporate trust business of the
Agent, shall be the successor to the Agent hereunder without the execution
or filing of any document by any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Agent. In
case at the time such successor to the Agent shall succeed to the agency
created by this Agreement, any of the Subscription Rights shall have been
countersigned but not delivered, any such successor to the Agent may adopt
the countersignature of the original Agent and deliver such Subscription
Rights so countersigned, and in case at that time any of the Subscription
Rights shall not have been countersigned, any successor to the Agent may
countersign such Subscription Rights either in the name of the predecessor
Agent or in the name of the successor Agent, and in all such cases such
Subscription Rights shall have the full force provided in the Subscription
Rights and in this Agreement.
(b) In case at any time the name of the Agent shall be changed and at such
time any of the Subscription Rights shall have been countersigned but not
delivered, the Agent may adopt the countersignature under its prior name
and deliver Subscription Rights so countersigned, and in case at that time
any of the Subscription Rights shall not have been countersigned, the
Agent may countersign such Subscription Rights either in its prior name or
in its changed name, and in all such cases such Subscription Rights shall
have the full force provided in the Subscription Rights and in this
Agreement.
12. The Fund agrees to pay to the Agent at the completion of the offering, on
demand of the Agent, reasonable compensation for all services rendered by
it hereunder and also its reasonable out-of-pocket expenses and other
disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder as set
forth in Schedule A (attached).
13. The Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions:
(a) Whenever in the performance of its duties under this Agreement the
Agent shall deem it necessary or desirable that any fact or matter be
proved or established, prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof is herein
specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board or
President or a Vice President or the Secretary or Assistant Secretary or
the Treasurer of the Fund delivered to the Agent, and such certificate
shall be full authorization to the Agent for any action taken or suffered
good faith by it under the provisions of this Agreement in reliance upon
such certificate.
(b) The Agent shall not be responsible for and the Fund shall indemnify
and hold the Agent harmless from and against, any and all losses, damages,
costs, charges, counsel fees, payments, expenses and liabilities arising
out of or attributable to all actions of the Agent or its agents or
subcontractors required to be taken pursuant to this Agreement, provided
that such actions are taken in good faith and without gross negligence or
willful misconduct.
(c) The Agent shall be liable hereunder only for its own gross negligence
or willful misconduct and for the negligence or misconduct of its agents
or subcontractors.
(d) The Agent may consult with legal counsel of its selection (who may be
legal counsel to the Fund), and the opinions of such counsel shall be full
and complete authorization and protection to the Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(e) Nothing herein shall preclude the Agent from acting in any other
capacity for the Fund or for any other legal entity.
(f) The Agent is hereby authorized and directed to accept instructions
with respect to the performance of its duties hereunder from any officer
or assistant officer of the Fund and to apply to any such officer of the
Fund for advice or instructions in connection with its duties, and shall
be indemnified and not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any officer or assistant
officer of the Fund.
(g) The Agent shall be indemnified and shall incur no liability for or in
respect of any action taken, suffered, or omitted by it in reliance upon
any Subscription Right or certificate for Common Stock, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or
document that it reasonably believes to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper
person or persons.
14. The Agent may, without the consent or concurrence of the Shareholders in
whose names Subscription Rights are registered, by supplemental agreement
or otherwise, concur with the Fund in making any changes or corrections in
a Subscription Right that it shall have been advised by counsel (who may
be counsel for the Fund) is appropriate to cure any ambiguity or to
correct any defective or inconsistent provision or clerical omission or
mistake or manifest error therein or herein contained, and which shall not
be inconsistent with the provisions of the Subscription Right or the
Prospectus except insofar as any such change may confer additional rights
upon the Shareholders.
15. A11 the covenants and provisions of the Agreement by or for the benefit of
the Fund or the Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
16. A11 capitalized terms used herein and not defined herein shall have the
meaning specified in the Prospectus.
17. The validity, interpretation and performance of this Agreement shall be
governed by the law of the Commonwealth of Massachusetts.
STATE STREET BANK AND TRUST COMPANY JAPAN OTC EQUITY FUND, INC.
By: By:
___________________________ ____________________________
Name:
Title
Dated: ______________________ Dated: ________________________
