EXHIBIT (k)(2)
SUBSCRIPTION AGENCY AGREEMENT
This Subscription Agency Agreement (the "Agreement") is made as of
Xxxxx 0, 0000 xxxxxxx Xxx Xxxxxxx Xxxxx Fund, Inc., a Maryland corporation
(the "Fund"), and PNC Bank, National Association, as subscription agent (the
"Agent"). All terms not defined herein shall have the meaning given in the
prospectus filed by the Fund with the Securities and Exchange Commission
pursuant to Rule 497(b) under the Securities Act of 1933 (the "Prospectus")
relating to the Registration Statement on Form N-2 (File No. 333-00691) filed
by the Fund with the Securities and Exchange Commission on February 5, 1996,
as amended by any amendment filed with respect thereto (the "Registration
Statement").
WHEREAS, the Fund proposes to make a subscription offer by issuing
certificates or other evidences of subscription rights, in the form designated
by the Fund (the "Subscription Certificates") to shareholders of record (the
"Shareholders") of its common stock, par value $.001 per share ("Common
Stock"), as of a record date specified by the Fund (the "Record Date"),
pursuant to which each Shareholder will have certain rights (the "Rights") to
subscribe for shares of Common Stock, as described in and upon such terms as
are set forth in the Prospectus, a final copy of which has been or, upon
availability will promptly be, delivered to the Agent;
WHEREAS, the Fund wishes the Agent to perform certain acts on behalf
of the Fund, and the Agent is willing to so act, in connection with the
distribution of the Subscription Certificates and the issuance and exercise of
the Rights to subscribe therein set forth, all upon the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements set forth herein, the parties agree as follows:
Form and Execution of Subscription Certificates;
Appointment
1. The Fund hereby appoints the Agent to act as subscription agent
in connection with the distribution of the Subscription Certificates and the
issuance and exercise of the Rights, in accordance with the terms set forth in
this Agreement. Each Subscription Certificate shall be irrevocable and non-
transferable. The Agent shall, in its capacity as Transfer Agent of the Fund,
maintain a register of Subscription Certificates 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 Certificates). Each
Subscription Certificate shall, subject to the provisions thereof, entitle the
Shareholder in whose name it is recorded to the following:
(1) The right to acquire during the Subscription Period at the
Subscription Price a number of shares of Common Stock equal to one
share of Common Stock for every four Rights (the "Primary
Subscription Right"); and
(2) The right to subscribe for additional shares of Common
Stock, subject to the availability of such shares and to the
allotment of such shares as may be available among Shareholders who
exercise Over-Subscription Rights on the basis specified in the
Prospectus; provided, however, that such Shareholder has exercised
all Primary Subscription Rights issued to him (other than those
Rights which cannot be exercised because they represent the right to
acquire less than one share) (the "Over-Subscription Privilege").
Rights and Issuance of Subscription Certificates
2. (a) Each Subscription Certificate shall evidence the Rights of
the Shareholder therein named 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 Chairman,
President, Secretary or Assistant Secretary, the Agent shall, from a list of
the Fund Shareholders as of the Record Date to be prepared by the Agent in its
capacity as Transfer Agent of the Fund, prepare and record Subscription
Certificates in the names of the Shareholders, setting forth the number of
Rights to subscribe for the Fund's Common Stock calculated on the basis of one
Right for each share of Common Stock recorded on the books in the name of each
such Shareholder as of the Record Date. Each Subscription Certificate shall
be dated as of the Record Date. Upon the written advice, signed as aforesaid,
as to the effective date of the Registration Statement, the Agent shall
promptly deliver the Subscription Certificates, together with a copy of the
Prospectus and instruction letter, to all Shareholders with record addresses
within the United States (including its territories and possessions and the
District of Columbia). Delivery shall be by first class mail (without
registration or insurance).
Exercise
3. (a) Shareholders may acquire shares on Primary Subscription and
pursuant to the Over-Subscription Privilege by delivery to the Agent at its
Corporate Stock Transfer Department specified in the Prospectus (i) the
Subscription Certificate with respect thereto, duly executed by such
Shareholder in accordance with and as provided by the terms and conditions of
the Subscription Certificate, together with (ii) payment of the full estimated
subscription price for the shares subscribed for on Primary Subscription and
any additional shares subscribed for pursuant to the Over-Subscription
Privilege, in U.S. dollars in cash, by check, or bank draft drawn on a bank in
the continental United States or by postal, telegraphic, or express money
order, in each case payable to the order of the Fund.
(b) Rights may be exercised at any time after the date of issuance
of the Subscription Certificates with respect thereto but no later than 5:00
p.m. New York 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 Stock
Transfer Department of the Agent specified in the Prospectus.
(c) Notwithstanding the provisions of Section 3(a) and 3(b) regard-
ing delivery of an executed Subscription Certificate to the Agent prior to
5:00 p.m. New York time on the Expiration Date, if prior to such time the
Agent receives a notice of guaranteed delivery by telegram or otherwise from a
bank, a trust company or a New York Stock Exchange member guaranteeing
delivery of (i) payment of the estimated subscription price for the shares
subscribed for in the Primary Subscription and for any additional shares
subscribed for pursuant to the Over-Subscription Privilege and (ii) a properly
completed and executed Subscription Certificate, then such exercise of Primary
Subscription Rights and Over-Subscription Rights shall be regarded as timely,
subject, however, to receipt of the duly executed Subscription Certificate and
full payment for the Shares are received by the Subscription Agent by the
close of business on the third business day after the Expiration Date.
(d) Within eight (8) business days following the Pricing Date (the
"Confirmation Date"), the Agent shall send to each exercising rights holder
(or, if shares of Common Stock on the Record Date are held by Cede & Co. or
any other depository or nominee, to Cede & Co. or such other depository or
nominee), confirmation showing (i) the number of Shares acquired pursuant to
the Primary Subscription, (ii) the number of Shares, if any, acquired pursuant
to the Over-Subscription Privilege, (iii) the per Share and total purchase
price for the Shares, and (iv) any additional amount payable by such
exercising rights holder to the Fund or any excess to be refunded by the Fund
to such exercising rights holder, in each case based on the Subscription Price
as determined on the Expiration Date. Any additional payment required from an
exercising rights holder must be received by the Agent within ten (10)
business days after the Confirmation Date. Any excess payment to be refunded
by the Fund to an exercising rights holder shall be mailed by the Agent to him
as promptly as possible.
(e) In the event the Agent does not receive, within ten business
days after the Confirmation Date, any amount due from an exercising rights
holder as specified in (d) above, then it shall take such action with respect
to such exercising rights holder's Rights as may be instructed by the Fund,
including, without limitation, (i) applying any payment actually received by
it toward the purchase of the greatest whole number of shares that could be
acquired with such payment, (ii) allocating the shares subject to such Rights
to one or more other Shareholders, and (iii) selling all or a portion of the
shares deliverable upon exercise of such Rights on the open market, and
applying the proceeds thereof to the amount owed.
Validity of Subscriptions
4. Irregular subscriptions not otherwise covered by specific
instructions herein shall be submitted to an appropriate Officer of the Fund
and handled in accordance with his instructions. Such instructions will be
documented by the Agent indicating the instructing officer and the date
thereof.
Over-subscription
5. If, after allocation of shares of Common Stock to persons
exercising Primary 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
Privileges, in the amounts of such over-subscriptions. If the number of shares
for which the Over-Subscription Privilege has been exercised is greater than
the Remaining Shares, the Agent shall allocate the Remaining Shares to the
persons exercising Over-Subscription Privilege pro rata based generally on the
number of shares of Common Stock owned by them on the Record Date. The per-
centage of Remaining Shares each oversubscribing Shareholder may acquire may
be rounded up or down to result in delivery of whole shares. 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.
Delivery of Certificates
6. The Agent will deliver (i) certificates representing those
shares purchased pursuant to exercise of Primary Subscription Rights as soon
as practicable after the corresponding Rights have been validly exercised and
full payment for such shares have been received and cleared and (ii)
certificates representing those shares purchased pursuant to the exercise of
Over-Subscription Privilege as soon as practicable after the Expiration Date
and after all allocations have been effected.
Holding Proceeds of Rights Offering in Escrow
7. (a) All proceeds received by the Agent from Shareholders in
respect of the exercise of Rights shall be held by the Agent, on behalf of the
Fund, in a segregated, interest-bearing escrow account (the "Escrow Account").
Pending disbursement in the manner described in Section 3(d) above, funds held
in the Escrow Account shall be invested by the Agent at the direction of the
Fund.
(b) The Agent shall deliver all proceeds received in respect of the
Rights (including interest earned thereon) to the Fund as promptly as
practicable, but in no event later than __ business days after the
Confirmation Date. Proceeds held in respect of Excess Payments (including
interest earned thereon) shall be refunded to Shareholders entitled to such a
refund within __ business days after the Expiration Date.
Reports
8. (a) Daily, during the period commencing March __, 1996 until
April 12, 1996 (or such later date if the Subscription Period is extended),
the Agent shall report by telephone by 5:00 p.m., New York time, to the Dealer
Manager (PaineWebber Incorporated) and to Xxxxxxxx Xxxxxxxx Asset Management
Inc., the Fund's Administrator (the "Administrator"), the following
information: the total number of Rights exercised, the total number of new
shares subscribed for, payments received therefor, together with such other
information as may be mutually determined by the Fund and the Agent. In
addition, the Agent shall also report to the Dealer Manager and the
Administrator, based on a review of Subscription Certificates received, the
number of shares subscribed for through Subscription Certificates which
designate the Dealer Manager as a soliciting dealer, the number of shares
subscribed for through Subscription Certificates which designate a broker
dealer other than the Dealer Manager as a soliciting dealer (specifying the
name and number of shares subscribed for through each such designee) and the
number of shares subscribed for through Subscription Certificates which do not
designate a soliciting dealer. Such information shall be promptly confirmed
by facsimile transmission from the Agent to the Dealer Manager and the
Administrator. On _________ __, 1996, the Agent shall provide to the Dealer
Manager and the Administrator by facsimile transmission (and confirm by
letter), a final report setting forth the aforementioned information.
(b) Information to be transmitted to the Dealer Manager pursuant to
this Section 8, shall be directed to:
PaineWebber Incorporated
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(c) Information to be transmitted to the Administrator pursuant to
this Section 8, shall be directed to:
Xxxxxxxx Xxxxxxxx Asset Management Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: C. Xxxxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Loss or Mutilation
9. If any Subscription Certificate is lost, stolen, mutilated, or
destroyed the Agent may, on such terms which will indemnify and protect the
Fund and the Agent as the Agent may in its discretion impose (which shall, in
the case of a mutilated Subscription Certificate include the surrender and
cancellation thereof), issue a new Subscription Certificate of like
denomination in substitution for the Subscription Certificate so lost, stolen,
mutilated or destroyed.
Compensation for Services
10. The Fund agrees to pay to the Agent $________ 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.
Instructions and Indemnification
11. The Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions:
(a) The Agent shall be entitled to rely upon any instructions or
directions furnished to it by an appropriate Officer of the Fund, whether
in conformity with the provisions of this Agreement or constituting a
modification hereof or a supplement hereto. Without limiting the
generality of the foregoing or any other provision of this Agreement, the
Agent, in connection with its duties hereunder, shall not be under any
duty or obligation to inquire into the validity or invalidity or
authority or lack thereof of any instruction or direction from an Officer
of the Fund which conforms to the applicable requirements of this
Agreement and which the Agent reasonably believes to be genuine and shall
not be liable for any delays, errors or loss of data occurring by reason
of circumstances beyond the Agent's control, including without limitation
acts of civil or military authority, national emergencies, labor
difficulties, fire, flood, catastrophe, acts of God, insurrection, war,
riots or failure of the mails, transportation, communication or power
supply.
(b) The Fund will indemnify the Agent and its nominees against, and
hold it harmless from, all liability and expense which may arise out of
or in connection with the services described in this Agreement or the
instructions or directions furnished to the Agent relating to this
Agreement by an appropriate Officer of the Fund, except for any liability
or expense which shall arise out of the gross negligence, bad faith or
willful misconduct of the Agent or such nominee.
Changes in Subscription Certificate
12. The Agent may, without the consent or concurrence of the
Shareholders in whose names Subscription Certificates are registered, by
supplemental agreement or otherwise, concur with the Fund in making any
changes or corrections in a Subscription Certificate that it shall have been
advised by counsel (who may be counsel for the Fund) is appropriate to cure
any ambiguity or to correct any defective or inconsistent provision or
clerical omission or mistake or manifest error therein or herein contained,
and which shall not be inconsistent with the provision of the Subscription
Certificate except insofar as any such change may confer additional rights
upon the Shareholders.
Assignment; Delegation
13. (a) Neither this Agreement nor any rights or obligations
hereunder may be assigned or delegated by either party without the written
consent of the other party.
(b) This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
Nothing in this Agreement is intended or shall be construed to confer upon any
other person any right, remedy or claim or to impose upon any other person any
duty, liability or obligation.
Governing Law
14. The validity, interpretation and performance of this Agreement
shall be governed by the law of the State of New York.
Entire Agreement
15. This Agreement contains the entire agreement among the parties
hereto with respect to the matters contemplated herein, and supersedes all
prior agreements, representations and understandings of the parties. As to
matters or provisions which are not reasonably the subject of instructions or
directions from an Officer of the Fund, this Agreement may not be
supplemented, modified or amended except by a writing executed by all of the
parties to this Agreement.
Severability
16. The parties hereto agree that if any of the provisions
contained in this Agreement shall be determined invalid, unlawful or
unenforceable to any extent, such provisions shall be deemed modified to the
extent necessary to render such provisions enforceable. The parties hereto
further agree that this Agreement shall be deemed severable, and the
invalidity, unlawfulness or unenforceability of any term or provision thereof
shall not affect the validity, legality or enforceability of this Agreement or
of any other term or provision hereof.
Counterparts
17. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
Captions
18. The captions and descriptive headings herein are for the
convenience of the parties only. They do not in any way modify, amplify,
alter or give full notice of the provisions hereof.
Facsimile Signatures
19. Any facsimile signature of any party hereto shall constitute a
legal, valid and binding execution hereof by such party.
Further Actions
20. Each party agrees to perform such further acts and execute such
further documents as are necessary to effect the purposes of this Agreement.
Additional Provisions
21. Except as specifically modified by this Agreement, the Agent's
rights and responsibilities set forth in the Transfer Agency Services
Agreement between the Fund and the Agent are hereby ratified and confirmed and
continue in effect.
PNC BANK, NATIONAL ASSOCIATION THE GREATER CHINA FUND, INC.
By:__________________________ By:_____________________
Vice President Authorized Officer
Dated:_______________________ Dated:__________________
