440 Shares
RMR Hospitality and Real Estate Fund
Series Th Auction Preferred Shares
($0.0001 Par Value)
FORM OF EQUITY UNDERWRITING AGREEMENT
September ___, 2005
RBC Xxxx Xxxxxxxx Inc.
c/o RBC Capital Markets Corporation
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Ladies and Gentlemen:
RMR Hospitality and Real Estate Fund, a Massachusetts business trust (the
"Company"), proposes to sell to you, the sole underwriter (the "Underwriter"),
an aggregate of 440 shares (the "Shares") of the Company's Series Th Auction
Preferred Shares, $0.0001 par value per share, with a liquidation preference of
$25,000 per share ("Auction Preferred"). The Company and the Company's
investment adviser, RMR Advisors, Inc., a Massachusetts corporation (the
"Advisor"), wish to confirm their agreement concerning the purchase of the
Shares from the Company. The Company has entered into an Investment Advisory
Agreement with the Advisor dated May 16, 2005 (the "Advisory Agreement"), an
Administration Agreement dated April 2, 2004 with the Advisor (the
"Administration Agreement"), a custody agreement with State Street Bank and
Trust Company dated April 2, 2004 (the "Custody Agreement"), and an Auction
Agency Agreement with The Bank of New York dated June 14, 2004 (the "Auction
Agency Agreement"). The Advisor has entered into a sub-administration agreement
with State Street Bank and Trust Company dated April 2, 2004 (the
"Sub-administration Agreement"). Collectively, the Advisory Agreement, the
Administration Agreement, the Custody Agreement, the Auction Agency Agreement
and the Sub-administration Agreement are referred to herein as the "Company
Agreements."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you as follows:
(a) A registration statement on Form N-2 (File Nos. 333-127331 and
811-21502) with respect to the Shares has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended (the
"1933 Act"), the Investment Company Act of 1940, as amended (the "1940 Act", and
collectively with the 1933 Act, the "Acts"), and the rules and regulations (the
"Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") promulgated under the 1933 Act and the
1940 Act and has been filed with the Commission. Copies of such registration
statement, including any amendments thereto, the preliminary prospectuses
(meeting the requirements of the Rules and Regulations) contained therein and
the exhibits, financial statements and schedules, as finally amended and
revised, have heretofore been delivered by the Company to you. Such registration
statement, as amended from time to time, together with any registration
statement filed by the Company pursuant to Rule 462(b) of the 1933 Act, is
herein referred to as the "Registration Statement," which shall be deemed to
include all information omitted therefrom in reliance upon Rule 430A of the
Rules and Regulations under the 1933 Act and contained in the Prospectus
referred to below, has become effective under the Acts and no post-effective
amendment to the Registration Statement has been filed as of the date of this
Agreement. "Prospectus" means the form of prospectus first filed with the
Commission pursuant to Rule 497(h) of the Rules and Regulations under the 1933
Act. Each preliminary prospectus or statement of additional information included
in the Registration Statement prior to the time it becomes effective is herein
referred to as a "Preliminary Prospectus."
(b) A notification of registration of the Company as an investment
company under the 1940 Act on Form N-8A (the "1940 Act Notification") has been
prepared by the Company in conformity with the 1940 Act and has been filed with
the Commission.
(c) The Commission has not issued an order preventing or suspending
the use of any Prospectus relating to the proposed offering of the Shares nor
instituted proceedings for that purpose. The Registration Statement contains,
and the Prospectus and any amendments or supplements thereto will contain, all
statements which are required to be stated therein by, and will conform with,
the requirements of the Acts and the Rules and Regulations. The Registration
Statement and any amendment thereto do not contain, and will not contain, any
untrue statement of a material fact and do not omit, and will not omit, to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus and any amendments and
supplements thereto do not contain, and will not contain, any untrue statement
of material fact; and do not omit, and will not omit, to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or warranties as to
information contained in or omitted from the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon, and in
conformity with, written information furnished to the Company by you
specifically for use in the preparation thereof. The 1940 Act Notification
complied in all material respects with the requirements of the 1940 Act and the
Rules and Regulations thereunder and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. There are no
contracts or documents that are required to be filed as exhibits to the
Registration Statement or described in the Registration Statement or the
Prospectus which are not so filed or described as required, and such contracts
and documents as are summarized in the Registration Statement or the Prospectus
are fairly summarized in all material respects.
(d) This Agreement and each of the Company Agreements (to which the
Company is a party) has been duly authorized, executed and delivered by the
Company, and constitute a valid, legal, and binding obligation of the Company,
enforceable in accordance with
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its terms, except as rights to indemnity hereunder may be limited by federal or
state securities laws and except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally, and subject to general principles of equity. The Company
has full power and authority to enter into this Agreement and each of the
Company Agreements (to which the Company is a party) and to authorize, issue and
sell the Shares as contemplated by this Agreement.
(e) The Company has been duly formed and is validly existing under
the laws of the Commonwealth of Massachusetts as a trust with transferable
shares of the type commonly called a Massachusetts business trust. The Agreement
and Declaration of Trust of the Company, as amended (the "Declaration of
Trust"), pursuant to which the Company was established, confers upon the
Trustees named therein, and their successors in trust, power and authority to
own or lease its properties and conduct its business as described in the
Registration Statement. The Company has no direct or indirect subsidiaries. The
Company is duly qualified to transact business and is in good standing in all
jurisdictions in which the conduct of its business requires such qualification;
except where the failure to be so qualified or to be in good standing would not
have a material adverse effect on the condition (financial or otherwise),
properties, assets, liabilities, rights, operations, earnings, business,
management or prospects of the Company, whether or not arising from transactions
in the ordinary course of business (a "Material Adverse Effect").
(f) The Shares to be issued and sold by the Company have been duly
authorized and when issued and paid for as contemplated herein will be validly
issued, fully paid and non-assessable (except as described in the Registration
Statement); and no preemptive rights of shareholders exist with respect to any
of the Shares or the issue and sale thereof. Neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated by
this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any capital stock of the
Company.
(g) The Company has authorized capital as set forth in the
Registration Statement and Prospectus. All of the Shares conform to the
description thereof contained in the Registration Statement. The form of
certificates, if any, for the Shares conforms to the relevant law of the
jurisdiction of the Company's organization. Immediately after the issuance and
sale of the Shares to you, no holder of any shares, securities convertible into
or exchangeable or exercisable for shares or options, warrants or other rights
to purchase shares or any other securities of the Company shall have any
existing or future right to acquire any preferred shares of the Company. No
holders of securities of the Company have rights to the registration of such
securities under the Registration Statement that have not been waived.
(h) The Company has not distributed and will not distribute any
prospectus or other offering material (including, without limitation, content on
the Company's website that may be deemed to be a prospectus or other offering
material) in connection with the offering and sale of the Shares other than any
Preliminary Prospectus or the Prospectus or other materials permitted by the
Acts to be distributed by the Company.
(i) The financial statements of the Company, together with related
notes and schedules as set forth or incorporated by reference in the
Registration Statement, present fairly
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the financial position and the results of operations and cash flows of the
Company, at the indicated dates and for the indicated periods. Such financial
statements and related schedules have been prepared in accordance with U.S.
generally accepted principles of accounting, consistently applied throughout the
periods involved, except as disclosed therein, and all adjustments necessary for
a fair presentation of results for such periods have been made. The summary
financial and statistical data included or incorporated by reference in the
Registration Statement presents fairly the information shown therein and such
data has been compiled on a basis consistent with the financial statements
presented therein and the books and records of the Company.
(j) The Company maintains, or causes its custodian, State Street Bank
and Trust Company, to maintain, a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; 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.
(k) Ernst & Young, LLP which has certified certain financial
statements of the Company and delivered its opinion with respect to the
audited financial statements and schedules included or incorporated by
reference in the Registration Statement and the Prospectus, are independent
public accountants with respect to the Company within the meaning of the Acts
and the Rules and Regulations.
(l) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company before any court or
administrative agency or otherwise which if determined adversely to the Company
might have a Material Adverse Effect or prevent the consummation of the
transactions contemplated hereby, except as set forth in the Registration
Statement and the Prospectus.
(m) The Company has good and marketable title to all of the assets
reflected in the financial statements (or as described in the Registration
Statement) hereinabove described, subject to no lien, mortgage, pledge, charge
or encumbrance of any kind except those reflected in such financial statements
(or as described in the Registration Statement) or which are not material in
amount.
(n) The Company has filed all federal, state, local and foreign tax
returns which have been required to be filed and has paid all taxes whether or
not indicated on such returns and all assessments received by it. All tax
liabilities have been adequately provided for in the financial statements of the
Company, and the Company does not know of any actual or proposed additional tax
assessments. 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 or sale by the Company of the Shares.
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(o) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, as it may be amended or
supplemented, there has not been any material adverse change or any development
involving a prospective change which has had or is reasonably likely to have a
Material Adverse Effect, whether or not occurring in the ordinary course of
business, and there has not been any material transaction entered into or any
material transaction that is probable of being entered into by the Company,
other than transactions in the ordinary course of business and changes and
transactions described in the Registration Statement and the Prospectus, as it
may be amended or supplemented. The Company has no material contingent
obligations that are not disclosed in the Company's financial statements in the
Registration Statement and the Prospectus.
(p) The Company is not, and with the giving of notice or lapse of
time or both, will not be, in violation of or in default under its Declaration
of Trust or Amended and Restated Bylaws, as amended (the "By-Laws") or under any
agreement, lease, contract, indenture or other instrument or obligation to which
it is a party or by which it, or any of its properties, is bound and which
default has had or is reasonably likely to have a Material Adverse Effect. The
execution and delivery of this Agreement and the consummation of the
transactions herein contemplated and the fulfillment of the terms hereof will
not (i) conflict with or otherwise violate any of the terms or provisions of the
Declaration of Trust or By-Laws of the Company or (ii) conflict with or result
in a breach of any of the terms or provisions of, or constitute a default under,
any contract, indenture, mortgage, deed of trust or other agreement or
instrument to which the Company is a party or any order, rule or regulation
applicable to the Company of any court or of any regulatory body or
administrative agency or other governmental body having jurisdiction, which
breach or default has had or is likely to have a Material Adverse Effect.
(q) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the NASD or such additional steps as may be necessary to qualify the Shares for
public offering by you under state securities or Blue Sky laws) has been
obtained or made and is in full force and effect.
(r) The Company has all material licenses, certifications, permits,
franchises, approvals, clearances and other regulatory authorizations
("Permits") from governmental authorities as are necessary to conduct its
businesses as currently conducted and to own, lease and operate its properties
in the manner described in the Prospectus. There is no claim, proceeding or
controversy, pending or, to the knowledge of the Company, threatened, involving
the status of or sanctions under any of the Permits. The Company has fulfilled
and performed all of its material obligations with respect to the Permits, and
no event has occurred which allows, or after notice or lapse of time would
allow, the revocation, termination, modification or other impairment of the
rights of the Company under such Permit. None of the Permits contains any
restriction that is materially burdensome on the Company.
(s) To the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's officers,
trustees or security holders, except as set forth in the Registration Statement
or as disclosed in writing to you.
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(t) Neither the Company, nor to the Company's knowledge, any of its
affiliates, has taken or may take, directly or indirectly, any action designed
to cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Shares to facilitate the sale or resale of the Shares.
(u) 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 at the time of filing any amendment or supplement thereto, conformed
in all material respects with all applicable provisions of the 1940 Act and the
Rules and Regulations under the 0000 Xxx. 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 (or any amendment or
supplement to either of them).
(v) The Company carries a fidelity bond sufficient to satisfy the
requirements of Rule 17g-1 under the 1940 Act.
(w) Other than as contemplated by this Agreement, the Company has not
incurred any liability for any finder's or broker's fee, or agent's commission
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(x) The Company has not sent or received any notice indicating the
termination of or intention to terminate any of the contracts or agreements
referred to or described in the Registration Statement or the Prospectus, or
filed as an exhibit to the Registration Statement, and no such termination has
been threatened by the Company or any other party to any such contract or
agreement.
(y) The Company owns, licenses, or otherwise has rights in all United
States and foreign patents, trademarks, service marks, tradenames, copyrights,
trade secrets and other proprietary rights necessary for the conduct of its
respective business as currently carried on and as proposed to be carried on as
described in the Registration Statement and the Prospectus (collectively and
together with any applications or registrations for the foregoing, the
"Intellectual Property"). Except as specifically described in the Registration
Statement or the Prospectus, (i) no third parties have obtained rights to any
such Intellectual Property from the Company, other than licenses granted in the
ordinary course and those that would not have a Material Adverse Effect; (ii) to
the Company's knowledge, there is no infringement or misappropriation by the
Company or third parties of any such Intellectual Property; (iii) there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim by others challenging the Company's rights in or to any such Intellectual
Property, and the Company is unaware of any facts which would form a basis for
any such claim; and (iv) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the validity,
enforceability, or scope of any such Intellectual Property, and the Company is
unaware of any facts which would form a basis for any such claim. None of the
technology employed by the Company has been obtained or, to the Company's
knowledge, is being used by the Company in violation of the rights of any person
or third party. The Company knows of no infringement or misappropriation by
others of Intellectual Property.
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(z) The conduct of business by the Company complies, and at all times
has complied, in all material respects with federal, state, local and foreign
laws, statutes, ordinances, rules, regulations, decrees, orders, Permits and
other similar items ("Laws") applicable to its business, including, without
limitation, licensing and certification Laws covering any aspect of the business
of the Company. The Company has not received any notification asserting, nor
does it have knowledge of, any present or past failure to comply with or
violation of any such Laws.
(aa) The information contained in the Registration Statement and the
Prospectus regarding the Company's expectations, plans and intentions, and any
other information that constitutes "forward-looking" information within the
meaning of the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), were made by the Company on a reasonable basis and
reflect the Company's good faith belief and/or estimate of the matters described
therein.
(bb) Any certificate signed by any officer of the Company and
delivered to you or your counsel in connection with the offering of the Shares
contemplated hereby shall be deemed a representation and warranty by the Company
to you and shall be deemed to be a part of this Section 1 and incorporated
herein by this reference.
(cc) The Company has taken all required action under the Acts and the
Rules and Regulations to make the public offering and consummate the sale of the
Shares as contemplated by this Agreement.
(dd) All advertising, sales literature, promotional materials or any
other materials or information (including "prospectus wrappers", "broker kits"
and any roadshow or investor presentations), whether in oral, printed or
electronic form, authorized, provided or prepared by the Company or the Advisor
in connection with the offering and sale of the Shares (collectively, the
"Marketing Materials") complied and comply in all material respects with the
applicable requirements of the 1933 Act, the 1940 Act, the Rules and Regulations
and the rules and interpretations of the NASD and if required to be filed with
the NASD under the NASD's conduct rules were so filed. No Marketing Materials
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Any advertisement or sales material authorized by the Company
for use in the public offering of the Shares pursuant to Rule 482 complied with
the requirements of Rule 482 of the Rules and Regulations under the 1933 Act.
(ee) This Agreement and each of the Company Agreements comply in all
material respects with all applicable provisions of the 1940 Act, the Rules and
Regulations thereunder, the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and the rules and regulations adopted by the Commission under
the Advisers Act (the "Advisers Act Rules and Regulations").
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(ff) The Company has elected to be treated as a regulated
investment company under Subchapter M of the Code effective for its taxable
year ending December 31, 2005, and intends and expects to qualify as a
regulated investment company under Subchapter M of the Code for the current
and all future taxable years. The Company will distribute timely all of its
investment company taxable income and net capital gain so as to avoid any
corporate income tax, and the Company has taken and will take all actions and
has omitted and will omit to take all actions as are necessary to be
consistent with the foregoing, including, but not limited to, with respect to
the investment of the proceeds of the offering of Shares contemplated by this
Agreement.
(gg) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), no trustee or
officer of the Company is an "interested person" (as defined in the 0000 Xxx) of
the Company or the Advisor or an "affiliated person" (as defined in the 0000
Xxx) of you.
2. REPRESENTATIONS AND WARRANTIES OF THE ADVISOR.
The Advisor represents and warrants to you as follows:
(a) The Advisor has been duly organized and is validly existing as a
corporation in good standing under the laws of the Commonwealth of
Massachusetts, with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement. The Advisor
is duly qualified to transact business and is in good standing in all
jurisdictions in which the conduct of its business requires such qualification,
except where the failure to be so qualified or to be in good standing would not
have a Material Adverse Effect.
(b) Each of the Company Agreements (to which the Advisor is a
party) has been duly authorized, executed and delivered by the Advisor, and
constitutes a valid, legal, and binding obligation of the Advisor,
enforceable in accordance with its terms, except as rights to indemnity
hereunder may be limited by federal or state securities laws and except as
such enforceability may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting the rights of creditors generally, and subject to
general principles of equity. The Advisor has full power and authority to
enter into this Agreement and each of the Company Agreements (to which the
Advisor is a party).
(c) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Advisor, threatened against the Advisor before any court or
administrative agency or otherwise which if determined adversely to the Advisor
might have a Material Adverse Effect or prevent the consummation of the
transactions contemplated hereby, except as set forth in the Registration
Statement and the Prospectus.
(d) Neither the Advisor, nor to the Advisor's knowledge, any of its
affiliates, has taken or may take, directly or indirectly, any action designed
to cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Shares to facilitate the sale or resale of the Shares.
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(e) The Advisor carries, or is covered by, insurance, including, at a
minimum, errors and omissions insurance, in such amounts and covering such risks
as is adequate for the conduct of its businesses and the value of its properties
and as is customary for companies engaged in similar industries. All policies of
insurance insuring the Advisor or its respective businesses, assets, employees,
officers and directors are in full force and effect, and the Advisor is in
compliance with the terms of such policies in all material respects. There are
no claims by the Advisor under any such policy or instrument as to which an
insurance company is denying liability or defending under a reservation of
rights clause.
(f) Other than as contemplated by this Agreement, the Advisor has not
incurred any liability for any finder's or broker's fee, or agent's commission
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(g) The Advisor is not, and with the giving of notice or lapse of
time or both, will not be, in violation of or in default under its Articles of
Organization ("Charter") or By-Laws or under any agreement, lease, contract,
indenture or other instrument or obligation to which it is a party or by which
it, or any of its properties, is bound and which default has had or is
reasonably likely to have a Material Adverse Effect. The execution and delivery
of this Agreement and the consummation of the transactions herein contemplated
and the fulfillment of the terms hereof will not (i) conflict with or otherwise
violate the terms and provisions of the Charter or By-Laws of the Advisor or
(ii) conflict with or result in a breach of any of the terms or provisions of,
or constitute a default under, any contract, indenture, mortgage, deed of trust
or other agreement or instrument to which the Advisor is a party or any order,
rule or regulation applicable to the Advisor of any court or of any regulatory
body or administrative agency or other governmental body having jurisdiction,
which breach or default has had or is reasonably likely to have a Material
Adverse Effect.
(h) The Advisor is duly registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act, the 1940 Act, the
Advisers Act Rules and Regulations or the Rules and Regulations under the 1940
Act from acting under the Company Agreements (to which such Advisor is a party)
as contemplated by the Registration Statement and the Prospectus (or any
amendment or supplement thereto).
(i) The Advisor has the financial resources available to it necessary
for the performance of its services and obligations as contemplated in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto) and under this Agreement and the Company Agreements (to which the
Advisor is a party).
(j) The description of the Advisor, Reit Management & Research LLC,
and their affiliates and their respective businesses, and the statements
attributable to the Advisor, in the Registration Statement and the Prospectus
(and any amendment or supplement thereto) or any Preliminary Prospectus complied
and comply in all material respects with the provisions of the Acts, the
Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations and did not and will not contain an untrue statement of a material
fact necessary to make the statements therein (in the case of a prospectus, in
light of the circumstances under which they were made) not misleading.
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(k) Since the date as of which information is given in the
Registration Statement and the Prospectus through the date hereof, and except as
may otherwise be disclosed in the Prospectus, there have been no transactions
entered into by the Advisor which are material to the Advisor other than in the
ordinary course of its business.
(l) This Agreement and each of the Company Agreements (to which the
Advisor is a party) comply in all material respects with all applicable
provisions of the 1940 Act, the Rules and Regulations under the 1940 Act, the
Advisers Act and the Advisers Act Rules and Regulations.
3. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Company
agrees to sell to you and you agree to purchase, at a price of $24,750 per
share, the Shares.
(b) Payment for the Shares to be sold hereunder is to be made in New
York Clearing House funds by federal (same day) funds against delivery of the
Shares to your account. Such payment and delivery are to be made through Full
Fast Delivery through the facilities of the Depository Trust Company, New York,
New York at 9:00 a.m., New York time, on the third business day after the date
of this Agreement or at such other time and date not later than five business
days thereafter as you and the Company shall agree upon, such time and date
being herein referred to as the "Closing Date." As used herein, "business day"
means a day on which the American Stock Exchange is open for trading and on
which banks in New York are open for business and are not permitted by law or
executive order to be closed. Shares will be delivered in such denominations and
in such registrations as you request in writing not later than the second full
business day prior to the Closing Date.
4. OFFERING BY THE UNDERWRITER.
It is understood that you are to make a public offering of the Shares as
soon as you deem it advisable to do so. The Shares are to be initially offered
to the public in the manner and at the public offering price set forth in the
Prospectus. You may from time to time thereafter change the public offering
price and other selling terms.
It is further understood that you will act as the sole underwriter in the
offering and sale of the Shares in accordance with this Agreement.
5. COVENANTS OF THE COMPANY AND THE ADVISOR.
(a) The Company covenants and agrees with you that:
(i) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A of
the Rules and Regulations under the 1933 Act is followed, to prepare and timely
file with the Commission under Rule 497 of the Rules and Regulations under the
1933 Act a Prospectus in a form approved by you containing information
previously omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A of the Rules and Regulations under the 1933 Act; (B) not
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file any amendment to the Registration Statement or supplement to the Prospectus
of which you shall not previously have been advised and furnished with a copy or
to which you shall have reasonably objected in writing or which is not in
compliance with the Rules and Regulations; and (C) file on a timely basis all
reports and any definitive proxy or information statements required to be filed
by the Company with the Commission subsequent to the date of the Prospectus and
prior to the termination of the offering of the Shares by you.
(ii) The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.
(iii) The Company will advise you promptly (A) when the
Registration Statement or any post-effective amendment thereto shall have become
effective; (B) of receipt of any comments from the Commission; (C) of any
request of the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information; and (D) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus or of the institution of any
proceedings for that purpose. The Company will use its best efforts to prevent
the issuance of any such stop order preventing or suspending the use of the
Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(iv) The Company will cooperate with you in endeavoring to
qualify the Shares for sale under the securities laws of such jurisdictions as
you may reasonably have designated in writing and will make such applications,
file such documents, and furnish such information as may be reasonably required
for that purpose, provided the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in any
jurisdiction where it is not now so qualified or required to file such a
consent. The Company will, from time to time, prepare and file such statements,
reports, and other documents, as are or may be required to continue such
qualifications in effect for so long a period as you may reasonably request for
distribution of the Shares.
(v) The Company will deliver to, or upon the order of, you,
from time to time, as many copies of any Preliminary Prospectus as you may
reasonably request. The Company will deliver to, or upon the order of, you
during the period when delivery of a Prospectus is required under the Acts, as
many copies of the Prospectus in final form, or as thereafter amended or
supplemented, as you may reasonably request. The Company will deliver to you
such number of copies of the Registration Statement (including such number of
copies of the exhibits filed therewith that may reasonably be requested) and of
all amendments thereto, as you may reasonably request.
(vi) The Company will comply with the Acts and the Rules and
Regulations, and the Exchange Act, and the rules and regulations of the
Commission thereunder, so as to permit the completion of the distribution of the
Shares as contemplated in this Agreement and the Prospectus. If during the
period in which a prospectus is required by law to be delivered by you or a
dealer, any event shall occur as a result of which, in the judgment of the
Company or in your reasonable opinion, it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein, in the light
of the circumstances existing at
11
the time the Prospectus is delivered to a purchaser, not misleading, or, if it
is necessary at any time to amend or supplement the Prospectus to comply with
any law, the Company promptly will prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not, in the
light of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with the law.
(vii) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an earning
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earning statement shall satisfy the requirements
of Section 11(a) of the 1933 Act and Rule 158 of the Rules and Regulations
thereunder and will advise you in writing when such statement has been so made
available.
(viii) Except for the Shares, no offering, sale, short sale or
other disposition of any (A) securities of the Company or (B) shares of Auction
Preferred or any other securities convertible into or exchangeable or
exercisable for shares of Auction Preferred or derivative of shares of Auction
Preferred (or agreement for such), will be made for a period of 90 days after
the date of this Agreement, directly or indirectly, by the Company otherwise
than hereunder or with your prior written consent.
(ix) The Company will use its best efforts to cause the
Shares, prior to the Closing Date, to be assigned ratings of "Aaa" by Xxxxx'x
Investors Service, Inc. ("Moody's") and "AAA" by Fitch Ratings, Inc. ("Fitch"),
respectively.
(x) The Company shall invest or otherwise use the net
proceeds of its sale of the Shares as described under the heading "Use of
Proceeds" in the Prospectus in such a manner as to comply with the investment
restrictions and the 1940 Act and shall report with the Commission with respect
to the sale of the Shares and the application of the proceeds therefrom as may
be required in accordance with Rule 463 under the 1933 Act.
(xi) The Company has elected to be treated as a regulated
investment company under Subchapter M of the Code effective for its taxable
year ending December 31, 2005, will distribute timely all of its investment
company taxable income and net capital gain so as to avoid any corporate
income tax, and will take all actions and omit to take all actions as are
necessary to qualify as a regulated investment company under Subchapter M of
the Code for the current and all future taxable years and to be consistent
otherwise with the foregoing, including, but not limited to, with respect to
the investment of the proceeds of the offering of Shares contemplated by this
Agreement.
(b) Except for the Shares, the Advisor covenants and agrees with you
that no offering, sale, short sale or other disposition of any (i) securities of
the Company or (ii) shares of Auction Preferred or other securities convertible
into or exchangeable or exercisable for shares of Auction Preferred or
derivative of shares of Auction Preferred (or agreement for such) will be made
for a period of 90 days after the date of this Agreement, directly or
indirectly, by the Advisor otherwise than hereunder or with your prior written
consent.
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6. COSTS AND EXPENSES.
The Company and the Advisor will pay all costs, expenses and fees incident
to the performance of the obligations of the Company under this Agreement,
including, without limiting the generality of the foregoing, the following:
accounting fees of the Company; the fees and disbursements of counsel for the
Company; the cost of printing and delivering to, or as requested by, you copies
of the Registration Statement, the Preliminary Prospectuses, and the Prospectus;
any fees charged by Fitch, Moody's or any other securities rating agency for
rating the Shares, the Blue Sky Survey and any supplements or amendments
thereto; the filing fees of the Commission; the filing fees and expenses
(including legal fees and disbursements) incident to securing any required
review by the NASD of the terms of the sale of the Shares, estimated not to
exceed $25,000; the fees and expenses of the Auction Agent under the Auction
Agency Agreement; and the expenses, including the fees and disbursements of
counsel for you up to a maximum amount of $3,000, incurred in connection with
the qualification of the Shares under state securities or Blue Sky laws.
The Company shall not, however, be required to pay for any of your expenses
(other than those related to qualification under NASD regulation and state
securities or Blue Sky laws) except that, if this Agreement shall not be
consummated because the conditions in Section 7 hereof are not satisfied, or
because this Agreement is terminated by you pursuant to Section 11 hereof, or by
reason of any failure, refusal or inability on the part of the Company to
perform any undertaking or satisfy any condition of this Agreement or to comply
with any of the terms hereof on its part to be performed, unless such failure to
satisfy said condition or to comply with said terms be due to your default or
omission, then the Company shall reimburse you for reasonable out-of-pocket
expenses, including all fees and disbursements of counsel, reasonably incurred
in connection with investigating, marketing and proposing to market the Shares
or in contemplation of performing your obligations hereunder; but the Company
shall not in any event be liable to you for damages on account of loss of
anticipated profits from the sale by you of the Shares.
7. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITER.
Your obligation to purchase the Shares on the Closing Date is subject to
the accuracy, as of the Closing Date, of the representations and warranties of
the Company and the Advisor contained herein, and to the performance by the
Company of its covenants and obligations hereunder and to the following
additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 497
and Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to you and complied with to
your reasonable satisfaction. No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been issued and
no proceedings for that purpose shall have been taken or, to the knowledge of
the Company, shall be contemplated by the Commission and no injunction,
restraining order, or order of any nature by a federal or state court of
competent jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance of the Shares.
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(b) You shall have received on the Closing Date the opinion of
Xxxxxxxx & Worcester LLP, counsel for the Company, dated the Closing Date
addressed to you (and stating that it may be relied upon by Xxxxxxx Procter LLP,
your counsel) to the effect that:
(i) The Company has been duly formed and is validly existing
under the laws of the Commonwealth of Massachusetts as a trust with transferable
shares of the type commonly called a Massachusetts business trust. The
Declaration of Trust confers upon the Trustees named therein, and their
successors in trust, power and authority to own or lease its properties and
conduct its business as described in the Registration Statement; and the Company
is duly qualified to transact business in all jurisdictions in which the conduct
of its business requires such qualification, or in which the failure to qualify
would have a Material Adverse Effect.
(ii) The Company has authorized and outstanding common shares
of beneficial interest of the Company (the "Common Shares") as set forth under
the caption "Description of Common Shares" in the Prospectus; the outstanding
Common Shares have been duly authorized and validly issued and are fully paid
and non-assessable (except as set forth in the Registration Statement). The
Company has authorized preferred shares as set forth under the caption
"Description of New Series Th Preferred Shares" in the Prospectus. All of the
Shares conform in all material respects to the descriptions thereof contained in
the Prospectus; the Shares to be sold by the Company pursuant to this Agreement
have been duly authorized and will be validly issued, fully paid and
non-assessable (except as set forth in the Registration Statement) when issued
and paid for as contemplated by this Agreement; and no preemptive rights of
shareholders exist with respect to any of the Shares or the issue or sale
thereof pursuant to the Company's Declaration of Trust, its By-Laws or any other
agreement or instrument known to such counsel. The Company has no "senior
security" (as such term is defined in Section 18 of the 0000 Xxx) outstanding,
except as otherwise disclosed in the Registration Statement.
(iii) Except as described in or contemplated by the Prospectus,
to the knowledge of such counsel, there are no outstanding securities of the
Company convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and there are no
outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and except as described in the
Prospectus, to the knowledge of such counsel, no holder of any securities of the
Company or any other person has the right, contractual or otherwise, which has
not been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any of the
Shares or the right to have any other securities of the Company included in the
Registration Statement or the right, as a result of the filing of the
Registration Statement, to require registration under the Acts of any other
securities of the Company.
(iv) The Registration Statement has become effective under the
Acts and, to the knowledge of such counsel, no stop order proceedings with
respect thereto have been instituted or are pending or threatened under the
Acts.
14
(v) The Registration Statement, at the time it became
effective under the Acts, the Prospectus, as of its date, and each amendment or
supplement thereto, as of its respective date, complied as to form in all
material respects with the requirements of the Acts and the applicable rules and
regulations thereunder (except that such counsel need express no opinion as to
the financial statements, related schedules and other financial data included or
incorporated by reference therein).
(vi) The statements under the captions "Management of the
Fund - Advisory Agreement," "Management of the Fund - Administration Agreement,"
"Description of New Series Th Preferred Shares," "The Auction," "Description of
Common Shares" and "Certain Provisions in the Declaration of Trust" in the
Prospectus, insofar as such statements constitute a summary of documents
referred to therein or matters of law, fairly summarize in all material respects
the information called for with respect to such documents and matters by Form
N-2.
(vii) The statements made in the Registration Statement and the
Prospectus (and any amendment or supplement thereto through the date of the
opinion) under the caption "Tax Matters" have been reviewed by such counsel and
to the extent they describe or summarize tax laws, legal conclusions, doctrines
or practices of the United States, present a fair and accurate description or
summary thereof as of the date of the opinion.
(viii) This Agreement and each Company Agreement (to which the
Company is a party) has been duly authorized, executed and delivered by the
Company and complies in all material respects with all applicable provisions of
the 1940 Act, the Advisers Act, the Rules and Regulations under the 1940 Act and
the Advisers Act Rules and Regulations.
(ix) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or described in
the Registration Statement or the Prospectus which are not so filed or described
as required, and such contracts and documents as are summarized in the
Registration Statement or the Prospectus are fairly summarized in all material
respects.
(x) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company except as set forth in the
Prospectus.
(xi) The execution and delivery of this Agreement and the
Company Agreements (to which the Company is a party) and the consummation of the
transactions herein contemplated do not and will not conflict with or result in
a breach of any of the terms or provisions of, or constitute a default under,
the Declaration of Trust or By-Laws of the Company, or any agreement or
instrument known to such counsel to which the Company is a party or by which the
Company may be bound.
(xii) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery of
this Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by
15
state securities and Blue Sky laws as to which such counsel need express no
opinion) except such as have been obtained or made, specifying the same.
(xiii) 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 at the time of filing any amendment or supplement thereto, conformed
in all material respects with all applicable provisions of the 1940 Act and the
Rules and Regulations thereunder and, to such counsel's knowledge, 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
(or any amendment or supplement to either of them).
The opinion in paragraph 7(b)(ii) will be subject to the qualification
that the shareholders of a Massachusetts business trust may, under some
circumstances, be subject to assessment at the insistence of creditors to pay
the obligations of such trust in the event that its assets are insufficient for
the purpose.
(c) You shall have received on the Closing Date the opinion of
Xxxxxxxx & Worcester LLP, counsel for the Advisor, dated the Closing Date
addressed to you (and stating that it may be relied upon by Xxxxxxx Procter LLP,
your counsel) to the effect that:
(i) The Advisor has been duly organized and is validly
existing as a corporation in good standing under the laws of the Commonwealth of
Massachusetts with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement; and the
Advisor is duly qualified to transact business in all jurisdictions in which the
conduct of its business requires such qualification.
(ii) The Advisor is duly registered as an investment adviser
under the Advisers Act and is not prohibited by the Advisers Act, the 1940 Act,
the Advisers Act Rules and Regulations or the Rules and Regulations under the
1940 Act from acting under the Company Agreements (to which the Advisor is a
party) as contemplated by the Registration Statement and the Prospectus (or any
amendment or supplement thereto).
(iii) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Advisor except as set forth in the
Prospectus.
(iv) The execution and delivery of this Agreement and the
Company Agreements (to which the Advisor is a party) and the consummation of the
transactions contemplated herein and therein do not and will not conflict with
or result in a breach of any of the terms or provisions of, or constitute a
default under, the Charter or By-Laws of the Advisor, or any agreement or
instrument known to such counsel to which the Advisor is a party or by which the
Advisor may be bound.
(v) This Agreement and each Company Agreement (to which the
Advisor is a party) has been duly authorized, executed and delivered by the
Advisor and complies in all material respects with all applicable provisions of
the 1940 Act, the Advisers Act, the Rules and Regulations under the 1940 Act and
the Advisers Act Rules and Regulations.
16
(vi) The description of the Advisor and its business, and the
statements attributable to the Advisor, in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) complied and comply in all
material respects with the provisions of the Acts, the Advisers Act, the Rules
and Regulations and the Advisers Act Rules and Regulations.
In addition to the matters set forth in Subsection (b) and (c) of this
Section, the opinions delivered pursuant to Subsection (b) and (c) of this
Section shall also include a statement to the effect that nothing has come to
the attention of such counsel which leads them to believe that (i) the
Registration Statement, at the time it became effective under the Acts (but
after giving effect to any modifications incorporated therein pursuant to Rule
430A under the 0000 Xxx) and as of the Closing Date contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(ii) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements, in the light of the circumstances
under which they are made, not misleading (except that such counsel need express
no view as to financial statements, related schedules and other financial data
included or incorporated by reference therein). With respect to such statement,
Xxxxxxxx & Worcester LLP may state that their belief is based upon the
procedures set forth therein, but is without independent check and verification.
(d) You shall have received from Xxxxxxx Procter LLP, your counsel,
an opinion dated the Closing Date with respect to the formation of the Company,
the validity of the Shares and other related matters as you reasonably may
request, and such counsel shall have received such papers and information as
they request to enable them to pass upon such matters.
(e) You shall have received, on each of the date hereof and the
Closing Date, a letter dated the date hereof or the Closing Date, as the case
may be, in form and substance satisfactory to you, of Ernst & Young, LLP
confirming that they are independent public accountants within the meaning of
the Acts and the applicable published Rules and Regulations thereunder and
stating that in their opinion the financial statements and schedules examined
by them and included or incorporated by reference in the Registration
Statement comply in form in all material respects with the applicable
accounting requirements of the Acts and the related published Rules and
Regulations; and containing such other statements and information as is
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial and statistical
information contained or incorporated by reference in the Registration
Statement and the Prospectus.
(f) You shall have received on the Closing Date a certificate or
certificates of the Company's President and Treasurer to the effect that, as of
the Closing Date, each of them severally represents as follows:
(i) The Registration Statement has become effective under the
1933 Act and 1940 Act and no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for such purpose have
been taken or are, to his knowledge, contemplated by the Commission;
17
(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date;
(iii) All filings required to have been made pursuant to
Rules 497 or 430A under the 1933 Act have been made;
(iv) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration Statement
were true and correct, and such Registration Statement and Prospectus did not
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment; and
(v) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been any
material adverse change or any development involving a prospective change, which
has had or is reasonably likely to have a Material Adverse Effect, whether or
not arising in the ordinary course of business.
(g) You shall have received on the Closing Date a certificate or
certificates of the Advisor's President and Treasurer to the effect that, as of
the Closing Date, each of them severally represents as follows:
(i) The representations and warranties of the Advisor
contained in Section 2 hereof are true and correct as of the Closing Date;
(ii) After giving effect to the issuance of the Shares, the
Company will have asset coverage of at least 200% as calculated in accordance
with Section 18 of the 1940 Act;
(iii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration Statement
were true and correct, and such Registration Statement and Prospectus did not
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment; and
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been any
material adverse change or any development involving a prospective change, which
has had or is reasonably likely to have a Material Adverse Effect, whether or
not arising in the ordinary course of business.
(h) The Company shall have furnished to you such further certificates
and documents confirming the representations and warranties, covenants and
conditions contained herein and related matters as you may reasonably have
requested.
18
(i) The Shares shall have been rated "Aaa" by Moody's and "AAA" by
Fitch.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects satisfactory to you and to Xxxxxxx Procter LLP, your counsel.
If any of the conditions hereinabove provided for in this Section shall not
have been fulfilled when and as required by this Agreement to be fulfilled, your
obligations hereunder may be terminated by you by notifying the Company of such
termination in writing on or prior to the Closing Date.
In such event, the Company and you shall not be under any obligation to
each other (except to the extent provided in Sections 6 and 9 hereof).
8. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion of the
Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date no stop order suspending the
effectiveness of the Registration Statement shall have been issued and in effect
or proceedings therefor initiated or threatened.
9. INDEMNIFICATION.
(a) The Company and the Advisor, jointly and severally, agree:
(i) to indemnify and hold harmless you and each person, if
any, who controls you within the meaning of the 1933 Act, against any losses,
claims, damages or liabilities to which you or any such controlling person may
become subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (A) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, (B) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(C) any alleged act or failure to act by you in connection with, or relating in
any manner to, the Shares or the offering contemplated hereby, and which is
included as part of or referred to in any loss, claim, damage, liability or
action arising out of or based upon matters covered by clause (A) or (B) above
(provided, however, that neither the Company nor the Advisor shall be liable
under this clause (C) to the extent that it is determined in a final judgment by
a court of competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act undertaken or
omitted to be taken by you through your gross negligence or willful misconduct);
provided, however, that neither the Company nor the Advisor will be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement,
or omission or alleged omission made in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or such amendment or supplement, in
reliance upon and in conformity with written information furnished to the
Company by or through you specifically for use in the preparation thereof.
19
(ii) to reimburse you and each such controlling person upon
demand for any legal or other out-of-pocket expenses reasonably incurred by you
or such controlling person in connection with investigating or defending any
such loss, claim, damage or liability, action or proceeding or in responding to
a subpoena or governmental inquiry related to the offering of the Shares,
whether or not you or such controlling person is a party to any action or
proceeding. In the event that it is finally judicially determined that you are
not entitled to receive payments for legal and other expenses pursuant to this
subparagraph, you will promptly return all sums that had been advanced pursuant
hereto.
(b) You agree to indemnify and hold harmless the Company, each of its
trustees, each of its officers who have signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of the 1933
Act, against any losses, claims, damages or liabilities to which the Company or
any such trustee, officer, or controlling person may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or (ii) the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made; and will reimburse any legal or other
expenses reasonably incurred by the Company or any such trustee, officer, or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding; PROVIDED, HOWEVER, that you will
be liable in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission has been
made in the Registration Statement, any Preliminary Prospectus, the Prospectus
or such amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through you specifically for use in
the preparation thereof.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
9(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Subsection if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 9(a) or (b). In case any
such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 30 days of presentation) the
fees and expenses of the counsel retained by the indemnified party in the event
(i) the indemnifying party and the indemnified party shall have mutually agreed
to the
20
retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action.
It is understood that the indemnifying party shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing by you in the case
of parties indemnified pursuant to Section 9(a) and by the Company in the case
of parties indemnified pursuant to Section 9(b). The indemnifying party shall
not be liable for any settlement of any proceeding effected without its written
consent but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment. In
addition, the indemnifying party will not, without the prior written consent of
the indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action or
proceeding.
(d) If the indemnification provided for in this Section is
unavailable to or insufficient to hold harmless an indemnified party under
Section 9(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Advisor (treated as one person for this purpose) on the one hand and you on the
other from the offering of the Shares. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company or the Advisor on
the one hand and you on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Advisor
(treated as one person for this purpose) on the one hand and you on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by you, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Advisor on
the one hand or you on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
21
The Company, the Advisor and you agree that it would not be just and
equitable if contributions pursuant to this Subsection were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Subsection. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to above in this Subsection shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Subsection, (i) you shall not be required to contribute any
amount in excess of the underwriting discounts and commissions applicable to the
Shares purchased by you and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 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 and the representations and
warranties of the Company and the Advisor 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 you or any person controlling you, the
Company, its trustees or officers or any persons controlling the Company, or the
Advisor, or its directors or officers or any persons controlling the Advisor,
(ii) acceptance of any Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to you, or to the Company or the
Advisor, their respective directors or officers, or any person controlling the
Company or the Advisor, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section.
22
10. NOTICES.
All communications hereunder shall be in writing and, except as otherwise
provided herein, will be mailed, delivered, or faxed and confirmed as follows:
if to you, to RBC Xxxx Xxxxxxxx Inc.
c/o RBC Capital Markets Corporation
Xxx Xxxxxxx Xxxxx
000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxx
Syndicate Director
Fax: (000) 000-0000
if to the Company, to RMR Hospitality and Real Estate Fund
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. X'Xxxxx
President
Fax: (000) 000-0000
if to the Advisor, to RMR Advisors, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. X'Xxxxx
President
Fax: (000) 000-0000
11. TERMINATION.
This Agreement may be terminated by you by notice to the Company at any
time prior to the Closing Date if any of the following has occurred: (i) since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change or any development
involving a prospective change, which has had or is reasonably likely to have a
Material Adverse Effect; (ii) any outbreak or escalation of hostilities or
declaration of war or national emergency or other national or international
calamity or crisis or change in economic or political conditions if the effect
of such outbreak, escalation, declaration, emergency, calamity, crisis or change
in the financial markets of the United States would, in your reasonable
judgment, make it impracticable or inadvisable to market the Shares or to
enforce contracts for the sale of the Shares; (iii) suspension of trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange or limitation on prices (other than limitations on hours or numbers of
days of trading) for securities on either such Exchange; (iv) the enactment,
publication, decree or other promulgation of any statute, regulation, rule or
order of any court or other governmental authority which in your opinion
materially and adversely affects or may materially and adversely affect the
business or operations of the Company; (v) declaration of a banking moratorium
by United States or New York State authorities; (vi) the suspension of trading
of the Company's common shares of beneficial
23
interest, par value $.001 per share, by the American Stock Exchange, the
Commission, or any other governmental authority; (vii) the taking of any action
by any governmental body or agency in respect of its monetary or fiscal affairs
which in your reasonable opinion has a material adverse effect on the securities
markets in the United States; or (viii) the failure of the conditions set forth
in Section 7 of this Agreement to be fulfilled when required to be fulfilled.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the Company,
the Advisor and you and the respective successors, executors, administrators,
heirs and assigns, and the officers, directors and controlling persons referred
to herein, and no other person will have any right or obligation hereunder. No
purchaser of any of the Shares from you shall be deemed a successor or assign
merely because of such purchase.
13. INFORMATION PROVIDED BY THE UNDERWRITER.
The Company and you acknowledge and agree that the only information
furnished or to be furnished by you to the Company for inclusion in any
Prospectus or the Registration Statement consists of the information contained
in the first and third sentences of the first paragraph under the heading
"Commissions and Discounts" under the caption "Underwriting" in the Prospectus.
14. NO FIDUCIARY DUTY.
Notwithstanding any preexisting relationship, advisory or otherwise,
between the parties or any oral representations or assurances previously or
subsequently made by the Underwriter, the Company acknowledges and agrees
that: (a) nothing herein shall create a fiduciary or agency relationship
between the Company and the Underwriter in connection with any aspect of the
offering of securities hereunder; (b) the Underwriter is not acting as an
advisor, expert or otherwise, to the Company in connection with this
offering, the sale of the Shares or any other services the Underwriter may be
deemed to be providing hereunder, including, without limitation, with respect
to the public offering price of the Shares; (c) the relationship between the
Company and the Underwriter is entirely and solely commercial, based on
arms-length negotiations; (d) any duties and obligations that the Underwriter
may have to the Company shall be limited to those duties and obligations
specifically stated herein; (e) notwithstanding anything in this Underwriting
Agreement to the contrary, the Company acknowledges that the Underwriter may
have financial interest in the success of the offering of the Shares that is
not limited to the difference between the price to the public and the
purchase price paid to the Company by the Underwriter for the Shares and the
Underwriter has no obligation to disclose, or account to the Company for, any
of such additional financial interests; and (f) the Underwriter has advised
the Company that the Underwriter has agreements and understandings with, and
owes duties and obligations to, third parties, including purchasers and
potential purchasers of the securities, that may create or exacerbate actual,
potential or apparent conflicts of interest between the Company and the
Underwriter.
24
15. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements contained in
this Agreement and the representations, warranties and covenants in this
Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of you
or controlling person thereof, or by or on behalf of the Company or the Advisor
or any of their respective directors or officers, and (c) delivery of and
payment for the Shares under this Agreement.
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof.
This Agreement may only be amended or modified in writing, signed by all of
the parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
[REMAINDER OF PAGE INTENTIONALLY BLANK.]
25
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Advisor and
you in accordance with its terms.
Very truly yours,
RMR HOSPITALITY AND REAL
ESTATE FUND
By:
-----------------------------
Xxxxxx X. X'Xxxxx
President
RMR ADVISORS, INC.
By:
------------------------------
Xxxxxx X. X'Xxxxx
President
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
RBC XXXX XXXXXXXX INC.
By:
-----------------------
Name: Xxxxx Xxxxxx
Title: Managing Director
