Exhibit (h)
[________] Shares of Common Stock
Issuable Upon Exercise of Transferable Rights
to Subscribe for such Shares
DEALER MANAGER AGREEMENT
New York, New York
January [_], 2007
UBS Securities LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Each of Korea Equity Fund, Inc., a Maryland corporation (the "Fund"),
and Nomura Asset Management U.S.A. Inc., a New York corporation (the
"Manager"), hereby confirms the agreement with and appointment of UBS
Securities LLC to act as dealer manager (the "Dealer Manager") in connection
with the issuance by the Fund to the holders of record (the "Record Date
Stockholders") at the close of business on the record date set forth in the
Prospectus (as defined herein) (the "Record Date") transferable rights
entitling such Record Date Stockholders to subscribe for up to [________]
shares (each a "Share" and, collectively, the "Shares") of common stock, par
value $0.10 per share (the "Common Shares"), of the Fund (the "Offer").
Pursuant to the terms of the Offer, the Fund is issuing each Record Date
Stockholders one transferable right (each a "Right" and, collectively, the
"Rights") for each Common Share held by such Record Date Stockholder on the
Record Date. Such Rights entitle their holders to acquire during the
subscription period set forth in the Prospectus (the "Subscription Period"),
at the price set forth in such Prospectus (the "Subscription Price"), one
Share for each three Rights exercised, on the terms and conditions set forth
in such Prospectus. No fractional shares will be issued. Any Record Date
Stockholder who fully exercises all Rights initially issued to such Record
Date Stockholder (other than those Rights that cannot be exercised because
they represent the right to acquire less than one Share) will be entitled to
subscribe for, subject to allocation, additional Shares (the
"Over-Subscription Privilege") on the terms and conditions set forth in the
Prospectus. The Rights are transferable and are expected to be listed on the
New York Stock Exchange, Inc. ("NYSE") under the symbol "KEF.RT".
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (Nos. 333-138220 and
811-08002) and a related preliminary prospectus under the Investment Company
Act of 1940, as amended (the "Investment Company Act"), the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations of the
Commission under the Investment Company Act (the "Investment Company Act Rules
and Regulations") and the rules and regulations of the Commission under the
Securities Act (the "Securities Act Rules and Regulations" and, together with
the Investment Company Act Rules and Regulations, the "Rules and
Regulations"), and has filed such amendments to such registration statement on
Form N-2, if any, and such amended preliminary prospectuses as may have been
required to the date hereof. If the registration statement has not become
effective, a further amendment to such registration statement, including forms
of a final prospectus necessary to permit such registration statement to
become effective, will promptly be filed by the Fund with the Commission. If
the registration statement has become effective and any prospectus contained
therein omits certain information at the time of effectiveness pursuant to
Rule 430A of the Rules and Regulations, a final prospectus containing such
omitted information will promptly be filed by the Fund with the Commission in
accordance with Rule 497(h) of the Rules and Regulations. The term
"Registration Statement" means the registration statement, as amended, at the
time it becomes
or became effective, including financial statements and all exhibits and all
documents, if any, incorporated therein by reference, and any information
deemed to be included by Rule 430A. The term "Prospectus" means (except as
otherwise specified herein) the final prospectus in the form filed with the
Commission pursuant to Rule 497(c), (e), (h) or (j) of the Rules and
Regulations, as the case may be, as from time to time amended or supplemented
pursuant to the Securities Act.
The Prospectus and letters to owners of Common Shares of the Fund,
subscription certificates and other forms used to exercise rights, brochures,
wrappers, any letters from the Fund to securities dealers, commercial banks
and other nominees and any newspaper announcements, press releases and other
offering materials and information that the Fund may use, approve, prepare or
authorize for use in connection with the Offer are collectively referred to
hereinafter as the "Offering Materials".
1. Representations and Warranties.
(a) The Fund and the Manager jointly and severally represent and
warrant to, and agree with, the Dealer Manager as of the date
hereof, as of the date of the commencement of the Offer (such date
being hereinafter referred to as the "Representation Date") and as
of the Expiration Date (as defined below) that:
(i) The Fund meets the requirements for use of Form N-2 under
the Securities Act and the Investment Company Act and the
Rules and Regulations. At the time the Registration
Statement became or becomes effective, the Registration
Statement did or will contain all statements required to be
stated therein in accordance with, and did or will comply in
all material respects with, the requirements of the
Securities Act, the Investment Company Act and the Rules and
Regulations and did not or will not contain an untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading. From the time the
Registration Statement became or becomes effective through
the expiration date of the Offer set forth in the
Prospectus, as it may be extended as provided in the
Prospectus (the "Expiration Date"), the Offering Materials
will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated
therein or necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the
representations and warranties in this subsection shall not
apply to statements in or omissions from the Registration
Statement, Prospectus or Offering Materials made in reliance
upon and in conformity with information relating to the
Dealer Manager furnished to the Fund in writing by the
Dealer Manager expressly for use in the Registration
Statement, Prospectus or Offering Materials.
(ii) The Fund (i) has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the State of Maryland, (ii) has full corporate power and
authority to own, lease and operate its properties and
conduct its business as described in the Registration
Statement and the Prospectus, (iii) currently maintains all
necessary licenses, permits, consents, orders, approvals,
and other authorizations (collectively, the "Licenses and
Permits") necessary to carry on its business as contemplated
in the Prospectus, (iv) is duly qualified to do business as
a foreign corporation, (v) has made all necessary filings
required under any federal, state, local or foreign law,
regulation or rule, and (vi) is in good standing in each
jurisdiction wherein it owns or leases real property or in
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which the conduct of its business requires such
qualification, except where the failure to obtain or
maintain such Licenses and Permits, to be qualified as a
foreign corporation, to make such filings or be in good
standing would not have a material adverse effect upon the
Fund's business, properties, management, prospects,
financial condition or results of operations. The Fund has
no subsidiaries.
(iii) The Fund is duly registered with the Commission under the
Investment Company Act as a closed-end, non-diversified
management investment company, no order of suspension or
revocation of such registration has been issued or
proceedings therefor initiated or, to the best of the Fund's
and the Manager's knowledge, threatened by the Commission,
all required action has been taken by the Fund under the
Securities Act and the Investment Company Act to make the
public offering and to consummate the issuance of the Rights
and the issuance and sale of the Shares by the Fund upon
exercise of the Rights, and the provisions of the Fund's
articles of incorporation and by-laws comply as to form in
all material respects with the requirements of the
Investment Company Act and the Investment Company Act Rules
and Regulations.
(iv) Ernst & Young LLP, the independent registered public
accounting firm that certified the financial statements of
the Fund set forth or incorporated by reference in the
Registration Statement and the Prospectus, is an independent
registered public accounting firm as required by the
Investment Company Act, the Securities Act, the Rules and
Regulations and by the rules of the Public Company
Accounting Oversight Board.
(v) The financial statements of the Fund, together with the
related notes and schedules thereto, set forth or
incorporated by reference in the Registration Statement and
the Prospectus present fairly in all material respects the
financial condition of the Fund as of the dates or for the
periods indicated in conformity with U.S. generally accepted
accounting principles applied on a consistent basis; and the
information set forth in the Prospectus under the headings
"Fund expenses" and "Financial highlights" presents fairly
in all material respects the information stated therein.
(vi) The Fund has an authorized and outstanding capitalization as
set forth in the Prospectus; the issued and outstanding
Common Shares have been duly authorized and are validly
issued, fully paid and non-assessable and conform in all
material respects to the description thereof in the
Prospectus under the heading "Capital stock"; the Rights
have been duly authorized by all requisite action on the
part of the Fund for issuance pursuant to the Offer; the
certificates for the Shares are in due and proper form; the
Shares have been duly authorized by all requisite action on
the part of the Fund for issuance and sale pursuant to the
terms of the Offer and, when issued and delivered by the
Fund pursuant to the terms of the Offer against payment of
the consideration set forth in the Prospectus, will be
validly issued, fully paid and non-assessable; the Shares
and the Rights conform in all material respects to all
statements relating thereto contained in the Registration
Statement, the Prospectus and the other Offering Materials;
and the issuance of each of the Rights and the Shares has
been done in compliance with all applicable federal and
state securities laws and is not subject to any preemptive
rights.
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(vii) Except as set forth in the Prospectus, subsequent to the
respective dates as of which information is given in the
Registration Statement and the Prospectus, (A) the Fund has
not incurred any liabilities or obligations, direct or
contingent, or entered into any transactions, other than in
the ordinary course of business, that are material to the
Fund and (B) there has not been any material change in the
Common Shares or long-term debt of the Fund, or any material
adverse change, or, to the Fund's or the Manager's
knowledge, any development involving a prospective material
adverse change, in the condition (financial or other),
business, prospects, net worth or results of operations of
the Fund, (C) there has been no dividend or distribution
declared in respect of the Fund's capital stock and (D) the
Fund has not incurred any long-term debt.
(viii) Each of this agreement (the "Agreement"); the Reorganization
Support Service Agreement (the "Subscription Agency
Agreement") dated as of [_________], 2007 between the Fund
and The Colbent Corporation (the "Subscription Agent"); the
Information Agent Letter Agreement (the "Information Agent
Agreement") dated as of [________], 2007 between the Fund
and The ▇▇▇▇▇▇ Group, Inc. (the "Information Agent"); the
Management Agreement dated as of [_______], [___] between
the Fund and the Manager (the "Management Agreement"); the
Custodian Agreement dated as of [________], [____] between
the Fund and Brown Brothers ▇▇▇▇▇▇▇▇ & Co. (the "Custodian
Agreement"); and the [Registrar, Transfer Agency and Service
Agreement] dated as of [________], [____] between the Fund
and Computershare Investor Services (the "Transfer Agency
Agreement") (collectively, all the foregoing are referred to
herein as the "Fund Agreements"), has been duly authorized,
executed and delivered by the Fund; each of the Fund
Agreements complies with all applicable provisions of the
Investment Company Act, the Investment Advisers Act of 1940,
as amended (the "Advisers Act"), and the rules and
regulations under such Acts; and, assuming due
authorization, execution and delivery by the other parties
thereto, each of the Fund Agreements constitutes a legal,
valid, binding and enforceable obligation of the Fund,
subject to the qualification that the enforceability of the
Fund's obligations thereunder may be limited by U.S.
bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or
affecting creditors' rights and to general principles of
equity (regardless of whether enforceability is considered
in a proceeding in equity or at law), except as enforcement
of rights to indemnity and contribution hereunder may be
limited by federal or state securities laws or principles of
public policy.
(ix) Neither the issuance of the Rights, nor the issuance and
sale of the Shares upon the exercise of the Rights, nor the
execution, delivery, performance and consummation by the
Fund of any other of the transactions contemplated in this
Agreement, or to the extent applicable to the Rights or the
Shares in the Fund Agreements, nor the consummation of the
transactions contemplated in this Agreement or in the
Registration Statement nor the fulfillment of the terms
thereof will conflict with or violate the articles of
incorporation, by-laws or similar organizational documents
of the Fund, or conflict with, result in a breach or
violation of, or constitute a default or an event of default
under, or result in the creation or imposition of any lien,
charge or encumbrance upon any properties or assets of the
Fund under the charter, by-laws or similar organizational
documents of the Fund, or the terms and provisions of any
agreement, indenture, mortgage, loan agreement, note,
insurance or surety agreement, lease or other instrument to
4
which the Fund is a party or by which it may be bound or to
which any of the property or assets of the Fund is subject,
nor will such action by the Fund result in any violation of
any order, law, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Fund or any of its properties.
(x) Except as set forth in the Registration Statement, there is
no pending or, to the Fund's or the Manager's knowledge,
threatened action, suit, claim, investigation or proceeding
affecting the Fund or to which the Fund is a party before or
by any court or governmental agency, authority or body or
any arbitrator which would result in any material adverse
change in the condition (financial or other), business
prospects, net worth or operations of the Fund, or which
would materially and adversely affect the properties or
assets thereof of a character required to be disclosed in
the Registration Statement or the Prospectus or the
consummation of the transactions contemplated hereby.
(xi) There are no franchises, contracts or other documents of the
Fund required to be described in the Registration Statement
or the Prospectus, or to be filed or incorporated by
reference as exhibits to the Registration Statement which
are not described or filed or incorporated by reference
therein as required by the Securities Act, the Investment
Company Act or the Rules and Regulations.
(xii) No consent, approval, authorization, notification or order
of, or filing with, any federal, state, local or foreign
court or governmental or regulatory agency, commission,
board, authority or body or with any self-regulatory
organization or other non-governmental regulatory authority
is required for the consummation by the Fund of the
transactions contemplated by the Fund Agreements or the
Registration Statement, except such as have been obtained,
or if the Registration Statement filed with respect to the
Shares is not effective under the Securities Act as of the
time of execution hereof, such as may be required (and shall
be obtained prior to commencement of the Offer) under the
Investment Company Act, the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(xiii) The Common Shares have been duly listed on the NYSE and
prior to their issuance the Shares and the Rights will have
been duly approved for listing, subject to official notice
of issuance, on the NYSE.
(xiv) The Fund (A) has not taken, directly or indirectly, any
action designed to cause or to result in, or that has
constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price
of any security of the Fund to facilitate the issuance of
the Rights or the sale or resale of the Rights and the
Shares, (B) has not since the filing of the Registration
Statement sold, bid for or purchased, or paid anyone any
compensation for soliciting purchases of, Common Shares of
the Fund (except for the solicitation of exercises of the
Rights pursuant to this Agreement) and (C) will not, until
the later of the expiration of the Rights or the completion
of the distribution (within the meaning of the
anti-manipulation rules under the Exchange Act) of the
Shares, sell, bid for or purchase, pay or agree to pay to
any person any compensation for soliciting another to
purchase any other securities of the Fund (except for the
solicitation of exercises of the Rights pursuant to this
Agreement); provided that any action in
5
connection with the Fund's Dividend Reinvestment Plan will
not be deemed to be within the terms of this Section
1.a.xiv.
(xv) The Fund has complied in all previous tax years and intends
to direct the investment of the proceeds of the Offer
described in the Registration Statement and the Prospectus
in such a manner as to continue to comply, with the
requirements of Subchapter M of the Internal Revenue Code of
1986, as amended ("Subchapter M of the Code"), and is
qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Code.
(xvi) The Fund has complied in the last five years, and intends to
direct the investment of the proceeds of the Offer described
in the Registration Statement and the Prospectus in such a
manner as to continue to comply, with the asset coverage
requirements of the Investment Company Act.
(xvii) The Fund has (a) appointed a Chief Compliance Officer and
(b) adopted and implemented written policies and procedures
which the Board of Directors of the Fund has determined are
reasonably designed to prevent violations of the federal
securities laws in a manner required by and consistent with
Rule 38a-1 of the Rules and Regulations under the Investment
Company Act and is in compliance in all material respects
with such Rule.
(xviii) The Offering Materials complied and comply with the
requirements of the Securities Act and the Securities Act
Rules and Regulations. Other than the Offering Materials,
the Fund has not, without the written permission of the
Dealer Manager, used, approved, prepared or authorized any
letters to beneficial owners of the shares of Common Stock
of the Fund, forms used to exercise rights, any letters from
the Fund to securities dealers, commercial banks and other
nominees or any newspaper announcements or other offering
materials and information in connection with the Offer;
provided, however, that any use of transmittal documentation
and subscription documentation independently prepared by the
Dealer Manager, broker-dealers, trustees, nominees or other
financial intermediaries shall not cause a violation of this
section (xviii).
(xix) Any Offering Materials authorized in writing by or prepared
by the Fund or an Adviser used in connection with the
issuance of the Rights does not contain an untrue statement
of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading. Moreover, all Offering Materials
complied and will comply in all material respects with the
applicable requirements of the Securities Act, the
Investment Company Act, the Rules and Regulations and the
rules and interpretations of the NASD.
(xx) The Fund maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management's
general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial
statements in conformity with U.S. generally accepted
accounting principles and to maintain accountability for
assets; (C) access to assets is permitted only in accordance
with management's general or specific authorization; and (D)
the recorded accountability for assets is
6
compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxi) The Fund has established and maintains disclosure controls
and procedures; such disclosure controls and procedures (as
such term is defined in Rule 30a-3 under the Investment
Company Act) are designed to ensure that material
information relating to the Fund is made known to the Fund's
Chief Executive Officer and its Chief Financial Officer by
others within the Fund, and such disclosure controls and
procedures are effective to perform the functions for which
they were established; the Fund's independent registered
public accounting firm and the Audit Committee of the Board
of Directors of the Fund have been advised of: (A) any
significant deficiencies in the design or operation of
internal controls over financial reporting which could
adversely affect the Fund's ability to record, process,
summarize, and report financial data; and (B) any fraud,
whether or not material, that involves management or other
employees who have a role in the Fund's internal controls
over financial reporting; any material weaknesses in the
Fund's internal controls over financial reporting have been
identified for the Fund's independent registered public
accounting firm; and since the date of the most recent
evaluation of such disclosure controls and procedures, there
have been no significant changes in internal controls over
financial reporting or in other factors that could
materially affect internal controls over financial
reporting, including any corrective actions with regard to
significant deficiencies and material weaknesses.
(xxii) The Fund and its officers and directors, in their capacities
as such, are in compliance in all material respects with the
applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and
the rules and regulations promulgated thereunder.
(b) The Manager represents and warrants to, and agrees with, the
Dealer Manager as of the date hereof, as of the Representation
Date and as of the Expiration Date that:
(i) Each of the Manager, Nomura Asset Management Co., Ltd., a
Japanese corporation (the "Investment Adviser"), Nomura
Asset Management Hong Kong Limited, a Hong Kong corporation
("NAM HK"), an investment sub-adviser, and Nomura Asset
Management Singapore Limited, a Singapore corporation ("NAM
Singapore" and, together with the Manager, the Investment
Adviser and NAM HK, the "Advisers") has been duly
incorporated and is validly existing as (i) a corporation
under the laws of the State of New York, with respect to the
Manager, (ii) a corporation under the laws of Japan, with
respect to the Investment Adviser, (iii) a Hong Kong
corporation under the laws of Hong Kong, with respect to NAM
HK and (iv) a Singapore corporation under the laws of
Singapore, with respect to NAM Singapore, and has full
corporate power and authority to own its properties and
assets and conduct its business as described in the
Registration Statement and the Prospectus, currently
maintains all Licenses and Permits material to the conduct
of its business and necessary to enable such Adviser to
continue to supervise investments in securities as
contemplated in the Registration Statement and Prospectus.
(ii) Each Adviser is duly registered as an investment adviser
under the Advisers Act, and is not prohibited by the
Advisers Act or the Investment Company Act, or the
7
rules and regulations under such Acts, from acting as
investment adviser for the Fund as contemplated in the
Prospectus and the Management Agreement, the Investment
Advisory Agreement dated as of [_______], [___] between the
Manager and the Investment Adviser (the "Investment Advisory
Agreement"), the Sub-Advisory Agreement dated as of
[_______], [___] between the Manager and NAM HK (the "HK
Sub-Advisory Agreement") and the Sub-Advisory Agreement
dated as of [_______], [___] between the Manager and NAM
Singapore (the "Singapore Sub-Advisory Agreement" and,
together with the HK Sub-Advisory Agreement, the
"Sub-Advisory Agreements"), to which it is a party.
(iii) Each of this Agreement, the Management Agreement, the
Investment Advisory Agreement and the Sub-Advisory
Agreements (collectively, the "Adviser Agreements") has been
duly authorized, executed and delivered by each Adviser that
is a party to such Agreement, and complies with all
applicable provisions of the Investment Company Act, the
Advisers Act and the rules and regulations under such Acts,
and is, assuming due authorization, execution and delivery
by the other parties thereto, a legal, valid, binding and
enforceable obligation of each Adviser that is a party to
such Agreement, subject to the qualification that the
enforceability of each Adviser's obligations thereunder, as
applicable, may be limited by U.S. bankruptcy, insolvency,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and
to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at
law), except as enforcement of rights to indemnity and
contribution hereunder may be limited by federal or state
securities laws or principles of public policy.
(iv) Neither the execution, delivery, performance and
consummation by an Adviser of its obligations under this
Agreement or any other Adviser Agreement to which it is a
party, nor the consummation of the transactions contemplated
therein or in the Registration Statement nor the fulfillment
of the terms thereof will conflict with or violate the
articles of incorporation, by-laws or similar organizational
documents of such Adviser, or conflict with, result in a
breach or violation of, or constitute a default or an event
of default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any properties or
assets of such Adviser under the articles of incorporation,
bylaws or similar organizational document, the terms and
provisions of any indenture, mortgage, loan agreement, note,
insurance or surety agreement, or any other material lease,
instrument or agreement to which such Adviser is a party or
by which it may be bound or to which any of the property or
assets of such Adviser is subject, nor will such action
result in any violation of any order, law, rule or
regulation of any court or governmental agency or body
having jurisdiction over such Adviser or any of its
properties.
(v) Except as set forth in the Registration Statement, there is
no pending or, to the best of the Manager's knowledge,
threatened action, suit or proceeding affecting either
Adviser or to which either Adviser is a party before or by
any court or governmental agency, authority or body or any
arbitrator which would result in any material adverse change
in either Adviser's condition (financial or other), business
prospects, net worth or operations, or which would
materially and
8
adversely affect the properties or assets thereof of a
character required to be disclosed in the Registration
Statement or Prospectus.
(vi) No consent, approval, authorization, notification or order
of, or filing with, any court or governmental agency or body
is required for the consummation by an Adviser of the
transactions contemplated by this Agreement or any other
Adviser Agreement, to which such Adviser is a party, except
where the failure to obtain such consent, approval,
authorization, notification or order, or make such filing
would have a material adverse effect on such Adviser's
business, properties, management, prospects, financial
condition or results of operations.
(vii) Each Adviser (A) has not taken, directly or indirectly, any
action designed to cause or to result in, or that has
constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price
of any security of the Fund to facilitate the issuance of
the Rights or the sale or resale of the Rights and the
Shares, (B) has not since the filing of the Registration
Statement sold, bid for or purchased, or paid anyone any
compensation for soliciting purchases of, Common Shares of
the Fund (except for the solicitation of exercises of the
Rights pursuant to this Agreement) and (C) will not, until
the later of the expiration of the Rights or the completion
of the distribution (within the meaning of the
anti-manipulation rules under the Exchange Act) of the
Shares, sell, bid for or purchase, pay or agree to pay any
person any compensation for soliciting another to purchase
any other securities of the Fund (except for the
solicitation of exercises of the Rights pursuant to this
Agreement); provided that any action in connection with the
Fund's Dividend Reinvestment Plan will not be deemed to be
within the terms of this Section 1.b.vii.
(viii) The Manager intends to direct the other Advisers with
respect to the investment of the proceeds of the Offer
described in the Registration Statement and the Prospectus
in such a manner as to cause the Fund to comply with the
requirements of Subchapter M of the Code. Such other
Advisers intend to direct the investment of the proceeds of
the Offer described in the Registration Statement and the
Prospectus in such a manner as to cause the Fund to comply
with the requirements of Subchapter M of the Code.
(c) Any certificate required by this Agreement that is signed by any
officer of the Fund or the Manager and delivered to the Dealer
Manager or counsel for the Dealer Manager shall be deemed a
representation and warranty by the Fund or the Manager, as the
case may be, to the Dealer Manager, as to the matters covered
thereby.
2. Agreement to Act as Dealer Manager.
(a) On the basis of the representations and warranties contained
herein, and subject to the terms and conditions of the Offer:
(i) The Fund hereby appoints the Dealer Manager to solicit the
exercise of Rights and authorizes the Dealer Manager to sell
Shares purchased by the Dealer Manager from the Fund through
the exercise of Rights as described herein in accordance
with the Securities Act, the Investment Company Act and the
Exchange Act; the Fund hereby authorizes the Dealer Manager
to form and manage a group of selling broker-dealers (each a
"Selling Group Member" and
9
collectively the "Selling Group") that enter into a Selling
Group Agreement with the Dealer Manager in the form attached
hereto as Exhibit A to solicit the exercise of Rights and to
sell Shares purchased by the Selling Group Member from the
Dealer Manager as described herein; and the Fund hereby
authorizes other soliciting broker-dealers (each a
"Soliciting Dealer" and collectively the "Soliciting
Dealers") that enter into a Soliciting Dealer Agreement with
the Dealer Manager in the form attached hereto as Exhibit B
to solicit the exercise of Rights. The Dealer Manager hereby
agrees to solicit the exercise of Rights in accordance with
its customary practice subject to the terms and conditions
of this Agreement, the procedures described in the
Registration Statement, the Prospectus and, where
applicable, the terms and conditions of such Selling Group
Agreement or Soliciting Dealer Agreement; and the Dealer
Manager hereby agrees to form and manage the Selling Group
to solicit the exercise of Rights and to sell Shares to the
Selling Group purchased by the Dealer Manager from the Fund
through the exercise of Rights as described herein in
accordance with its customary practice subject to the terms
and conditions of this Agreement, the procedures described
in the Registration Statement, the Prospectus and, where
applicable, the terms and conditions of the Selling Group
Agreement.
(ii) The Fund hereby authorizes the Dealer Manager to buy and
exercise Rights, including unexercised Rights delivered to
the Subscription Agent for resale and Rights of Record Date
Shareholders whose record addresses are outside the United
States held by the Subscription Agent for which no
instructions are received, on the terms and conditions set
forth in such Prospectus, and to sell Shares to the public
or to Selling Group Members at the offering price set by the
Dealer Manager from time to time. Sales of Shares by the
Dealer Manager or Selling Group Members shall not be at a
price higher than the offering price set by the Dealer
Manager from time to time.
(b) To the extent permitted by applicable law, the Fund agrees to
furnish, or cause to be furnished, to the Dealer Manager, lists,
or copies of those lists, showing the names and addresses of, and
number of Common Shares held by, Record Date Stockholders as of
the Record Date, and the Dealer Manager agrees to use such
information only in connection with the Offer, and not to furnish
the information to any other person except for securities brokers
and dealers that have been requested by the Dealer Manager to
solicit exercises of Rights.
(c) The Dealer Manager agrees to provide to the Fund, in addition to
the services described in paragraph 2(a), financial advisory and
marketing services in connection with the Offer. No advisory fee,
other than the fees provided for in Section 3 of this Agreement
and the reimbursement of the Dealer Manager's out-of-pocket
expenses as described in Section 5 of this Agreement, will be
payable by the Fund, or any other party hereto, to the Dealer
Manager in connection with the financial advisory and marketing
services provided by the Dealer Manager pursuant to this Section
2(c).
(d) The Fund and the Dealer Manager agree that the Dealer Manager is
an independent contractor with respect to the solicitation of the
exercise of the Rights, and that the Dealer Manager's performance
of financial advisory and marketing services for the Fund is
pursuant to a contractual relationship created solely by this
Agreement entered into on an arm's length basis, and in no event
do the parties intend that the Dealer Manager act or be
responsible as a fiduciary to the Fund, its management,
stockholders, creditors or any
10
other person, including Selling Group Members and Soliciting
Dealers, in connection with any activity that the Dealer Manager
may undertake or has undertaken in furtherance of its engagement
pursuant to this Agreement, either before or after the date
hereof. The Dealer Manager, Selling Group Members and Soliciting
Dealers hereby expressly disclaim any fiduciary or similar
obligations to the Fund, either in connection with the
transactions contemplated by this Agreement or any matters leading
up to such transactions, and the Fund hereby confirms its
understanding and agreement to that effect. The Fund, Dealer
Manager, Selling Group Members and Soliciting Dealers agree that
they are each responsible for making their own independent
judgments with respect to any such transactions, and that any
opinions or views expressed by the Dealer Manager, Selling Group
Members or Soliciting Dealers to the Fund regarding such
transactions, including but not limited to any opinions or views
with respect to the subscription price or market for the Fund's
Shares, do not constitute advice or recommendations to the Fund.
The Fund hereby waives and releases, to the fullest extent
permitted by law, any claims that the Fund may have against the
Dealer Manager, Selling Group Members and Soliciting Dealers with
respect to any breach or alleged breach of any fiduciary or
similar duty to the Fund in connection with the transactions
contemplated by this Agreement or any matters leading up to such
transactions; provided that this release shall not protect or
purport to protect the Dealer Manager, Selling Group Members and
Soliciting Dealers against any liability to which they would
otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence, in the performance of their duties, or by
reason of their reckless disregard of their obligations and duties
under this Agreement.
(e) In rendering the services contemplated by this Agreement, the
Dealer Manager will not be subject to any liability to the Fund or
the Manager or any of their affiliates, for any act or omission on
the part of any soliciting broker or dealer (except with respect
to the Dealer Manager acting in such capacity) or any other
person, and the Dealer Manager will not be liable for acts or
omissions in performing its obligations under this Agreement,
except for any losses, claims, damages, liabilities and expenses
that are finally judicially determined to have resulted primarily
from the bad faith, willful misconduct or gross negligence or
reckless disregard of the Dealer Manager or by reason of the
reckless disregard of the obligations and duties of the Dealer
Manager under this Agreement.
3. Dealer Manager Fees. In full payment for the financial advisory,
marketing and soliciting services rendered and to be rendered hereunder
by the Dealer Manager, the Fund agrees to pay the Dealer Manager a fee
(the "Dealer Manager Fee") equal to 3.75% of the aggregate Subscription
Price for the Shares issued pursuant to the exercise of Rights and the
Over-Subscription Privilege. In full payment for the soliciting efforts
to be rendered, the Dealer Manager agrees to reallow selling fees (the
"Selling Fees") to Selling Group Members equal to 2.50% of the
Subscription Price per Share for each Share issued pursuant to either
(a) the exercise of Rights and the Over-Subscription Privilege where
such Selling Group Member is so designated on the subscription form or
(b) the purchase for resale from the Dealer Manager in accordance with
the Selling Group Agreement. In full payment for the soliciting efforts
to be rendered, the Dealer Manager agrees to reallow soliciting fees
(the "Soliciting Fees") to Soliciting Dealers equal to 0.50% of the
Subscription Price per Share for each Share issued pursuant to the
exercise of Rights and the Over-Subscription Privilege where such
Soliciting Dealer is so designated on the subscription form, subject to
a maximum fee based on the number of Common Shares held by such
Soliciting Dealer through The Depository Trust Company ("DTC") on the
Record Date. The Dealer Manager agrees to pay the Selling Fees or
Soliciting Fees, as the case may be, to the
11
broker-dealer designated on the applicable portion of the form used by
the holder to exercise Rights and the Over-Subscription Privilege, and
if no broker-dealer is so designated or a broker-dealer is otherwise not
entitled to receive compensation pursuant to the terms of the Selling
Group Agreement or Soliciting Dealer Agreement, then the Dealer Manager
shall retain such Selling Fee or Solicitation Fee for Shares issued
pursuant to the exercise of Rights and the Over-Subscription Privilege.
Payment to the Dealer Manager by the Fund will be in the form of a wire
transfer of same day funds to an account or accounts identified by the
Dealer Manager. Such payment will be made on each date on which the Fund
issues Shares after the Expiration Date. Payment to a Selling Group
Member or Soliciting Dealer will be made by the Dealer Manager directly
to such Selling Group Member or Soliciting Dealer by check to an address
identified by such broker-dealer. Such payments shall be made on or
before the tenth business day following the day the Fund issues Shares
after the Expiration Date.
4. Other Agreements.
(a) The Fund covenants with the Dealer Manager as follows:
(i) The Fund will use its best efforts to cause the Registration
Statement to become effective and maintain its effectiveness
under the Securities Act, and will advise the Dealer Manager
promptly as to the time at which the Registration Statement
and any amendments thereto (including any post-effective
amendment) becomes so effective.
(ii) The Fund will notify, and confirm the notice in writing to,
the Dealer Manager immediately (A) of the effectiveness of
the Registration Statement and any amendment thereto
(including any post-effective amendment), (B) of the receipt
of any comments from the Commission, (C) of any request by
the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus
or for additional information, (D) of the issuance by the
Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any
proceedings for that purpose and (E) of the receipt of any
written notice regarding the suspension of the qualification
of the Shares or the Rights for offering or sale in any
jurisdiction. The Fund will make every reasonable effort to
prevent the issuance of any stop order described in
subsection (D) hereunder and, if any such stop order is
issued, to obtain the lifting thereof at the earliest
possible moment.
(iii) The Fund will give the Dealer Manager notice of its
intention to file any amendment to the Registration
Statement (including any post-effective amendment) or any
amendment or supplement to the Prospectus (including any
revised prospectus which the Fund proposes for use by the
Dealer Manager in connection with the Offer, which differs
from the prospectus on file at the Commission at the time
the Registration Statement becomes effective, whether or not
such revised prospectus is required to be filed pursuant to
Rule 497(c), (e) or (h) of the Rules and Regulations),
whether pursuant to the Investment Company Act, the
Securities Act, or otherwise, and will furnish the Dealer
Manager with copies of any such amendment or supplement a
reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file any such
amendment or supplement to which the Dealer Manager or
counsel for the Dealer Manager shall reasonably object.
12
(iv) The Fund will, without charge, deliver to the Dealer
Manager, as soon as practicable, the number of copies (one
of which is manually executed) of the Registration Statement
as originally filed and of each amendment thereto as it may
reasonably request, in each case with the exhibits filed
therewith.
(v) The Fund will, without charge, furnish to the Dealer
Manager, from time to time during the period when the
Prospectus is required to be delivered under the Securities
Act, such number of copies of the Prospectus (as amended or
supplemented) as the Dealer Manager may reasonably request
for the purposes contemplated by the Securities Act or the
Securities Act Rules and Regulations.
(vi) If any event shall occur as a result of which it is
necessary, in the reasonable opinion of counsel for the
Dealer Manager, to amend or supplement the Registration
Statement or the Prospectus (or the other Offering
Materials) to make the Prospectus (or such other Offering
Materials) not contain an untrue statement of material fact
or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein
not misleading in the light of the circumstances existing at
the time it is delivered to a Record Date Stockholder, the
Fund will forthwith amend or supplement the Prospectus by
preparing and filing with the Commission (and furnishing to
the Dealer Manager a reasonable number of copies of) an
amendment or amendments of the Registration Statement or an
amendment or amendments of or a supplement or supplements to
the Prospectus (in form and substance reasonably
satisfactory to counsel for the Dealer Manager), at the
Fund's expense, which will amend or supplement the
Registration Statement or the Prospectus (or otherwise will
amend or supplement such other Offering Materials) so that
the Prospectus (or such other Offering Materials) will not
contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements therein, in the
light of the circumstances existing at the time the
Prospectus (or such other Offering Materials) is delivered
to a Record Date Stockholder, not misleading.
(vii) The Fund will endeavor, in cooperation with the Dealer
Manager and its counsel, to qualify the Rights and the
Shares for offering and sale under the applicable securities
laws of such states and other jurisdictions of the United
States as the Dealer Manager may designate and maintain such
qualifications in effect for the duration of the Offer;
provided, however, that the Fund will not be obligated to
file any general consent to service of process, or to
qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not now so
qualified. The Fund will file such statements and reports as
may be required by the laws of each jurisdiction in which
the Rights and the Shares have been qualified as above
provided.
(viii) The Fund will make generally available to its security
holders as soon as practicable, but no later than April 30,
2008, an earnings statement (which need not be audited) (in
form complying with the provisions of Rule 158 of the
Securities Act Rules and Regulations) covering a
twelve-month period beginning not later than the first day
of the Fund's fiscal semi-annual period next following the
"effective" date (as defined in said Rule 158) of the
Registration Statement.
13
(ix) For a period of 180 days from the date of this Agreement,
the Fund will not, without the prior consent of the Dealer
Manager, offer or sell, or enter into any agreement to sell,
any equity or equity related securities of the Fund or
securities convertible into such securities, other than the
Rights and the Shares and the Common Shares issued in
reinvestment of dividends or distributions.
(x) The Fund will use the net proceeds from the Offer to acquire
portfolio securities as set forth under "Use of proceeds" in
the Prospectus.
(xi) The Fund will use its best efforts to cause the Rights and
the Shares to be duly authorized for listing by the NYSE
prior to the time the Rights and the Shares are issued,
respectively.
(xii) The Fund will use its best efforts to maintain its
qualification as a regulated investment company under
Subchapter M of the Code.
(xiii) The Fund will apply the net proceeds from the Offer in such
a manner as to continue to comply with the requirements of
the Prospectus and the Investment Company Act.
(xiv) The Fund will advise or cause the Subscription Agent (A) to
advise the Dealer Manager and, only where specifically
noted, each Selling Group Member who specifically requests,
from day to day during the period of, and promptly after the
termination of, the Offer, as to the names and addresses of
all Record Date Stockholders exercising Rights, the total
number of Rights exercised by each Record Date Stockholder
during the immediately preceding day, indicating the total
number of Rights verified to be in proper form for exercise,
rejected for exercise and being processed and, for the
Dealer Manager and each Selling Group Member, the number of
Rights exercised on subscription certificates indicating the
Dealer Manager or such Selling Group Member, as the case may
be, as the broker-dealer with respect to such exercise, and
as to such other information as the Dealer Manager may
reasonably request; and will notify the Dealer Manager and
each Selling Group Member, not later than 5:00 P.M., New
York City time, on the first business day following the
Expiration Date, of the total number of Rights exercised and
Shares related thereto, the total number of Rights verified
to be in proper form for exercise, rejected for exercise and
being processed and, for the Dealer Manager and each Selling
Group Member, the number of Rights exercised on subscription
certificates indicating the Dealer Manager or such Selling
Group Member, as the case may be, as the broker-dealer with
respect to such exercise, and as to such other information
as the Dealer Manager may reasonably request; (B) to sell
any Rights received for resale from Record Date Stockholders
exclusively to or through the Dealer Manager, which may, at
its election, purchase such Rights as principal or act as
agent for the resale thereof; and (C) to issue Shares upon
the Dealer Manager's exercise of Rights no later than the
close of business on the business day following the day that
full payment for such Shares has been received by the
Subscription Agent.
(b) Neither the Fund nor the Manager will take, directly or
indirectly, any action designed to cause or to result in, or that
has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any
security of the Fund to facilitate the issuance of the Rights or
the sale or resale of the Rights or the Shares;
14
provided that any action in connection with the Fund's Dividend
Reinvestment Plan will not be deemed to be within the meaning of
this Section 4.b.
(c) Except as required by applicable law, the use of any reference to
the Dealer Manager in any Offering Materials or any other document
or communication prepared, approved or authorized by the Fund or
the Manager in connection with the Offer is subject to the prior
approval of the Dealer Manager, provided that if such reference to
the Dealer Manager is required by applicable law, the Fund and the
Manager agree to notify the Dealer Manager within a reasonable
time prior to such use but the Fund and the Manager are
nonetheless permitted to use such reference.
5. Payment of Expenses.
(a) The Fund will pay all expenses incident to the performance of its
obligations under this Agreement and in connection with the Offer,
including, but not limited to, (i) expenses relating to the
printing and filing of the Registration Statement as originally
filed and of each amendment thereto, (ii) expenses relating to the
preparation, issuance and delivery of the certificates for the
Shares and subscription certificates relating to the Rights, (iii)
the fees and disbursements of the Fund's counsel (including the
fees and disbursements of local counsel) and accountants, (iv)
expenses relating to the qualification of the Rights and the
Shares under securities laws in accordance with the provisions of
Section 4.a.vii. of this Agreement, including filing fees, (v)
expenses relating to the printing or other production and delivery
to the Dealer Manager of copies of the Registration Statement as
originally filed and of each amendment thereto and of the
Prospectus and any amendments or supplements thereto, (vi) the
fees and expenses incurred with respect to filing with the NASD,
Inc., including the fees and disbursements of the Dealer Manager's
counsel with respect thereto, (vii) the fees and expenses incurred
in connection with the listing of the Rights and the Shares on the
NYSE, (viii) expenses relating to the printing or other
production, mailing and delivery expenses incurred in connection
with Offering Materials, including all reasonable out-of-pocket
fees and expenses, if any, incurred by the Dealer Manager, Selling
Group Members, Soliciting Dealers and other brokers, dealers and
financial institutions in connection with their customary mailing
and handling of materials related to the Offer to their customers,
(ix) the fees and expenses incurred with respect to the
Subscription Agent and the Information Agent and (x) all other
fees and expenses (excluding the announcement, if any, of the
Offer in The Wall Street Journal) incurred in connection with or
relating to the Offer.
(b) In addition to any fees that may be payable to the Dealer Manager
under this Agreement, the Fund agrees to reimburse the Dealer
Manager upon request made from time to time for a portion of its
reasonable expenses incurred in connection with its activities
under this Agreement, including the reasonable fees and
disbursements of its legal counsel (excluding fees and expenses
pursuant to Section 5.a.iv which are to be paid directly by the
Fund), upon proper presentation of documentation therefor, in an
amount not to exceed $100,000.
(c) If this Agreement is terminated by the Dealer Manager in
accordance with the provisions of Section 6 or Section 9.a., the
Fund agrees to reimburse the Dealer Manager for all of its
reasonable out-of-pocket expenses incurred in connection with its
performance hereunder, including the reasonable fees and
disbursements of counsel for the Dealer Manager. In the event the
transactions contemplated hereunder are not consummated, the
15
Fund agrees to pay all of the costs and expenses set forth in
paragraphs 5.a. and 5.b. which the Fund would have paid if such
transactions had been consummated.
6. Conditions of the Dealer Manager's Obligations. The obligations of the
Dealer Manager hereunder (including any obligation to pay for Shares
issuable upon exercise of Rights by the Dealer Manager) are subject to
the accuracy of the respective representations and warranties of the
Fund and the Manager contained herein, to the performance by the Fund
and the Manager of their respective obligations hereunder, and to the
following further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M., New York City time, on the Record Date, or at such
later time and date as may be approved by the Dealer Manager; the
Prospectus and any amendment or supplement thereto shall have been
filed with the Commission in the manner and within the time period
required by Rule 497(c), (e), (h) or (j), as the case may be,
under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement or any amendment
thereto shall have been issued, and no proceedings for that
purpose shall have been instituted or threatened or, to the
knowledge of the Fund, the Manager or the Dealer Manager, shall be
contemplated by the Commission; and the Fund shall have complied
with any request of the Commission for additional information (to
be included in the Registration Statement, the Prospectus or
otherwise).
(b) On the Representation Date and the Expiration Date, the Dealer
Manager shall have received:
(i) The favorable opinion, dated the Representation Date and the
Expiration Date, of ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, counsel for the Fund,
in form and substance satisfactory to counsel for the Dealer
Manager, to the effect that:
(1) The Fund is a corporation duly incorporated and
existing under and by virtue of the laws of the State
of Maryland and is in good standing with the State
Department of Assessments and Taxation, and the Fund
has corporate power to own its properties and assets
and to conduct its business as described in the
Registration Statement and the Prospectus. The Fund is
duly qualified to do business as a foreign corporation
in each jurisdiction wherein it owns or leases
material properties or conducts material business,
except where the failure to be so qualified,
considering all such cases in the aggregate would have
a material adverse effect on the Fund.
(2) The Fund is registered with the Commission under the
Investment Company Act as a closed-end,
non-diversified management investment company; to the
best of such counsel's knowledge, no order of
suspension or revocation of such registration has been
issued or proceedings therefor initiated or threatened
by the Commission; all required action has been taken
by the Fund under the Securities Act and the
Investment Company Act to make the Offer and
consummate the issuance of the Rights and the issuance
and sale of the Shares upon exercise of the Rights;
and the provisions of the Fund's charter (the
"Charter") and Amended and Restated Bylaws (the
"Bylaws") comply as to form in all material respects
with the requirements of the Investment Company Act
and the Investment Company Act Rules and Regulations.
16
(3) The Fund has the number of authorized shares of stock
set forth in the Prospectus under the caption "Capital
Stock;" the authorized stock of the Fund conforms in
all material respects as to legal matters to the
description thereof contained in the Prospectus under
the heading "Capital stock;" the Common Shares issued
and outstanding as of the date hereof (immediately
prior to the issuance of the Rights, as of the
Representation Date and the Shares, as of the
Expiration Date, as the case may be) have been duly
authorized and validly issued and are fully paid and
nonassessable; the issuance of the Rights has been
duly authorized and the sale and issuance of the
Shares, upon the exercise of the Rights, have been
duly authorized and, when issued and delivered by the
Fund against the payment of consideration by the
Dealer Manager as set forth in this Agreement, the
Prospectus and the resolutions of the Board of
Directors of the Fund authorizing the issuance
thereof, the Shares will be validly issued, fully paid
and nonassessable; the form of certificate
representing the Shares complies in all material
respects with the applicable statutory requirements of
the Maryland General Corporation Law (the "MGCL") and
with any applicable requirements of the Charter and
the Bylaws; and, sale and issuance of the Shares upon
the exercise of the Rights are not subject to
preemptive or other similar rights under the MGCL, the
Charter or the Bylaws; the Rights and the Shares
conform as to legal matters in all material respects
to all statements relating thereto contained in the
Registration Statement, the Prospectus and the other
Offering Materials.
(4) The Fund has the corporate power to execute and
deliver this Agreement and the Fund Agreements and to
perform its obligations thereunder. This Agreement and
each of the Fund Agreements has been duly authorized,
executed and delivered by the Fund; each of the Fund
Agreements complies in all material respects with all
applicable provisions of the Investment Company Act
and the Investment Company Act Rules and Regulations,
the Advisers Act and the rules and regulations under
such Act; and, assuming due authorization, execution
and delivery by the other parties thereto, each of the
Fund Agreements constitutes a legal, valid and legally
binding obligation of the Fund enforceable in
accordance with its terms, subject to the
qualification that the enforceability of the Fund's
obligations thereunder may be limited by U.S.
bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or
affecting creditors' rights and to general principles
of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law) and,
with respect to this Agreement, subject to the
qualification that the right to indemnity and
contribution hereunder may be limited by federal or
state laws.
(5) Neither the issuance of the Rights, nor the issuance
and sale of the Shares upon exercise of the Rights,
nor the execution, delivery, performance and
consummation by the Fund of any other of the
transactions contemplated in this Agreement, or to the
extent relevant to the Rights or the Shares, in the
Fund Agreements, nor the consummation of the
transactions contemplated herein or therein or in the
Registration Statement nor the fulfillment of the
terms thereof will conflict with or violate the
Charter or
17
Bylaws of the Fund, or will result in a breach or
violation of, or constitute a default or an event of
default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any properties
or assets of the Fund under the Charter, Bylaws, the
terms and provisions of any agreement, indenture,
mortgage, loan agreement, note, insurance or surety
agreement, lease or other instrument, known to such
counsel after reasonable inquiry, to which the Fund is
a party or by which it may be bound or to which any of
the property or assets of the Fund is subject, nor, to
the best of such counsel's knowledge, will such action
by the Fund result in any material violation of any
order, law, rule or regulation of any U.S. federal,
New York or Maryland state court or governmental
agency or body having jurisdiction over the Fund or
any of its properties or published rule or regulation
of the Maryland General Corporation Law; provided,
however, that solely for purposes of this paragraph
(5) and not for purposes of the opinions expressed in
other paragraphs, such counsel need express no opinion
with respect to the antifraud provisions of Federal
securities laws, state securities laws, laws governing
fiduciary relationships, fraudulent transfer laws,
antitrust laws, the Employee Retirement Income
Security Act of 1974 or laws governing the
solicitation of deposits and provided, further, that
insofar as performance by the Fund of its obligations
under this Agreement and the Fund Agreements is
concerned, such counsel need express no opinion as to
U.S. bankruptcy, insolvency, reorganization,
moratorium, and similar laws of general applicability
relating to or affecting creditors' rights.
(6) To the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding to
which the Fund is a party before or by any court or
governmental agency, authority or body or any
arbitrator which might result in any material adverse
change in the condition (financial or other), business
prospects, net worth or operations of the Fund, or
which might materially and adversely affect the
properties or assets thereof of a character required
to be disclosed in the Registration Statement or the
Prospectus which is not adequately disclosed therein
and there is no contract or other document of the Fund
of a character required to be described in the
Registration Statement or the Prospectus, or to be
filed or incorporated by reference as exhibits to the
Registration Statement which are not described or
filed or incorporated by reference therein as required
by the Securities Act, the Investment Company Act or
the Rules and Regulations.
(7) No consent, approval, authorization, notification or
order of, or filing with, any court or governmental
agency or body under the laws of New York or U.S.
Federal law that would be normally applicable to
transactions of the type contemplated by this
Agreement or the Fund Agreements is required for the
consummation by the Fund of the transactions
contemplated by this Agreement or the Fund Agreements,
except (A) such as have been obtained under the
Securities Act, the Exchange Act, the Investment
Company Act or from the NYSE, (B) such as may be
required under the blue sky laws of any jurisdiction
in connection with the transactions contemplated
hereby and (C) such other approvals as have been
obtained or the failure to have obtained will not
18
have a material adverse effect on the Fund or its
ability to perform its obligations under this
Agreement or the Fund Agreements.
(8) The outstanding Common Shares have been duly listed on
the NYSE and the Shares and the Rights have been duly
approved for listing, subject to official notice of
issuance, on the NYSE.
(9) The Registration Statement has become effective under
the Securities Act; any required filing of the
Prospectus or any supplement thereto pursuant to Rule
497(c), (e), (h) or (j) required to be made prior to
the date hereof has been made in the manner and within
the time period required by Rule 497(c), (e), (h) or
(j), as the case may be; to the best knowledge of such
counsel, no stop order suspending the effectiveness of
the Registration Statement has been issued, and no
proceedings for that purpose have been instituted or
threatened; and the Registration Statement, the
Prospectus and each amendment thereof or supplement
thereto (other than the financial statements,
schedules, the notes thereto and the schedules and
other financial data contained or incorporated by
reference therein or omitted therefrom, as to which
such counsel need express no opinion) as of their
respective effective or issue dates complied as to
form in all material respects with the applicable
requirements of the Securities Act and the Investment
Company Act and the Rules and Regulations.
(10) The statements in the Prospectus under the headings
"The Offer--Federal income tax consequences of the
Offer" and "Taxation," insofar as such statements
describe or summarize United States tax laws,
treaties, doctrines or practices, provide an accurate
description thereof as of the date of the Prospectus.
The statements in the Prospectus under the caption
"Capital stock" and "Risk factors and special
considerations" insofar as such statements constitute
a summary of the Charter, Bylaws or of Maryland law,
constitute accurate summaries thereof in all material
respects.
In rendering such opinion, such counsel may rely as to
matters of Maryland law on the opinion of ▇▇▇▇▇▇▇ LLP and as
to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Fund and public
officials.
Such counsel shall also have stated that, while they have
not themselves checked the accuracy and completeness of or
otherwise verified, and are not passing upon and assume no
responsibility for the accuracy or completeness of, the
statements contained in the Registration Statement or the
Prospectus, in the course of their review and discussion of
the contents of the Offering Materials, Registration
Statement and Prospectus with certain officers and employees
of the Fund, the Manager and its independent registered
public accounting firm, no facts have come to their
attention which cause them to believe that the Registration
Statement, on the date it became effective, contained any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to
make the statements contained therein not misleading or that
the Prospectus, as of its date and on the Representation
Date or the Expiration Date, as the case may be, contained
any untrue statement of a material fact or omitted
19
to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading
(except that such counsel need not express any statement or
belief with respect to the financial statements, schedules
or other financial data included or incorporated by
reference in the Registration Statement or Prospectus or
omitted therefrom).
(ii) The favorable opinion, dated the Representation Date and the
Expiration Date, of ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, counsel for the
Advisers, in form and substance satisfactory to counsel for
the Dealer Manager to the effect that:
(1) The Manager is a corporation duly incorporated and
validly existing under the laws of State of New York
and, based solely on a good standing certificate from
the Secretary of State of the State of New York, the
Manager is in good standing under the laws of the
State of New York, and the Manager has the corporate
power to own its properties and assets and conduct its
business as described in the Registration Statement
and the Prospectus. To the best knowledge of such
counsel, each Adviser currently maintains all
governmental licenses, permits, consents, orders,
approvals, and other authorizations under New York or
United States law material to the conduct of its
business and necessary to enable such Adviser to
continue to supervise investment in securities as
contemplated in the Adviser Agreements to which such
Adviser is a party. The Manager is duly qualified to
do business as a foreign corporation in each
jurisdiction wherein it owns or leases material
properties or conducts material business, except where
the failure to be so qualified, considering all such
cases in the aggregate would not have a material
adverse effect on the Manager.
(2) Each Adviser is registered as an investment adviser
under the Advisers Act, and is not prohibited by the
Advisers Act or the Investment Company Act, or the
rules and regulations under such Acts, from acting as
a manager or an investment adviser, as the case may
be, for the Fund as contemplated in the Management
Agreement, the Investment Advisory Agreement and the
Sub-Advisory Agreements, to which such Adviser is a
party.
(3) Each of this Agreement and the Management Agreement
has been duly authorized, executed and delivered by
the Manager and complies in all material respects with
all applicable provisions of the Investment Company
Act, the Advisers Act and the rules and regulations
under such Acts, and is, assuming due authorization,
execution and delivery by the other parties thereto, a
legal, valid and legally binding obligation of the
Manager enforceable in accordance with its terms,
subject to the qualification that the enforceability
of the Manager's obligations thereunder may be limited
by U.S. bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to
general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity
or at law) and, with respect to this Agreement,
subject to the
20
qualification that the right to indemnity and
contribution hereunder may be limited by federal and
state laws.
(4) Each of the Investment Advisory Agreement and the
Sub-Advisory Agreements complies in all material
respects with all applicable provisions of the
Investment Company Act, the Advisers Act and the rules
and regulations under such Acts. The Investment
Advisory Agreement has been duly authorized, executed
and delivered by the Manager, and, assuming due
authorization, execution and delivery by the other
parties thereto and assuming that the Investment
Advisory Agreement is enforceable under Japanese law,
the Investment Advisory Agreement is a legal, valid,
binding and enforceable obligation of the Manager and
the Investment Adviser in accordance with its terms,
subject to the qualification that the enforceability
of the obligations of the Manager and the Investment
Adviser thereunder may be limited by U.S. bankruptcy,
insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting
creditors' rights and to general principles of equity
(regardless of whether enforceability is considered in
a proceeding in equity or at law).
(5) The execution, delivery, performance and consummation
by the Manager of its obligations under this Agreement
or any of the Adviser Agreements to which the Manager
is a party will not materially conflict with or
materially violate the charter, by-laws or similar
organizational documents of the Manager, or materially
conflict with, result in a material breach or
violation of, or constitute a material default under,
or result in the creation or imposition of any
material lien, charge or encumbrance upon any
properties or assets of the Manager under the charter,
by-laws or similar organizational documents of the
Manager, the terms and provisions of any material
agreement, indenture, mortgage, loan agreement, note,
insurance or surety agreement, lease or other
instrument, known to such counsel after reasonable
inquiry, to which the Manager is a party or by which
it may be bound or to which any of the property or
assets of the Manager is subject, nor will such action
result in any material violation of any U.S. federal
law; provided, however, that solely for purposes of
this paragraph (4) and not for purposes of the
opinions expressed in other paragraphs, such counsel
need express no opinion with respect to the antifraud
provisions of the Federal securities laws, state
securities laws, laws governing fiduciary
relationships, fraudulent transfer laws, antitrust
laws, the Employee Retirement Income Security Act of
1974 or laws governing the solicitation of deposits;
and provided, further, that in so far as performance
by the Manager of its obligations under the Adviser
Agreements, to which the Manager is a party, is
concerned, such counsel need express no opinion as to
U.S. bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability
relating to or affecting creditors' rights.
(6) To the best of such counsel's knowledge, the
consummation by (i) the Investment Adviser of its
obligations under the Investment Advisory Agreement
and the Sub-Advisory Agreements and (ii) the
Sub-Advisers of their obligations under their
respective Sub-Advisory Agreement will
21
not materially conflict with or materially violate any
law, rule or regulation applicable to the Investment
Adviser or a Sub-Adviser of any United States court,
regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over the
Investment Adviser or a Sub-Adviser or any of their
properties.
(7) To the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding to
which the Manager is a party before or by any court or
governmental agency, authority or body or any
arbitrator which would result in a material adverse
effect upon the Fund or upon the ability of the
Manager to perform its obligations under this
Agreement or the Adviser Agreements to which the
Manager is a party.
In rendering such opinion, such counsel has relied as to
matters of Maryland law, with the Dealer Manager's consent
and without making any investigation with respect thereto,
on the opinion of ▇▇▇▇▇▇▇ LLP, and as to matters of fact, to
the extent they deem proper, on certificates of responsible
officers of the Investment Adviser and public officials.
(iii) The favorable opinion, dated the Representation Date and the
Expiration Date, of [______], internal counsel for the
Manager, in form and substance satisfactory to counsel for
the Dealer Manager to the effect that:
(1) To the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding to
which the Investment Adviser is a party before or by
any court or governmental agency, authority or body or
any arbitrator which would result in a material
adverse effect upon the Fund or upon the ability of
the Investment Adviser to perform its obligations
under the Investment Advisory Agreement and the
Sub-Advisory Agreements.
(iv) The favorable opinion, dated the Representation Date and the
Expiration Date, of ▇▇▇ & ▇▇▇▇▇, Korean counsel for the
Fund, in form and substance satisfactory to counsel for the
Dealer Manager, to the effect that, under existing Korean
laws and regulations:
(1) no consent, approval, authorization or order of any
court or governmental agency or body is required under
the laws of Korea for the issuance of the Rights, the
issuance and sale of the Shares by the Fund outside
Korea or for the consummation by the Fund of the
transactions contemplated in the Fund Agreements based
on the representations and warranties contained
herein;
(2) such counsel does not know of any Korean statutes,
regulations or legal or governmental proceedings
materially affecting the operation of the Fund as
contemplated in the Prospectus and which would be
material to an investor considering an investment in
the Fund, except as are described in the Prospectus;
22
(3) the statements of Korean law in Sections [_______],
[_______] and [______] in the Prospectus are true and
correct in all material respects as of the date of the
Prospectus;
(4) no taxes or charges of any kind are or will be payable
in or to Korea, or any political subdivision thereof,
by the Dealer Manager with respect to the execution
and delivery of the Fund Agreements or for the
issuance of the Rights and the issuance and sale of
the Shares by the Fund assuming all such agreements
are signed outside of Korea and such issuance of
Rights and the issuance and sale of the Shares are
made outside of Korea; and
(5) except as set forth in the Prospectus, to the best
knowledge of such counsel, there is no pending or
threatened action, suit or proceeding in Korea before
any court or governmental agency, authority or body or
any arbitrator involving the Fund, which questions the
validity of the Fund Agreements.
Such counsel shall also have stated that, while they have
not themselves checked the accuracy and completeness of or
otherwise verified, and are not passing upon and assume no
responsibility for the accuracy or completeness of, the
statements contained in the Registration Statement or the
Prospectus, in the course of their review and discussion of
the contents of the Registration Statement and Prospectus
with certain officers and employees of the Fund, no facts
relating to Korean laws, treaties, legal doctrines or legal
practices have come to their attention which cause them to
believe that the Registration Statement, on the date it
became effective, contained any untrue statement of a
material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements
contained therein not misleading or that the Prospectus, as
of its date and on the Representation Date or the Expiration
Date, as the case may be, contained any untrue statement of
a material fact or omitted to state any material fact
required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading (except that such
counsel need not express any statement or belief with
respect to the financial statements, schedules or other
financial data included or incorporated by reference in the
Registration Statement or Prospectus).
(v) The favorable opinion, dated the Representation Date and the
Expiration Date, of [_______________], Japanese counsel for
the Investment Adviser, in form and substance satisfactory
to counsel for the Dealer Manager, to the effect that, under
existing Japanese laws and regulations:
(1) the Investment Adviser has been duly organized and is
validly existing as a corporation under the laws of
Japan, and has full corporate power and authority to
own its properties and conduct its business as
described in the Prospectus;
(2) the Investment Advisory Agreement and the Sub-Advisory
Agreements have been duly authorized, executed and
delivered by the Investment Adviser;
23
(3) neither the performance by the Investment Adviser of
its obligations under the Investment Advisory
Agreement and the Sub-Advisory Agreements nor the
consummation of the transactions contemplated herein
or therein nor the fulfillment of the terms hereof or
thereof will conflict with, or result in a breach of,
or constitute a default under, or result in the
creation or imposition of any lien, charge or
encumbrance upon any property or assets of the
Investment Adviser pursuant to the constitutive
documents of the Investment Adviser or, to the
knowledge of such counsel, the terms of any material
agreement, indenture, mortgage, lease or other
instrument to which the Investment Adviser is a party
or is bound or to which any of its property or assets
is subject, which conflict, breach or default would
have a material adverse effect on the ability of the
Investment Adviser to carry out its obligations under
such agreements, or any Japanese law, order of which
such counsel has knowledge, rule or regulation
applicable to the Investment Adviser of any Japanese
court, regulatory body, administrative agency,
governmental body, stock exchange or securities
association having jurisdiction over the Investment
Adviser or its properties or operations; no consent,
approval, authorization or order of any court or
governmental agency or body is required under the laws
of Japan in connection with the execution, performance
and delivery of the Investment Advisory Agreement and
the Sub-Advisory Agreements by the Investment Adviser;
(4) the Investment Adviser owns, possesses or has obtained
and currently maintains all material authorizations
under Japanese law as are necessary for the Investment
Adviser to perform its obligation under the Investment
Advisory Agreement and the Sub-Advisory Agreements as
set forth in and contemplated by the Prospectus; and
(5) except as set forth in the Prospectus, to the best
knowledge of such counsel, there is no pending or
threatened action, suit or proceeding in Japan before
any court or governmental agency, authority or body or
any arbitrator involving the Investment Adviser, which
questions the validity of the Investment Advisory
Agreement or the Sub-Advisory Agreements.
Such counsel shall also have stated that, while they have
not themselves checked the accuracy and completeness of or
otherwise verified, and are not passing upon and assume no
responsibility for the accuracy or completeness of, the
statements contained in the Registration Statement or the
Prospectus, in the course of their review and discussion of
the contents of the Registration Statement and Prospectus
with certain officers and employees of the Investment
Adviser, no facts relating to Japanese laws, treaties, legal
doctrines or legal practices have come to their attention
which cause them to believe that the Registration Statement,
on the date it became effective, contained any untrue
statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to
make the statements with respect to the Investment Adviser
contained therein not misleading or that the Prospectus, as
of its date and on the Representation Date or the Expiration
Date, as the case may be, contained any untrue statement of
a material fact or omitted to state any material fact
required to be stated therein or necessary to make the
statements therein with respect to
24
the Investment Adviser, in the light of the circumstances
under which they were made, not misleading (except that such
counsel need not express any statement or belief with
respect to the financial statements, schedules or other
financial data included or incorporated by reference in the
Registration Statement or Prospectus).
(vi) The favorable opinion, dated the Representation Date and the
Expiration Date, of Sidley Austin, Hong Kong counsel for NAM
HK, in form and substance satisfactory to counsel for the
Dealer Manager, to the effect that, under existing Hong Kong
laws and regulations:
(1) NAM HK has been duly organized and is validly existing
as a corporation under the laws of Hong Kong, and has
full corporate power and authority to own its
properties and conduct its business as described in
the Prospectus;
(2) the HK Sub-Advisory Agreement has been duly
authorized, executed and delivered by NAM HK;
(3) neither the performance by NAM HK of its obligations
under the HK Sub-Advisory Agreement nor the
consummation of the transactions contemplated herein
or therein nor the fulfillment of the terms hereof or
thereof will conflict with, or result in a breach of,
or constitute a default under, or result in the
creation or imposition of any lien, charge or
encumbrance upon any property or assets of NAM HK
pursuant to the constitutive documents of NAM HK or,
to the knowledge of such counsel, the terms of any
material agreement, indenture, mortgage, lease or
other instrument to which NAM HK is a party or is
bound or to which any of its property or assets is
subject, which conflict, breach or default would have
a material adverse effect on the ability of NAM HK to
carry out its obligations under such agreements, or
any Hong Kong law, order of which such counsel has
knowledge, rule or regulation applicable to NAM HK of
any Hong Kong court, regulatory body, administrative
agency, governmental body, stock exchange or
securities association having jurisdiction over NAM HK
or its properties or operations; no consent, approval,
authorization or order of any court or governmental
agency or body is required under the laws of Hong Kong
in connection with the execution, performance and
delivery of the HK Sub-Advisory Agreement;
(4) NAM HK owns, possesses or has obtained and currently
maintains all material authorizations under Hong Kong
law as are necessary for NAM HK to perform its
obligation under the HK Sub-Advisory Agreement as set
forth in and contemplated by the Prospectus;
(5) To the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding to
which NAM HK is a party before or by any court or
governmental agency, authority or body or any
arbitrator which would result in a material adverse
effect upon the Fund or upon the ability of NAM HK to
perform its obligations under the HK Sub-Advisory
Agreement; and
25
(6) except as set forth in the Prospectus, to the best
knowledge of such counsel, there is no pending or
threatened action, suit or proceeding in Hong Kong
before any court or governmental agency, authority or
body or any arbitrator involving NAM HK, which
questions the validity of the HK Sub-Advisory
Agreement.
Such counsel shall also have stated that, while they have
not themselves checked the accuracy and completeness of or
otherwise verified, and are not passing upon and assume no
responsibility for the accuracy or completeness of, the
statements contained in the Registration Statement or the
Prospectus, in the course of their review and discussion of
the contents of the Registration Statement and Prospectus
with certain officers and employees of NAM HK, no facts
relating to Hong Kong laws, treaties, legal doctrines or
legal practices have come to their attention which cause
them to believe that the Registration Statement, on the date
it became effective, contained any untrue statement of a
material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements
with respect to NAM HK contained therein not misleading or
that the Prospectus, as of its date and on the
Representation Date or the Expiration Date, as the case may
be, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated
therein or necessary to make the statements therein with
respect to NAM HK, in the light of the circumstances under
which they were made, not misleading (except that such
counsel need not express any statement or belief with
respect to the financial statements, schedules or other
financial data included or incorporated by reference in the
Registration Statement or Prospectus).
(vii) The favorable opinion, dated the Representation Date and the
Expiration Date, of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Singapore counsel for
NAM Singapore, in form and substance satisfactory to counsel
for the Dealer Manager, to the effect that, under existing
Singapore laws and regulations:
(1) NAM Singapore is a company duly organized and validly
existing under the Companies Act, Chapter 50 of
Singapore, and has the corporate power to conduct its
business as described in the Prospectus;
(2) as the holder of a capital markets service license
issued by the Monetary Authority of Singapore under
the Securities and Futures Act, Chapter 289 of
Singapore, NAM Singapore is duly licensed to carry on
the business of fund management in Singapore and NAM
Singapore is not prohibited by the laws of the
Republic of Singapore from acting under the Singapore
Sub-Advisory Agreement;
(3) NAM Singapore has the corporate power to enter into,
and to perform its obligations under, the Singapore
Sub-Advisory Agreement;
(4) all necessary corporate action required under the laws
of Singapore and the Memorandum and Articles of
Association of NAM Singapore has been taken by NAM
Singapore to authorize its execution and delivery of
the Singapore Sub-Advisory Agreement and the
performance by it of its obligations under the
Singapore Sub-Advisory Agreement;
26
(5) the Singapore Sub-Advisory Agreement constitutes the
valid, legally binding and enforceable obligations of
NAM Singapore under the laws of Singapore;
(6) the consummation of the transactions contemplated
under the Singapore Sub-Advisory Agreement do not
contravene any provisions of the laws of Singapore;
(7) the execution, delivery and performance of the
Singapore Sub-Advisory Agreement and the consummation
by NAM Singapore of the transactions contemplated
therein do not contravene or breach (i) the
Certificate of Incorporation or the Memorandum and
Articles of Association of NAM Singapore, (ii) the
material agreements governed by Singapore law binding
on NAM Singapore or (iii) any provisions of the laws
of Singapore applicable to companies generally;
(8) no consent, approval, authorization, filing with or
order of any court or governmental agency or body in
Singapore is required on the part of NAM Singapore in
connection with the transactions contemplated in the
Singapore Sub-Advisory Agreement; and
(9) as far as we are aware, there are no actions, suits or
proceedings involving NAM Singapore by or before any
court of Singapore.
Such counsel shall also have stated that, while they have
not themselves checked the accuracy and completeness of or
otherwise verified, and are not passing upon and assume no
responsibility for the accuracy or completeness of, the
statements contained in the Registration Statement or the
Prospectus, in the course of their review and discussion of
the contents of the Registration Statement and Prospectus
with certain officers and employees of NAM Singapore, no
facts relating to Singapore laws, treaties, legal doctrines
or legal practices have come to their attention which cause
them to believe that the Registration Statement, on the date
it became effective, contained any untrue statement of a
material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements
with respect to NAM Singapore contained therein not
misleading or that the Prospectus, as of its date and on the
Representation Date or the Expiration Date, as the case may
be, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated
therein or necessary to make the statements therein with
respect to NAM Singapore, in the light of the circumstances
under which they were made, not misleading (except that such
counsel need not express any statement or belief with
respect to the financial statements, schedules or other
financial data included or incorporated by reference in the
Registration Statement or Prospectus).
(c) The Dealer Manager shall have received from Clifford Chance US
LLP, counsel for the Dealer Manager, such opinion or opinions,
dated the Representation Date and the Expiration Date, with
respect to the Offer, the Registration Statement, the Prospectus
and other related matters as the Dealer Manager may reasonably
require, and the Fund shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling
them to pass upon such matters.
27
(d) The Fund shall have furnished to the Dealer Manager certificates
of the Fund, signed on behalf of the Fund by the President of the
Fund, dated the Representation Date and the Expiration Date, to
the effect that the signer(s) of such certificate carefully
examined the Registration Statement, the Prospectus, any
supplement to the Prospectus and this Agreement and that, to the
best of their knowledge:
(i) the representations and warranties of the Fund in this
Agreement are true and correct in all material respects on
and as of the Representation Date or the Expiration Date, as
the case may be, with the same effect as if made on the
Representation Date or the Expiration Date, as the case may
be, and the Fund has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to the Representation Date or the
Expiration Date, as the case may be;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings
for that purpose have been instituted or threatened; and
(iii) since the date of the most recent balance sheet included or
incorporated by reference in the Prospectus, there has been
no material adverse change, or any development involving a
prospective material adverse change, in the condition
(financial or other), business, prospects, net worth or
results of operations of the Fund (excluding fluctuations in
the Fund's net asset value due to investment activities in
the ordinary course of business), except as set forth in or
contemplated in the Prospectus.
(e) Each Adviser shall have furnished to the Dealer Manager
certificates of such Adviser, signed on behalf of the Adviser by
the Chairman or other senior official, dated the Representation
Date and the Expiration Date, to the effect that the signer(s) of
such certificate carefully examined the Registration Statement,
the Prospectus, any supplement to the Prospectus and this
Agreement and, to the best of their knowledge, that the
representations and warranties with respect to such Adviser in
this Agreement are true and correct in all material respects on
and as of the Representation Date or the Expiration Date, as the
case may be, with the same effect as if made on the Representation
Date or the Expiration Date, as the case may be.
(f) ▇▇▇▇▇ & Young LLP shall have furnished to the Dealer Manager
letters, dated the Representation Date and the Expiration Date, in
form and substance satisfactory to the Dealer Manager and ▇▇▇▇▇ &
Young LLP, stating in effect that:
(i) it is an independent registered public accounting firm with
respect to the Fund within the meaning of the Securities Act
and the applicable Securities Act Rules and Regulations, and
the rules and regulations adopted by the Commission and the
Public Accounting Oversight Board (United States);
(ii) in its opinion, the audited financial statements examined by
it and included or incorporated by reference in the
Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the
Securities Act and the Investment Company Act and the
respective Rules and Regulations with respect to
registration statements on Form N-2;
28
(iii) it has performed procedures specified by the Public
Accounting Oversight Board for a review of the interim
financial information for the period ended June 30, 2006;
(iv) it has performed specified procedures, not constituting an
audit in accordance with generally accepted auditing
standards, including a reading of the latest available
unaudited financial information of the Fund, a reading of
the minute books of the Fund, and inquiries of officials of
the Fund responsible for financial and accounting matters,
and on the basis of such inquiries and procedures nothing
came to its attention that caused it to believe that at a
specified date prior to the Representation Date or the
Expiration Date, as the case may be, there was any change in
the Common Shares, any decrease in net assets or any
increase in long-term debt of the Fund as compared with
amounts shown in the most recent statement of assets and
liabilities included or incorporated by reference in the
Registration Statement, except as the Registration Statement
discloses has occurred or may occur, or they shall state any
specific changes, increases or decreases; and
(v) in addition to the procedures referred to in clause (iii)
above, it has compared certain dollar amounts (or
percentages as derived from such dollar amounts) and other
financial information regarding the operations of the Fund
appearing in the Registration Statement, which have
previously been specified by the Dealer Manager and which
shall be specified in such letter, and have found such items
to be in agreement with the accounting and financial records
of the Fund.
(g) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (excluding
an amendment or supplement subsequent to the Representation Date),
(i) there shall not have been any change, increase or decrease
specified in the letter or letters referred to in paragraph 6(f),
(ii) no material adverse change, or any development involving a
prospective material adverse change, in the business, properties,
management, financial condition or results of operations of the
Fund shall have occurred or become known and (iii) no transaction
which is material and adverse to the Fund shall have been entered
into by the Fund.
(h) Prior to the Representation Date, the Fund shall have furnished to
the Dealer Manager such further information, certificates and
documents as the Dealer Manager may reasonably request.
(i) If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided
in this Agreement, or if any of the opinions and certificates
mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Dealer
Manager and its counsel, this Agreement and all obligations of the
Dealer Manager hereunder may be canceled at, or at any time prior
to, the Expiration Date by the Dealer Manager. Notice of such
cancellation shall be given to the Fund in writing or by telephone
confirmed in writing.
7. Indemnity and Contribution.
(a) Each of the Fund and the Manager, jointly and severally, agrees to
indemnify, defend and hold harmless the Dealer Manager, each
Selling Group Member and each Soliciting Dealer, and their
respective partners, directors and officers, and any person who
controls
29
the Dealer Manager, a Selling Group Member and or a Soliciting
Dealer within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and the successors and assigns of
all of the foregoing persons from and against any loss, damage,
expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, the Dealer Manager, a
Selling Group Member, a Soliciting Dealer or any such person may
incur under the Securities Act, the Exchange Act, the Investment
Company Act, the Advisers Act, common law or otherwise, insofar as
such loss, damage, expense, liability or claim arises out of or is
based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment
thereof by the Fund) or in a Prospectus (the term "Prospectus" for
the purpose of this Section 7 being deemed to include any
preliminary prospectus, the Offering Materials, the Prospectus and
the Prospectus as amended or supplemented by the Fund), or arises
out of or is based upon any omission or alleged omission to state
a material fact required to be stated in either such Registration
Statement or Prospectus or necessary to make the statements made
therein not misleading, except insofar as any such loss, damage,
expense, liability or claim arises out of or is based upon any
untrue statement or omission or alleged untrue statement or
omission of a material fact contained in and in conformity with
information furnished in writing by or on behalf of the Dealer
Manager to the Fund or the Manager expressly for use with
reference to the Dealer Manager, Selling Group Members or
Soliciting Dealers in such Registration Statement or such
Prospectus.
If any action, suit or proceeding (together, a "Proceeding") is
brought against the Dealer Manager, a Selling Group Member, a
Soliciting Dealer or any such person in respect of which indemnity
may be sought against the Fund pursuant to the foregoing
paragraph, the Dealer Manager, a Selling Group Member, a
Soliciting Dealer or such person shall promptly notify the Fund
and the Manager in writing of the institution of such Proceeding
and the Fund shall assume the defense of such Proceeding,
including the employment of counsel reasonably satisfactory to
such indemnified party and payment of all reasonable fees and
expenses; provided, however, that the failure to so notify the
Fund and the Manager shall not relieve the Fund from any liability
which the Fund or the Manager may have to the Dealer Manager, a
Selling Group Member, a Soliciting Dealer or any such person or
otherwise, unless such omission results in the forfeiture of
substantive rights or defenses by the indemnifying party. The
Dealer Manager, a Selling Group Member, a Soliciting Dealer or
such person shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of the Dealer Manager, a Selling
Group Member, a Soliciting Dealer or of such person unless the
employment of such counsel shall have been authorized in writing
by the Fund in connection with the defense of such Proceeding or
the Fund shall not have, within a reasonable period of time in
light of the circumstances, employed counsel to have charge of the
defense of such Proceeding or such indemnified party or parties
shall have reasonably concluded (based on advice from counsel)
that there may be defenses available to it or them which are
different from, additional to or in conflict with those available
to the Fund (in which case the Fund shall not have the right to
direct the defense of such Proceeding on behalf of the indemnified
party or parties, but the Fund may employ counsel and participate
in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Fund), in any of which events the
reasonable fees and expenses shall be borne by the Fund and paid
as incurred (it being understood, however, that the Fund shall not
be liable for the expenses of more than one separate counsel (in
addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the
indemnified parties who are parties
30
to such Proceeding). The Fund and the Manager shall not be liable
for any settlement of any Proceeding effected without the Fund's
written consent, but if settled with the written consent of the
Fund, the Fund and the Manager agree to indemnify and hold
harmless the Dealer Manager, a Selling Group Member, a Soliciting
Dealer and any such person from and against any loss or liability
by reason of such settlement. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees
and expenses of counsel as contemplated by the second sentence of
this paragraph, then the indemnifying party agrees that it shall
be liable for any settlement of any Proceeding effected without
its written consent if (i) such settlement is entered into more
than 60 business days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request
prior to the date of such settlement and (iii) such indemnified
party shall have given the indemnifying party at least 30 days'
prior notice of its intention to settle. No indemnifying party
shall, without the prior written consent of the indemnified party,
effect any settlement of any pending or threatened Proceeding in
respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability
on claims that are the subject matter of such Proceeding and does
not include an admission of fault, culpability or a failure to
act, by or on behalf of such indemnified party unless such
indemnified party gives written consent to such admission of
fault, culpability or a failure to act.
(b) The Dealer Manager agrees to indemnify, defend and hold harmless
the Fund and the Manager, and their directors and officers, and
any person who controls the Fund or the Manager, within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the
foregoing persons to the same extent as the foregoing indemnity
from the Fund or the Manager to the Dealer Manager, from and
against any loss, damage, expense, liability or claim (including
the reasonable cost of investigation) which, jointly or severally,
the Fund, the Manager or any such person may incur under the
Securities Act, the Exchange Act, the Investment Company Act, the
Advisers Act, the common law or otherwise, insofar as such loss,
damage, expense, liability or claim arises out of or is based upon
any untrue statement or alleged untrue statement of a material
fact contained in and in conformity with information furnished in
writing by or on behalf of the Dealer Manager to the Fund
expressly for use with reference to the Dealer Manager in the
Registration Statement (or in the Registration Statement as
amended by any post-effective amendment thereof by the Fund) or in
a Prospectus, or arises out of or is based upon any omission or
alleged omission to state a material fact in connection with such
information required to be stated in such Registration Statement
or such Prospectus or necessary to make such information not
misleading (with respect to the Prospectus, in light of the
circumstances under which they were made).
If any Proceeding is brought against the Fund, the Manager or any
such person in respect of which indemnity may be sought against
the Dealer Manager pursuant to the foregoing paragraph, the Fund,
the Manager or such person shall promptly notify the Dealer
Manager in writing of the institution of such Proceeding and the
Dealer Manager shall assume the defense of such Proceeding,
including the employment of counsel reasonably satisfactory to
such indemnified party and payment of all reasonable fees and
expenses; provided, however, that the omission to so notify the
Dealer Manager shall not relieve the Dealer Manager from any
liability which the Dealer Manager may have to the Fund or
31
any such person or otherwise, unless such omission results in the
forfeiture of substantive rights or defenses by the indemnifying
party. The Fund, the Manager or such person shall have the right
to employ its own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of the Fund, the
Manager or such person, as the case may be, unless the employment
of such counsel shall have been authorized in writing by the
Dealer Manager in connection with the defense of such Proceeding
or such Dealer Manager shall not have, within a reasonable period
of time in light of the circumstances, employed counsel to have
charge of the defense of such Proceeding or such indemnified party
or parties shall have reasonably concluded (based on advice from
counsel) that there may be defenses available to it or them which
are different from or additional to or in conflict with those
available to the Dealer Manager (in which case the Dealer Manager
shall not have the right to direct the defense of such Proceeding
on behalf of the indemnified party or parties, but the Dealer
Manager may employ counsel and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense
of the Dealer Manager), in any of which events the reasonable fees
and expenses shall be borne by the Dealer Manager and paid as
incurred (it being understood, however, that the Dealer Manager
shall not be liable for the expenses of more than one separate
counsel (in addition to any local counsel) in any one Proceeding
or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such
Proceeding). The Dealer Manager shall not be liable for any
settlement of any such Proceeding effected without the written
consent of the Dealer Manager but if settled with the written
consent of the Dealer Manager, the Dealer Manager agrees to
indemnify and hold harmless the Fund, the Manager and any such
person from and against any loss or liability by reason of such
settlement. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel
as contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any
settlement of any Proceeding effected without its written consent
if (i) such settlement is entered into more than 60 business days
after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the
date of such settlement and (iii) such indemnified party shall
have given the indemnifying party at least 30 days' prior notice
of its intention to settle. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any
settlement of any pending or threatened Proceeding in respect of
which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the
subject matter of such Proceeding and does not include an
admission of fault, culpability or a failure to act, by or on
behalf of such indemnified party unless such indemnified party
gives written consent to such admission of fault, culpability or a
failure to act.
(c) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under subsections (a) and (b)
of this Section 7 in respect of any losses, damages, expenses,
liabilities or claims referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, damages, expenses,
liabilities or claims (i) in such proportion as is appropriate to
reflect the relative benefits received by the Fund or the Manager
on the one hand and the Dealer Manager, Selling Group Member(s) or
Soliciting Dealer(s) on the other hand from the offering of the
Shares or (ii) if the allocation provided by clause (i) above is
not permitted by applicable
32
law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the
relative fault of the Fund or the Manager on the one hand and of
the Dealer Manager on the other in connection with the statements
or omissions which resulted in such losses, damages, expenses,
liabilities or claims, as well as any other relevant equitable
considerations with respect to the Offer. The relative benefits
received by the Fund or the Manager on the one hand and the Dealer
Manager, Selling Group Member(s) or Soliciting Dealer(s) on the
other shall be deemed to be in the same respective proportions as
the total proceeds from the Offer (net of the Dealer Manager Fee
but before deducting expenses) received by the Fund or the Manager
and the total Dealer Manager Fee received by the Dealer Manager,
bear to the aggregate public offering price of the Shares. The
relative fault of the Fund or the Manager on the one hand and of
the Dealer Manager, Selling Group Member(s) or Soliciting
Dealer(s) on the other shall be determined by reference to, among
other things, whether the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission
relates to information supplied by the Fund or the Manager or the
Dealer Manager and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a
result of the losses, damages, expenses, liabilities and claims
referred to in this subsection shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party
in connection with investigating, preparing to defend or defending
any Proceeding.
(d) The Fund, the Manager and the Dealer Manager agree that it would
not be just and equitable if contribution pursuant to this Section
7 were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable
considerations referred to in subsection (c) above.
Notwithstanding the provisions of this Section 7, neither the
Dealer Manager nor any Selling Group Member or Soliciting Dealer
shall be required to contribute any amount in excess of the fees
received by it. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(e) Notwithstanding any other provisions in this Section 7, no party
shall be entitled to indemnification or contribution under this
Dealer Manager Agreement against any loss, claim, liability,
expense or damage arising by reason of such person's willful
misfeasance, or gross negligence in the performance of its duties
hereunder or by reason of such person's reckless disregard of such
person's obligations and duties thereunder. The parties hereto
acknowledge that the foregoing provision shall not be construed to
impose upon any such parties any duties under this Agreement other
than as specifically set forth herein (it being understood that
the Dealer Manager, Selling Group Members and Soliciting Dealers
have no duty hereunder to the Fund, the Manager or the Investment
Adviser to perform any due diligence investigation).
(f) The indemnity and contribution agreements contained in this
Section 7 and the covenants, warranties and representations of the
Fund and the Manager contained in this Agreement shall remain in
full force and effect regardless of any investigation made by or
on behalf of the Dealer Manager, a Selling Group Member, a
Soliciting Dealer, and their respective partners, directors or
officers or any person (including each partner, officer or
director of such person) who controls the Dealer Manager, a
Selling Group Member or a Soliciting Dealer within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act, or by or on behalf of the Fund, the Manager or the Investment
Adviser, its directors or officers or any person who controls the
Fund or the
33
Manager within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and shall survive any termination
of this Agreement or the issuance and delivery of the Rights. The
Fund and the Manager and the Dealer Manager agree promptly to
notify each other of the commencement of any Proceeding against it
and, in the case of the Fund or the Manager against any of their
officers or directors in connection with the issuance of the
Rights, or in connection with the Registration Statement or
Prospectus.
(g) The Fund and the Manager acknowledges that the statements under
the caption "Distribution arrangements" in the Prospectus
constitute the only information furnished in writing to the Fund
by the Dealer Manager expressly for use in such document, and the
Dealer Manager confirms that such statements are correct in all
material respects.
8. Representations, Warranties and Agreements to Survive Delivery. The
respective agreements, representations, warranties, indemnities and
other statements of the Fund or its officers, of the Manager and of the
Dealer Manager set forth in or made pursuant to this Agreement shall
survive the Expiration Date and will remain in full force and effect,
regardless of any investigation made by or on behalf of Dealer Manager
or the Fund or the Manager or any of their officers, directors or
controlling persons referred to in Section 7 hereof, and will survive
delivery of and payment for the Shares pursuant to the Offer. The
provisions of Sections 5 and 7 hereof shall survive the termination or
cancellation of this Agreement.
9. Termination of Agreement.
(a) The obligations of the Dealer Manager hereunder shall be subject
to termination in the absolute discretion of the Dealer Manager,
by notice given to the Fund prior to 5:00 p.m., New York time on
the Expiration Date, if (x) since the time of execution of this
Agreement or the earlier respective dates as of which information
is given in the Registration Statement and the Prospectus, there
has been any material adverse change or any development involving
a material adverse change in the business, properties, management,
financial condition or results of operations of the Fund, which
would, in the Dealer Manager's judgment, make it impracticable or
inadvisable to proceed with the Offer on the terms and in the
manner contemplated in the Registration Statement and the
Prospectus, or (y) since the time of execution of this Agreement,
there shall have occurred: (i) a suspension or material limitation
in trading in securities generally on the NYSE, the American Stock
Exchange or the NASDAQ; (ii) a suspension or material limitation
in trading in the Fund's Common Shares or in the Rights on the
NYSE; (iii) a general moratorium on commercial banking activities
declared by either federal or New York State authorities or a
material disruption in commercial banking or securities settlement
or clearance services in the United States; (iv) acts of terrorism
or a material outbreak or escalation of hostilities involving the
United States or Korea or a declaration by the United States or
Korea of a national emergency or war; or (v) any other calamity or
crisis or any change in financial, political, economic, currency,
banking or social conditions in the United States or Korea, if the
effect of any such event specified in clause (iv) or (v) in the
Dealer Manager's judgment makes it impracticable or inadvisable to
proceed with the Offer on the terms and in the manner contemplated
in the Registration Statement and the Prospectus.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other
party except as provided in Section 5 and the Dealer Manager shall
not have any obligation to purchase any Shares upon exercise of
Rights.
34
10. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Dealer Manager, will be mailed,
delivered or telegraphed and confirmed to UBS Securities LLC, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: Syndicate Department and,
if to the Fund or the Manager, shall be sufficient in all respects if
delivered or sent to the Fund or the Manager at Two World Financial
Center, Building B, New York, New York 10281, Attention: ▇▇▇▇ ▇.
▇▇▇▇▇▇▇.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and will inure
to the benefit of the officers and directors and controlling persons
referred to in Section 7 hereof, and no other person will have any right
or obligation hereunder.
12. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
13. Submission to Jurisdiction. Except as set forth below, no claim (a
"Claim") which relates to the terms of this Agreement or the
transactions contemplated hereby may be commenced, prosecuted or
continued in any court other than the courts of the State of New York
located in the City and County of New York or in the United States
District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and each of the
Fund and the Manager consents to the jurisdiction of such courts and
personal service with respect thereto. Each of the Fund and the Manager
hereby consents to personal jurisdiction, service and venue in any court
in which any Claim arising out of or in any way relating to this
Agreement is brought by any third party against the Dealer Manager or
any indemnified party. Each of the Dealer Manager, the Fund (on its
behalf and, to the extent permitted by applicable law, on behalf of its
stockholders and affiliates) and the Manager (on its behalf and, to the
extent permitted by applicable law, on behalf of its stockholders and
affiliates) waives all right to trial by jury in any action, proceeding
or counterclaim (whether based upon contract, tort or otherwise) in any
way arising out of or relating to this Agreement. Each of the Fund and
the Manager agrees that a final judgment in any such action, proceeding
or counterclaim brought in any such court shall be conclusive and
binding upon the Fund or the Manager, as the case may be, and may be
enforced in any other courts in the jurisdiction of which the Fund or
the Manager is or may be subject, by suit upon such judgment.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
35
If the foregoing is in accordance with your understanding of our
agreement, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among the Fund, the
Manager and the Dealer Manager.
Very truly yours,
KOREA EQUITY FUND, INC.
By: __________________________________
Name:
Title:
NOMURA ASSET MANAGEMENT U.S.A. INC.
By: __________________________________
Name:
Title:
36
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
UBS SECURITIES LLC
By: __________________________________
Name:
Title:
By: __________________________________
Name:
Title:
37
Exhibit A
KOREA EQUITY FUND, INC.
[________] Shares of Common Stock
Issuable Upon Exercise of Transferable Rights
to Subscribe for Such Shares
SELLING GROUP AGREEMENT
New York, New York
[_________], 2007
UBS Securities LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
We understand that Korea Equity Fund, Inc., a Maryland corporation (the
"Fund"), proposes to issue to holders of record (the "Record Date
Stockholders") as of the close of business on the record date set forth in the
Prospectus (as defined herein) (the "Record Date") transferable rights
entitling such Record Date Stockholders to subscribe for up to [________]
shares (each a "Share" and, collectively, the "Shares") of common stock, par
value $0.10 per share (the "Common Shares"), of the Fund (the "Offer").
Pursuant to the terms of the Offer, the Fund is issuing each Record Date
Stockholder one transferable right (each a "Right" and, collectively, the
"Rights") for each Common Share held by such Record Date Stockholder on the
Record Date. Such Rights entitle their holders to acquire during the
subscription period set forth in the Prospectus (the "Subscription Period"),
at the price set forth in such Prospectus (the "Subscription Price"), one
Share for each three Rights, on the terms and conditions set forth in such
Prospectus. No fractional shares will be issued. Any Record Date Stockholder
who fully exercises all Rights initially issued to such Record Date
Stockholder (other than those Rights that cannot be exercised because they
represent the right to acquire less than one Share) will be entitled to
subscribe for, subject to allocation, additional Shares (the
"Over-Subscription Privilege") on the terms and conditions set forth in such
Prospectus. The Rights are transferable and are listed on the New York Stock
Exchange, Inc. under the symbol "KEF.RT".
We further understand that the Fund has appointed UBS Securities LLC to
act as the dealer manager (the "Dealer Manager") in connection with the Offer
and has authorized the Dealer Manager to form and manage a group of
broker-dealers (each a "Selling Group Member" and collectively the "Selling
Group") to solicit the exercise of Rights and to sell Shares purchased by the
Dealer Manager from the Fund through the exercise of Rights.
We hereby express our interest in participating in the Offer as a
Selling Group Member.
We hereby agree with you as follows:
1. We have received and reviewed the Fund's prospectus dated
[_______], 2007 (the "Prospectus") relating to the Offer and we
understand that additional copies of the Prospectus (or of the
Prospectus as it may be subsequently supplemented or amended, if
applicable) and any other solicitation materials authorized by the
Fund relating to the Offer ("Offering Materials") will be supplied
to us in reasonable quantities upon our
A-1
request therefor to you. We agree that we will not use any
solicitation material other than the Prospectus (as supplemented
or amended, if applicable) and such Offering Materials and we
agree not to make any representation, oral or written, to any
shareholders or prospective shareholders of the Fund that are not
contained in the Prospectus, unless previously authorized to do so
in writing by the Fund.
2. From time to time during the Subscription Period commencing on
[_______], 2007 and ending at 5:00 p.m., New York City time, on
the Expiration Date (the term "Expiration Date" means [_______],
2007, unless and until the Fund shall, in its sole discretion,
have extended the period for which the Offer is open, in which
event the term "Expiration Date" with respect to the Offer will
mean the latest time and date on which the Offer, as so extended
by the Fund, will expire), we may solicit the exercise of Rights
in connection with the Offer. We will be entitled to receive fees
in the amounts and at the times described in Section 4 of this
Selling Group Agreement with respect to Shares purchased pursuant
to the exercise of Rights and with respect to which Computershares
Shareholder Services, Inc. (the "Subscription Agent") has
received, no later than 5:00 p.m., New York City time, on the
Expiration Date, either (i) a properly completed and executed
Subscription Certificate identifying us as the broker-dealer
having been instrumental in the exercise of such Rights, and full
payment for such Shares, or (ii) a Notice of Guaranteed Delivery
guaranteeing to the Subscription Agent by the close of business of
the third business day after the Expiration Date a properly
completed and duly executed Subscription Certificate, similarly
identifying us, and full payment for such Shares. We understand
that we will not be paid these fees with respect to Shares
purchased pursuant to an exercise of Rights for our own account or
for the account of any of our affiliates. We also understand and
agree that we are not entitled to receive any fees in connection
with the solicitation of the exercise of Rights other than
pursuant to the terms of this Selling Group Agreement and, in
particular, that we will not be entitled to receive any fees under
the Fund's Soliciting Dealer Agreement. We agree to solicit the
exercise of Rights in accordance with the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, the
Investment Company Act of 1940, as amended, and the rules and
regulations under each such Act, any applicable securities laws of
any state or jurisdiction where such solicitations may be lawfully
made, the applicable rules and regulations of any self-regulatory
organization or registered national securities exchange and
customary practice and subject to the terms of the Subscription
Agent Agreement between the Fund and the Subscription Agent and
the procedures described in the Fund's registration statement on
Form N-2 (File Nos. 333-138220 and 811-08002), as amended (the
"Registration Statement").
3. From time to time during the Subscription Period, we may indicate
interest in purchasing Shares from the Dealer Manager. We
understand that from time to time the Dealer Manager intends to
offer Shares obtained or to be obtained by the Dealer Manager
through the exercise of Rights to Selling Group Members who have
so indicated interest at prices which shall be determined by the
Dealer Manager (the "Offering Price"). We agree that, with respect
to any such Shares purchased by us from the Dealer Manager, the
sale of such Shares to us shall be irrevocable, and we will offer
them to the public at the Offering Price at which we purchase them
from the Dealer Manager. Shares not sold by us at such Offering
Price may be offered by us after the next succeeding Offering
Price is set at the latest Offering Price set by the Dealer
Manager. The Dealer Manager agrees that, if requested by any
Selling Group Member, and subject to applicable law, the Dealer
Manager will set a new Offering Price prior to 4:00 p.m., New York
City time, on any business day. We agree to advise the Dealer
Manager from time to time upon request,
A-2
prior to the termination of this Selling Group Agreement, of the
number of Shares remaining unsold which were purchased by us from
the Dealer Manager and, upon the Dealer Manager's request, we will
resell to the Dealer Manager any of such Shares remaining unsold
at the purchase price thereof if in the Dealer Manager's opinion
such Shares are needed to make delivery against sales made to
other Selling Group Members. Any shares purchased hereunder from
the Dealer Manager shall be subject to regular way settlement
through the facilities of The Depository Trust Company.
4. We understand that you will remit to us on or before the tenth
business day following the day the Fund issues Shares after the
Expiration Date, following receipt by you from the Fund of the
Dealer Manager Fee (as defined in the Dealer Manager Agreement,
dated [_______], 200[__], among the Fund, the Manager and UBS
Securities LLC as the dealer manager (the "Dealer Manager
Agreement"), a fee (the "Selling Fee") equal to 2.50% of the
Subscription Price per Share for (A) each Share issued pursuant to
the exercise of Rights or the Over-Subscription Privilege pursuant
to each Subscription Certificate upon which we are designated, as
certified to you by the Subscription Agent, as a result of our
solicitation efforts in accordance with Section 2 and (B) each
Share sold by the Dealer Manager to us in accordance with Section
3 less any Shares resold to the Dealer Manager in accordance with
Section 3. Your only obligation with respect to payment of the
Selling Fee to us is to remit to us amounts owing to us and
actually received by you from the Fund. Except as aforesaid, you
shall be under no liability to make any payments to us pursuant to
this Selling Group Agreement. We also understand that the Fund and
the Manager have agreed to indemnify us pursuant to the terms set
forth in the Dealer Manager Agreement.
5. We agree that you, as Dealer Manager, have full authority to take
such action as may seem advisable to you in respect of all matters
pertaining to the Offer. You are authorized to approve on our
behalf any amendments or supplements to the Registration Statement
or the Prospectus.
6. We represent that we are a member in good standing of the NASD
and, in making sales of Shares, agree to comply with all
applicable rules of the NASD including, without limitation, Rule
2740 and Rule 2790 of the NASD's Conduct Rules. We understand that
no action has been taken by you or the Fund to permit the
solicitation of the exercise of Rights or the sale of Shares in
any jurisdiction (other than the United States) where action would
be required for such purpose. We agree that we will not, without
your approval in advance, buy, sell, deal or trade in, on a
when-issued basis or otherwise, the Rights or the Shares or any
other option to acquire or sell Shares for our own account or for
the accounts of customers, except as provided in Sections 2 and 3
hereof and except that we may buy or sell Rights or Shares in
brokerage transactions on unsolicited orders which have not
resulted from activities on our part in connection with the
solicitation of the exercise of Rights and which are executed by
us in the ordinary course of our brokerage business. We will keep
an accurate record of the names and addresses of all persons to
whom we give copies of the Registration Statement, the Prospectus,
any preliminary prospectus (or any amendment or supplement
thereto) or any Offering Materials and, when furnished with any
subsequent amendment to the Registration Statement and any
subsequent prospectus, we will, upon your request, promptly
forward copies thereof to such persons.
7. Nothing contained in this Selling Group Agreement will constitute
the Selling Group Members partners with the Dealer Manager or with
one another or create any association
A-3
between those parties, or will render the Dealer Manager or the
Fund liable for the obligations of any Selling Group Member. The
Dealer Manager will be under no liability to make any payment to
any Selling Group Member other than as provided in Section 4 of
this Selling Group Agreement, and will be subject to no other
liabilities to any Selling Group Member, and no obligations of any
sort will be implied. We agree to indemnify and hold harmless the
Fund, the Manager, you and each other Selling Group Member and
each person, if any, who controls you and any such Selling Group
Member within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, against loss or liability
caused by any breach by us of the terms of this Selling Group
Agreement.
8. We agree to pay any transfer taxes which may be assessed and paid
on account of any sales or transfers for our account.
9. All communications to you relating to the Offer will be addressed
to: UBS Securities LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attn: Syndicate Department.
10. This Selling Group Agreement will be governed by the internal laws
of the State of New York.
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A signed copy of this Selling Group Agreement will be promptly returned
to the Selling Group Member at the address set forth below.
Very truly yours,
UBS SECURITIES LLC
By: __________________________________
Name:
Title:
By: __________________________________
Name:
Title:
PLEASE COMPLETE THE INFORMATION BELOW
Printed Firm Name Address
Contact at Selling Group Member
Authorized Signature Area Code and Telephone
Number
Name and Title Facsimile Number
Dated:
Payment of the Selling Fee shall be mailed
by check to the following address:
A-5
Exhibit B
KOREA EQUITY FUND, INC.
[______] Shares of Common Stock
Issuable Upon Exercise of Transferable Rights
to Subscribe for Such Shares
SOLICITING DEALER AGREEMENT
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
[_______], 2007, UNLESS EXTENDED
New York, New York
[_______], 2007
To Securities Dealers and Brokers:
Korea Equity Fund, Inc., a Maryland corporation (the "Fund"), is issuing
to its shareholders of record ("Record Date Stockholders") as of the close of
business on [_______], 2007 (the "Record Date") transferable rights ("Rights")
to subscribe for an aggregate of up to [____] shares (the "Shares") of common
stock, par value $0.10 per share (the "Common Shares"), of the Fund upon the
terms and subject to the conditions set forth in the Fund's prospectus (the
"Prospectus") dated [_______], 2007 (the "Offer"). Each such Record Date
Stockholder is being issued one Right for each full Common Share owned on the
Record Date. Such Rights entitle their holders to acquire during the
Subscription Period (as hereinafter defined) at the Subscription Price (as
hereinafter defined) one Share for each three Rights, on the terms and
conditions set forth in such Prospectus. No fractional shares will be issued.
Any Record Date Stockholder who fully exercises all Rights initially issued to
such Record Date Stockholder (other than those Rights that cannot be exercised
because they represent the right to acquire less than one Share) will be
entitled to subscribe for, subject to allocation, additional Shares (the
"Over-Subscription Privilege") on the terms and conditions set forth in such
Prospectus. The Rights are transferable and are listed on the New York Stock
Exchange, Inc. (the "NYSE") under the symbol "KEF.RT."
The Subscription Price will be [90% of the average of the last reported
sale prices of a share of the Fund's Common Stock on the NYSE on the
Expiration Date (as hereinafter defined) and the four preceding trading days].
The Subscription Period will commence on [_______], 2007 and end at 5:00 p.m.,
New York City time on the Expiration Date (the term "Expiration Date" means
[_______], 2007, unless and until the Fund shall, in its sole discretion, have
extended the period for which the Offer is open, in which event the term
"Expiration Date" with respect to the Offer will mean the latest time and date
on which the Offer, as so extended by the Fund, will expire).
For the duration of the Offer, the Fund has authorized and the Dealer
Manager (as hereinafter defined) has agreed to reallow a fee to any qualified
broker or dealer executing a Soliciting Dealer Agreement who solicits the
exercise of Rights and the Over-Subscription Privilege in connection with the
Offer and who complies with the procedures described below (a "Soliciting
Dealer"). Upon timely delivery to ComputerShares, the Fund's Subscription
Agent for the Offer, of payment for Shares purchased pursuant to the exercise
of Rights and the Over-Subscription Privilege and of properly completed and
executed documentation as set forth in this Soliciting Dealer Agreement, a
Soliciting Dealer will be entitled to receive a fee (the "Soliciting Fee")
equal to 0.50% of the Subscription Price per Share so purchased subject to a
maximum fee based on the number of Common Shares held by such
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Soliciting Dealer through The Depository Trust Company on the Record Date;
provided, however, that no payment shall be due with respect to the issuance
of any Shares until payment therefor is actually received. A qualified broker
or dealer is a broker or dealer which is a member of a registered national
securities exchange in the United States or the NASD or any foreign broker or
dealer not eligible for membership who agrees to conform to the Rules of Fair
Practice of the NASD, including Sections 2730, 2740, 2420 and 2750 thereof, in
making solicitations in the United States to the same extent as if it were a
member thereof.
The Fund has authorized and the Dealer Manager has agreed to pay the
Soliciting Fees payable to the undersigned Soliciting Dealer, and the Fund and
the Manager have agreed to indemnify such Soliciting Dealer on the terms set
forth in the Dealer Manager Agreement, dated [_______], 2007, among the Fund,
the Manager and UBS Securities LLC as the dealer manager (the "Dealer
Manager"). Solicitation and other activities by Soliciting Dealers may be
undertaken only in accordance with the applicable rules and regulations of the
Securities and Exchange Commission and only in those states and other
jurisdictions where such solicitations and other activities may lawfully be
undertaken and in accordance with the laws thereof. Compensation will not be
paid for solicitations in any state or other jurisdiction in which, in the
opinion of counsel to the Fund or counsel to the Dealer Manager, such
compensation may not lawfully be paid. No Soliciting Dealer shall be paid
Soliciting Fees with respect to Shares purchased pursuant to an exercise of
Rights and the Over-Subscription Privilege for its own account or for the
account of any affiliate of the Soliciting Dealer. No Soliciting Dealer or any
other person is authorized by the Fund or the Dealer Manager to give any
information or make any representations in connection with the Offer other
than those contained in the Prospectus and other authorized solicitation
material furnished by the Fund through the Dealer Manager. No Soliciting
Dealer is authorized to act as agent of the Fund or the Dealer Manager in any
connection or transaction. In addition, nothing herein contained shall
constitute the Soliciting Dealers partners with the Dealer Manager or with one
another, or agents of the Dealer Manager or of the Fund, or create any
association between such parties, or shall render the Dealer Manager or the
Fund liable for the obligations of any Soliciting Dealer. The Dealer Manager
shall be under no liability to make any payment to any Soliciting Dealer, and
shall be subject to no other liabilities to any Soliciting Dealer, and no
obligations of any sort shall be implied.
In order for a Soliciting Dealer to receive Soliciting Fees, the
Subscription Agent must have received from such Soliciting Dealer no later
than 5:00 p.m., New York City time, on the Expiration Date, either (i) a
properly completed and duly executed Subscription Certificate with respect to
Shares purchased pursuant to the exercise of Rights and the Over-Subscription
Privilege and full payment for such Shares or (ii) a Notice of Guaranteed
Delivery guaranteeing delivery to the Subscription Agent by close of business
on the third business day after the Expiration Date of (a) a properly
completed and duly executed Subscription Certificate with respect to Shares
purchased pursuant to the exercise of Rights and the Over-Subscription
Privilege and (b) full payment for such Shares. Soliciting Fees will only be
paid after receipt by the Subscription Agent of a properly completed and duly
executed Soliciting Dealer Agreement and a Subscription Certificate
designating the Soliciting Dealer in the applicable portion hereof. In the
case of a Notice of Guaranteed Delivery, Soliciting Fees will only be paid
after delivery in accordance with such Notice of Guaranteed Delivery has been
effected. Soliciting Fees will be paid by the Fund (through the Subscription
Agent) to the Soliciting Dealer by check to an address designated by the
Soliciting Dealer below by the tenth business day following the day the Fund
issues Shares after the Expiration Date.
All questions as to the form, validity and eligibility (including time
of receipt) of this Soliciting Dealer Agreement will be determined by the
Fund, in its sole discretion, which determination shall be final and binding.
Unless waived, any irregularities in connection with a Soliciting Dealer
Agreement or delivery thereof must be cured within such time as the Fund shall
determine. None of the Fund, the
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Dealer Manager, the Subscription Agent, the Information Agent for the Offer or
any other person will be under any duty to give notification of any defects or
irregularities in any Soliciting Dealer Agreement or incur any liability for
failure to give such notification.
The acceptance of Soliciting Fees from the Fund by the undersigned
Soliciting Dealer shall constitute a representation by such Soliciting Dealer
to the Fund that: (i) it has received and reviewed the Prospectus; (ii) in
soliciting purchases of Shares pursuant to the exercise of the Rights and the
Over-Subscription Privilege, it has complied with the applicable requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
applicable rules and regulations thereunder, any applicable securities laws of
any state or jurisdiction where such solicitations were made, and the
applicable rules and regulations of any self-regulatory organization or
registered national securities exchange; (iii) in soliciting purchases of
Shares pursuant to the exercise of the Rights and the Over-Subscription
Privilege, it has not published, circulated or used any soliciting materials
other than the Prospectus and any other authorized solicitation material
furnished by the Fund through the Dealer Manager; (iv) it has not purported to
act as agent of the Fund or the Dealer Manager in any connection or
transaction relating to the Offer; (v) the information contained in this
Soliciting Dealer Agreement is, to its best knowledge, true and complete; (vi)
it is not affiliated with the Fund; (vii) it will not accept Soliciting Fees
paid by the Fund pursuant to the terms hereof with respect to Shares purchased
by the Soliciting Dealer pursuant to an exercise of Rights and the
Over-Subscription Privilege for its own account or the account of any
affiliates; (viii) it will not remit, directly or indirectly, any part of
Soliciting Fees paid by the Fund pursuant to the terms hereof to any
beneficial owner of Shares purchased pursuant to the Offer; and (ix) it has
agreed to the amount of the Soliciting Fees and the terms and conditions set
forth herein with respect to receiving such Soliciting Fees. By returning a
Soliciting Dealer Agreement and accepting Soliciting Fees, a Soliciting Dealer
will be deemed to have agreed to indemnify the Fund, the Manager and the
Dealer Manager against losses, claims, damages and liabilities to which the
Fund may become subject as a result of the breach of such Soliciting Dealer's
representations made herein and described above. In making the foregoing
representations, Soliciting Dealers are reminded of the possible applicability
of the anti-manipulation rules under the Exchange Act if they have bought,
sold, dealt in or traded in any Shares for their own account since the
commencement of the Offer.
Upon expiration of the Offer, no Soliciting Fees will be payable to
Soliciting Dealers with respect to ▇▇▇▇▇▇ purchased thereafter.
Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Dealer Manager Agreement or, if not defined therein,
in the Prospectus.
This Soliciting Dealer Agreement will be governed by the laws of the
State of New York.
Please execute this Soliciting Dealer Agreement below accepting the
terms and conditions hereof and confirming that you are a member firm of the
NASD or a foreign broker or dealer not eligible for membership who has
conformed to the Rules of Fair Practice of the NASD, including Sections 2730,
2740, 2420 and 2750 thereof, in making solicitations of the type being
undertaken pursuant to the Offer in the United States to the same extent as if
you were a member thereof, and certifying that you have solicited the purchase
of the Shares pursuant to exercise of the Rights and the Over-Subscription
Privilege, all as described above, in accordance with the terms and conditions
set forth in this Soliciting Dealer Agreement. Please forward two executed
copies of this Soliciting Dealer Agreement to: UBS Securities LLC, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: Syndicate Department.
A signed copy of this Soliciting Dealer Agreement will be promptly
returned to the Soliciting Dealer at the address set forth below.
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Very truly yours,
UBS SECURITIES LLC
By: __________________________________
Name:
Title:
By: __________________________________
Name:
Title:
PLEASE COMPLETE THE INFORMATION BELOW
Printed Firm Name Address
Contact at Soliciting Dealer
Authorized Signature Area Code and Telephone
Number
Name and Title Facsimile Number
Dated:
Payment of the Soliciting Fee shall be mailed by check to
the following address:
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