Exhibit 2(h)(3)
NEW COLONY EQUITY INCOME FUND
MINIMUM OF $20,000,000 UNITS OF BENEFICIAL INTEREST
AND
MAXIMUM OF $75,000,000 UNITS OF BENEFICIAL INTEREST
AGREEMENT AMONG UNDERWRITERS
, 2002
Investors Capital Corp.
000 Xxxxxxxx
Xxxxxxxxx, XX 00000
As Managing Underwriter
GENTLEMEN:
We wish to confirm as follows the agreement among you, the undersigned and
the other members of the Underwriting Group named in Schedule A to the Best
Efforts Underwriting Agreement, as it is to be executed (all such parties being
herein called the "Underwriters"), with respect to the sale by the Underwriters
severally from New Colony Equity Income Fund, a closed-end investment Fund
("Fund") of a minimum of $20,000,000 units of beneficial interest ("Units") and
a maximum of $75,000,000 Units offered as described above and as set forth in
Schedule A to the Best Efforts Underwriting Agreement. The number of Units to be
sold by each Underwriter from the Fund shall be determined in accordance with
Section 2 of the Best Efforts Underwriting Agreement. It is understood that
changes may be made in those who are to be Underwriters and in the respective
numbers of Units to be sold by them, but that the Best Efforts Underwriting
Agreement will not be changed without our consent, except as provided herein,
and in the Best Efforts Underwriting Agreement. The obligations of the
Underwriters to sell the number of Units set opposite their respective names in
Schedule A to the Best Efforts Underwriting Agreement, are herein called their
"underwriting obligations." The number of Units set opposite our names in said
Schedule A, are herein called "our Units." For purposes of this Agreement the
following definitions shall be applicable:
(a) "Manager's Concession" shall be the compensation to you for acting as
Manager as provided in Paragraph 1 of not less than eight percent (8.0%) of the
underwriting commission. The Manager's Concession shall include the right to the
non-accountable expenses to be paid pursuant to the Best Efforts Underwriting
Agreement.
(b) "Underwriting Group Concession" shall mean compensation to members of
the Underwriting Group for assuming the underwriting risk and shall be not less
than 0.75 percent (.75%) of the underwriting discount and does not include any
non-accountable expenses.
(c) "Dealer's Concession" shall mean compensation to Dealers, who are
members of the Selling Group and shall, as to Dealers who have executed an
agreement with you, be not less than five and one-half percent (5.5 %) of the
underwriting discount.
(d) "Dealer's Reallowance Concession" shall mean the compensation allowed
Dealers by Underwriters other than you and shall be one-half (1/2) of the
Dealer's Concession.
1. Authority and Compensation of Representative. We hereby authorize you,
as our Representative and on our behalf, (a) to enter into an agreement with the
Fund substantially in the form attached hereto as Exhibit A ("Best Efforts
Underwriting Agreement"), but with such changes therein as in your judgment are
not materially adverse to the Underwriters, (b) to exercise all the authority
and discretion vested in the Underwriters and in you by the provisions of the
Best Efforts Underwriting Agreement, and (c) to take all such action as you, in
your discretion, may deem necessary or advisable in order to carry out the
provisions of the Best Efforts Underwriting Agreement and this Agreement and the
sale and distribution of the Units. We authorize you, in executing the Best
Efforts Underwriting Agreement on our behalf, to set forth in Schedule A of the
Best Efforts Underwriting Agreement as our commitment to sell the number of
Units (which shall not be substantially in excess of the number of Units
included in your invitation to participate unless we have agreed otherwise)
included in a wire, telex, or similar means of communication transmitted by you
to us at least twenty-four (24) hours prior to the commencement of the offering
as our finalized underwriting participation.
2. Public Offering. A public offering of the Units is to be made, as herein
provided, as soon after the Registration Statement relating thereto shall become
effective as in your judgment is advisable. The Units shall be initially offered
to the public at the public offering price of $20.00 per trust unit. You will
advise us by telegraph or telephone when the Units shall be released for
offering. We authorize you as Representative of the Underwriters, after the
initial public offering, to vary the public offering price, in your sole
discretion, by reason of changes in general market conditions or otherwise. The
public offering price of the Units at any time in effect is herein called the
"Offering Price." Unless otherwise permitted, we will not sell any of the Units
to any account over which we have discretionary authority.
We hereby agree to deliver all preliminary and final Prospectuses as
required for compliance with the provisions of Rule 15c2-8 under the Securities
Exchange Act of 1934 and Section 5(b) of the Securities Act of 1933. You have
heretofore delivered to us such preliminary Prospectuses as have been requested
by us, receipt of which is hereby acknowledged, and will deliver such final
Prospectuses as will be requested by us.
3. Offering to Dealers and Group Sales. We authorize you to reserve for
offering and sale, and on our behalf to sell, to institutions or other retail
purchasers (such sales being herein called "Group Sales") and to dealers
selected by you (such dealers being herein called the "Dealers") all or any part
of our Units as you may determine. Such sales of Units, if any, shall be made
(a) in the case of Group Sales, at the Offering Price, and (b) in the case of
sales to Dealers, at the Offering Price less the Dealer's Concession.
Any Group Sales shall be as nearly as practicable in proportion to the
underwriting obligations of the respective Underwriters. Any sales to Dealers
made for our account shall be as nearly as practicable in the ratio that the
Units reserved for our account for offering to Dealers bears to the aggregate of
all Units of all Underwriters, including you, so reserved. On any Group Sales or
sales to Dealers made by you on our behalf, we shall be entitled to receive only
the Underwriter's Concession.
You agree to notify us not less than twenty-four (24) hours prior to the
commencement of the public offering as to the number of Units, if any, which we
may retain for direct sale. Prior to the termination of this Agreement, you may
reserve for offering and sale, as herein before provided, any Units remaining
unsold theretofore retained by us and we may, with your consent, retain any
Units remaining unsold theretofore reserved by you. Sales to Dealers shall be
made under a Selected Dealers Agreement, attached hereto as Exhibit B and by
this reference incorporated herein. We authorize you to determine the form and
manner of any communications with Dealers, and to make such changes in the
Selected Dealers Agreement, as you may deem appropriate. In the event that there
shall be any such agreements with Dealers, you are authorized to act as managers
thereunder, and we agree, in such event, to be governed by the terms and
conditions of such agreements. Each Underwriter agrees that it will not offer
any of the Units for sale at a price below the Offering Price or allow any
concession therefrom. We, as to our Units, may enter into agreements with
Dealers, but any Dealer's Reallowance Concession shall not exceed half of the
Dealer's Concession.
It is understood that any person to whom an offer may be made, as herein before
provided, shall be a member of the National Association of Units Dealers, Inc.
("NASD") or dealers or institutions with their principal place of business
located outside of the United States, its territories or possessions, and who
are not eligible for membership under Section 1 of the Bylaws of the NASD who
agree to make no sales within the United States, its territories or possessions,
or to persons who are nationals thereof, or residents therein, and, in making
sales, to comply with the NASD's Rules of Fair Practice.
We authorize you to determine the form and manner of any public
advertisement of the Units.
Nothing in this Agreement contained therein shall be deemed to restrict our
right, subject to the provisions of this Section 3, to offer our Units prior to
the effective date of the Registration Statement, provided, however, that any
such offer shall be made in compliance with any applicable requirements of the
Securities Act of 1933 and the Securities Exchange Act of 1934 and the rules and
regulations of the Securities and Exchange Commission thereunder and of any
applicable state securities laws.
4. Payment. We agree to send to the State Street Bank and Trust Company,
upon receipt in accordance with Rule 15c2-4, funds from purchasers which are to
be forwarded to the following special escrow account: "New Colony Equity Income
Fund, Special Escrow Account"; a certified or bank cashier's check payable as
above for the offering price of the Units, without any deductions.
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5. Stabilization. We authorize you, until the termination of this
Agreement, (a) to make purchases and sales of the Units, in the open market or
otherwise, for long or short account, and on such terms, and at such prices as
you in your discretion may deem desirable, (b) in arranging for sales of Units,
to overallot, and (c) either before or after the termination of this Agreement,
to cover any short position incurred pursuant to this Section 5; subject,
however, to the applicable rules and regulations of the Securities and Exchange
Commission under the Securities Exchange Act of 1934. All such purchases, sales
and overallotments shall be made for the accounts of the several Underwriters as
nearly as practicable in proportion to their respective underwriting
obligations; provided, however, that our net position resulting from such
purchases and sales and overallotments shall not at any time exceed, either for
long or short account, fifteen percent (15%) of the number of Units agreed to be
sold by us.
If you engage in any stabilizing transactions as representative of the
underwriters, you shall promptly notify us of that fact and in like manner you
agree to promptly notify and file with us any stabilizing transaction in
accordance with the requirements of Rule 17a-2(d) under the Securities Exchange
Act of 1934.
We agree to advise you from time to time, upon request, until the settlement of
accounts hereunder, of the number of Units at the time retained by us unsold.
6. Open Market Transactions. We agree that, except with your consent and
except as herein provided upon advice from you, we will not make purchases or
sales on the open market or otherwise, or attempt to induce others to make
purchases or sales, either before or after the purchase of the Units, and prior
to the completion (as defined in Regulation M of the Securities Exchange Act of
1934) of our participation in the distribution, we will otherwise comply with
Regulation M. Nothing in this Section 10 contained shall prohibit us from acting
as broker or agent in the execution of unsolicited orders of customers for the
purchase or sale of any Units of the Fund.
7. Blue Sky. Prior to the initial offering by the Underwriters, you will
inform us as to the states under the respective securities or Blue Sky laws of
which it is believed that the Units have been qualified or are exempt for sale,
but you do not assume any responsibility or obligation as to the accuracy of
such information or as to the right of any Underwriter or Dealer to sell the
Units in any jurisdiction. We will not offer and/or sell any Units in any other
state or jurisdiction and we will not offer and/or sell Units in any state or
jurisdiction unless we are qualified or licensed to sell Units in such state or
jurisdiction. We authorize you, if you deem it inadvisable in arranging sales of
Units for our account hereunder, to sell any of our Units to any particular
Dealer, or other buyer, because of the securities or Blue Sky laws of any
jurisdiction, to sell our Units to one or more other Underwriters at the
Offering Price. Any transfer tax on any such sales among Underwriters shall be
treated as an expense and charged to the respective accounts of the several
Underwriters, in proportion to their respective underwriting obligations.
8. Termination of Agreement. Unless earlier terminated by you, the
provisions of Sections 2, 3, 6, 9 10 and 11 of this Agreement shall, except as
otherwise provided therein, terminate thirty (30) full business days after the
effective date of the Registration Statement herein referred to, but may be
extended by you for an additional period or periods not exceeding thirty (30)
full business days in the aggregate. You may, however, terminate this Agreement,
or any provisions hereof, at any time by written or telegraphic notice to us.
9. General Position of the Representative. In taking action under this
Agreement, you shall act only as agent of the several Underwriters. Your
authority as Representative of the several Underwriters shall include the taking
of such action as you may deem advisable in respect of all matters pertaining to
any and all offers and sales of the Units, including the right to make any
modifications which you consider necessary or desirable in the arrangements with
Dealers or others. You shall be under no liability for or in respect of the
value of the Units or the validity or the form thereof, the Registration
Statement, the Prospectus, the Best Efforts Underwriting Agreement, or other
instruments executed by the Fund or others of any agreement on its or their
part; nor shall you, as such Representative or otherwise, be liable under any of
the provisions hereof, or for any matters connected herewith, except for want of
good faith, and except for any liability arising under the Securities Act of
1933; and no obligation not expressly assumed by you as such Representative
herein shall be implied from this Agreement. In representing the Underwriters
hereunder, you shall act as the representative of each of them respectively.
Nothing herein contained shall constitute the several Underwriters partners with
you or with each other, or render any Underwriter liable for the commitments of
any other Underwriter, except as otherwise provided in Section 12 hereof. The
commitments and liabilities of each of the several Underwriters are several in
accordance with their respective underwriting obligations and are not joint.
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10. Acknowledgment of Registration Statement, etc. We hereby confirm that
we have examined the Registration Statement (including all amendments thereto)
relating to the Units as heretofore filed with the Securities and Exchange
Commission, that we are familiar with the amendment(s) to the Registration
Statement and the final form of Prospectus proposed to be filed, that we are
willing to accept the responsibilities of an underwriter thereunder, and that we
are willing to proceed as therein contemplated. We further confirm that the
statements made under the heading "Underwriting" in such proposed final form of
Prospectus are correct and we authorize you so to advise the Fund on our behalf.
We understand that the aforementioned documents are subject to further change
and that we will be supplied with copies of any amendment or amendments to the
Registration Statement and of any amended Prospectus promptly, if and when
received by you, but the making of such changes and amendments shall not release
us or affect our obligations hereunder or under the Best Efforts Underwriting
Agreement.
11. Indemnification. Each Underwriter, including you, agrees to indemnify
and hold harmless each other Underwriter and each person who controls any other
Underwriter within the meaning of Section 15 of the Securities Act of 1933, as
amended, to the extent of their several commitments under the Best Efforts
Underwriting Agreement and upon the terms that such Underwriter agrees to
indemnify and hold harmless the Fund as set forth in Section 7 of the Best
Efforts Underwriting Agreement. The Agreement contained in this Section 16 shall
survive any termination of this Agreement Among Underwriters.
12. Capital Requirements. Not applicable
13. Miscellaneous. Any notice hereunder from you to us or from us to you
shall be deemed to have been duly given if sent by registered mail, telegram,
teletype, telex, telecopier, graphic scan, or other written form of
telecommunication to us at our address as set forth in the Best Efforts
Underwriting Agreement, or to you at the address set forth on the first page of
this Agreement.
You hereby confirm that you are registered as a broker-dealer with the
United States Securities and Exchange Commission and that you are a member of
the NASD and we confirm that we are either a member of the NASD or a foreign
broker-dealer not eligible for membership under Section I of the Bylaws of the
NASD, who agree to make no sales within the United States, its territories or
possessions, or to persons who are nationals thereof or residents therein, and,
in making sales, to comply with the requirements of the NASD's Interpretation
with Respect to Free Riding and Withholding, and with Sections 2730, 2740, and
2420 to the extent applicable to foreign nonmember brokers or dealers, and
Section 2750 of the NASD's Rules of Fair Practice.
We will comply with all applicable federal laws, the laws of the states or
other jurisdictions concerned and the Rules and Regulations of the NASD,
including, but not limited to, Section 2740 of the Rules of Fair Practice.
This instrument may be signed by the Underwriters in various counterparts
which together shall constitute one and the same agreement among all the
Underwriters and shall become effective as between us at such time as you shall
have confirmed same by returning an executed copy to us, and thereafter, as to
us and the other Underwriters, upon execution by them of counterparts which are
confirmed by you. In no event, however, shall we have any liability under this
Agreement if the Best Efforts Underwriting Agreement is not executed.
Please confirm that the foregoing correctly states the understanding
between us by signing and returning to us a counterpart hereof.
Very truly yours,
------------------------------------
Attorney-in-Fact
for the Underwriter
named in Schedule A
to the Best Efforts Underwriting Agreement
Confirmed as of the date first above written.
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Investors Capital Corp.
As Managing Underwriter
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