KAYNE ANDERSON MIDSTREAM/ENERGY FUND, INC. (a Maryland corporation) [-] Shares of Common Stock ($0.001 par value) UNDERWRITING AGREEMENT
Exhibit (h)(1)
XXXXX XXXXXXXX MIDSTREAM/ENERGY FUND, INC.
(a Maryland corporation)
(a Maryland corporation)
[-] Shares of Common Stock
($0.001 par value)
($0.001 par value)
[-], 2010
UBS Securities LLC
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Citigroup Global Markets Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxx Fargo Securities, LLC
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Citigroup Global Markets Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxx Fargo Securities, LLC
As Representatives of the several Underwriters
c/o UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
The undersigned, Xxxxx Xxxxxxxx Midstream/Energy Fund, Inc., a Maryland corporation (the
“Company”), KA Fund Advisors, LLC, a Delaware limited liability company (the “Adviser”), and Xxxxx
Xxxxxxxx Capital Advisors, L.P., a California limited partnership, parent of the Adviser (“KACALP”)
(solely with respect to Section 2(b), Section 2(e), Section 7(l), Section 9 and Section 12 hereof),
address you as underwriters and as the representatives (the “Representatives”) of each of the
several underwriters named on Schedule I hereto (herein collectively called the “Underwriters”).
The Company proposes to sell to the Underwriters [-] shares of Common Stock, par value $0.001 per
share (“Common Stock”) of the Company (said shares to be issued and sold by the Company being
hereinafter called the “Underwritten Securities”). The Company also proposes to grant to the
Underwriters an option to purchase up to [-] additional shares of Common Stock to cover
over-allotments (the “Option Securities”; the Option Securities, together with the Underwritten
Securities, being hereinafter called the “Securities”).
Unless otherwise stated, the term “you” as used herein means each of UBS Securities LLC,
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, Citigroup Global Markets Inc., Xxxxxx Xxxxxxx &
Co. Incorporated and Xxxxx Fargo Securities, LLC individually on its own behalf and on behalf of
the other Underwriters. Certain terms used herein are defined in Section 20 hereof.
The Company and the Adviser wish to confirm as follows their agreements with you and the other
several Underwriters on whose behalf you are acting in connection with the several purchases of the
Securities by the Underwriters.
The Company has entered into (i) an Investment Management Agreement with the Adviser, dated
October 19, 2010 (the “Advisory Agreement”); (ii) a Custody Agreement with JPMorgan Chase Bank,
N.A., dated October [-], 2010 (the “Custodian Agreement”); (iii) a Certificate of Appointment as
Transfer Agent and Registrar with American Stock Transfer & Trust Company LLC, dated October 19,
2010 (the “Transfer Agency Agreement”); (iv) an Administration Agreement with Ultimus Fund
Solutions, LLC (“Ultimus”), dated as of October 19, 2010 (the “Administration Agreement”); and (v)
a Fund Accounting Agreement with Ultimus, dated October 19, 2010 (the “Accounting Agreement”).
Collectively, the Advisory Agreement, the Custodian Agreement, the Transfer Agency Agreement, the
Administration Agreement and the Accounting Agreement are herein referred to as the “Company
Agreements.” [The Adviser has entered into [list all structuring fee agreements], collectively, the
“Fee Agreements.”] In addition, the Company has adopted a distribution reinvestment plan (the
“Dividend Reinvestment Plan”) pursuant to which the holders of Common Stock shall have their
dividends automatically reinvested in additional Common Stock of the Company unless they elect to
receive such dividends in cash.
1. Representations and Warranties of the Company and the Adviser. The Company and
the Adviser, jointly and severally, represent and warrant to, and agree with, each Underwriter as
set forth below in this Section 1.
(a) The Company has prepared and filed with the Commission a registration
statement (file numbers 333-169177 and 811-22467) on Form N-2, including a related
preliminary prospectus (including the statement of additional information incorporated
by reference therein), for registration under the Acts of the offering and sale of the
Securities. The Company has prepared and filed with the Commission the 1940 Act
Notification (file number 811-22467). The Company has filed with the Commission one or
more amendments to the Registration Statement, (including a preliminary prospectus and
the statement of additional information incorporated by reference therein), each of
which has previously been furnished to you. Such Registration Statement, including any
amendments thereto filed prior to the Execution Time, has become effective. The
Company will file with the Commission a final prospectus (including any statement of
additional information incorporated by reference therein) relating to the Securities in
accordance with Rules 430A and 497. As filed with the Commission, such amendment and
form of final prospectus, or such final prospectus, shall contain all Rule 430A
Information, together with all other such required information, and, except to the
extent the Representatives shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the Execution Time or, to
the extent not completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the latest
Preliminary Prospectus)
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as the Company has advised you, prior to the Execution Time, will be included or
made therein. The Company has furnished the Representatives with copies of such
Registration Statement, each amendment to such Registration Statement filed with the
Commission and each Preliminary Prospectus.
(b) Each Preliminary Prospectus included as part of the Registration Statement as
originally filed or as part of any amendment or supplement thereto, or filed pursuant
to Rule 497, complied when so filed in all material respects with the applicable
provisions of the Acts and the Rules and Regulations.
(c) On the Effective Date, the Registration Statement did and when the Prospectus
is first filed in accordance with Rule 497 and on the Closing Date (as defined herein)
and on any date on which Option Securities are purchased, if such date is not the
Closing Date (a “settlement date”), the Prospectus (and any supplements thereto) will,
and the 1940 Act Notification when originally filed with the Commission and any
amendment or supplement thereto when filed with the Commission did, comply in all
material respects with the applicable requirements of the Acts and the Rules and
Regulations and the Registration Statement did not contain any 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 not misleading; and, on the Effective
Date, the Prospectus, if not filed pursuant to Rule 497, will not, and on the date of
any filing pursuant to Rule 497 and on the Closing Date and any settlement date, the
Prospectus (together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact 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 Company makes no representations or
warranties as to the information contained in or omitted from the Registration
Statement, or the Prospectus (or any supplement thereto), in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf of any
Underwriter through the Representatives specifically for inclusion in the Registration
Statement or the Prospectus (or any supplement thereto), it being understood and agreed
that the only such information furnished by or on behalf of any Underwriters, consists
of the information described as such in the last sentence of Section 9(b) hereof. The
Commission has not issued any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus.
(d) The Disclosure Package as of the Time of Sale does not, and the Prospectus as
of its date and as of the Closing Date will not, include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading. The preceding sentence does not apply to statements in or omissions from
the Disclosure Package or the
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Prospectus based upon and in conformity with written information furnished through
the Representatives or on the Representatives’ behalf specifically for use therein, it
being understood and agreed that the only such information furnished by or on behalf of
any Underwriter consists of the information described as such in the last sentence of
Section 9(b) hereof.
(e) The Company is a corporation duly organized and validly existing in good
standing under the laws of the State of Maryland with full corporate power and
authority to own, lease and operate its properties and assets and to conduct its
business as described in the Registration Statement, the Disclosure Package and the
Prospectus, and is duly qualified to conduct business as a foreign corporation and is
in good standing under the laws of each jurisdiction which requires such
qualifications, except where the failure to be so qualified and in good standing would
not, individually or in the aggregate, have a material adverse effect on (i) the
performance of this Agreement or the consummation of any of the transactions herein
contemplated or (ii) the condition (financial or otherwise), prospects, earnings,
business or properties of the Company, whether or not arising from transactions in the
ordinary course of business (clauses (i) and (ii) together or individually with respect
to the Adviser, KACALP or the Company, a “Material Adverse Effect”). The Company has
no subsidiaries.
(f) The Company’s authorized equity capitalization is as set forth in the
Registration Statement, the Disclosure Package and the Prospectus; the capital stock of
the Company conforms to the description thereof contained in the Registration
Statement, the Disclosure Package and the Prospectus; all outstanding shares of Common
Stock have been duly and validly authorized and issued, are fully paid and
nonassessable and are free of any preemptive or other similar rights; the Securities
have been duly and validly authorized, and, when issued and delivered to and paid for
by the Underwriters pursuant to this Agreement, will be fully paid and nonassessable,
and free of any preemptive or similar rights that entitle or will entitle any person to
acquire any Securities upon issuance thereof by the Company; the Securities are duly
listed, and admitted and authorized for trading, subject to official notice of
issuance, on the NYSE; the certificates for the Securities are in valid and sufficient
form; and, no options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or exchange any
securities for, shares of capital stock of or ownership interests in the Company are
outstanding.
(g) The Company’s registration statement on Form 8-A, as amended, under the
Exchange Act has become effective.
(h) The Company, subject to the Registration Statement having been declared
effective and the filing of the Prospectus under Rule 497, has taken all required
action under the Acts and the Rules and Regulations to make the
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public offering and consummate the sale of the Securities as contemplated by this
Agreement.
(i) There are no agreements, contracts, indentures, leases or other instruments
that are required to be described in the Registration Statement, the Disclosure Package
or the Prospectus, or to be filed as an exhibit thereto, which are not described or
filed as required by the Acts or the Rules and Regulations; and the statements in the
Disclosure Package and the Prospectus under the headings “Tax Matters” and “Description
of Capital Stock” fairly summarize the matters therein described.
(j) The execution and delivery of, and the performance by the Company of its
obligations under, this Agreement and the Company Agreements have been duly and validly
authorized by the Company, and this Agreement and the Company Agreements have been duly
executed and delivered by the Company.
(k) The Company is duly registered under the 1940 Act as a closed-end,
non-diversified management investment company and the 1940 Act Notification has been
duly filed with the Commission and, at the time of filing thereof and any amendment or
supplement thereto, conformed in all material respects with all applicable provisions
of the 1940 Act and the 1940 Rules and Regulations. The Company is, and at all times
through the completion of the transactions contemplated hereby will be, in compliance
in all material respects with the terms and conditions of the Acts. No person is
serving or acting as an officer, director or investment adviser of the Company except
in accordance with the provisions of the 1940 Act, the 1940 Act Rules and Regulations,
the Advisers Act, and the Advisers Act Rules and Regulations; the Company has not
received any notice from the Commission pursuant to Section 8(e) of the 1940 Act with
respect to the 1940 Act Notification or the Registration Statement. The Company and
the Adviser are not aware that any executive, key employee or significant group of
employees of the Company plans to terminate employment with the Company.
(l) No consent, approval, authorization, filing with or order of any court or
governmental agency or body is required in connection with the transactions
contemplated herein, in the Company Agreements or in the Fee Agreements, other than (a)
those that have been made or obtained under the Acts, (b) those under state securities
or blue sky laws of any jurisdiction in connection with the purchase and distribution
of the Securities by the Underwriters in the manner contemplated in this Agreement and
in the Disclosure Package and the Prospectus, (c) any necessary approval of the
Corporate Financing Department of FINRA, and (d) such other approvals as have been
obtained, it being understood and agreed that for purposes of this representation and
warranty, the transactions contemplated under the Advisory Agreement do not include any
prospective investment transactions generally authorized therein.
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(m) Subsequent to the respective dates as of which information is given in the
Disclosure Package and the Prospectus: (i) there has been no Material Adverse Effect
with respect to the Company or the Adviser; and (ii) neither the Company nor the
Adviser has incurred any material liability or obligation, indirect, direct or
contingent, not in the ordinary course of business nor entered into any material
transaction or agreement not in the ordinary course of business other than as may be
incurred hereunder or entered into herewith.
(n) Neither the issuance and sale of the Securities, the execution, delivery or
performance of this Agreement or any of the Company Agreements by the Company, nor the
consummation by the Company of the transactions herein or therein contemplated (i)
conflicts or will conflict with or constitutes or will constitute a breach of the
articles of incorporation of the Company, as amended to date (the
“Charter”), or bylaws
of the Company, as amended to date (the “Bylaws”), (ii) conflicts or will conflict with
or constitutes or will constitute a breach of or a default under, any material
agreement, indenture, lease or other instrument to which the Company is a party or by
which it or any of its properties may be bound or (iii) violates or will violate any
material statute, law, regulation or filing or judgment, injunction, order or decree
applicable to the Company or any of its properties or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company pursuant to the terms of any agreement or instrument to which it is a party or
by which it may be bound or to which any of the property or assets of the Company is
subject, it being understood and agreed that for purposes of this representation and
warranty, the transactions contemplated under the Advisory Agreement do not include any
prospective investment transactions generally authorized therein.
(o) There are no contracts, agreements or understandings between the Company and
any person granting such person the right to require the Company to include any
securities of the Company owned or to be owned by such person in the securities
registered pursuant to the Registration Statement.
(p) The financial statements, together with related schedules and notes, included
or incorporated by reference in the Registration Statement, the Disclosure Package and
the Prospectus, present fairly in all material respects the financial condition,
results of operations and cash flows of the Company as of the dates and for the periods
indicated, comply as to form with the applicable accounting requirements of the Acts
and have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as otherwise
noted therein); and the other financial and statistical information and data included
in the Registration Statement, the Disclosure Package and the Prospectus are accurately
derived from such financial statements and the books and records of the Company.
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(q) No action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or its property is pending
or, to the best knowledge of the Company, threatened that could reasonably be expected
to have a Material Adverse Effect.
(r) The Company owns or leases all such properties as are necessary to the
conduct of its operations as presently conducted.
(s) The Company is not (i) in violation of its Charter or Bylaws, (ii) in breach
or default in the performance of the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which it is a party or bound or to which its
property is subject or (iii) in violation of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or of any decree of the
Commission, FINRA, any state securities commission, any national securities exchange,
any arbitrator, any court or any other governmental, regulatory, self-regulatory or
administrative agency or any official having jurisdiction over the Company.
(t) PricewaterhouseCoopers LLP, who have audited the financial statements
included in the Registration Statement, are an
independent registered public accounting firm with respect to the Company within the
meaning of the 1933 Act and the 1933 Act Rules and Regulations.
(u) The Company has not distributed and, prior to the later to occur of (i) the
Closing Date and (ii) completion of the distribution of the Securities, will not
distribute any offering material in connection with the offering and sale of the
Securities other than the Registration Statement, the Disclosure
Package, the Marketing
Brochure and the Prospectus.
(v) There are no transfer taxes or other similar fees or charges under federal
law or the laws of any state, or any political subdivision thereof, required to be paid
in connection with the execution and delivery of this Agreement or the issuance by the
Company or sale by the Company of the Securities.
(w) The Company has filed all foreign, federal, state and local tax returns that
are required to be filed or has requested extensions thereof (except in any case in
which the failure so to file would not have a Material Adverse Effect) and has paid all
taxes required to be paid by it and any other
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assessment, fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine or penalty that is
currently being contested in good faith or as would not have a Material Adverse Effect.
(x) All advertising, sales literature or other promotional material (including
“prospectus wrappers”, “broker kits”, “road
show slides”, “road show scripts” and the Marketing Brochure),
whether in printed or electronic form, authorized in writing by or prepared by the
Company or the Adviser for use in connection with the offering and sale of the
Securities (collectively, “sales material”) complied and comply in all material
respects with the applicable requirements of the 1933 Act, the 1933 Act Rules and
Regulations and the rules and interpretations of FINRA and if required to be filed with
FINRA under FINRA’s conduct rules were provided to the Underwriters for filing. No
sales material contained or contains an untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(y) The Company’s directors and officers/errors and omissions insurance policy
and its fidelity bond required by Rule 17g-1 of the 1940 Act Rules and Regulations are
in full force and effect; the Company is in compliance with the terms of such policy
and fidelity bond in all material respects; and there are no claims by the Company
under any such policy or fidelity bond; the Company has not been refused any insurance
coverage sought or applied for; and the Company has no reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
(z) The Company has such licenses, permits and authorizations of governmental or
regulatory authorities (“permits”) as are necessary to own its property and assets and
to conduct its business in the manner described in the Disclosure Package and the
Prospectus, except where the failure to obtain such licenses, permits or authorizations
would not have a Material Adverse Effect; the Company has fulfilled and performed all
its material obligations with respect to such permits and no event has occurred which
allows, or after notice or lapse of time would allow, revocation or termination thereof
or results in any other material impairment of the rights of the Company under any such
permit; and none of such permits contains any restriction that is materially burdensome
to the Company.
(aa) The Company maintains and will maintain a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with general or specific authorization from the Company’s officers and
with the investment objectives, policies and
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restrictions of the Company and the applicable requirements of the 1940 Act, the
1940 Act Rules and Regulations and the Code; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with generally
accepted accounting principles, to calculate net asset value, to maintain
accountability for assets and to maintain material compliance with the books and
records requirements under the 1940 Act and the 1940 Act Rules and Regulations; (iii)
access to assets is permitted only in accordance with general or specific authorization
from the Company’s officers; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(bb)
The Company has not taken, directly or indirectly, any action designed to or that
would constitute or that might reasonably be expected to cause or result in, under the
Exchange Act or otherwise, stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Securities, and the Company is
not aware of any such action taken or to be taken by any affiliates of the Company.
(cc) The Company has established and shall maintain disclosure controls and
procedures (as defined in Rule 30a-3 of the 1940 Act Rules and Regulations), which: (i)
are designed to ensure that material information relating to the Company is made known
to the Company’s principal executive officer and its principal financial officer by
others within the Company, particularly during the periods in which the periodic
reports required under the Exchange Act are being prepared; and (ii) are effective in
all material respects to perform the functions for which they were established.
(dd)
This Agreement and each of the Company Agreements complies in all material
respects with all applicable provisions of the 1940 Act, the 1940 Act Rules and
Regulations, the Advisers Act and the Advisers Act Rules and Regulations. The
provisions of the Charter and Bylaws and the investment objectives, policies and
restrictions described in the Disclosure Package and the Prospectus, assuming they are
implemented as so described, will comply in all material respects with the applicable
requirements of the 1940 Act.
(ee)
Except as disclosed in the Registration Statement and the Prospectus, no director
of the Company is an “interested person” (as defined in the 0000 Xxx) of the Company or
an “affiliated person” (as defined in the 0000 Xxx) of any Underwriter listed in
Schedule I hereto.
(ff) There are no business relationships or related-party transactions involving
the Company or any other person required to be described in the Registration Statement,
the Disclosure Package and Prospectus which have not been described as required, it
being understood and agreed that the Company and the Adviser make no representation or
warranty with respect to
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any such relationships involving any Underwriter and any third party that have not
been disclosed to the Company.
(gg) The Company intends to direct the investment of the proceeds of the offering
of the Securities in such a manner as to comply with the requirements of Subchapter M
of the Code, and the Company intends to make an election under Section 851(b) of the
Code, or any successor provisions thereto, to be treated as a regulated investment
company for U.S. federal income tax purposes.
(hh) The conduct by the Company of its business (as described in the Disclosure
Package and the Prospectus) does not require it to be the owner, possessor or licensee
of any patents, patent licenses, trademarks, service marks or trade names which it does
not own, possess or license.
(ii) To the Company’s knowledge, neither the Company nor any employee or agent of
the Company has made any payment of funds of the Company or received or retained any
funds in violation of any law, rule or regulation, which payment, receipt or retention
of funds is of a character required to be disclosed in the Disclosure Package and the
Prospectus.
(jj) The Company (i) does not have any material lending or other relationship
with any bank or lending affiliate of any Underwriter and (ii) does not intend to use
any of the proceeds from the sale of the Securities hereunder to repay any outstanding
debt owed to any affiliate of any Underwriter.
(kk) There is and has been no failure on the part of the Company and any of the
Company’s directors or officers, in their capacities as such, to comply in all material
respects with any applicable provision of the Xxxxxxxx-Xxxxx Act of 2002, as amended,
and the rules and regulations promulgated in connection therewith (the “Xxxxxxxx-Xxxxx
Act”), including Sections 302 and 906 related to certifications.
(ll) The Company has satisfied the conditions for the use of Form N-2, as set
forth in the general instructions thereto, with respect to the Registration Statement.
(mm) The operations of the Company are and have been conducted at all times in
compliance in all material respects with any applicable financial recordkeeping and
reporting requirements of The Bank Secrecy Act of 1970, as amended (including
amendments pursuant to the International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001), the money laundering statutes of all jurisdictions, the rules
and regulations thereunder and any related or similar rules, regulations or guidelines,
issued, administered or enforced by any governmental agency (collectively, the “Money
Laundering Laws”) and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
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Company with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company, threatened.
(nn) Neither the Company nor, to the knowledge of the Company, any director,
officer, agent, employee or affiliate of the Company is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”); and the Company will not directly or indirectly use the proceeds
of the offering, or lend, contribute or otherwise make available such proceeds to any
other person or entity, for the purpose of financing the activities of any person
currently subject to any U.S. sanctions administered by OFAC.
(oo) Neither the Company nor, to the knowledge of the Company, any director,
officer, agent, employee or affiliate of the Company is aware of or has taken any
action, directly or indirectly, that would result in a violation by such persons of the
FCPA, including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce in furtherance of an offer, payment, promise to
pay or authorization of the payment of any money, or other property, gift, promise to
give, or authorization of the giving of anything of value to any “foreign official” (as
such term is defined in the FCPA) or any foreign political party or official thereof or
any candidate for foreign political office, in contravention of the FCPA and the
Company, and, to the knowledge of the Company, its affiliates have conducted their
businesses in compliance with the FCPA and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to continue to ensure,
continued compliance therewith.
Any certificate signed by any officer of the Company and delivered to the Representatives or
counsel for the Underwriters in connection with the offering of the Securities shall be deemed a
joint and several representation and warranty by the Company and the Adviser, as to matters covered
therein, to any Underwriter.
2. Representations and Warranties of the Adviser and KACALP. The Adviser and KACALP
(solely with respect to paragraphs (b) and (e) below) represent and warrant to each Underwriter as
follows:
(a) The Adviser is a limited liability company duly formed and validly existing
in good standing under the laws of the State of Delaware, with full limited liability
company power and authority to own, lease and operate its properties and assets and to
conduct its business as described in the Registration Statement, the Disclosure Package
and the Prospectus, and is duly qualified to do business as a foreign limited liability
company and is in good standing under the laws of each jurisdiction which requires such
qualification, except where the failure to be so qualified and in good standing would
not, individually or in the aggregate, have a Material Adverse Effect on the Adviser.
KACALP holds of record 99% of the membership interests of
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the Adviser and Xxxxxxx Xxxxx holds of record 1% of the membership interests of
the Adviser.
(b) KACALP is a limited partnership duly formed and validly existing in good
standing under the laws of the State of California, with full limited partnership power
and authority to own, lease and operate its properties and assets and to conduct its
business as described in the Registration Statement and the Prospectus, and is duly
qualified to do business as a foreign limited partnership and is in good standing under
the laws of each jurisdiction which requires such qualification, except where the
failure to be so qualified and in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on KACALP.
(c) The Adviser is duly registered with the Commission as an investment adviser
under the Advisers Act and is not prohibited by the Advisers Act, the Advisers Act
Rules and Regulations, the 1940 Act or the 1940 Act Rules and Regulations from acting
under the Advisory Agreement as investment adviser to the Company as contemplated by
the Disclosure Package and the Prospectus. There does not exist any proceeding or, to
the Adviser’s knowledge, any facts or circumstances the existence of which could lead
to any proceeding which might adversely affect the registration of the Adviser with the
Commission.
(d) The Adviser has full limited liability company power and authority to enter
into this Agreement and be party to the Advisory Agreement; the execution and delivery
of this Agreement, and the performance by the Adviser of its obligations under, this
Agreement and the Advisory Agreement have been duly and validly authorized by the
Adviser; and this Agreement and the Advisory Agreement have been duly executed and
delivered by the Adviser and, assuming due execution and delivery hereof by you, constitute the valid and legally binding agreements of the Adviser,
enforceable against the Adviser in accordance with their terms, except as rights to
indemnity and contribution hereunder may be limited by federal or state securities laws
or principles of public policy and subject to the qualification that the enforceability
of the Adviser’s obligations hereunder and thereunder may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium and other laws relating
to or affecting creditors’ rights generally and by general equitable principles,
regardless whether enforcement is considered in a proceeding in equity or at law.
(e) KACALP has full limited partnership power and authority to enter into this
Agreement, the execution and delivery of, and the performance by the Adviser of its
obligations under, this Agreement has been duly and validly authorized by KACALP; and
this Agreement has been duly executed and delivered by KACALP and, assuming due
execution and delivery hereof by you, constitutes the valid and legally binding
agreement of KACALP,
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enforceable against KACALP in accordance with its terms, except as rights to
indemnity and contribution hereunder may be limited by federal or state securities laws
or principles of public policy and subject to the qualification that the enforceability
of KACALP’s obligations hereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium and other laws relating to or affecting
creditors’ rights generally and by general equitable principles, regardless whether
enforcement is considered in a proceeding in equity or at law.
(f) The Adviser has the financial resources available to it necessary for the
performance of its services and obligations as described in the Disclosure Package and
the Prospectus and as contemplated under this Agreement and the Advisory Agreement.
(g) The description of the Adviser and its business, and the statements
attributable to the Adviser in the Registration Statement, the Disclosure Package and
the Prospectus complied and comply in all material respects with the provisions of the
1933 Act, the Advisers Act, the 1933 Act Rules and Regulations, the Advisers Act Rules
and Regulations and the 1940 Act and 1940 Act Rules and Regulations and did not and
will not contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Adviser is not aware that any
executive, key employee or significant group of employees of the Adviser plans to
terminate employment with the Company or the Adviser.
(h) No action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Adviser or its property is pending
or, to the best knowledge of the Adviser, threatened that (i) could reasonably be
expected to have a material adverse effect on the ability of the Adviser to fulfill its
obligations hereunder or under the Advisory Agreement or (ii) could reasonably be
expected to have a Material Adverse Effect.
(i) The Adviser has such licenses, permits and authorizations of governmental or
regulatory authorities (“permits”) as are necessary to own its property and to conduct
its business in the manner described in the Disclosure Package and the Prospectus,
except where the failure to obtain such licenses, permits or authorizations would not
have a Material Adverse Effect; the Adviser has fulfilled and performed all its
material obligations with respect to such permits and no event has occurred which
allows, or after notice or lapse of time would allow, revocation or termination thereof
or results in any other material impairment of the rights of the Adviser under any such
permit.
(j) Neither the execution, delivery or performance of this Agreement, the
Advisory Agreement or the Fee Agreements by the Adviser nor the consummation by the
Adviser of the transactions herein contemplated or by
-13-
the Adviser of the transactions therein contemplated (i) conflicts or will
conflict with or constitutes or will constitute a breach of the certificate of
formation or limited liability company operating agreement of the Adviser, (ii)
conflicts or will conflict with or constitutes or will constitute a breach of or a
default under, any material agreement, indenture, lease or other instrument to which
the Adviser is a party or by which it or any of its properties may be bound or (iii)
violates or will violate any material statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Adviser or any of its properties or,
other than pursuant to the terms of Section 6(j) hereof, will result in the creation
or imposition of any material lien, charge or encumbrance upon any property or assets
of the Adviser pursuant to the terms of any agreement or instrument to which the
Adviser is a party or by which the Adviser may be bound or to which any of the property
or assets of the Adviser is subject, it being understood and agreed that for purposes
of this representation and warranty, the transactions contemplated under the Advisory
Agreement do not include any prospective investment transactions generally authorized
therein.
(k) The Adviser has not taken, directly or indirectly, any action designed to or
that would constitute or that might reasonably be expected to cause or result in, under
the Exchange Act or otherwise, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities, and the
Adviser is not aware of any such action taken or to be taken by any affiliates of the
Adviser.
Any certificate signed by any officer of the Adviser and delivered to the Representatives or
counsel for the Underwriters in connection with the offering of the Securities shall be deemed a
representation and warranty by the Adviser, as to matters covered therein, to each Underwriter.
3. Purchase and Sale.
(a) Subject to the terms and conditions and in reliance upon the representations
and warranties herein set forth, the Company agrees to sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase from the Company, at a
purchase price of $[-] per share, the number of the Underwritten Securities set forth
opposite such Underwriter’s name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the representations
and warranties herein set forth, the Company hereby grants an option to the several
Underwriters to purchase, severally and not jointly, up to [-] Option Securities at the
same purchase price per share as the Underwriters shall pay for the Underwritten
Securities. Said option may be exercised only to cover over-allotments in the sale of
the Underwritten Securities by the Underwriters. Said option may be exercised in whole
or in part at any time on or before the 45th day after the date of the Prospectus upon
written or
-14-
telegraphic notice by the Representatives to the Company setting forth the number
of shares of the Option Securities as to which the several Underwriters are exercising
the option and the settlement date. The number of Option Securities to be purchased by
each Underwriter shall be the same percentage of the total number of shares of the
Option Securities to be purchased by the several Underwriters as such Underwriter is
purchasing of the Underwritten Securities, subject to such adjustments as you in your
absolute discretion shall make to eliminate any fractional shares.
4. Delivery and Payment. Delivery of and payment for the Underwritten Securities and
the Option Securities (if the option provided for in Section 3(b) hereof shall have been exercised
on or before the third Business Day prior to the Closing Date) shall be made at 10:00 AM, New York
City time, on [-], 2010, or at such time on such later date not more than three Business Days after
the foregoing date as the Representatives shall designate, which date and time may be postponed by
agreement between the Representatives and the Company or as provided in Section 10 hereof (such
date and time of delivery and payment for the Securities being herein called the “Closing Date”).
Delivery of the Securities shall be made to the Representatives for the respective accounts of the
several Underwriters against payment by the Underwriters through the Representatives of the purchase price
thereof to or upon the order of the Company by wire transfer payable in same-day funds to an
account specified by the Company. Delivery of the Underwritten Securities and the Option
Securities shall be made through the facilities of The Depository Trust Company (“DTC”) unless the
Representatives shall otherwise instruct the Company in writing.
If the option provided for in Section 3(b) hereof is exercised after the third Business Day
prior to the Closing Date, the Company will deliver the Option Securities (at the expense of the
Company) to the Representatives c/o UBS Securities LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000
on the date specified by the Representatives (which shall be within three Business Days after
exercise of said option) for the respective accounts of the several Underwriters, against payment
by the several Underwriters through the Representatives of the purchase price thereof to or upon
the order of the Company by wire transfer payable in same-day funds to an account specified by the
Company. If settlement for the Option Securities occurs after the Closing Date, the Company will
deliver to the Representatives on the settlement date for the Option Securities, and the obligation
of the Underwriters to purchase the Option Securities shall be conditioned upon receipt of,
supplemental opinions, certificates and letters confirming as of such date the opinions,
certificates and letters delivered on the Closing Date pursuant to
Section 7(n) hereof.
5. Offering by the Underwriters. It is understood that the several Underwriters
propose to offer the Securities for sale to the public as set forth in the Prospectus.
6. Agreements of the Company and the Adviser. The Company and the Adviser, jointly
and severally, agree with the Underwriters as follows:
(a) Prior to the termination of the offering of the Securities, the Company will
not file any amendment of the Registration Statement or supplement to the Prospectus or
any Rule 462(b) Registration Statement
-15-
unless the Company has furnished you a copy for your review prior to filing and
will not file any such proposed amendment or supplement to which you reasonably object.
Subject to the foregoing sentence, if the Registration Statement has become effective
pursuant to Rule 430A, or filing of the Prospectus is otherwise required under Rule
497, the Company will cause the Prospectus, properly completed, and any supplement
thereto, to be filed in a form approved by the Representatives with the Commission
pursuant to Rule 497 within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The Company will promptly
advise the Representatives (1) when the Prospectus, and any supplement thereto, shall
have been filed (if required) with the Commission pursuant to Rule 497 or when any Rule
462(b) Registration Statement shall have been filed with the Commission, (2) when,
prior to termination of the offering of the Securities, any amendment to the
Registration Statement shall have been filed or become effective, (3) of any request by
the Commission or its staff for any amendment of the Registration Statement, or any
Rule 462(b) Registration Statement, or for any supplement to the Prospectus or for any
additional information, (4) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any notice objecting
to its use or the institution or threatening of any proceeding for that purpose and (5)
of the receipt by the Company of any notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction or the institution or
threatening of any proceeding for such purpose. The Company will use its best efforts
to prevent the issuance of any such stop order or of any such suspension or objection
to the use of the Registration Statement and, upon such issuance, occurrence or notice
of objection, to obtain as soon as possible the withdrawal of such stop order or relief
from such occurrence or objection, including, if necessary, by filing an amendment to
the Registration Statement or a new registration statement and using its best efforts
to have such amendment or new registration statement declared effective as soon as
practicable.
(b) If, at any time prior to the filing of the Prospectus pursuant to Rule 497,
any event occurs as a result of which the Disclosure Package would include any untrue
statement of a material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were made at such
time not misleading, the Company will (i) notify promptly the Representatives so that
any use of the Disclosure Package may cease until it is amended or supplemented; (ii)
amend or supplement the Disclosure Package to correct such statement or omission; and
(iii) supply any amendment or supplement to you in such quantities as you may
reasonably request.
(c) If, at any time when a prospectus relating to the Securities is required to
be delivered under the 1933 Act, any event occurs as a result of which, in the
reasonable judgment of the Company or in the reasonable opinion of the Underwriters or
their counsel, the Prospectus as then
-16-
supplemented would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it shall be necessary
to amend the Registration Statement or supplement the Prospectus to comply with the
Acts and the Rules and Regulations, the Company promptly will (1) notify the
Representatives of any such event; (2) prepare and file with the Commission, subject to
the second sentence of paragraph (a) of this Section 6, an amendment or supplement
which will correct such statement or omission or effect such compliance; and (3) supply
any supplemented prospectus to you in such quantities as you may reasonably request.
(d) If there occurs an event or development as a result of which the Disclosure
Package would include an untrue statement of a material fact or would omit to state a
material fact necessary in order to make the statements therein, in the light of the
circumstances then prevailing, not misleading, the Company will notify promptly the
Representatives so that any use of the Disclosure Package may cease until it is amended
or supplemented.
(e) As soon as practicable, the Company will make generally available to its
security holders and to the Representatives an earnings statement or statements of the
Company which will satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158
under the 1933 Act.
(f) The
Securities have been duly authorized for listing, upon notice of
issuance,
on the New York Stock Exchange.
(g) The Company will cooperate with the Underwriters and use its reasonable best
efforts to permit the Securities to be eligible for clearance and settlement through
the facilities of DTC.
(h) The Company will furnish (i) to the Representatives and counsel for the
Underwriters signed copies of the Registration Statement (including exhibits thereto)
and the 1940 Act Notification, (ii) to each other Underwriter a copy of the
Registration Statement (without exhibits thereto) and (iii) so long as delivery of a
prospectus by an Underwriter or dealer may be required by the 1933 Act, as many copies
of each Preliminary Prospectus, the Prospectus and any supplement thereto as the
Representatives may reasonably request.
(i) The Company will arrange, if necessary, for the qualification of the
Securities for sale under the laws of such jurisdictions as the Representatives may
designate and will maintain such qualifications in effect so long as required for the
distribution of the Securities; provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action that would subject it to service
-17-
of process in suits, other than those arising out of the offering or sale of the
Securities, in any jurisdiction where it is not now so subject.
(j) The Company and the Adviser will not, without the prior written consent of
the Representatives, offer, sell, contract to sell, pledge, or otherwise dispose of (or
enter into any transaction which is designed to, or might reasonably be expected to,
result in the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Company and
the Adviser or any affiliate, as
such term is defined in Rule 501(b) under the 1933 Act (each, an “Affiliate”), of the
Company and
the Adviser or any person in privity with the Company or any Affiliate of the Company,
directly or indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or increase a
put equivalent position or liquidate or decrease a call equivalent position within the
meaning of Section 16 of the Exchange Act) any other shares of Common Stock or any
securities convertible into, or exercisable, or exchangeable for, shares of Common
Stock other than the Securities; or publicly announce an intention to effect any such
transaction for a period of 180 days following the Execution Time, provided,
however, that the Company may issue and sell Common Stock pursuant to the Dividend
Reinvestment Plan. In the event that either (x) during the last 17 days of the 180-day
period referred to above, the Company issues an earnings release or (y) prior to the
expiration of such 180-day period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of such 180-day period, the
restrictions described above shall continue to apply until the expiration of the 18-day
period beginning on the date of the earnings release.
(k) The Company will comply with all applicable securities and other applicable
laws, rules and regulations, including, without limitation, the Xxxxxxxx-Xxxxx Act, and
will use its best efforts to cause the Company’s directors and officers, in their
capacities as such, to comply with such laws, rules and regulations, including, without
limitation, the provisions of the Xxxxxxxx-Xxxxx Act.
(l) The Company and the Adviser will not take, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected to cause or
result in, under the Exchange Act or otherwise, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities.
(m) The Company agrees to apply the net proceeds from the sale of the Securities
in the manner set forth under the caption “Use of Proceeds” in the Disclosure Package
and the Prospectus.
(n) The Company agrees to pay the costs and expenses relating to the following
matters: (A) the preparation, printing or reproduction and filing
-18-
with the Commission of the Registration Statement (including financial statements
and exhibits thereto), each Preliminary Prospectus, the Prospectus and the 1940 Act
Notification, and each amendment or supplement to any of them; (B) the printing (or
reproduction) and delivery (including postage, air freight charges and charges for
counting and packaging) of such copies of the Registration Statement, each Preliminary
Prospectus, the Prospectus and all amendments or supplements to any of them, as may, in
each case, be reasonably requested for use in connection with the offering and sale of
the Securities; (C) the preparation, printing, authentication, issuance and delivery of
certificates for the Securities, including any stamp or transfer taxes in connection
with the original issuance and sale of the Securities; (D) the printing (or
reproduction) and delivery of this Agreement, any blue sky memorandum, dealer
agreements and all other agreements or documents printed (or reproduced) and delivered
in connection with the offering of the Securities; (E) the registration of the
Securities under the 1933 Act and the listing of the Securities on the NYSE; (F) any
registration or qualification of the Securities for offer and sale under the securities
or blue sky laws of the several states (including filing fees and the reasonable fees
and expenses of counsel for the Underwriters relating to such registration and
qualification and the preparation of the blue sky memorandum); (G) any filings required
to be made with FINRA (including filing fees and the reasonable fees and expenses of
counsel for the Underwriters relating to such filings); (H) the transportation and
other expenses incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Securities and the Underwriters’ sales
forces; (I) the fees and expenses of the Company’s accountants and the fees and
expenses of counsel (including local and special counsel) for the Company; and (J) all
other costs and expenses incident to the performance by the Company of its obligations
hereunder, but not including the fees, expenses, and costs of Sidley Austin
llp, counsel to the Underwriters, except as provided in Sections 6(n)(D), (F)
and (G) above and in Section 8 of this Agreement.
(o) The Company will direct the investment of the net proceeds of the offering of
the Securities in such a manner as to comply with the investment objectives, policies
and restrictions of the Company as described in the Prospectus.
(p) The Company will use its best efforts to qualify for and elect to be treated
as a regulated investment company under Subchapter M of the Code.
(q) The Company has established and shall maintain disclosure controls and
procedures (as defined in Rule 30a-3 of the 1940 Act Rules and Regulations), which: (i)
are designed to ensure that material information relating to the Company is made known
to the Company’s principal executive officer and its principal financial officer by
others within the Company,
-19-
particularly during the periods in which the periodic reports required under the
Exchange Act are being prepared; and (ii) are effective in all material respects to
perform the functions for which they were established.
(r) The Company and the Adviser will use their reasonable best efforts to perform
all of the agreements required of them by this Agreement and discharge all their
conditions to closing as set forth in this Agreement.
7. Conditions to the Obligation of the Underwriters. The obligations of the
Underwriters to purchase the Securities shall be subject to the accuracy of the representations and
warranties on the part of the Company and the Adviser contained herein as of the Execution Time,
the Time of Sale, the Closing Date and any settlement date pursuant to Section 4 hereof, to the
accuracy of the statements of the Company or the Adviser made in any certificates pursuant to the
provisions hereof, to the performance by the Company or the Adviser of its obligations hereunder
and to the following additional conditions (except to the extent that any such conditions may have
been waived in writing by the Representatives on or prior to such respective dates):
(a) The Registration Statement, including any amendments thereto prior to the
Execution Time, has become effective, the Prospectus containing the Rule 430A
Information and any supplement, will be filed in the manner and within the time period
required by Rule 497, and no stop order suspending the effectiveness of the
Registration Statement or any notice objecting to its use shall have been issued and no
proceedings for that purpose shall have been instituted or threatened, and any request
of the Commission for additional information (to be included in the Registration
Statement or Prospectus or otherwise) shall have been complied with in all material
respects.
(b) The Company shall have requested and caused Paul, Hastings, Xxxxxxxx & Xxxxxx
LLP, counsel for the Company, to have furnished to the Representatives their opinion,
dated the Closing Date and addressed to the Representatives, substantially to the
effect that:
(i) Based solely on a review of good standing certificates (or other evidence
described in the opinion) of the Secretary of State of California and the Secretary
of State of the State of Texas, the Company is duly qualified to do business as a
foreign corporation in the States of California and Texas and is in good standing
under the laws of each of the States of California and Texas;
(ii) The Company is duly registered with the Commission under the 1940 Act as
a closed-end, non-diversified management investment company, and all required
action has been taken by the Company under the Acts and the Rules and Regulations
in connection with the issuance and sale of the Securities to make the public
offering and consummate the sale of the Securities as contemplated by this
Agreement; the provisions of
-20-
the Charter and the Bylaws of the Company comply as to form in all material
respects with the requirements of the 1940 Act and the 1940 Act Rules and
Regulations; and the Company has not received any notice from the Commission
pursuant to Section 8(e) of the 1940 Act with respect to the 1940 Act Notification
or the Registration Statement;
(iii) This Agreement has been delivered by the Company and complies with the
provisions of the 1940 Act and the 1940 Act Rules and Regulations applicable to the
Company;
(iv) Each of the Company Agreements complies in all material respects with
all applicable provisions of the 1940 Act, the Advisers Act, the 1940 Act Rules and
Regulations, and the Advisers Act Rules and Regulations; and each of the Company
Agreements constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as rights to
indemnity and contribution may be limited by federal or state securities laws or
principles of public policy and subject to the qualification that the
enforceability of the Company’s obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors’ rights generally and by general equitable
principles, regardless whether enforcement is considered in a proceeding in equity
or at law;
(v) Neither the issuance and sale of the Securities, the execution, delivery
or performance of this Agreement or any of the Company Agreements by the Company,
nor the consummation by the Company of the transactions herein or therein
contemplated or the adoption of the Company’s Dividend Reinvestment Plan (i) to the
knowledge of such counsel, conflicts or will conflict with or constitutes or will
constitute a material breach of or a default under, any agreement, indenture, lease
or other instrument to which the Company is a party or by which it or any of its
properties may be bound, in each case, as such agreement, indenture, lease or other
instrument has been amended through the Closing Date and which has been filed as an
exhibit to the Registration Statement, or (ii) violates or will violate any
material statute, law, regulation or filing or judgment, injunction, order or
decree applicable to the Company or any of its properties or (iii) to the knowledge
of such counsel, will result in the creation or imposition of any material lien,
charge or encumbrance upon any property or assets of the Company pursuant to the
terms of any agreement or instrument to which it is a party or by which it may be
bound or to which any of the property or assets of the Company is subject;
(vi) To such counsel’s knowledge, there is no pending or threatened action,
suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or its property of a character required to
be disclosed in the
-21-
Registration Statement which is not adequately disclosed in the Disclosure
Package and the Prospectus, and there are no agreements, contracts, indentures,
leases or other instruments that are required to be described in the Registration
Statement or Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required by the Acts or the Rules and Regulations; and the
statements included in the Prospectus under the captions “Tax Matters” insofar as
they purport to constitute summaries of legal matters, agreements, documents or
proceedings discussed therein, accurately and fairly summarize such legal matters,
agreements, documents or proceedings described therein in all material respects;
(vii) No consent, approval, authorization, filing with or order of any
federal or California governmental agency or body or supervisory authority, or to
our knowledge, any California or United States federal court, is required in
connection with the transactions contemplated in this Agreement or the Company
Agreements, other than (a) those that have been made or obtained under the Acts,
(b) those under state securities or blue sky laws of any jurisdiction in connection
with the purchase and distribution of the Securities by the Underwriters in the
manner contemplated in this Agreement and in the Prospectus (as to which such
counsel expresses no opinion) and (c) such other approvals (specified herein) as
have been obtained;
(viii) The Securities are duly listed, and admitted and authorized for
trading, subject to official notice of issuance, on the NYSE;
(ix) Except as set forth in the Prospectus, no options, warrants or other
rights to purchase, agreements or other obligations to issue, or rights to convert
any obligations into or exchange any securities for, shares of capital stock of or
ownership interests in the Company are outstanding;
(x) No holders of securities of the Company have rights to the registration
of such securities under the Registration Statement; and
(xi) The Registration Statement has become effective under the 1933 Act
(which opinion is based solely on telephonic advice received by such counsel from
the Commission); any required filing of the Prospectus, and any supplements
thereto, pursuant to Rule 497 have been made in the manner and within the time
period required by Rule 497; to our knowledge, based solely on telephonic advice
received by such counsel from the Commission, no stop order suspending the
effectiveness of the Registration Statement has been issued, no proceedings for
that purpose have been instituted or threatened and the Registration Statement, the
Disclosure Package and the Prospectus (other than the financial statements and
other financial and statistical information contained therein, as to which such
counsel express no opinion) appear on their face to comply as
-22-
to form in all material respects with the applicable requirements of the Acts
and the Rules and Regulations.
Such counsel shall also state that, although such counsel has not independently verified and
is not passing upon and does not assume responsibility, explicitly or implicitly, for the accuracy,
completeness or fairness of the statements contained in the Registration Statement, the Disclosure
Package or the Prospectus (except as to the extent expressly stated in the opinion of such
counsel), such counsel has no reason to believe (i) that on the Effective Date or the date the
Registration Statement was last deemed amended the Registration Statement 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 not misleading, (ii) that the Prospectus as of its date
and on the Closing Date included or includes any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or (iii) that the Disclosure Package
as of the Time of Sale included any untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (in each case, other than the financial
statements and other financial information contained therein, as to which such counsel need express
no opinion).
In rendering such opinion, such counsel may rely (A) as to matters involving the application
of laws of any jurisdiction other than the State of California or the Federal laws of the United
States, to the extent they deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are satisfactory to counsel for
the Underwriters (which shall include as to matters involving the laws of the State of Maryland the
opinion of Xxxxxxx LLP referred to in paragraph (c) of this Section 7) and (B) as to matters of
fact, to the extent they deem proper, on certificates of responsible officers of the Company and
public officials and, where appropriate, a review of the Registration Statement, the Disclosure
Package, the Prospectus, the Charter and Bylaws. References to the Prospectus and the Disclosure
Package in this paragraph (b) shall also include any supplements thereto at the Closing Date.
(c) You shall have received on the Closing Date an opinion of Xxxxxxx LLP,
special Maryland counsel to the Company, dated the Closing Date and addressed to you,
as Representatives of the several Underwriters, substantially to the effect that:
(i) The Company 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 of Maryland;
(ii) The Company has the corporate power to own its properties and assets and
to conduct its business as a closed-end investment company;
-23-
(iii) The Company has the number of authorized shares of Common Stock
set forth in the Prospectus under the caption “Description of
Capital Stock — Capital Stock”;
(iv) The authorized stock of the Company conforms in all material respects as
to legal matters to the description thereof contained in the Prospectus under the
caption “Description of Capital Stock”;
(v) The shares of Common Stock issued and outstanding as of the date hereof
(immediately prior to the issuance of the Securities) (the “Outstanding Shares”)
have been duly authorized and are validly issued, fully paid and nonassessable;
(vi) The sale and issuance of the Securities have been duly authorized and,
when issued and delivered to and paid for by the Underwriters in accordance with
this Agreement, the resolutions adopted by the Board of Directors of
the Company, the Securities will be validly issued, fully
paid and nonassessable;
(vii) The form of certificate representing shares of Common Stock 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;
(viii) The Securities are not subject to preemptive or other similar rights
under the MGCL, the Charter or the Bylaws;
(ix) The Company has corporate power to execute and deliver this Agreement
and the Company Agreements and perform its obligations hereunder and thereunder.
The execution and delivery of this Agreement and each of the Company Agreements by
the Company have been duly authorized by all necessary corporate action of the
Company. Each of this Agreement and the Company Agreements have been duly executed
and, so far as is known to such counsel, delivered by the Company;
(x) The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not conflict with or constitute a breach of
the Charter or the Bylaws, or any Maryland law or regulation, or, so far as is
known to such counsel, any order of any Maryland governmental authority (other than
any law, regulation or order in connection with the securities laws of the State of
Maryland, as to which such counsel need not express an opinion); and
(xi) The statements in the Prospectus under the caption “Description of
Capital Stock” and “Risk Factors — Anti-Takeover Provisions,” insofar as such
statements purport to summarize certain provisions of Maryland law or the Charter
or the Bylaws, constitute a fair summary of such provisions and are accurate in all
material respects.
-24-
In rendering such opinion, Xxxxxxx LLP may rely, as to matters of fact, upon the
representations and warranties made by the Company and the Adviser herein and on certificates and
written statements of officers and employees of and accountants for the Company and the Adviser and
of public officials. Except as otherwise specifically provided herein, when giving their opinions
to their “knowledge”, Xxxxxxx LLP has relied solely upon an inquiry of the attorneys of that firm
who have worked on matters for the Company, on certificates or written statements of officers of
the Company and, where appropriate, a review of the Registration Statement, the Disclosure Package,
the Prospectus, exhibits to the Registration Statement, the Charter and Bylaws.
(d) You shall have received on the Closing Date an opinion of Xxxxx Xxxxxxxxxx,
Esq., General Counsel for the Adviser, dated the Closing Date and addressed to you, as
Representatives of the several Underwriters, substantially to the effect that:
(i) The Adviser has been duly organized and is validly existing as a limited
liability company in good standing under the laws of the State of Delaware, with
limited liability company power and authority to own, lease and operate its
properties or assets and to conduct its business as described in the Registration
Statement, the Disclosure Package and in the Prospectus, and is duly qualified to
do business as a foreign limited liability company and is in good standing under
the laws of each jurisdiction which requires such qualification;
(ii) The Adviser is duly registered as an investment adviser under the
Advisers Act, and is not prohibited by the Advisers Act, the rules and regulations
promulgated by the commission under the Advisers Act Rules and Regulations, the
1940 Act, or the 1940 Act Rules and Regulations from acting under the Advisory
Agreement as contemplated by the Prospectus;
(iii) The Adviser has full limited liability company power and authority to
enter into this Agreement, the Advisory Agreement and the Fee Agreements; and this
Agreement has been duly authorized, executed and delivered by the Adviser; this
Agreement, the Advisory Agreement and the Fee Agreements are each a valid and
legally binding agreement of the Adviser, enforceable against the Adviser in
accordance with its terms except as rights to indemnity and contribution hereunder
and thereunder may be limited by federal or state securities laws or principles of
public policy and subject to the qualification that the enforceability of the
Adviser’s obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to or
affecting creditors’ rights generally and by general equitable principles whether
enforcement is considered in a proceeding in equity or at law;
-25-
(iv) To the knowledge of such counsel, this Agreement, the Advisory Agreement
and the Fee Agreements comply in all material respects with all applicable
provisions of the Acts, the Advisers Act, the Rules and Regulations and the
Advisers Act Rules and Regulations;
(v) Neither the issuance and sale of the Securities, the execution or
delivery of this Agreement, the performance of this Agreement, the Advisory
Agreement or the Fee Agreements, nor the consummation by the Adviser of the
transactions contemplated thereby (a) conflicts or will conflict with or
constitutes or will constitute a breach of or default under the certificate of
formation or limited liability company agreement, or other organizational
documents, of the Adviser, (b) conflicts or will conflict with, or constitutes or
will constitute a breach of or default under any agreement, indenture, lease or
other instrument to which the Adviser is a party or by which it or any of its
properties may be bound or (c) to such counsel’s knowledge, violates or will
violate any statute, law, regulation or filing or judgment, injunction, order or
decree applicable to the Adviser or any of its properties or will result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Adviser pursuant to the terms of any agreement or instrument to which
it is a party or by which it may be bound or to which any of the property or assets
of the Adviser are subject, except in the case of clauses (a) and (b), such
conflicts, breaches and violations that in the aggregate would not reasonably be
expected to have a Material Adverse Effect;
(vi) To the knowledge of such counsel, the description of the Adviser and its
business in the Prospectus complies in all material respects with all requirements
of the Acts and the Rules and Regulations;
(vii) To the knowledge of such counsel, there is no pending or threatened
action, suit or proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Adviser or its property of a character
required to be disclosed in the Registration Statement which is not adequately
disclosed in the Disclosure Package and the Prospectus, and there are no
agreements, contracts, indentures, leases or other instruments that are required to
be described in the Registration Statement, the Disclosure Package or the
Prospectus, or to be filed as an exhibit thereto, which is not described or filed
as required by the Acts or the Rules and Regulations;
(viii) To the knowledge of such counsel, no consent, approval,
authorization, filing with or order of any court or governmental agency or body or
supervisory authority is required in connection with the transactions contemplated
in this Agreement, in the Advisory Agreement or in the Fee Agreements, other than
(a) those that have been made or obtained under the Acts,
(b) those with FINRA,
and (c) those under state securities or blue sky laws of any jurisdiction in
connection with the
-26-
purchase and distribution of the Securities by the Underwriters in the manner
contemplated in this Agreement and in the Prospectus (as to which such counsel need
not express an opinion); and
Such counsel shall also state that, although such counsel has not independently verified and
is not passing upon and does not assume responsibility, explicitly or implicitly, for the accuracy,
completeness or fairness of the statements contained in the Prospectus (except as to the extent
expressly stated in the opinion of such counsel), such counsel has no reason to believe that (a)
on the Effective Date or the date the Registration Statement was last deemed amended the
Registration Statement 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 not
misleading, (b) the Prospectus as of its date and on the Closing Date included or includes any
untrue statement of a material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which they were made, not
misleading, or (c) the Disclosure Package as of the Time of Sale included any untrue statement of a
material fact or omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading (in each
case, other than the financial statements and other financial and statistical information contained
therein or omitted therefrom, as to which such counsel need express no opinion).
In rendering such opinion, such counsel (A) may state that he expresses no opinion as to the
laws of any jurisdiction other than the laws of the State of California and the Delaware Limited
Liability Company Act and the federal laws of the United States of America, (B) may rely, as to
matters of fact, upon the representations and warranties made by the Company and the Adviser herein
and on certificates and written statements of officers and employees of and accountants for the
Company and the Adviser and of public officials, and (C) may state that he is a member of the Bar
of the State of California.
(e) The Representatives shall have received on the Closing Date an opinion of
Sidley Austin llp, counsel for the Underwriters, dated the Closing Date and
addressed to the Underwriters, with respect to the issuance and sale of the Securities,
the Registration Statement, the Disclosure Package, the Prospectus (together with any
supplement thereto) and other related matters as the Underwriters may reasonably
require. In rendering such opinion, Sidley Austin llp (A) may state that they
express no opinion as to the laws of any jurisdiction other than the laws of the State
of New York, the laws of the State of Maryland and the federal laws of the United
States of America, (B) may rely as to matters involving the laws of the State of
Maryland upon the opinion of Xxxxxxx LLP referred to in paragraph (c) of this Section 7
and (C) may rely, as to matters of fact, upon the representations and warranties made
by the Company and the Adviser herein and in certificates and written statements of
officers and employees of and accountants for the Company and the Adviser and of public
officials. Except as otherwise specifically provided herein, when giving their
opinions to their “knowledge”, Sidley Austin llp
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has relied solely upon (i) an inquiry of the attorneys of that firm who have
worked on matters involving the issuance of the Securities as contemplated by this
Agreement or otherwise devoted substantive attention to matters involving the Company,
(ii) certificates or written statements of officers of the Company and the Adviser,
(iii) where appropriate, a review of the Registration Statement, the Disclosure
Package, the Prospectus, exhibits to the Registration Statement, the Charter and Bylaws
and (iv) a review of the minute books of the Company and have made no other
investigation or inquiry.
(f) Each of the Company and the Adviser shall have furnished to the
Representatives a certificate, signed by the Chief Executive Officer and the principal
financial or accounting officer of each of the Company and by the manager of the
Adviser, as the case may be, dated the Closing Date, to the effect that the signers of
such certificate have carefully examined the Registration Statement, the Disclosure
Package, the Prospectus, any supplements or amendments to the Prospectus and this
Agreement and that:
(i) The representations and warranties of the Company and the Adviser in this
Agreement are true and correct as of the date hereof, as of the Time of Sale and on
and as of the Closing Date with the same effect as if made on the Closing Date and
the Company and the Adviser have complied with all the agreements and satisfied all
the conditions on its part that are respectively required to be performed or
satisfied by them at or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been instituted by the
Commission or, to the knowledge of the Company or the Adviser, threatened by the
Commission; and
(iii) Since the date of the most recent financial statements included or
incorporated in the Prospectus (with respect to the certificate of the Company) and
since the date of the Prospectus (with respect to the certificate of the Adviser),
there has been no Material Adverse Effect.
(g) The Company shall have requested and caused PricewaterhouseCoopers LLP to
have furnished to the Representatives, at the Execution Time and at the Closing Date,
letters, dated respectively as of the Execution Time and as of the Closing Date, in
form and substance heretofore approved by the Representatives.
(h) Subsequent to the Execution Time or, if earlier, the dates as of which
information is given in the Registration Statement (exclusive of any amendment
thereof), the Disclosure Package (exclusive of any supplement thereto) and the
Prospectus (exclusive of any supplement thereto), there shall not have been (i) any
material change specified in the letter or letters referred
-28-
to in paragraph (g) of this Section 7 delivered on the Closing Date from the
letter delivered at the Execution Time or (ii) any change in the condition (financial
or otherwise), prospects, earnings, business or properties of the Company and the
Adviser, whether or not arising from transactions in the ordinary course of business
except as set forth in or contemplated in the Disclosure Package and the Prospectus
(exclusive of any supplement thereto), the effect of which, in any case referred to in
clause (i) or (ii) above, is, in the sole judgment of the Representatives, so material
and adverse as to make it impractical or inadvisable to proceed with the offering or
delivery of the Securities as contemplated by the Registration Statement (exclusive of
any amendment thereof), the Disclosure Package and the Prospectus (exclusive of any
supplement thereto).
(i) On or prior to the Closing Date, the Adviser shall deliver to each of the
other parties to the Fee Agreements copies of the Fee Agreements, executed by the
Adviser, together with reproduced copies of such agreements executed by the Adviser for
each of the other parties thereto.
(j) The Securities shall have been listed and admitted and authorized for trading
on the NYSE, and satisfactory evidence of such actions shall have been provided to the
Representatives.
(k) FINRA has confirmed that it has not raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(l) On or prior to the Closing Date, the Representatives shall have received
lock-up agreements substantially in the form of Exhibit A hereto (the “Lock-up
Agreements”) from (i) the Company’s directors listed on Schedule II hereof and
(ii) certain officers of the Adviser and KACALP (including all of the officers of the
Company) listed on Schedule II hereof.
(m) Prior to the Closing Date, the Company and the Adviser shall have furnished
to the Representatives such further information, certificates and documents as the
Representatives may reasonably request.
(n) In the event that the Underwriters exercise their option provided in Section
3(b) hereof to purchase all or any portion of the Option Securities, the
representations and warranties of the Company and the Adviser contained herein and the
statements in any certificates furnished by the Company and the Adviser hereunder shall
be true and correct as of each settlement date and, at the relevant settlement date,
the Representatives shall have received:
(i) A certificate, dated such settlement date, signed by the Chief Executive
Officer and the principal financial or accounting officer of the Company and by the
manager of the Adviser confirming that the
-29-
certificate delivered at the Closing Date pursuant to Section 7(f) hereof
remains true and correct as of such settlement date.
(ii) The favorable opinions of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, counsel
to the Company, Xxxxxxx LLP, special Maryland counsel to the Company, and of Xxxxx
Xxxxxxxxxx, Esq., general counsel of the Adviser each in form and substance
satisfactory to the counsel for the Underwriters, dated such settlement date,
relating to the Option Securities to be purchased on such settlement and otherwise
to the same effect as the opinions required by Sections 7(b), 7(c) and 7(d) hereof,
respectively.
(iii) The favorable opinion of Sidley Austin llp, counsel for the
Underwriters, dated such settlement date, relating to the Option Securities to be
purchased on such settlement date and otherwise to the same effect as the opinion
required by Section 7(e) hereof.
(iv) A letter from PricewaterhouseCoopers LLP in form and substance
satisfactory to the Representatives and dated such settlement date, substantially
the same in form and substance as the letter furnished to the Representatives
pursuant to Section 7(g), except that the “specified date” in the letter furnished
pursuant to this paragraph shall be a date not more than three days prior to such
settlement date.
(v) Prior to each settlement date, the Company and the Adviser shall have
furnished to the Underwriters such further information, certificates and documents
as the Underwriters may reasonably request.
If any of the conditions specified in this Section 7 shall not have been fulfilled when and as
provided for 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
Representatives and counsel for the Underwriters, this Agreement and all obligations of the
Underwriters hereunder may be canceled at, or at any time prior to, the Closing Date by the
Underwriters (unless any such conditions have been waived in writing by the Representatives on or
prior to such respective dates). Notice of such cancellation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 7 shall be delivered at the office of
Sidley Austin llp, counsel for the Underwriters, at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, 00000, Attention: Xxxx X. XxxXxxxxx, Esq., on the Closing Date.
8. Reimbursement of Underwriters’ Expenses. If the sale of the Securities provided
for herein is not consummated because any condition to the obligations of the Underwriters set
forth in Section 7 hereof is not satisfied, because of any termination pursuant to Section 11
hereof or because of any refusal, inability or failure on the part of the Company or the Adviser to
perform any agreement herein or comply with any provision hereof other than by reason of a default
by the Underwriters, the Adviser will reimburse the Underwriters severally through
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UBS Securities LLC on demand for all out-of-pocket expenses (including reasonable and
documented fees and disbursements of counsel) that shall have been incurred by the Underwriters in
connection with the proposed purchase and sale of the Securities.
9. Indemnification and Contribution.
(a) The Company, KACALP and the Adviser, jointly and severally, agree to
indemnify and hold harmless each Underwriter, the directors, officers, employees and
agents of each Underwriter, each person who controls any Underwriter within the meaning
of either the 1933 Act or the Exchange Act and any “affiliate” (within the meaning of
Rule 405 under the 0000 Xxx) of any such Underwriter that sells Securities on behalf of
such Underwriter against any and all losses, claims, damages or liabilities, joint or
several (including reasonable costs of investigation), to which they or any of them may
become subject under the 1933 Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement for the Securities as originally filed or in any amendment
thereof (and including any post-effective amendment, any Rule 462(b) Registration
Statement and any Rule 430A Information deemed to be included or incorporated therein),
or in the Prospectus, any Preliminary Prospectus, or the Disclosure Package (or any
amendment or supplement to any of the foregoing), (ii) or arise out of or are based
upon the omission or alleged omission to state therein a 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, and subject to the provisions
hereof, agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however, that
the Company, KACALP and the Adviser will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to the
Company, KACALP and the Adviser by or on behalf of any Underwriter through the
Representatives specifically for inclusion therein, it being understood that the only
information furnished by or on behalf of any Underwriter consists of the information
described as such in the last sentence of Section 9(b). This indemnity agreement will
be in addition to any liability which the Company, KACALP and the Adviser may otherwise
have to the indemnified parties to the indemnified parties.
(b) Each Underwriter, severally and not jointly, agrees to indemnify and hold
harmless each of the Company, KACALP and the Adviser, each of its directors, each of
its officers who signs the Registration Statement, and each person who controls the
Company, KACALP or the Adviser within the
-31-
meaning of either the 1933 Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company, KACALP and the Adviser to each Underwriter, but
only with reference to written information relating to such Underwriter furnished to
the Company, KACALP or the Adviser by or on behalf of such Underwriter through the
Representatives specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any liability
which any Underwriter may otherwise have to the Company, KACALP and the Adviser. The
Company, KACALP and the Adviser acknowledge that the statements set forth in the last
paragraph of the cover page regarding delivery of the Securities and, under the heading
“Underwriting”, (i) the list of Underwriters and their respective participation in the
sale of the Securities, (ii) the sentences related to concessions and reallowances, and
(iii) the paragraphs related to stabilization, syndicate covering transactions and
penalty bids, in any Preliminary Prospectus and the Prospectus constitute the only
information furnished in writing by or on behalf of the several Underwriters for
inclusion in any Preliminary Prospectus or the Prospectus.
(c) Promptly after receipt by an indemnified party under this Section 9 of notice
of the commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 9, notify the
indemnifying party in writing of the commencement thereof; but the failure so to notify
the indemnifying party (i) will not relieve the indemnifying party from liability under
paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such
action and such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The indemnifying
party shall be entitled to appoint counsel of the indemnifying party’s choice at the
indemnifying party’s expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not thereafter be
responsible for the fees and expenses of any separate counsel retained by the
indemnified party or parties except as set forth below) and to control such action;
provided, however, that such counsel shall be satisfactory to the indemnified party.
Notwithstanding the indemnifying party’s election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall bear the
reasonable and documented fees, costs and expenses of such separate counsel if (A) the
use of counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (B) the actual or potential
defendants in, or targets of, any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably concluded that
there may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, (C) the
indemnifying party shall not
-32-
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of the
institution of such action or (D) the indemnifying party shall authorize the
indemnified party to employ separate counsel at the expense of the indemnifying party.
(d) In the event that the indemnity provided in paragraph (a) or (b) of this
Section 9 is unavailable to or insufficient to hold harmless an indemnified party for
any reason, the Company, KACALP, the Adviser and the Underwriters severally agree to
contribute to the aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating or defending same)
(collectively “Losses”) to which the Company, KACALP, the Adviser and one or more of
the Underwriters may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company, KACALP and the Adviser, on the one hand
(treated jointly for this purpose as one person), and by the Underwriters, on the
other, from the offering of the Securities; provided, however, that in no case shall
any Underwriter (except as may be provided in any agreement among underwriters relating
to the offer of the Securities) be responsible for any amount in excess of the
underwriting discount or commission applicable to the Securities purchased by such
Underwriter hereunder. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company, KACALP, the Adviser and the
Underwriters severally shall contribute in such proportion as is appropriate to reflect
not only such relative benefits but also the relative fault of the Company, KACALP and
the Adviser, on the one hand (treated jointly for this purpose as one person), and of
the Underwriters, on the other, in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable considerations.
Benefits received by the Company, KACALP, and the Adviser (treated jointly for this
purpose as one person) shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses) received by it, and benefits received by the
Underwriters shall be deemed to be equal to the total underwriting discounts and
commissions, in each case as set forth on the cover page of the Prospectus. Relative
fault of the parties shall be determined by reference to, among other things, whether
any untrue or any alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information provided by the
Company, KACALP and the Adviser, on the one hand (treated jointly for this purpose as
one person), or the Underwriters, on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company, KACALP, the Adviser and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this Section
9 were determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above. Notwithstanding
the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933
-33-
Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9, each person who controls
an Underwriter within the meaning of either the 1933 Act or the Exchange Act and each
director, officer, employee and agent of an Underwriter shall have the same rights to
contribution as such Underwriter, and each person who controls the Company, KACALP or
the Adviser within the meaning of either the 1933 Act or the Exchange Act, each officer
of the Company, KACALP and the Adviser who shall have signed the Registration Statement
and each director of the Company, KACALP and the Adviser shall have the same rights to
contribution as the Company, KACALP and the Adviser, subject in each case to the
applicable terms and conditions of this paragraph (d). The Underwriters’ obligations to
contribute pursuant to this Section 9 are several in proportion to the respective
number of Securities set forth opposite their names in Schedule I hereof (or
such numbers of Securities increased as set forth in Section 10 hereof) and not joint.
(e) No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action, suit or
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 (i) includes an unconditional release of such indemnified party from all
liability from claimants on claims that are the subject matter of such action, suit or
proceeding and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party. Subject to
the following sentence, an indemnifying party shall not be liable to an indemnified
party under this Section 9 for any settlement of any claim or action effected without
the prior written consent of such indemnifying party, which shall not be unreasonably
withheld. If at any time an indemnified party shall have requested an indemnifying
party to reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the nature
contemplated by this Section 9 effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being entered
into and (iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
(f) Any losses, claims, damages, liabilities or expenses for which an indemnified
party is entitled to indemnification or contribution under this Section 9 shall be paid
by the indemnifying party to the indemnified party as such losses, claims, damages,
liabilities or expenses are incurred. The indemnity and contribution agreements
contained in this Section 9 and the representations and warranties of the Company,
KACALP and the Adviser set forth in this Agreement shall remain operative and in full
force and effect, regardless of (i) any investigation made by or on behalf of any
Underwriter or
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any person controlling any Underwriter, the Company, KACALP, the Adviser or their
shareholders, trustees, directors, managers, members or officers or any person
controlling the Company, KACALP or the Adviser (control to be determined within the
meaning of the 1933 Act or the Exchange Act), (ii) acceptance of any Securities and
payment therefor hereunder and (iii) any termination or cancellation of this Agreement.
A successor to any Underwriter or to the Company, KACALP, the Adviser or their
shareholders, trustees, directors, managers, members or officers or any person
controlling any Underwriter, the Company, KACALP or the Adviser shall be entitled to
the benefits of the indemnity, contribution and reimbursement agreements contained in
this Section 9.
10. Default by an Underwriter. If any one or more Underwriters shall fail to
purchase and pay for any of the Securities agreed to be purchased by such Underwriter or
Underwriters hereunder and such failure to purchase shall constitute a default in the performance
of its or their obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the number of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate number of Securities
set forth opposite the names of all the remaining Underwriters or in such other proportion as UBS
Securities LLC may specify in accordance with the UBS Securities LLC Master Agreement Among
Underwriters) the Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate number of Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of the
aggregate number of Securities set forth in Schedule I hereto, the remaining Underwriters
shall have the right to purchase all, but shall not be under any obligation to purchase any, of the
Securities, and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter, the Company or the
Adviser. In the event of a default by any Underwriter as set forth in this Section 10, the Closing
Date shall be postponed for such period, not exceeding five Business Days, as the Underwriters
shall determine in order that the required changes in the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve any defaulting
Underwriter of its liability, if any, to the Company and any nondefaulting Underwriter for damages
occasioned by its default hereunder. The term “Underwriter” as used in this Agreement includes,
for all purposes of this Agreement, any party not listed in Schedule I hereto who, with
your approval and the approval of the Company, purchases Securities which a defaulting Underwriter
agreed, but failed or refused, to purchase.
11. Termination. This Agreement shall be subject to termination in the absolute
discretion of the Representatives, without liability on the part of the Underwriters to the Company
or the Adviser, by notice given to the Company or the Adviser prior to delivery of and payment for
the Securities, if at any time prior to such time (i) there has been, since the Execution Time, or
since the respective dates as of which information is given in the Disclosure Package and the
Prospectus, any material adverse change in the condition (financial or otherwise), prospects,
earnings, business or properties of the Company or the Adviser, whether or not arising in the
ordinary course of business, (ii) trading in the Company’s Common Stock or in any of its
affiliates’ (within the meaning of Rule 405 under the 0000 Xxx) common stock (including for this
purpose Xxxxx Xxxxxxxx Energy Development Company,
-35-
Xxxxx Xxxxxxxx Energy Total Return Fund, Inc. and Xxxxx Xxxxxxxx MLP Investment Company) shall
have been suspended by the Commission or the NYSE or trading in securities generally on the NYSE
shall have been suspended or limited or minimum prices shall have been established on the NYSE,
(iii) a banking moratorium shall have been declared either by federal or New York State
authorities, (iv) a material disruption has occurred in securities settlement or securities
clearance in the United States, or (v) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or other calamity or
crisis the effect of which on financial markets is such as to make it, in the sole judgment of the
Representatives, impractical or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Preliminary Prospectus or the Prospectus (exclusive of any
supplement thereto).
12. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of each of the Company, KACALP and
the Adviser or its officers and of the Underwriters set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or on behalf of any
Underwriter or the Company, KACALP or the Adviser or any of the officers, trustees, directors,
employees, agents or controlling persons referred to in Section 9 hereof, and will survive delivery
of and payment for the Securities. The provisions of Sections 8 and 9 hereof shall survive the
termination or cancellation of this Agreement.
13. No Fiduciary Duty. The Company hereby acknowledges and agrees that (a) the
purchase and sale of the Securities pursuant to this Agreement is an arm’s-length commercial
transaction between the Company, on the one hand, and the Underwriters and any affiliate through
which it may be acting, on the other, (b) the Underwriters are acting as principal and not as an
agent or fiduciary of the Company and (c) the Company’s engagement of the Underwriters in
connection with the offering and the process leading up to the offering is as independent
contractors and not in any other capacity. Furthermore, the Company agrees that it is solely
responsible for making its own judgments in connection with the offering (irrespective of whether
any of the Underwriters has advised or is currently advising the Company on related or other
matters). The Company agrees that it will not claim that the Underwriters have rendered advisory
services of any nature or respect, or owe an agency, fiduciary or similar duty to the Company, in
connection with such transaction or the process leading thereto.
14. Integration. This Agreement supersedes all prior agreements and understandings
(whether written or oral) between the Company, the Adviser and the Underwriters, or any of them,
with respect to the subject matter hereof.
15. Notices. All communications hereunder will be in writing and effective only on
receipt, and, if sent to the Representatives will be mailed, delivered or telefaxed to UBS
Securities LLC, 000 Xxxx Xxxxxx Xxx Xxxx, XX 00000, Attention: Equity Capital Markets Group
Syndicate (fax no.: (000) 000-0000); or, if sent to the Company, KACALP or the Adviser, will be
mailed, delivered or telefaxed to KA Fund Advisors, LLC General Counsel (fax no.: (000)
000-0000) and confirmed to it at c/o KA Fund Advisors, LLC, 1800 Avenue of the Stars, Xxxxxx Xxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx Xxxxxxxxxx, Esq.
-36-
16. Successors. This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and the officers, trustees, directors, employees,
agents and controlling persons referred to in Section 9 hereof, and no other person will have any
right or obligation hereunder.
17. Applicable Law; Waiver of Jury Trial. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to contracts made and to
be performed within the State of New York. The parties hereby waive any right to trial by jury in
any action, proceeding or counterclaim arising out of or relating to this Agreement or the
transactions contemplated hereby.
18. Counterparts. This Agreement may be signed in one or more counterparts, each of
which shall constitute an original and all of which together shall constitute one and the same
agreement.
19. Headings. The section headings used herein are for convenience only and shall not
affect the construction hereof.
20. Definitions. The terms which follow, when used in this Agreement, shall have the
meanings indicated.
“1933 Act” shall mean the Securities Act of 1933, as amended.
“1933 Act Rules and Regulations” shall mean the rules and regulations of the
Commission under the 1933 Act.
“1940 Act” shall mean the Investment Company Act of 1940, as amended.
“1940 Act Notification” shall mean a notification of registration of the Company as an
investment company under the 1940 Act on Form N-8A, as the 1940 Act Notification may be
amended from time to time.
“1940 Act Rules and Regulations” shall mean the rules and regulations of the
Commission under the 1940 Act.
“Acts” shall mean, collectively, the 1933 Act and the 1940 Act.
“Advisers Act” shall mean the Investment Advisers Act of 1940, as amended.
“Advisers Act Rules and Regulations” shall mean the rules and regulations of the
Commission under the Advisers Act.
“Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday
or a day on which banking institutions or trust companies are authorized or obligated by
law to close in New York City.
-37-
“Code” means the Internal Revenue Code of 1986, as amended, and the regulations and
published interpretations thereunder.
“Commission” shall mean the Securities and Exchange Commission.
“Disclosure Package” shall mean the Preliminary Prospectus, dated [-], 2010, relating
to the Securities together with the written information set forth in the Oral Pricing
Script attached hereto as Exhibit B.
“Effective Date” shall mean each date and time that the Registration Statement, any
post-effective amendment or amendments thereto and any Rule 462(b) Registration Statement
became or become effective.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Exchange Act Rules and Regulations” shall mean the rules and regulations of the
Commission under the Exchange Act.
“Execution Time” shall mean the date and time that this Agreement is executed and
delivered by the parties hereto.
“FCPA” means Foreign Corrupt Practices Act of 1977, as amended, and the rules and
regulations thereunder.
“FINRA” means the Financial Industry Regulatory Authority, Inc.
“Marketing
Brochure” means the marketing brochure for the Company,
initially filed with FINRA on October 12, 2010, as amended.
“NYSE” means the New York Stock Exchange, Inc.
“PCAOB” means the Public Company Accounting Oversight Board.
“Preliminary Prospectus” shall mean the preliminary prospectus (including the
statement of additional information incorporated by reference therein) dated [-], 2010, and
any preliminary prospectus (including the statement of additional information incorporated
by reference therein) included in the Registration Statement at the Effective Date that
omits Rule 430A Information.
“Prospectus”
shall mean the prospectus and any amendment or supplement thereto
(including the statement of additional information incorporated by
reference therein) relating to the Securities that is first filed pursuant to Rule 497 after the Execution
Time or, if no filing pursuant to Rule 497 is required, shall mean the form of final
prospectus (including the statement of additional information incorporated by
reference therein) relating to the Securities included in the Registration Statement at the
Effective Date.
“Registration Statement” shall mean the registration statement referred to in
Section 1(a) above, including exhibits and financial statements, as amended at the
Execution Time and, in the event any post-effective amendment thereto or any Rule 462(b)
Registration Statement becomes effective prior to the Closing Date, shall also mean such
registration statement as so amended or such Rule 462(b)
-38-
Registration Statement, as the case may be. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as provided by Rule 430A.
“Rule 158”, “Rule 405”, “Rule 430A”, “Rule 462”, “Rule 497” and “Rule 501(b)” refer to
such rules under the 1933 Act.
“Rule 430A Information” shall mean information with respect to the Securities and the
offering thereof permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A.
“Rule 462(b) Registration Statement” shall mean a registration statement and any
amendments thereto filed pursuant to Rule 462(b) relating to the offering covered by the
registration statement referred to in Section 1(a) hereof.
“Rules and Regulations” shall mean, collectively, the 1933 Act Rules and Regulations
and the 1940 Act Rules and Regulations.
“Time of Sale” shall mean [-] [AM/PM], Eastern Standard Time, on [-], 2010.
-39-
If the foregoing is in accordance with your understanding of our agreement, please sign and
return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall
represent a binding agreement among the Company, the Adviser, KACALP and the several Underwriters.
| Very truly yours, XXXXX XXXXXXXX MIDSTREAM/ENERGY FUND, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| KA FUND ADVISORS, LLC | ||||
| By: | Xxxxx Xxxxxxxx Capital Advisors,. L.P. its Manager | |||
| By: | ||||
| Name: | ||||
| Title: | ||||
| XXXXX XXXXXXXX CAPITAL ADVISORS, L.P. (Solely with respect to Section 2(b), Section 2(e), Section 7(l), Section 9 and Section 12) |
||||
| By: | Xxxxx Xxxxxxxx Investment Management, Inc., its General Partner | |||
| By: | ||||
| Name: | ||||
| Title: | ||||
The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.
UBS SECURITIES LLC
|
CITIGROUP GLOBAL MARKETS INC. | |||||
Title:
|
Title: | |||||
Title: |
||||||
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED |
XXXXXX XXXXXXX & CO. INCORPORATED | |||||
Title:
|
Title: | |||||
XXXXX FARGO SECURITIES, LLC |
||||||
Title: |
For themselves and the other several Underwriters named in Schedule I to the foregoing
Agreement.
SCHEDULE I
| Number of | ||||
| Name of Underwriters | Securities | |||
UBS Securities LLC |
||||
Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
|
||||
Citigroup Global Markets Inc. |
||||
Xxxxxx Xxxxxxx & Co. Incorporated |
||||
Xxxxx Fargo Securities, LLC |
||||
Ameriprise
Financial Services, Inc. |
||||
Xxxxxx X. Xxxxx
& Co. Incorporated |
||||
Barclays
Capital Inc. |
||||
RBC Capital
Markets Corporation |
||||
Xxxxxx,
Xxxxxxxx & Company, Incorporated |
||||
J.J.B.
Xxxxxxxx, X.X. Xxxxx, LLC |
||||
Xxxxxx
Xxxxxxxxxx Xxxxx LLC |
||||
Ladenburg
Xxxxxxxx & Co. Inc. |
||||
Xxxxxxx
Xxxxxxxx & Company LLC |
||||
Xxxxxx
Xxxxxx & Company, Inc. |
||||
Xxxxxxxxxx
Securities, Inc. |
||||
Total |
||||
SCHEDULE II
List of (i) directors of the Company, and (ii) certain officers of Adviser and KACALP (including
all of the officers of the Company) who will execute Lock-up Agreements.
EXHIBIT A
Form of Lock-up Agreement
Xxxxx Xxxxxxxx Midstream/Energy Fund, Inc.
Public Offering of Common Stock
Public Offering of Common Stock
[-], 2010
UBS Securities LLC
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Citigroup Global Markets Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxx Fargo Securities, LLC
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Citigroup Global Markets Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxx Fargo Securities, LLC
As Representatives of the several Underwriters
c/o UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed Underwriting
Agreement (the “Underwriting Agreement”), among Xxxxx Xxxxxxxx Midstream/Energy Fund, Inc.,
a Maryland corporation (the “Company”), Xxxxx Xxxxxxxx Capital Advisors, L.P., a California
limited partnership (“KACALP”) (solely with respect to Section 2(b), Section 2(e), Section
7(l), Section 9 and Section 12 thereof), KA Fund Advisors, LLC, a Delaware limited liability
company (the “Adviser”), and you as underwriters and as the representatives (the
“Representatives”) of each of the several underwriters named therein (collectively called
the “Underwriters”), relating to an underwritten public offering (the “Public Offering”) of
common stock, $0.001 par value (the “Common Stock”), of the Company.
In order to induce you to enter into the Underwriting Agreement, the undersigned will
not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly,
any shares of Common Stock or securities convertible into or exchangeable or exercisable for
any shares of Common Stock, enter into a transaction that would have the same effect, or
enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of
the economic consequences of ownership of Common Stock, whether any of these transactions
are to be settled by delivery of Common Stock or other securities, in cash or otherwise, or
publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter
into any transaction, swap, hedge or other arrangement, without, in each case, the prior
written consent of each of the Representatives for a period
Exhibit A-1
of [180 days] after the date of the Prospectus (as defined in the Underwriting
Agreement) (such period, the “Lock-Up Period”). The Representatives in their sole
discretion may release any of the securities subject to lock-up agreements at any time
without notice. In the event that either (x) during the last 17 days of the Lock-Up Period,
the Company issues an earnings release or (y) prior to the expiration of the Lock-Up Period,
the Company announces that the Company will release earnings results during the 16-day
period beginning on the last day of the Lock-Up Period, the restrictions described above
shall continue to apply until the expiration of the 18-day period beginning on the date of
the earnings release.
Notwithstanding the foregoing, the undersigned may transfer any shares of Common Stock
owned by him or her or any interest therein (i) for estate-planning purposes to (x) a trust
under which the distribution of the shares of Common Stock transferred thereto may be made
only to beneficiaries who are the undersigned, his or her spouse, his or her parents,
members of his or her immediate family or his or her lineal descendants (collectively,
“Permitted Family Members”), (y) a corporation the shareholders of which are only the
undersigned or Permitted Family Members or (z) a partnership the partners of which are only
the undersigned or Permitted Family Members or (ii) in case of the death of the undersigned,
by will or by the laws of intestate succession, to his or her executors, administrators,
testamentary trustees, legatees or beneficiaries (each such person to which a transfer is
permitted pursuant to clauses (i) and (ii) immediately above is hereinafter referred to as a
“Permitted Transferee”); provided, however, that in each such case, the shares of Common
Stock transferred shall be subject to all provisions of this agreement as though the
undersigned were still the holder of such shares of Common Stock; and provided further, that
the Permitted Transferee must execute and deliver to each of the Representatives an
agreement stating that the Permitted Transferee is receiving and holding such shares of
Common Stock in the same manner as the person making the transfer.
Exhibit A-2
If for any reason the Underwriting Agreement shall be terminated prior to the
Closing Date (as defined in the Underwriting Agreement), the agreement set forth
above shall likewise automatically be terminated.
Yours very truly,
Signature:
Print Name:
EXHIBIT B
Oral Pricing Script
Shares Sold by the Underwriters
Issuer:
|
Xxxxx Xxxxxxxx Midstream/Energy Fund, Inc. | |
Securities Offered:
|
[-] shares of Common Stock, par value $0.001 per share (excluding | |
| [-] additional shares if the Underwriters over-allotment option is exercised in full) | ||
Issue Price to Public:
|
$25.00 |
Exhibit B-1
