Exhibit 2(h)
Auction Rate Cumulative Preferred Shares
[ ] Shares, Series TH Cumulative Preferred Shares
Liquidation Preference $25,000 Per Share
UNDERWRITING AGREEMENT
December [ ], 2002
XXXXXXX XXXXX XXXXXX INC.
XXXXXXX LYNCH, XXXXXX, XXXXXX & XXXXX
INCORPORATED
UBS WARBURG, LLC
As Representatives of the Several Underwriters
c/o XXXXXXX XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned, Xxxxx & Steers Advantage Income Realty Fund, Inc., a
Maryland corporation (the "Fund"), and Xxxxx & Steers Capital Management, Inc.,
a New York corporation (the "Investment Manager"), address you as Underwriters
and as the representatives (the "Representatives") of each of the other persons,
firms and corporations, if any, listed in Schedule I hereto (the
"Underwriters"). The Fund proposes to issue and sell an aggregate of [ ] shares
of its Series TH Auction Rate Cumulative Preferred Shares, liquidation
preference of $25,000 per share, (the "Shares"). The Shares will be authorized
by, and subject to the terms and conditions of, the Articles Supplementary of
the Fund (the "Articles Supplementary"), in the form filed as an exhibit to the
Registration Statement referred to in Section 1 of this Agreement and filed with
the Department of Taxation and Assessments of the State of Maryland on December
[ ], 2002. The Fund and the Investment Manager wish to confirm as follows their
agreement with you and the other Underwriters, in connection with the purchase
of the Shares by the Underwriters.
Collectively, the Investment Management Agreement dated as of May 24,
2001 between the Fund and the Investment Manager and the Fee Waiver Agreement
dated May 24, 2001 between the Fund and the Investment Manager (collectively,
the "Advisory Agreement"); the Administration Agreement dated as of May 24, 2001
between the Fund and the Investment Manager (the "Administration Agreement");
the agreement dated as of March 9, 2001 between the Fund and State Street Bank
and Trust Company ("the Sub-Administration Agreement"); the Master Custodian
Agreement dated as of March 9, 2001 between the Fund and State Street Bank
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and Trust Company (the "Custodian Agreement") and the Auction Agency Agreement
dated as of [ ], 2002, between the Fund and The Bank of New York, as auction
agent, are hereinafter referred to as the "Fund Agreements." This Underwriting
Agreement is hereinafter referred to as the "Agreement."
1. REGISTRATION STATEMENT AND PROSPECTUS. The Fund has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended (the
"1933 Act"), the Investment Company Act of 1940, as amended (the "1940 Act"),
and the rules and regulations of the Commission promulgated under the 1933 Act
(the "1933 Act Rules and Regulations") and the 1940 Act (the "1940 Act Rules and
Regulations" and, together with the 1933 Act Rules and Regulations, the "Rules
and Regulations") a registration statement on Form N-2 (File Nos. 333-62682 and
811-09993), under the 1933 Act and the 1940 Act (the "Registration Statement"),
including a prospectus relating to the Shares. The Fund has heretofore also
filed a notification of registration of the Fund as an investment company under
the 1940 Act on Form N-8A (the "1940 Act Notification"). The term "Registration
Statement" as used in this Agreement means the registration statement (including
all financial schedules and exhibits), as amended at the time it becomes
effective under the 1933 Act or, if the registration statement became effective
under the 1933 Act prior to the execution of this Agreement, as amended or
supplemented at the time it became effective prior to the execution of this
Agreement, and includes any information deemed to be included by Rule 430A under
the 1933 Act Rules and Regulations. If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the registration
statement will be filed under the 1933 Act and must be declared effective before
the offering of the Shares may commence, the term "Registration Statement" as
used in this Agreement means the registration statement as amended by said
post-effective amendment. If the Fund has filed an abbreviated registration
statement to register an additional amount of Shares pursuant to Rule 462(b)
under the 1933 Act (the "Rule 462 Registration Statement"), then any reference
herein to the term "Registration Statement" shall include such Rule 462
Registration Statement. The term "Prospectus" as used in this Agreement means
the prospectus and statement of additional information in the forms included in
the Registration Statement or, if the prospectus and statement of additional
information included in the Registration Statement omit information in reliance
on Rule 430A under the 1933 Act Rules and Regulations and such information is
included in a prospectus and statement of additional information filed with the
Commission pursuant to Rule 497(h) under the 1933 Act Rules and Regulations, the
term "Prospectus" as used in this Agreement means the prospectus and statement
of additional information in the forms included in the Registration Statement as
supplemented by the addition of the information contained in the prospectus
(including the statement of additional information) filed with the Commission
pursuant to Rule 497(h). The term "Prepricing Prospectus" as used in this
Agreement means the prospectus and statement of additional information subject
to completion in the forms included in the registration statement at the time of
the initial filing of the registration statement with the Commission on [ ]
2002, and as such prospectus and statement of additional information shall have
been amended from time to time prior to the date of the Prospectus, together
with any other prospectus and statement of additional information relating to
the Fund other than the Prospectus
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approved in writing by or directly or indirectly prepared by the Fund or the
Investment Manager. The terms "Registration Statement," "Prospectus" and
"Prepricing Prospectus" shall also include any financial statements incorporated
by reference therein.
The Fund has furnished the Representatives with copies of such
registration statement, each amendment to such registration statement filed with
the Commission and each Prepricing Prospectus, and the Representatives have
provided the same to the other Underwriters.
2. AGREEMENTS TO SELL AND PURCHASE. The Fund hereby agrees, subject to
all the terms and conditions set forth herein, to issue and to sell to each
Underwriter and, upon the basis of the representations, warranties and
agreements of the Fund and the Investment Manager herein contained and subject
to all the terms and conditions set forth herein, each Underwriter agrees,
severally and not jointly, to purchase from the Fund, at a purchase price of $[
] per Share, the number of Shares set forth opposite the name of such
Underwriter in Schedule I hereto.
3. TERMS OF PUBLIC OFFERING. The Fund and the Investment Manager have
been advised by you that the Underwriters propose to make a public offering of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in the Underwriters' judgment is advisable and initially to
offer the Shares upon the terms set forth in the Prospectus.
4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Delivery to the
Underwriters of and payment to the Fund for the Shares and compensation of the
Underwriters with respect thereto shall be made at the office of Skadden, Arps,
Slate, Xxxxxxx & Xxxx, LLP, Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, or
through the facilities of The Depository Trust Company or another mutually
agreeable facility, at 9:30 A.M., New York City time, on December [ ], 2002 (the
"Closing Date"). The place of closing for the Shares and the Closing Date may be
varied by agreement between you and the Fund.
A certificate for the Shares shall be registered in such name as the
Underwriters shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date. Such certificate shall be made
available to you in New York City for inspection not later than 9:30 A.M., New
York City time, on the business day next preceding the Closing Date. Each
certificate evidencing the Shares shall be delivered as directed by the
Underwriters on the Closing Date, through the facilities of The Depository Trust
Company or another mutually agreeable facility, against payment of the purchase
price therefor in immediately available funds.
5. AGREEMENTS OF THE FUND AND THE INVESTMENT MANAGER. The Fund and the
Investment Manager, jointly and severally, agree with the Underwriters as
follows:
(a) If, at the time this Agreement is executed and delivered,
it is necessary for the Registration Statement or a post-effective amendment
thereto to be declared effective under the 1933 Act before the offering of the
Shares may commence, the Fund will use its best efforts to
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cause the Registration Statement or such post-effective amendment to become
effective under the 1933 Act as soon as possible. If the Registration Statement
has become effective and the Prospectus contained therein omits certain
information at the time of effectiveness pursuant to Rule 430A of the 1933 Act
Rules and Regulations, the Fund will file a prospectus including such
information pursuant to Rule 497(h) of the 1933 Act Rules and Regulations, as
promptly as practicable, but no later than the second business day following the
earlier of the date of the determination of the offering price of the Shares or
the date the Prospectus is first used after the effective date of the
Registration Statement. If the Registration Statement has become effective and
the Prospectus contained therein does not so omit such information, the Fund
will file a Prospectus or certificate pursuant to Rule 497(c) or (j) of the 1933
Act Rules and Regulations as promptly as practicable, but no later than the
fifth business day following the date of the later of the effective date of the
Registration Statement or the commencement of the public offering of the Shares
after the effective date of the Registration Statement. The Fund will advise you
promptly and, if requested by you, will confirm such advice in writing (i) when
the Registration Statement or such post-effective amendment has become
effective, and (ii) when the Prospectus has been timely filed pursuant to Rule
497(c) or Rule 497(h) of the 1933 Act Rules and Regulations or the certification
permitted pursuant to Rule 497(j) of the 1933 Act Rules and Regulations has been
timely filed, whichever is applicable.
(b) For a period of three years from the date hereof, unless
otherwise provided herein, the Fund will advise you promptly and, if requested
by you, will confirm such advice in writing: (i) of any request made by the
Commission for amendment of or a supplement to the Registration Statement, any
Prepricing Prospectus or the Prospectus (or any amendment or supplement to any
of the foregoing) or for additional information, (ii) of the issuance by the
Commission, the National Association of Securities Dealers, Inc. (the "NASD"),
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 of any order suspending the effectiveness
of the Registration Statement, prohibiting or suspending the use of the
Prospectus or any Prepricing Prospectus, or any sales material (as hereinafter
defined), of any notice pursuant to Section 8(e) of the 1940 Act, of the
suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such purposes, (iii)
of receipt by the Fund, the Investment Manager, any affiliate of the Fund or the
Investment Manager or any representative or attorney of the Fund or the
Investment Manager of any other material communication from the Commission, the
NASD, 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 relating to the Fund (if such
communication relating to the Fund is received by such person within three years
after the date of this Agreement), the Registration Statement, the 1940 Act
Notification, the Prospectus, any Prepricing Prospectus, any sales material (as
herein defined) (or any amendment or supplement to any of the foregoing) or this
Agreement or any of the Fund Agreements and (iv) within the period of time
referred to in paragraph (f) below, of any material adverse change in the
condition (financial or other), general affairs, business, business prospects,
properties, net assets or results of operations
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of the Fund or the Investment Manager or of the happening of any other event
which makes any statement of a material fact made in the Registration Statement
or the Prospectus, or any Prepricing Prospectus or any sales materials (as
herein defined) (or any amendment or supplement to any of the foregoing) untrue
or which requires the making of any additions to or changes in the Registration
Statement or the Prospectus, or any Prepricing Prospectus or any sales materials
(as herein defined) (or any amendment or supplement to any of the foregoing) in
order to state a material fact required by the 1933 Act, the 1940 Act or the
Rules and Regulations to be stated therein or necessary in order to make the
statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made), not misleading or of the necessity to
amend or supplement the Registration Statement, the Prospectus, or any
Prepricing Prospectus or any sales material (as herein defined) (or any
amendment or supplement to any of the foregoing) to comply with the 1933 Act,
the 1940 Act, the Rules and Regulations or any other law or order of any court
or regulatory body. If at any time the Commission, the NASD, 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 shall issue any order suspending the effectiveness of the
Registration Statement, prohibiting or suspending the use of the Prospectus or
any sales material (as herein defined) (or any amendment or supplement to any of
the foregoing) or suspending the qualification of the Shares for offering or
sale in any jurisdiction, the Fund and the Investment Manager will use best
efforts to obtain the withdrawal of such order at the earliest possible time.
(c) The Fund will furnish to you, without charge, three (3)
signed copies of the registration statement and the 1940 Act Notification as
originally filed with the Commission and of each amendment thereto, including
financial statements and all exhibits thereto, and will also furnish to you,
without charge, such number of conformed copies of the registration statement as
originally filed and of each amendment thereto, with or without exhibits, as you
may reasonably request.
(d) The Fund will not (i) file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectus,
any Prepricing Prospectus, or any sales material (as herein defined), of which
you shall not previously have been advised or to which you shall reasonably
object after being so advised or (ii) so long as, in the opinion of counsel for
the Underwriters, a Prospectus is required by the 1933 Act to be delivered in
connection with sales by the Underwriters or any dealer, file any information,
documents or reports pursuant to the Securities Exchange Act of 1934, as amended
(the "1934 Act"), without delivering a copy of such information, documents or
reports to you prior to or concurrently with such filing.
(e) Prior to the execution and delivery of this Agreement, the
Fund has delivered to you, without charge, in such quantities as you have
reasonably requested, copies of each form of any Prepricing Prospectus. The Fund
consents to the use, in accordance with the provisions of the 1933 Act and with
the state securities or blue sky laws of the jurisdictions in which the Shares
are offered by the Underwriters and by dealers, prior to the date of the
Prospectus, of each Prepricing Prospectus so furnished by the Fund.
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(f) As soon after the execution and delivery of this Agreement
as possible and thereafter from time to time for such period as in the opinion
of counsel for the Underwriters a prospectus is required by the 1933 Act to be
delivered in connection with sales of Shares by the Underwriters or any dealer,
the Fund will expeditiously deliver to the Underwriters and each dealer, without
charge, as many copies of the Prospectus (and of any amendment or supplement
thereto) as you may reasonably request. The Fund consents to the use of the
Prospectus (and of any amendment or supplement thereto) in accordance with the
provisions of the 1933 Act and with the state securities or blue sky laws of the
jurisdictions in which the Shares are offered by the Underwriters and by all
dealers to whom Shares may be sold, both in connection with the offering and
sale of the Shares and for such period of time thereafter as the Prospectus is
required by the 1933 Act to be delivered in connection with sales by you or any
dealer. If during such period of time any event shall occur that in the judgment
of the Fund or the Investment Manager or in the opinion of counsel for the
Underwriters is required to be set forth in the Registration Statement or the
Prospectus (as then amended or supplemented) or should be set forth therein in
order to make the statements therein (in the case of the Prospectus, in the
light of the circumstances under which they were made) not misleading, or if it
is necessary to supplement or amend the Registration Statement or the Prospectus
to comply with the 1933 Act, the 1940 Act, the Rules and Regulations or any
other federal law, rule or regulation, or any state securities or blue sky laws,
rules or regulations, the Fund will forthwith prepare and, subject to the
provisions of paragraph (d) above, promptly file with the Commission an
appropriate supplement or amendment thereto, and will expeditiously furnish to
you and dealers, without charge, such number of copies thereof, as you or they
may reasonably request. In the event that the Fund and you agree that the
Registration Statement or the Prospectus should be amended or supplemented, the
Fund, if requested by you, will promptly issue a press release announcing or
disclosing the matters to be covered by the proposed amendment or supplement.
(g) The Fund will cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of the Shares
for offering and sale by the several Underwriters and by dealers under the
securities or blue sky laws of such jurisdictions as you may designate and will
file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification.
(h) The Fund will make generally available to holders of the
Fund's securities, as soon as practicable but in no event later than the last
day of the 18th full calendar month following the calendar quarter in which the
effective date of the Registration Statement falls, an earnings statement
satisfying the provisions of Section 11(a) of the 1933 Act and Rule 158 of the
1933 Act Rules and Regulations.
(i) During the period of three years after the date of this
Agreement, the Fund will furnish to you (i) as soon as available, a copy of each
report of the Fund mailed to stockholders or filed with the Commission or
furnished to the New York Stock Exchange (the "NYSE") other than reports on Form
N-SAR, and (ii) from time to time such other information concerning the Fund as
you may reasonably request.
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(j) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provision hereof (otherwise than by notice given
by the Underwriters terminating this Agreement pursuant to Section 12 hereof) or
if this Agreement shall be terminated by the Underwriters because of any failure
or refusal on the part of the Fund or the Investment Manager to comply with the
terms or fulfill, or cause to be fulfilled, any of the conditions of this
Agreement, the Fund and the Investment Manager, jointly and severally, agree to
reimburse the Underwriters for all out-of-pocket expenses (including reasonable
fees and expenses of counsel for the Underwriters) incurred by the Underwriters
in connection herewith.
(k) The Fund will apply the net proceeds from the sale of the
Shares in accordance with the description set forth in the Prospectus and in
such a manner as to comply with the investment objectives, policies and
restrictions of the Fund as described in the Prospectus.
(l) The Fund will timely file the requisite copies of the
Prospectus with the Commission pursuant to Rule 497(c) or Rule 497(h) of the
1933 Act Rules and Regulations, whichever is applicable or, if applicable, will
timely file the certification permitted by Rule 497(j) of the 1933 Act Rules and
Regulations and will advise you of the time and manner of such filing.
(m) Except as provided in this Agreement, so long as the
Shares remain outstanding, the Fund will not sell, contract to sell, or
otherwise dispose of any senior securities (as defined in the 1940 Act) (other
than senior securities sold in an underwriting lead-managed by Xxxxxxx Xxxxx
Xxxxxx Inc.) of the Fund, or grant any options or warrants to purchase senior
securities of the Fund for a period of 180 days after the date of the
Prospectus, without the prior written consent of the Underwriters.
(n) Except as stated in this Agreement and in the Prepricing
Prospectus and the Prospectus, neither the Fund nor the Investment Manager has
taken, nor will either take, directly or indirectly, any action designed to or
that might reasonably be expected to cause or result in stabilization or
manipulation of the price of any securities issued by the Fund to facilitate the
sale or resale of the Shares.
(o) The Fund will use commercially reasonable efforts to cause
the Shares, prior to the Closing Date, to be assigned a rating of 'Aaa' by
Xxxxx'x Investors Service, Inc. ("Moody's") and 'AAA' by Standard & Poor's, a
division of XxXxxx-Xxxx Companies, Inc. ("S&P" and, together with Moody's, the
"Rating Agencies").
(p) The Fund and the Investment Manager will use commercially
reasonable efforts to perform all of the agreements required of them and
discharge all conditions to closing as set forth in this Agreement.
(q) The Fund will comply with the undertaking set forth in
paragraph 6 of Item 33 of Part C of the Registration Statement.
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(r) The Fund will apply the proceeds of the offering of Shares
so as to comply with the requirements of Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), to qualify as a regulated investment
company under the Code.
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6. REPRESENTATIONS AND WARRANTIES OF THE FUND AND THE INVESTMENT
MANAGER. The Fund and the Investment Manager, jointly and severally, represent
and warrant to the Underwriters that:
(a) Each Prepricing 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 of the 1933 Act Rules and Regulations, complied
when so filed in all material respects with the provisions of the 1933 Act, the
1940 Act and the Rules and Regulations. The Commission has not issued any order
preventing or suspending the use of any Prepricing Prospectus.
(b) The Registration Statement, in the form in which it was
originally filed and in the form in which it became or becomes effective and
also in such form as it may be when any post-effective amendment thereto shall
become effective and the Prospectus and any supplement or amendment thereto when
filed with the Commission under Rule 497 of the 1933 Act Rules and Regulations
and the 1940 Act Notification when originally filed with the Commission and any
amendment or supplement thereto when filed with the Commission, complied or will
comply in all material respects with the provisions of the 1933 Act, the 1940
Act and the Rules and Regulations and did not or will not at any such times
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus, in the light of the circumstances under which they
were made) not misleading, except that this representation and warranty does not
apply to statements in or omissions from the Registration Statement or the
Prospectus made in reliance upon and in conformity with information relating to
the Underwriters furnished to the Fund in writing by or on behalf of the
Underwriters expressly for use therein.
(c) All of the Fund's outstanding shares of common stock (the
"Common Shares") and the outstanding shares of Series M preferred stock (the "M
Shares") and the Series W preferred stock (the "W Shares") have been duly
authorized and validly issued by the Fund, are fully paid and nonassessable and
are free of any preemptive or similar rights; the Shares have been duly
authorized and, when issued and delivered to the Underwriters against payment
therefor in accordance with the terms hereof, will be validly issued by the
Fund, fully paid and nonassessable and free of any preemptive or similar rights
and will conform to the description thereof in the Registration Statement and
the Prospectus (and any amendment or supplement to either of them); and the
capitalization of the Fund conforms to the description thereof in the
Registration Statement and the Prospectus (and any amendment or supplement to
either of them).
(d) The Fund is a corporation duly incorporated 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 to conduct its
business as described in the Registration Statement and the Prospectus (and any
amendment or supplement to either of them), and is duly registered and qualified
to conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not have a material adverse
9
effect on the condition (financial or other), general affairs, business,
business prospects (other than as a result of a change in the financial markets
generally), properties, net assets or results of operations of the Fund, whether
or not arising in the ordinary course of business (a "Material Adverse Effect");
and the Fund has no subsidiaries.
(e) There are no legal or governmental proceedings pending or, to
the knowledge of the Fund, threatened, against the Fund, or to which the Fund or
any of its properties is subject, that are required to be described in the
Registration Statement or the Prospectus (and any amendment or supplement to
either of them) but are not described as required, and there are no agreements,
contracts, indentures, leases or other instruments that are required to be
described in the Registration Statement or the Prospectus (and any amendment or
supplement to either of them) or to be filed as an exhibit to the Registration
Statement that are not described or filed as required by the 1933 Act, the 1940
Act or the Rules and Regulations.
(f) The Fund is not in violation of its Articles of Incorporation,
as amended or supplemented through [December [ ], 2002] (the "Charter"),
Articles Supplementary, or Bylaws, as amended or supplemented through the date
hereof (the "Bylaws"), or other organizational documents or of any law,
ordinance, administrative or governmental rule or regulation applicable to the
Fund or of any decree of the Commission, the NASD, any state securities
commission, any national securities exchange, any arbitrator, any court or
governmental agency, body or official having jurisdiction over the Fund, or in
default in any respect in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any material agreement, indenture, lease or other instrument
to which the Fund is a party or by which it or any of its properties may be
bound, except where such violation does not have a Material Adverse Effect.
(g) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or any of the Fund Agreements by the
Fund, nor the consummation by the Fund of the transactions contemplated hereby
or thereby (i) requires any consent, approval, authorization or other order of
or registration or filing with, the Commission, the NASD, any state securities
commission, any national securities exchange, any arbitrator, any court,
regulatory body, administrative agency or other governmental body, agency or
official (except such as may have been obtained prior to the date hereof and
such as may be required for compliance with the state securities or blue sky
laws of various jurisdictions and the filing and acceptance for record of the
Articles Supplementary with the State Department of Assessments and Taxation of
the State of Maryland which have been or will be effected in accordance with
this Agreement) or conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the Charter, the Bylaws or other
organizational documents of the Fund or (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 Fund is a party or
by which it or any of its properties may be bound, or violates or will violate
any statute, law, regulation or judgment, injunction, order or decree applicable
to the Fund or any of its properties, or will result in the creation or
imposition of any material lien, charge or encumbrance upon any property or
10
assets of the Fund 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 its property or
assets is subject. The Fund is not in violation of any order of any court or of
any arbitrator, governmental authority or administrative agency.
(h) The accountants, PricewaterhouseCoopers LLP, who have certified
or shall certify the financial statements included or incorporated by reference
in the Registration Statement and the Prospectus (or any amendment or supplement
to either of them) have represented to the Fund that they are independent public
accountants as required by the 1933 Act, the 1940 Act and the Rules and
Regulations.
(i) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement and
the Prospectus (and any amendment or supplement to either of them), present
fairly in all material respects the financial position, results of operations
and changes in financial position of the Fund on the basis stated or
incorporated by reference in the Registration Statement at the respective dates
or for the respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as disclosed therein; and the other financial and statistical information
and data included in the Registration Statement and the Prospectus (and any
amendment or supplement to either of them) are accurately presented and prepared
on a basis consistent with such financial statements and the books and records
of the Fund.
(j) The Fund, subject to the Registration Statement having been
declared effective and the filing of the Prospectus under Rule 497 under the
1933 Act Rules and Regulations, has taken all required action under the 1933
Act, the 1940 Act and the Rules and Regulations to make the public offering and
consummate the sale of the Shares as contemplated by this Agreement.
(k) The execution and delivery of, and the performance by the Fund
of its obligations under, this Agreement and the Fund Agreements have been duly
and validly authorized by the Fund, and this Agreement and the Fund Agreements
have been duly executed and delivered by the Fund and, assuming due
authorization, execution and delivery by the other parties thereto, constitute
the valid and legally binding agreements of the Fund, enforceable against the
Fund in accordance with their terms, except as rights to indemnity and
contribution hereunder and thereunder may be limited by federal or state
securities laws or considerations of public policy and subject to the
qualification that the enforceability of the Fund's obligations hereunder and
thereunder may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and by general equitable principles (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(l) Except as disclosed in or contemplated by the Registration
Statement or the Prospectus (or any amendment or supplement to either of them),
subsequent to the respective
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dates as of which such information is given in the Registration Statement and
the Prospectus (or any amendment or supplement to either of them), the Fund has
not incurred any liability or obligation, direct or contingent, or entered into
any transaction not in the ordinary course of business that is material in
nature or amount, and there has not been any change in the capital stock, or
material increase in the short-term debt or long-term debt, of the Fund, or any
material adverse change, or any development involving or which may reasonably be
expected to involve a Material Adverse Effect.
(m) The Fund has not distributed and, prior to the later to occur of
(i) the Closing Date and (ii) completion of the distribution of the Shares, will
not distribute any offering material in connection with the offering and sale of
the Shares other than the Registration Statement, the Prepricing Prospectus, the
Prospectus or other materials, if any, permitted by the 1933 Act, the 1940 Act
or the Rules and Regulations.
(n) (i) The Fund has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus (and any amendment or supplement thereto), subject
to such qualifications as may be set forth in the Prospectus; (ii) the Fund 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 Fund under any such permit, subject in each case
to such qualification as may be set forth in the Prospectus (and any amendment
or supplement thereto); and (iii) except as described in the Prospectus (and any
amendment or supplement thereto), none of such permits contains any restriction
that is materially burdensome to the Fund.
(o) The Fund maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions in portfolio
securities are executed in accordance with management's general or specific
authorization and with 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 and to maintain accountability for assets and to
maintain 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 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.
(p) To the Fund's knowledge, neither the Fund nor any employee or
agent of the Fund has made any payment of funds of the Fund or received or
retained any funds, which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus and that is not so
disclosed.
(q) The Fund has filed all tax returns required to be filed, which
returns are complete and correct in all material respects, and the Fund is not
in material default in the
12
payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto.
(r) No holder of any security of the Fund has any right to require
registration of common shares of capital stock or any other security of the Fund
because of the filing of the registration statement or consummation of the
transactions contemplated by this Agreement.
(s) Except as described in the Prospectus, there are no outstanding
options, warrants or other rights calling for the issuance of, and the Fund has
no agreement to issue, any shares of capital stock of the Fund or any security
convertible into or exchangeable or exercisable for shares of capital stock of
the Fund.
(t) The conduct by the Fund of its business (as described in the
Prospectus) does not, to the knowledge of the Fund or the Investment Manager
after reasonable investigation, require the Fund 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.
(u) The Fund is registered under the 1940 Act and the 1940 Act Rules
and Regulations as a closed-end, non-diversified management investment company
and the 1940 Act Notification has been duly filed with the Commission and
conforms in all material respects with all applicable provisions of the 1940 Act
and the Rules and Regulations. The Fund 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 1933 Act and the 1940
Act. No person is serving or acting as an officer, director or investment
adviser of the Fund except in accordance with the provisions of the 1940 Act and
the 1940 Act Rules and Regulations and the Investment Advisers Act of 1940, as
amended (the "Advisers Act"), and the rules and regulations of the Commission
promulgated under the Advisers Act (the "Advisers Act Rules and Regulations").
The Fund 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) Except as stated in this Agreement and in the Prospectus (and
any amendment or supplement thereto), the Fund has not taken, nor will it take,
directly or indirectly, any action designed to or which might reasonably be
expected to cause or result in stabilization or manipulation of the price of any
securities issued by the Fund to facilitate the sale or resale of the Shares,
and the Fund is not aware of any such action taken or to be taken by any
affiliates of the Fund.
(w) The Fund has filed in a timely manner each document or report
required to be filed by it pursuant to the 1934 Act and the rules and
regulations of the Commission promulgated thereunder (the "1934 Act Rules and
Regulations"); each such document or report at the time it was filed conformed
to the requirements of the 1934 Act and the 1934 Act Rules and Regulations; and
none of such documents or reports contained an untrue statement of any material
fact or omitted to state any material fact required to be stated therein or
necessary to make the
13
statements therein not misleading.
(x) All advertising, sales literature or other promotional material
(including "prospectus wrappers," "broker kits," "road show slides" and "road
show scripts") authorized in writing by or prepared by the Fund or the
Investment Manager for use in connection with the offering and sale of the
Shares (collectively, "sales material") 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 no such
sales material 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 the light of the circumstances
under which they were made, not misleading.
(y) This Agreement and each of the Fund 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.
(z) As required by Subchapter M of the Code, the Fund is in
compliance with the requirements to qualify as a regulated investment company
under the Code.
(aa) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), no director of
the Fund is an "interested person" (as defined in the 1940 Act) of the Fund or
an "affiliated person" (as defined in the 1940 Act) of any Underwriter listed in
Schedule I hereto.
7. REPRESENTATIONS AND WARRANTIES OF THE INVESTMENT MANAGER. The
Investment Manager represents and warrants to the Underwriters as follows:
(a) The Investment Manager is a corporation duly incorporated and
validly existing in good standing under the laws of the State of New York, with
full power and authority to own, lease and operate its properties and to conduct
its business as described in the Registration Statement and the Prospectus (and
any amendment or supplement to either of them), and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or to qualify does not have a material adverse effect on the condition
(financial or other), general affairs, business, business prospects, properties,
net assets or results of operations of the Investment Manager or on the ability
of the Investment Manager to perform its obligations under this Agreement, the
Advisory Agreement and the Administration Agreement.
(b) The Investment Manager 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 for the Fund
as contemplated by the Prospectus (or any
14
amendment or supplement thereto). There does not exist any proceeding, or any
facts or circumstances the existence of which could lead to any proceeding,
which might adversely affect the registration of the Investment Manager with the
Commission.
(c) There are no legal or governmental proceedings pending or, to
the knowledge of the Investment Manager, threatened against the Investment
Manager, or to which the Investment Manager or any of its properties is subject,
that are required to be described in the Registration Statement or the
Prospectus (or any amendment or supplement to either of them) but are not
described as required or that may involve a prospective material adverse change
in the condition (financial or other), general affairs, business, business
prospects, properties, net assets or results of operations of the Investment
Manager or on the ability of the Investment Manager to perform its obligations
under this Agreement, the Advisory Agreement and the Administration Agreement.
(d) Neither the execution, delivery or performance of this Agreement
or the performance of the Advisory Agreement or the Administration Agreement by
the Investment Manager, nor the consummation by the Investment Manager of the
transactions contemplated hereby or thereby (i) requires the Investment Manager
to obtain any consent, approval, authorization or other order of or registration
or filing with, the Commission, the NASD, any state securities commission, any
national securities exchange, any arbitrator, any court, regulatory body,
administrative agency or other governmental body, agency or official or
conflicts or will conflict with or constitutes or will constitute a breach of or
a default under the Charter, By-laws, or other organizational documents, of the
Investment Manager or (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 Investment Manager is a party
or by which it or any of its properties may be bound, or violates or will
violate any statute, law, regulation or filing or judgment, injunction, order or
decree applicable to the Investment Manager or any of its properties or will
result in the creation or imposition of any material lien, charge or encumbrance
upon any property or assets of the Investment Manager 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 Investment Manager is subject.
The Investment Manager is not subject to any order of any court or of any
arbitrator, governmental authority or administrative agency.
(e) The Investment Manager has full power and authority to enter
into this Agreement and the Advisory Agreement, the execution and delivery of
this Agreement, and the performance by the Investment Manager of its obligations
under this Agreement, the Advisory Agreement and the Administration Agreement
have been duly and validly authorized by the Investment Manager, and this
Agreement and the Advisory Agreement and the Administration Agreement have been
duly executed and delivered by the Investment Manager and, assuming due
authorization, execution and delivery of this Agreement by the other parties
thereto, each constitutes the valid and legally binding agreement of the
Investment Manager, enforceable against the Investment Manager in accordance
with its terms except as rights to indemnity and contribution hereunder or
thereunder may be limited by federal or state securities laws or
15
considerations of public policy and subject to the qualification that the
enforceability of the Investment Manager's obligations hereunder and thereunder
may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and by general equitable principles (regardless of whether enforcement
is sought in a proceeding in equity or at law).
(f) The Investment Manager has the financial resources available to
it necessary for the performance of its services and obligations as contemplated
in the Prospectus (or any amendment or supplement thereto) and under this
Agreement, the Advisory Agreement and the Administration Agreement.
(g) The description of the Investment Manager 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 1933 Act, the
1940 Act, 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 or omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in the
light of the circumstances under which they were made) not misleading.
(h) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement to either of them),
the Investment Manager has not incurred any liability or obligation, direct or
contingent, or entered into any transaction, not in the ordinary course of
business, that is required to be disclosed in the Registration Statement or the
Prospectus and there has not been any material adverse change, or any
development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the condition (financial or other),
general affairs, business, business prospects, properties, net assets or results
of operations of the Investment Manager, whether or not arising in the ordinary
course of business, or which, in each case, could effect the ability of the
Investment Manager to perform its obligations under this Agreement, the Advisory
Agreement or the Administration Agreement.
(i) The Investment Manager has such permits as are necessary to own
its properties and to conduct its business in the manner described in the
Prospectus (and any amendment or supplement thereto); (ii) the Investment
Manager 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 would result in any other
material impairment of the rights of the Investment Manager under any such
permit.
(j) Except as stated in this Agreement and in the Prospectus (and in
any amendment or supplement thereto), the Investment Manager has not taken, nor
will it take, directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, stabilization or manipulation of
the price of the Shares or of any securities issued by the Fund to facilitate
the sale or resale of the Shares, and the Investment Manager is not aware of any
16
such action taken or to be taken by any affiliates of the Investment Manager.
(k) Each of this Agreement, the Advisory Agreement and the
Administration Agreement comply in all material respects with the 1940 Act, the
1940 Act Rules and Regulations, the Advisers Act and the Advisers Act Rules and
Regulations.
(l) In the event that the Fund or the Investment Manager makes
available any promotional materials regarding the Fund or the Investment Manager
in connection with the offering of the Shares intended for use only by qualified
broker-dealers and registered representatives thereof by means of an Internet
web site or similar electronic means, the Investment Manager will install and
maintain pre-qualification and password-protection or similar procedures which
are reasonably designed to effectively prohibit access to such promotional
materials by persons other than qualified broker-dealers and registered
representatives thereof.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Fund and the Investment Manager, jointly and severally,
agree to indemnify and hold harmless each of the Underwriters and each person,
if any, who controls any Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation), joint or several, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any sales
material, Prepricing Prospectus or in the Registration Statement or the
Prospectus or in any amendment or supplement thereto, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein (in the case of
the Prospectus, in the light of the circumstances under which they were made)
not misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information furnished in
writing to the Fund by or on behalf of any Underwriter through you expressly for
use in connection therewith; provided, however, that the indemnification
contained in this paragraph (a) with respect to any Prepricing Prospectus shall
not inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Shares by such Underwriter to
any person if a copy of the Prospectus shall not have been delivered or sent by
the Underwriters as required to such person within the time required by the 1933
Act and the 1933 Act Rules and Regulations, and the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact contained in
such Prepricing Prospectus was corrected in such Prospectus, provided that the
Fund has delivered such Prospectus to the several Underwriters in requisite
quantity on a timely basis to permit such delivery or sending. The foregoing
indemnity agreement shall be in addition to any liability which the Fund or the
Investment Manager may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter
17
or any person controlling any Underwriter in respect of which indemnity may be
sought against the Fund and the Investment Manager, such Underwriter or such
controlling person shall promptly notify the Fund or the Investment Manager, and
the Fund or the Investment Manager shall assume the defense thereof, including
the employment of counsel and payment of all fees and expenses. Such Underwriter
or any such controlling person shall have the right to employ separate counsel
in any such action, suit or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Underwriter or such controlling person unless (i) the Fund or the
Investment Manager has agreed in writing to pay such fees and expenses, (ii) the
Fund and the Investment Manager have failed within a reasonable time to assume
the defense and employ counsel, or (iii) the named parties to any such action,
suit or proceeding (including any impleaded parties) include both such
Underwriter or such controlling person and the Fund or the Investment Manager
and such Underwriter or such controlling person shall have been advised by its
counsel that representation of such indemnified party and the Fund or the
Investment Manager by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation by the
same counsel has been proposed) due to actual or potential differing interests
between them (in which case the Fund and the Investment Manager shall not have
the right to assume the defense of such action, suit or proceeding on behalf of
such Underwriter or such controlling person). It is understood, however, that
the Fund and the Investment Manager shall, in connection with any one such
action, suit or proceeding or separate but substantially similar or related
actions, suits or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of only one separate firm of attorneys (in addition to local counsel)
at any time for all such Underwriters and controlling persons not having actual
or potential differing interests with you or among themselves, which firm shall
be designated in writing by the Underwriters, and that all such fees and
expenses shall be reimbursed promptly as they are incurred. The Fund and the
Investment Manager shall not be liable for any settlement of any such action,
suit or proceeding effected without their written consent, but if settled with
such written consent, or if there be a final judgment for the plaintiff in any
such action, suit or proceeding, the Fund and the Investment Manager agree to
indemnify and hold harmless any Underwriter, to the extent provided in the
preceding paragraph, and any such controlling person from and against any loss,
claim, damage, liability or expense by reason of such settlement or judgment.
(c) Each Underwriter agrees to indemnify and hold harmless the Fund
and the Investment Manager, directors, any officers who sign the Registration
Statement, and any person who controls the Fund or the Investment Manager within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, to the
same extent as the foregoing indemnity from the Fund and the Investment Manager
to each Underwriter, but only with respect to information relating to such
Underwriter furnished in writing by or on behalf of such Underwriter expressly
for use in the Registration Statement, the Prospectus or any Prepricing
Prospectus, or any amendment or supplement thereto. If any action, suit or
proceeding shall be brought against the Fund or the Investment Manager, any of
their directors, any such officer, or any such controlling person based on the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or
18
supplement thereto, and in respect of which indemnity may be sought against any
Underwriter pursuant to this paragraph (c), such Underwriter shall have the
rights and duties given to the Fund and the Investment Manager by paragraph (b)
above (except that if the Fund or the Investment Manager shall have assumed the
defense thereof such Underwriter shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof, but the fees
and expenses of such counsel shall be at such Underwriter's expense), and the
Fund and the Investment Manager, their directors, any such officer, and any such
controlling person shall have the rights and duties given to the Underwriters by
paragraph (b) above. The foregoing indemnity agreement shall be in addition to
any liability which the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Fund and the Investment Manager on the one hand (treated jointly for this
purpose as one person) and the Underwriters on the other hand from the offering
of the Shares, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Fund and the Investment Manager on the one hand (treated jointly
for this purpose as one person) and the Underwriters on the other in connection
with the statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Fund and the Investment Manager on the one
hand (treated jointly for this purpose as one person) and the Underwriters 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 Fund bear to the
total underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Fund and the Investment Manager on the one hand (treated
jointly for this purpose as one person) and the Underwriters on the other 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 Fund and the Investment
Manager on the one hand (treated jointly for this purpose as one person) or by
the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(e) The Fund, the Investment Manager and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 8
were determined by a pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities and expenses referred to in
paragraph (d) above shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating any
19
claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 8, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price of the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligations
to contribute pursuant to this Section 8 are several in proportion to the
respective numbers of Shares set forth opposite their names in Schedule I hereto
(or such numbers of Shares increased as set forth in Section 11 hereof) and not
joint.
(f) 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 includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under this
Section 8 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 8 and the
representations and warranties of the Fund and the Investment Manager 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
any person controlling any Underwriter, the Fund, the Investment Manager,
directors or officers, or any person controlling the Fund or the Investment
Manager, (ii) acceptance of any Shares and payment therefor hereunder, and (iii)
any termination of this Agreement. A successor to any Underwriter or any person
controlling any Underwriter, or to the Fund, the Investment Manager, directors
or officers, or any person controlling the Fund or the Investment Manager, shall
be entitled to the benefits of the indemnity, contribution, and reimbursement
agreements contained in this Section 8.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase the Shares hereunder are subject to the accuracy of
and compliance with the representations, warranties and agreements of and by the
Fund and the Investment Manager contained herein on and as of the date hereof,
the date the Registration Statement becomes effective, the date of the
Prospectus (and of any amendment or supplement thereto), and the Closing Date;
to the accuracy and completeness of all statements made by the Fund, the
Investment Manager or any of their officers in any certificate delivered to the
Representatives or their counsel pursuant to this Agreement; and to the
following conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before
20
the offering of the Shares may commence, the Registration Statement or such
post-effective amendment shall have become effective not later than 5:30 P.M.,
New York City time, on the date hereof, or at such later date and time as shall
be consented to in writing by the Underwriters, and all filings, if any,
required by Rules 497 and 430A under the 1933 Act and the 1933 Act Rules and
Regulations shall have been timely made; no stop order suspending the
effectiveness of the Registration Statement or order pursuant to Section 8(e) of
the 1940 Act shall have been issued and no proceeding for those purposes shall
have been instituted or, to the knowledge of the Fund, the Investment Manager or
any Underwriter, threatened by the Commission, and any request of the Commission
for additional information (to be included in the registration statement or the
prospectus or otherwise) shall have been complied with to your reasonable
satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change or any development involving a prospective
change in or affecting the condition (financial or other), general affairs,
business, business prospects, properties, net assets, or results of operations
of the Fund or the Investment Manager not contemplated by the Prospectus, which
in the Underwriters' opinion would materially, adversely affect the market for
the Shares, or (ii) any event or development relating to or involving the Fund
or the Investment Manager or any officer, or director of the Fund or the
Investment Manager which makes any statement made in the Prospectus untrue or
which, in the opinion of the Fund and its counsel or the Underwriters and their
counsel, requires the making of any addition to or change in the Prospectus in
order to state a material fact required by the 1933 Act, the 1940 Act or the
Rules and Regulations or any other law to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, if amending or supplementing the
Prospectus to reflect such event or development would, in the Underwriters'
opinion, materially adversely affect the market for the Shares.
(c) The Fund shall have furnished to you a report showing compliance
with the asset coverage requirements of the 1940 Act and a Preferred Shares
Basic Maintenance Certificate (as defined in the Certificate), each dated the
Closing Date and in form and substance satisfactory to you. Each such report may
use portfolio holdings and valuations as of the close of business of any day not
more than six business days preceding the Closing Date, provided, however, that
the Fund represents in such report that its total net assets as of the Closing
Date have not declined by 5% or more from such valuation date.
(d) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the Fund, dated the Closing
Date and addressed to the Underwriters, substantially to the effect set forth in
Exhibit A.
Insofar as the opinions expressed above relate to or are dependent
upon matters governed by Maryland law, Xxxxxxx Xxxxxxx & Xxxxxxxx will be
permitted to rely on the opinion of Xxxxxxx, Xxxxxxx and Xxxxxx, LLP.
(e) The Underwriters shall have received on the Closing Date an
opinion of
21
Xxxxxxxx X. Xxxxxxx, Esq., general counsel for the Investment Manager, dated
the Closing Date and addressed to the Underwriters, substantially to the
effect set forth in Exhibit B.
(f) The Representative shall have received on the Closing Date an
opinion of Xxxxxxx, Arps, Slate Xxxxxxx and Xxxx LLP, counsel for the
Underwriters, dated the Closing Date and addressed to the Underwriters, with
respect to such matters as the Underwriters may reasonably request and the Fund,
and the Investment Manager and their respective counsels shall have furnished to
such counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters. It is agreed that Xxxxxxx, Arps, Slate
Xxxxxxx and Xxxx LLP may rely on the opinions of Xxxxxxx, Xxxxxxx and Xxxxxx,
LLP the extent those opinions relate to or are dependent upon matters governed
by the laws of the State of Maryland.
(g) The Underwriters shall have received letters addressed to you,
dated the date hereof and the Closing Date, from PricewaterhouseCoopers LLP
independent certified public accountants, substantially in the forms heretofore
approved by you.
(h) (i) No order suspending the effectiveness of the registration
statement or the Registration Statement or prohibiting or suspending the use of
the Prospectus (or any amendment or supplement thereto) or any Prepricing
Prospectus or any sales material shall have been issued and no proceedings for
such purpose or for the purpose of commencing an enforcement action against the
Fund, the Investment Manager or, with respect to the transactions contemplated
by the Prospectus (or any amendment or supplement thereto) and this Agreement,
the Underwriters, may be pending before or, to the knowledge of the Fund, the
Investment Manager or the Underwriters or in the reasonable view of counsel to
the Underwriters, shall be threatened or contemplated by the Commission or any
court or other regulatory or self-regulatory body having jurisdiction at or
prior to the Closing Date and that any request for additional information on the
part of the Commission or such court or other body (to be included in the
Registration Statement, the Prospectus or otherwise) be complied with to the
satisfaction of the Underwriters; (ii) there shall not have been any change in
the capital stock of the Fund nor any material increase in the short-term or
long-term debt of the Fund from that set forth or contemplated in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto); (iii) there shall not have been, subsequent to the respective dates as
of which information is given in the Registration Statement and the Prospectus
(or any amendment or supplement thereto), except as may otherwise be stated in
the Registration Statement and Prospectus (or any amendment or supplement
thereto), any material adverse change in the condition (financial or other),
general affairs, business, business prospects, properties, net assets or results
of operations of the Fund or the Investment Manager; (iv) the Fund shall not
have any liabilities or obligations, direct or contingent (whether or not in the
ordinary course of business), that are material to the Fund, other than those
reflected in the Registration Statement or the Prospectus (or any amendment or
supplement to either of them); (v) neither the Fund nor the Investment Manager
has sustained any material loss or interference with its business from any court
or from legislative or other governmental action, order or decree or from any
other occurrence not described in the Registration Statement and the Prospectus
(or any amendment or supplement to either of them);
22
and (vi) all the representations and warranties of the Fund and the Investment
Manager contained in this Agreement shall be true and correct on and as of the
date hereof and on and as of the Closing Date as if made on and as of the
Closing Date, and the Underwriters shall have received a certificate of the Fund
and the Investment Manager, dated the Closing Date and signed by the chief
executive officer and the chief financial officer of each of the Fund and the
Investment Manager (or such other officers as are acceptable to the
Underwriters), to the effect set forth in this Section 9(h) and in Section 9(i)
hereof.
(i) That neither the Fund nor the Investment Manager shall have
failed at or prior to the Closing Date to have performed or complied with any of
its agreements herein contained and required to be performed or complied with by
it hereunder at or prior to the Closing Date.
(j) The Fund shall have delivered and you shall have received
evidence satisfactory to you that the Shares are rated `Aaa' by Xxxxx'x and
`AAA' by S&P as of the Closing Date, and there shall not have been given any
notice of any intended or potential downgrading, or of any review for a
potential downgrading, in the rating accorded to the Shares, the M Shares or the
W Shares by either rating agency.
(k) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change or any development involving a prospective
change in or affecting the condition (financial or other), general affairs,
business, business prospects (other than as a result of a change in the
financial markets generally), properties, net assets or results of operations of
the Fund or the Investment Manager not contemplated by the Prospectus (and any
amendment or supplement thereto), which in your opinion, as Representatives of
the several Underwriters, would materially adversely affect the market for the
Shares; or (ii) any event or development relating to or involving the Fund, the
Investment Manager or any officer or director of the Fund or the Investment
Manager which makes any statement of a material fact made in the Prospectus (or
any amendment or supplement thereto) untrue or which, in the opinion of the Fund
and its counsel or the Underwriters and their counsel, requires the making of
any addition to or change in the Prospectus (or any amendment or supplement
thereto) in order to state a material fact required by the Act, the 1940 Act,
the Rules and Regulations or any other law to be stated therein (in the case of
a prospectus, in the light of the circumstances under which they were made) not
misleading, if amending or supplementing the Prospectus (or any amendment or
supplement thereto) to reflect such event or development would, in your opinion,
as Representatives of the several Underwriters, materially adversely affect the
market for the Shares.
(l) The Fund and the Investment Manager shall have furnished or
caused to be furnished to you such further certificates and documents as you
shall have reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to the Underwriters and the Underwriters' counsel.
23
Any certificate or document signed by any officer of the Fund or the
Investment Manager and delivered to the Underwriters, or to counsel for the
Underwriters, shall be deemed a representation and warranty by the Fund or the
Investment Manager to the Underwriters as to the statements made therein.
10. EXPENSES. The Fund agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction, and filing
with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the Prospectus and
each amendment or supplement to any of them (including, without limitation, the
filing fees prescribed by the 1933 Act, the 1940 Act and the Rules and
Regulations); (ii) 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 Prepricing Prospectus, the
Prospectus, any sales material and all amendments or supplements to any of them
as may be reasonably requested for use in connection with the offering and sale
of the Shares; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Shares, including any stamp taxes in connection
with the original issuance and sale of the Shares; (iv) the reproduction and
delivery of this Agreement, any dealer agreements, the preliminary blue sky
memorandum, if any, and all other agreements or documents reproduced and
delivered in connection with the offering of the Shares; (v) the reasonable
fees, expenses and disbursements of counsel for the Underwriters relating to
blue sky matters; (vi) fees paid to the Rating Agencies; (vii) the
transportation and other expenses incurred by or on behalf of Fund
representatives in connection with presentations to prospective purchasers of
the Shares; and (viii) the fees and expenses of the Fund's accountants and the
fees and expenses of counsel (including local and special counsel) for the Fund.
11. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective:
(i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at
the time this Agreement is executed and delivered, it is necessary for the
registration statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of the registration statement or such post-effective amendment
has been released by the Commission. Until such time as this Agreement shall
have become effective, it may be terminated by the Fund, by notifying the
Underwriters, or by the Underwriters, by notifying the Fund.
If any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they are obligated to purchase hereunder on the Closing Date,
and the aggregate number of Shares which such defaulting Underwriter or
Underwriters are obligated but fail or refuse to purchase is not more than
one-tenth of the aggregate number of Shares which the Underwriters are obligated
to purchase on the Closing Date, each non-defaulting Underwriter shall be
obligated, severally, in the proportion which the number of Shares set forth
opposite its name in Schedule I hereto bears to the aggregate number of Shares
set forth opposite the names of all non-defaulting Underwriters
24
or in such other proportion as you may specify, to purchase the Shares which
such defaulting Underwriter or Underwriters are obligated, but fail or refuse,
to purchase. If any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase on the Closing Date
and the aggregate number of Shares with respect to which such default occurs is
more than one-tenth of the aggregate number of Shares which the Underwriters are
obligated to purchase on the Closing Date and arrangements satisfactory to you
and the Fund for the purchase of such Shares by one or more non-defaulting
Underwriters or other party or parties approved by you and the Fund are not made
within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter, the Fund or the
Investment Manager. In any such case which does not result in termination of
this Agreement, either you or the Fund shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any such default of any such Underwriter under this Agreement. 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 Fund, purchases Shares which a defaulting Underwriter is
obligated, but fails or refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
12. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in the Underwriters' absolute discretion, without liability on the
part of any Underwriter to the Fund or the Investment Manager, by notice to the
Fund or the Investment Manager, if prior to the Closing Date (i) trading in the
Common Shares or securities generally on the NYSE, American Stock Exchange,
Nasdaq National Market or Nasdaq Stock Market shall have been suspended or
materially limited, (ii) additional material governmental restrictions not in
force on the date of this Agreement have been imposed upon trading in securities
in general, (iii) a general moratorium on commercial banking activities shall
have been declared by either federal or state authorities, or (iv) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or war, or other international or domestic
calamity, crisis or change in political, financial or economic conditions, the
effect of which is to make it, in your judgment, impracticable or inadvisable to
commence or continue the offering of the Shares at the offering price to the
public set forth on the cover page of the Prospectus or to enforce contracts for
the resale of the Shares by the Underwriters. Notice of such termination may be
given to the Fund or the Investment Manager by telegram, telecopy or telephone
and shall be subsequently confirmed by letter.
13. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements set forth
in the [ ] sentence of the [ ] under the caption "Underwriting" constitute the
only information furnished by or on behalf of the Underwriters through you as
such information is referred to in Sections [6(b)] and [8] hereof.
25
14. MISCELLANEOUS. Except as otherwise provided in Sections 5, 11 and
12 hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered:
(a) if to the Fund or the Investment Manager, at the office of the Fund
at:
Xxxxx & Steers Advantage Income Realty Fund, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
(b) or if to you as Representatives of the Underwriters, to:
Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Fund, the Investment Manager, directors and officers, and the
other controlling persons referred to in Section 8 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from the Underwriters of any of the Shares in his
status as such purchaser.
15. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
This Agreement may be signed in various counterparts, which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
[signature page follows]
26
Please confirm that the foregoing correctly sets forth the
agreement among the Fund, the Investment Manager and the several Underwriters.
Very truly yours,
XXXXX & STEERS ADVANTAGE INCOME
REALTY FUND, INC.
By: __________________________________
Title: _________________________________
XXXXX & STEERS CAPITAL MANAGEMENT,
INC.
By: ____________________________________
Title: ___________________________________
Confirmed as of the date first above
mentioned on behalf of themselves
and the other several Underwriters
named in Schedule I hereto.
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
UBS Warburg, LLC
As Representatives of the Underwriters
By: XXXXXXX XXXXX XXXXXX INC.
By: _____________________________
Title: ____________________________
27
SCHEDULE I
Xxxxx & Steers Advantage Income Realty Fund, Inc.
Underwriter Number of Shares
----------- ----------------
Xxxxxxx Xxxxx Xxxxxx Inc.........................................................
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx
Incorporated........................................................
UBS Warburg LLC..................................................................
Total [ ].......................................................
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