RMK Strategic Income Fund, Inc.
(a Maryland Corporation)
Shares of Common Stock
Par Value $.0001 Per Share
UNDERWRITING AGREEMENT
March [__], 2004
Xxxxxx Xxxxxx & Company, Inc.
00 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Ladies and Gentlemen:
RMK Strategic Income Fund, Inc., a Maryland corporation (the "Fund"), and
the Fund's investment adviser, Xxxxxx Asset Management, Inc., a Tennessee
corporation (the "Adviser"), each confirms its agreement with Xxxxxx Xxxxxx &
Company, Inc. ("Xxxxxx Xxxxxx") and Advest, Inc., BB&T Capital Markets, a
division of Xxxxx & Xxxxxxxxxxxx, Inc., Xxxxxx, Xxxxx Xxxxx, Incorporated, Xxxx
Xxxxx Xxxx Xxxxxx, Incorporated, McDonald Investments Inc., a KeyCorp Company,
Xxxxxxxxxxx & Co. Inc., RBC Capital Markets Corporation, Xxxxxxxx Inc., Sterne,
Agee & Xxxxx, Inc., Xxxxxx, Xxxxxxxx & Company, Incorporated, SunTrust Capital
Markets, Inc., X.X. Xxxxxxxxx, Towbin and Wedbush Xxxxxx Securities Inc. and
each of the other Underwriters named in Schedule A hereto (collectively, the
"Underwriters"), for whom Xxxxxx Xxxxxx and Advest, Inc., BB&T Capital Markets,
a division of Xxxxx & Xxxxxxxxxxxx, Inc., Xxxxxx, Xxxxx Xxxxx, Incorporated,
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated, McDonald Investments Inc., a KeyCorp
Company, Xxxxxxxxxxx & Co. Inc., RBC Capital Markets Corporation, Xxxxxxxx Inc.,
Sterne, Agee & Xxxxx, Inc., Xxxxxx, Xxxxxxxx & Company, Incorporated, SunTrust
Capital Markets, Inc., X.X. Xxxxxxxxx, Towbin and Wedbush Xxxxxx Securities Inc.
are acting as representatives (in such capacity, the "Representatives"), with
respect to the issue and sale by the Fund and the purchase by the Underwriters,
acting severally and not jointly, of the respective number of shares of common
stock, par value $.0001 per share, of the Fund ("Common Shares") set forth in
Schedule A hereof, and with respect to the grant by the Fund to the
Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of _________ additional Common
Shares to cover over-allotments, if any. The aforesaid __________ Common Shares
(the "Primary Shares") to be purchased by the Underwriters and all or any part
of the _________ Common Shares subject to the option described in Section 2(b)
hereof (the "Option Shares") are collectively referred to as the "Shares."
The Fund understands that the Underwriters propose to make a public
offering of the Shares as soon as the Representatives deem advisable after this
Agreement has been executed and delivered.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (File Nos. 333-111990 and
811-21487) covering the registration of the Shares under the Securities Act of
1933, as amended (the "1933 Act"), including the related preliminary prospectus
or prospectuses, and a notification on Form N-8A of registration of the Fund as
an investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and the rules and regulations of the Commission under the 1933 Act
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and the 1940 Act (the "Rules and Regulations"). Promptly after execution and
delivery of this Agreement, the Fund will either (i) prepare and file a
prospectus in accordance with the provisions of Rule 430A ("Rule 430A") and
paragraph (c) or (h) of Rule 497 ("Rule 497") of the Rules and Regulations or
(ii) if the Fund has elected to rely upon Rule 434 ("Rule 434") of the Rules and
Regulations, prepare and file a term sheet (a "Term Sheet") in accordance with
the provisions of Rule 434 and Rule 497. The information included in any such
prospectus, that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective, if applicable, (a) pursuant to paragraph (b) of
Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to paragraph
(d) of Rule 434 is referred to as "Rule 434 Information." Each prospectus used
before such registration statement became effective, and any prospectus that
omitted, as applicable, the Rule 430A Information or the Rule 434 Information,
that was used after such effectiveness and prior to the execution and delivery
of this Agreement, including in each case any statement of additional
information incorporated therein by reference, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits and schedules
thereto at the time it became effective and including the Rule 430A Information
or the Rule 434 Information, as applicable, is herein called the "Registration
Statement." Any registration statement filed pursuant to Rule 462(b) of the
Rules and Regulations is herein referred to as the "Rule 462(b) Registration
Statement," and the term "Registration Statement" shall include any Rule 462(b)
Registration Statement that shall have been filed. The final prospectus in the
form first furnished to the Underwriters for use in connection with the offering
of the Shares, including the statement of additional information incorporated
therein by reference, is herein called the "Prospectus." If Rule 434 is relied
on, the term "Prospectus" shall refer to the preliminary prospectus dated
February 24, 2004, including the statement of additional information
incorporated therein by reference, together with the Term Sheet and all
references in this Agreement to the date of the Prospectus shall mean the date
of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("XXXXX").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which are incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
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(a) REPRESENTATIONS AND WARRANTIES BY THE FUND AND THE ADVISER. The
Fund and the Adviser represent and warrant to each Underwriter as of the date
hereof, as of the Closing Time referred to in Section 2(c) hereof, and as of
each Date of Delivery (if any) referred to in Section 2(b) hereof, and agree
with each Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act, or order of
suspension or revocation of registration pursuant to Section 8(e) of the
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1940 Act, and no proceedings for any such purpose, have been instituted or
are pending or, to the knowledge of the Fund or the Adviser, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendment thereto (filed
before the Closing Time) became effective and at the Closing Time, as
hereinafter defined (and, if any Option Shares are purchased, at the Date
of Delivery), the Registration Statement, the Rule 462(b) Registration
Statement, the notification of Form N-8A and all amendments and
supplements thereto complied and will comply in all material respects with
the requirements of the 1933 Act, the 1940 Act and the 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 not misleading.
Neither the Prospectus nor any amendment or supplement thereto, at the
time the Prospectus or any such amendment or supplement was issued and at
the Closing Time (and, if any Option Shares are purchased, at the Date of
Delivery), included or will include an untrue statement of a material fact
or omitted or will omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading. If Rule 434 is used, the Fund will comply
with the requirements of Rule 434 and the Prospectus shall not be
"materially different," as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time it became
effective. The representations and warranties in this subsection shall not
apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Fund by or on behalf of any Underwriter for use in the
Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 497 under the 1933 Act, complied when
so filed in all material respects with the Rules and Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
If a Rule 462(b) Registration Statement is required in connection with the
offering and sale of the Shares, the Fund has complied or will comply with
the requirements of Rule 111 under the 1933 Act Regulations relating to
the payment of filing fees thereof.
(ii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
statement of assets and liabilities included in the Registration Statement
have confirmed to the Fund their status as independent public accountants
as required by the 1933 Act and the Rules and Regulations and the Fund and
the Adviser have no reason to believe that they are not independent public
accountants.
(iii) FINANCIAL STATEMENTS. The statement of assets and liabilities
included in the Registration Statement and the Prospectus, together with
the related notes, presents fairly in accordance with generally accepted
accounting principals ("GAAP") in all material respects the financial
position of the Fund at the date indicated and has been prepared in
conformity in all material respects with GAAP.
(iv) NO MATERIAL ADVERSE CHANGE. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no
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material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Fund, whether
or not arising in the ordinary course of business (other than as a result
of changes in market conditions generally) (a "Material Adverse Effect"),
(B) there have been no transactions entered into by the Fund, other than
those in the ordinary course of business, which are material with respect
to the Fund, and (C) there has been no dividend or distribution of any
kind declared, paid or made by the Fund on any class of its capital stock.
(v) GOOD STANDING OF THE FUND. The Fund has been duly organized and
is validly existing as a corporation in good standing under the laws of
the State of Maryland and has the corporate power and authority to own,
lease and operate its properties and to conduct its business as described
in the Prospectus and to enter into and perform its obligations under this
Agreement; and the Fund is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect.
(vi) NO SUBSIDIARIES. The Fund has no subsidiaries.
(vii) INVESTMENT COMPANY STATUS. The Fund is duly registered with the
Commission under the 1940 Act as a diversified, closed-end management
investment company, and no order of suspension or revocation of such
registration has been issued or proceedings therefor initiated or, to the
Fund's knowledge, threatened by the Commission.
(viii) OFFICERS AND DIRECTORS. 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 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"). Except as disclosed in the
Registration Statement or Prospectus, to the Fund's knowledge after due
inquiry, no director of the Fund is an "interested person" (as defined in
the 0000 Xxx) of the Fund or an "affiliated person" (as defined in the
0000 Xxx) of any Underwriter that serves as a Representative.
(ix) CAPITALIZATION. The authorized, issued and outstanding capital
stock of the Fund is as set forth in the Prospectus as of the date thereof
under the caption "Description of Shares." All issued and outstanding
Common Shares of the Fund have been duly authorized and validly issued and
are fully paid and non-assessable, and have been offered and sold or
exchanged by the Fund in compliance with all applicable laws (including,
without limitation, federal and state securities laws). None of the
outstanding Common Shares of the Fund was issued in violation of the
preemptive or other similar rights of any security holder of the Fund. No
shares of preferred stock of the Fund have been designated, offered, sold
or issued and none of such shares of preferred stock are currently
outstanding.
(x) AUTHORIZATION AND DESCRIPTION OF SHARES. The Shares to be
purchased by the Underwriters from the Fund have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Fund pursuant to this Agreement against
payment of the consideration set forth herein, will be validly issued,
fully paid and non-assessable, except as described in the Registration
Statement. The Common Shares conform in all material respects to all
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statements relating thereto contained in the Prospectus and such
description conforms in all material respects to the rights set forth in
the instruments defining the same; and the issuance of the Shares is not
subject to the preemptive or other similar rights of any security holder
of the Fund.
(xi) ABSENCE OF DEFAULTS AND CONFLICTS. The Fund is not in violation
of its charter or by-laws, or in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any
material contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other 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 Fund is subject (collectively, "Agreements and Instruments")
except for such violations or defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance of this
Agreement, the Investment Advisory Agreement, the Administration
Agreement, the Custodian Agreement and the Transfer Agency and Service
Agreement referred to in the Registration Statement (as used herein,
individually the "Investment Advisory Agreement," the "Administration
Agreement," the "Custodian Agreement" and the "Transfer Agency" and
"Service Agreement," respectively and collectively the "Offering
Agreements") and the consummation of the transactions contemplated in the
Offering Agreements and in the Registration Statement (including the
issuance and sale of the Shares and the use of the proceeds from the sale
of the Shares as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Fund with its obligations thereunder have
been duly authorized by all necessary corporate action and do not and will
not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Fund
pursuant to, the Agreements and Instruments (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
result in a Material Adverse Effect), nor will such action result in any
violation of the provisions of the charter or by-laws of the Fund or any
applicable law, statute, rule, regulation, judgment, order, writ or decree
of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Fund or any of its assets,
properties or operations (except for such violations that would not result
in a Material Adverse Effect). As used herein, a "Repayment Event" means
any event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Fund.
(xii) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Fund or the Adviser, threatened, against or affecting the Fund, which
is required to be disclosed in the Registration Statement (other than as
disclosed therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets of the Fund or
the consummation of the transactions contemplated in this Agreement or the
performance by the Fund of its obligations hereunder. The aggregate of all
pending legal or governmental proceedings to which the Fund is a party or
of which any of its property or assets is the subject which are not
described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Effect.
(xiii) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto by the 1933 Act, the 1940
5
Act or by the Rules and Regulations which have not been so described and
filed as required.
(xiv) POSSESSION OF INTELLECTUAL PROPERTY; FUND NAME. The Fund owns
or possesses, or can acquire on reasonable terms, adequate licenses,
copyrights, know-how (including trade secrets or confidential information,
systems or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary to
carry on the business now operated by the Fund, and the Fund has not
received any notice or is not otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Fund therein, and which infringement or conflict (if the subject of any
unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect.
(xv) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Fund of its
obligations hereunder, in connection with the offering, issuance or sale
of the Shares hereunder or the consummation of the transactions
contemplated by this Agreement, except such as have been already obtained
or as may be required under the 1933 Act, the 1940 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), or under the rules of
the New York Stock Exchange ("NYSE") or the NASD, Inc ("NASD") or state
securities laws.
(xvi) POSSESSION OF LICENSES AND PERMITS. The Fund possesses such
permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to operate
its properties and to conduct the business as contemplated in the
Prospectus. The Fund is in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply would
not, singly or in the aggregate, have a Material Adverse Effect. All of
the Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect. The Fund has not received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xvii) ADVERTISEMENTS. Any advertising, sales literature or other
promotional material (including "prospectus wrappers," "broker kits,"
"road show slides" and "road show scripts" and "electronic road show
presentations") authorized in writing by or prepared by the Fund or the
Adviser used in connection with the public offering of the Shares
(collectively, "Sales Material") does not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading. Moreover, all
Sales Material complied and will 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 (except that
this representation and warranty does not apply to statements in or
omissions from the Sales Material made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Fund by or
on behalf of any Underwriter through you expressly for use therein).
6
(xviii) SUBCHAPTER M. The Fund intends to direct the investment of
the proceeds of the offering described in the Registration Statement in
such a manner as to comply with the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended ("Subchapter M of the Code"
and the "Code," respectively), and intends to qualify as a regulated
investment company under Subchapter M of the Code.
(xix) DISTRIBUTION OF OFFERING MATERIALS. The Fund has not
distributed and, prior to the later of (A) the Closing Time and (B)
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, a preliminary prospectus, the
Prospectus or other materials, if any, permitted by the 1933 Act or the
1940 Act or the Rules and Regulations.
(xx) ACCOUNTING CONTROLS. The Fund maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or
specific authorization and with the applicable requirements of the 1940
Act, the Rules and Regulations, the NASD and the Code; (B) 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 Rules and Regulations; (C)
access to assets is permitted only in accordance with the management's
general or specific authorization; and (D) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxi) ABSENCE OF UNDISCLOSED PAYMENTS. 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.
(xxii) MATERIAL AGREEMENTS. The Offering Agreements have each been
duly authorized by all requisite action on the part of the Fund and
executed and delivered by the Fund, as of the dates noted therein, and
each complies with all applicable provisions of the 1940 Act in all
material respects. Assuming due authorization, execution and delivery by
the other parties thereto with respect to the Investment Advisory
Agreement, the Administration Agreement, the Custodian Agreement and the
Transfer Agency and Service Agreement, each Offering Agreement constitutes
a valid and binding agreement of the Fund, enforceable in accordance with
its terms, except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing and except as rights to
indemnification or contribution thereunder may be limited by federal or
state laws.
(xxiii)REGISTRATION RIGHTS. There are no persons with registration
rights or other similar rights to have any securities registered pursuant
to the Registration Statement or otherwise registered by the Fund under
the 1933 Act.
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(xxiv) NYSE LISTING. The Shares have been duly authorized for
listing, upon notice of issuance, on the NYSE and the Fund's registration
statement on Form 8-A under the 1934 Act has become effective.
(b) REPRESENTATIONS AND WARRANTIES BY THE ADVISER. The Adviser represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof as follows:
(i) GOOD STANDING OF THE ADVISER. The Adviser has been duly organized
and is validly existing and in good standing as a corporation under the
laws of the State of Tennessee with full power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and is duly qualified as a foreign company to transact business
and is in good standing in each other jurisdiction in which such
qualification is required except as would not, individually or in the
aggregate, result in a material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospectus
of such Adviser, whether or not arising in the ordinary course of business
(an "Adviser Material Adverse Effect").
(ii) INVESTMENT ADVISER STATUS. The Adviser is duly registered and in
good standing with the Commission as an investment adviser under the
Advisers Act, and is not prohibited by the Advisers Act, the 1940 Act, or
the rules and regulations under such acts, from acting under the
Investment Advisory Agreement for the Fund as contemplated by the
Prospectus.
(iii) DESCRIPTION OF ADVISER. The description of the Adviser in the
Registration Statement and the Prospectus (including 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 is true and
correct and does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(iv) CAPITALIZATION. The Adviser has the financial resources
available to it necessary for the performance of its services and
obligations as contemplated in the Prospectus, this Agreement and under
the Investment Advisory Agreement and the Administration Agreement.
(v) AUTHORIZATION OF AGREEMENTS; ABSENCE OF DEFAULTS AND CONFLICTS.
This Agreement, the Investment Advisory Agreement, and the Administration
Agreement have each been duly authorized, executed and delivered by the
Adviser, and (assuming the due authorization, execution and delivery of
each other party thereto) the Investment Advisory Agreement and the
Administration Agreement each constitutes a valid and binding obligation
of the Adviser, enforceable in accordance with its terms, except as
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and general equitable principles (whether considered in a
proceeding in equity or at law) or an implied covenant of good faith and
fair dealing and except as rights to indemnification or contribution
thereunder may be limited by federal or state laws; and neither the
execution and delivery of this Agreement, the Investment Advisory
Agreement, the Administration Agreement nor the performance by the Adviser
of its obligations hereunder or thereunder will conflict with, or result
in a breach of any of the terms and provisions of, or constitute, with or
8
without the giving of notice or lapse of time or both, a default under,
(i) any agreement or instrument to which the Adviser is a party or by
which it is bound, (ii) the charter, the by-laws or other organizational
documents of the Adviser, or (iii) to the Adviser's knowledge, by any law,
order, decree, rule or regulation applicable to it of any jurisdiction,
court, federal or state regulatory body, administrative agency or other
governmental body, stock exchange or securities association having
jurisdiction over the Adviser or its properties or operations other than
any conflict, breach or default that would not, individually or in the
aggregate, reasonably be expected to result in an Adviser Material Adverse
Effect; and no consent, approval, authorization or order of any court or
governmental authority or agency is required for the consummation by the
Adviser of the transactions contemplated by this Agreement, the Investment
Advisory Agreement, the Administration Agreement, except as have been
obtained or will be obtained prior to the Closing Time or may be required
under the 1933 Act, the 1940 Act, the 1934 Act or state securities laws.
(vi) NO MATERIAL ADVERSE CHANGE. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred any
event which would reasonably be expected to have a material adverse effect
on the ability of the Adviser to perform its respective obligations under
this Agreement, the Investment Advisory Agreement, and the Administration
Agreement.
(vii) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Adviser, threatened against or affecting the Adviser or any
"affiliated person" of the Adviser (as such term is defined in the 0000
Xxx) or any partners, directors, officers or employees of the foregoing,
whether or not arising in the ordinary course of business, which would
reasonably be expected to result in Adviser Material Adverse Effect or,
materially and adversely affect the ability of the Adviser to function as
an investment adviser with respect to the Fund or perform its obligations
under the Investment Advisory Agreement, or which is required to be
disclosed in the Registration Statement and the Prospectus.
(viii) ABSENCE OF VIOLATION OR DEFAULT. The Adviser is not in
violation of its charter, by-laws or other organizational documents or in
default under any agreement, indenture or instrument, except for such
violations or defaults that would not result in an Adviser Material
Adverse Effect.
(c) OFFICER'S CERTIFICATES. Any certificate signed by any officer of the
Fund or the Adviser delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by the Fund or the
Adviser, as the case may be, to each Underwriter as to the matters covered
thereby.
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.
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(a) PRIMARY SHARES. On the basis of the representations, warranties and
covenants contained herein and subject to the terms and conditions set forth
herein, the Fund agrees to sell to each Underwriter, severally and not jointly,
and each Underwriter, severally and not jointly, agrees to purchase from the
Fund, at the price per share set forth in Schedule B, the number of Primary
Shares set forth in Schedule A opposite the name of such Underwriter, plus any
additional number of Primary Shares which such Underwriter may become obligated
to purchase pursuant to the provisions of Section 10 hereof.
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(b) OPTION SHARES. In addition, on the basis of the representations and
warranties contained herein and subject to the terms and conditions set forth
herein, the Fund hereby grants an option to the Underwriters, severally and not
jointly, to purchase up to an additional 3,150,000 Common Shares in the
aggregate at the price per share set forth in Schedule B, less an amount per
share equal to any dividends or distributions declared by the Fund and payable
on the Primary Shares but not payable on the Option Shares. The option hereby
granted will expire 45 days after the date hereof and may be exercised in whole
or in part from time to time only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the
Primary Shares upon notice by the Representatives to the Fund setting forth the
number of Option Shares as to which the several Underwriters are then exercising
the option and the time and date of payment and delivery for such Option Shares.
Any such time and date of delivery (a "Date of Delivery") shall be determined by
the Representatives, but shall not be later than seven (7) full business days
and no earlier than three (3) full business days after the exercise of said
option, nor in any event prior to the Closing Time. If the option is exercised
as to all or any portion of the Option Shares, each of the Underwriters, acting
severally and not jointly, will purchase that proportion of the total number of
Option Shares then being purchased which the number of Primary Shares set forth
in Schedule A opposite the name of such Underwriter bears to the total number of
Primary Shares, subject in each case to such adjustments as Xxxxxx Xxxxxx in its
discretion shall make to eliminate any sales or purchases of a fractional number
of Option Shares plus any additional number of Option Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates, if any, for the Primary Shares shall be made at the offices of
Bass, Xxxxx & Xxxx PLC, 000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxx 00000
or at such other place as shall be agreed upon by the Representatives and the
Fund, at 10:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs
after 4:30 P.M. (Eastern time) on any given day) business day after the date
hereof (unless postponed in accordance with the provisions of Section 10), or
such other time not later than ten (10) business days after such date as shall
be agreed upon by the Representatives and the Fund (such time and date of
payment and delivery being herein called "Closing Time"). In addition, in the
event that any or all of the Option Shares are purchased by the Underwriters,
payment of the purchase price for such Option Shares shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Representatives and the Fund, on each Date of Delivery as specified in the
notice from the Representatives to the Fund.
Payment shall be made to the Fund by wire transfer of immediately
available funds to a bank account designated by the Fund, against delivery to
the Representatives for the respective accounts of the Underwriters of the
Shares to be purchased by them. It is understood that each Underwriter has
authorized the Representatives, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Primary Shares and the
Option Shares, if any, which it has agreed to purchase. Xxxxxx Xxxxxx,
individually and not as representative of the Underwriters, may (but shall not
be obligated to) make payment of the purchase price for the Primary Shares or
the Option Shares, if any, to be purchased by any Underwriter whose funds have
not been received by the Closing Time or the relevant Date of Delivery, as the
case may be, but such payment shall not relieve such Underwriter from its
obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Primary Shares and
the Option Shares, if any, shall be in such denominations and registered in such
names as the Representatives may request in writing at least three (3) full
business days before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Primary Shares and the Option Shares, if
the Fund determines to issue any such certificates, will be made available for
examination and packaging by the Representatives in the City of New York not
10
later than 10:00 A.M. (Eastern time) on the business day prior to the Closing
Time or the relevant Date of Delivery, as the case may be. The Primary Shares
and the Option Shares to be purchased hereunder shall be delivered to you at the
Closing Time or the relevant Date of Delivery, as the case may be, through the
facilities of the Depository Trust Company or another mutually agreeable
facility, against payment of the purchase price therefor in immediately
available funds to the order of the Fund.
SECTION 3. COVENANTS.
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(a) The Fund and Adviser, covenant with each Underwriter as follows:
(i) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.
The Fund, subject to Section 3(a)(ii), will comply with the requirements
of Rule 430A or Rule 434, as applicable, and will notify the
Representatives as soon as practicable, and confirm the notice in writing,
(i) when any post-effective amendment to the Registration Statement shall
become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from
the Commission, (iii) of any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the
Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of
the Shares for offering or sale in any jurisdiction, or of the initiation
or threatening of any proceedings for any of such purposes. The Fund will
promptly effect the filings necessary pursuant to Rule 497 and will take
such steps as it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 497 was received for filing
by the Commission and, in the event that it was not, it will promptly file
such prospectus. The Fund will make every reasonable effort to prevent the
issuance of any stop order, or order of suspension or revocation of
registration pursuant to Section 8(e) of the 1940 Act, and, if any such
stop order or order of suspension or revocation of registration is issued,
to obtain the lifting thereof at the earliest possible moment.
(ii) FILING OF AMENDMENTS. The Fund will give the Representatives
notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or
to the Prospectus, and will furnish the Representatives with copies of any
such documents a reasonable amount of time prior to such proposed filing
or use, as the case may be, and will not file or use any such document to
which the Representatives or counsel for the Underwriters shall reasonably
object; provided, however that this covenant shall not apply to any
post-effective amendment required by Rule 8b-16 of the 1940 Act which is
filed with the Commission after the later of (x) one year from the date of
this Agreement or (y) the date on which the distribution of the Shares is
completed.
(iii) DELIVERY OF REGISTRATION STATEMENTS. The Fund has furnished or
will deliver to the Representatives and counsel for the Underwriters,
without charge, signed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the Representatives,
without charge, a conformed copy of the Registration Statement as
originally filed and of each amendment (except any post-effective
amendment required by Rule 8b-16 of the 1940 Act which is filed with the
Commission after the later of (x) one year from the date of this Agreement
11
or (y) the date on which the distribution of the Shares is completed)
thereto (without exhibits) for each of the Underwriters. The copies of the
Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(iv) DELIVERY OF PROSPECTUSES. The Fund has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Fund hereby consents to
the use of such copies for purposes permitted by the 1933 Act. The Fund
will furnish to each Underwriter, without charge, during the period when
the Prospectus is required to be delivered under the 1933 Act or the 1934
Act, such number of copies of the Prospectus (as amended or supplemented)
as such Underwriter may reasonably request. The Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by Regulation
S-T.
(v) CONTINUED COMPLIANCE WITH SECURITIES LAWS. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with
sales of the Shares, any event shall occur or condition shall exist as a
result of which it is necessary, in the reasonable opinion of counsel for
the Underwriters or for the Fund, to amend the Registration Statement or
amend or supplement the Prospectus in order that the Prospectus will not
include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of
such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the
requirements of the 1933 Act or the Rules and Regulations, the Fund will
promptly prepare and file with the Commission, subject to Section
3(a)(ii), such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Fund will furnish to the
Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(vi) BLUE SKY QUALIFICATIONS. The Fund will use its best efforts, in
cooperation with the Underwriters, to qualify the Shares for offering and
sale under the applicable securities laws of such states and other
jurisdictions of the United States as the Representatives may designate
and to maintain such qualifications in effect so long as required for the
distribution of the Shares; provided, however, that the foregoing shall
not apply to the extent that the Shares are "covered securities" that are
exempt from state regulation of securities offerings pursuant to Section
18 of the 1933 Act; and provided, further, that the Fund shall not be
obligated to file any general consent to service of process or to qualify
as a foreign corporation or as a dealer in securities in any jurisdiction
in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise
so subject.
(vii) RULE 158. The Fund will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
security holders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
12
(viii) USE OF PROCEEDS. The Fund will use the net proceeds received
by it from the sale of the Shares in the manner specified in the
Prospectus under "Use of Proceeds."
(ix) LISTING. The Fund will use its best efforts to effect the
listing of the Shares on the NYSE, subject to notice of issuance, no later
than two weeks after the effectiveness of the Registration Statement.
(x) RESTRICTION ON SALE OF SHARES. During a period of 180 days from
the date of the Prospectus, the Fund will not, without the prior written
consent of Xxxxxx Xxxxxx, (A) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase
or otherwise transfer or dispose of Common Shares or any securities
convertible into or exercisable or exchangeable for Common Shares or file
any registration statement under the 1933 Act with respect to any of the
foregoing or (B) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly,
the economic consequence of ownership of the Common Shares, whether any
such swap or transaction described in clause (A) or (B) above is to be
settled by delivery of Common Shares or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to the Shares to be sold
hereunder or the Common Shares issued pursuant to any dividend
reinvestment plan.
(xi) REPORTING REQUIREMENTS. The Fund, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant
to the 1940 Act and the 1934 Act within the time periods required by the
1940 Act and the Rules and Regulations and the 1934 Act and the rules and
regulations of the Commission thereunder, respectively.
(xii) SUBCHAPTER M. The Fund will use its best efforts to maintain
its qualification as a regulated investment company under Subchapter M of
the Code.
(xiii) NO MANIPULATION OF MARKET FOR SHARES. Except for the
authorization of actions permitted to be taken by the Underwriters as
contemplated herein or in the Prospectus, the Fund will not (a) take,
directly or indirectly, any action designed to cause or to result in, or
that might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Fund to facilitate the
sale or resale of the Shares in violation of federal or state securities
laws, and (b) until the Closing Time, or the Date of Delivery, if any, (i)
except for Share repurchases permitted in accordance with applicable laws
and issuances of Shares or purchases of Shares in the open market pursuant
to the Fund's dividend reinvestment plan, sell, bid for or purchase the
Shares or pay any person any compensation for soliciting purchases of the
Shares or (ii) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the Fund.
(xiv) RULE 462(B) REGISTRATION STATEMENT. If the Fund elects to rely
upon Rule 462(b), the Fund shall file a Rule 462(b) Registration Statement
with the Commission in compliance with Rule 462(b) by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement, and the Fund shall
at the time of filing either pay to the Commission the filing fee for the
Rule 462(b) Registration Statement or give irrevocable instructions for
the payment of such fee pursuant to Rule 111(b) under the 1933 Act.
SECTION 4. PAYMENT OF EXPENSES.
--------- -------------------
13
(a) EXPENSES. The Fund will pay all expenses incident to the performance
of its obligations under this Agreement, including (i) the preparation, printing
and filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery to the Underwriters of this Agreement, any
Agreement among Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Shares, (iii) the preparation, issuance and delivery of the certificates for the
Shares, if any, to the Underwriters, including any stock or other transfer taxes
and any stamp or other duties payable upon the sale, issuance or delivery of the
Shares to the Underwriters, (iv) the fees and disbursements of the Fund's
counsel, accountants and other advisers, (v) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, Prospectus and any
amendments or supplements thereto, (vi) the fees and expenses of any transfer
agent or registrar for the Shares, (vii) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the NASD of the terms of the sale of the Shares, (viii) the
fees and expenses incurred in connection with the listing of the Shares on the
NYSE (ix) the printing of any Sales Material and (x) the transportation,
lodging, graphics and other expenses of the Fund and its officers related to the
preparation for and participation by the Fund and its officers in the roadshow.
The Adviser has agreed to pay organizational expenses and offering costs (other
than sales load) of the Fund that exceed $0.05 per Common Share.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section 9(a)
hereof, the Fund or the Adviser, shall reimburse, or arrange for an affiliate to
reimburse, the Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriters.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.
--------- ---------------------------------------
The obligations of the several Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Fund and the Adviser
contained in Section 1 hereof or in certificates of any officer of the Fund or
the Adviser delivered pursuant to the provisions hereof, to the performance by
the Fund and the Adviser of their respective covenants and other obligations
hereunder, and to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act, no notice or order pursuant
to Section 8(e) of the 1940 Act shall have been issued, and no proceedings with
respect to either shall have been initiated or, to the Fund's knowledge,
threatened by the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the Underwriters. A prospectus containing the Rule
430A Information shall have been filed with the Commission in accordance with
Rule 497 (or a post-effective amendment providing such information shall have
been filed and declared effective in accordance with the requirements of Rule
430A) or, if the Fund has elected to rely upon Rule 434, a Term Sheet shall have
been filed with the Commission in accordance with Rule 497.
(b) OPINION OF COUNSEL FOR THE FUND AND THE ADVISER. At Closing Time, the
Representatives shall have received the favorable opinions, dated as of Closing
Time, from Xxxxxxxxxxx & Xxxxxxxx LLP, counsel for the Fund and Xxxxxx
Xxxxxxxx, Esq., counsel for the Adviser, as to matters set forth in Schedule C
and D hereto.
14
(c) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, from Bass, Xxxxx & Xxxx, PLC, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in Section 1 hereof, clauses (a) (i),
(ii), (vi), (vii) (solely as to preemptive or other similar rights arising by
operation of law or under the charter or by-laws of the Fund), (viii) through
(x), inclusive, and (xiv) (solely as to the information in the Prospectus under
"Description of Shares"). In giving such opinion such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the law of the
State of Tennessee and the federal law of the United States, upon the opinions
of counsel satisfactory to the Representatives. Such counsel may also state
that, insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Fund and
certificates of public officials.
(d) OFFICERS' CERTIFICATES. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Fund, whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of a duly authorized officer
of the Fund and of the chief financial or chief accounting officer of the Fund
and of the President or a Vice President or Managing Director of the Adviser,
dated as of Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Sections 1(a) and (b)
hereof are true and correct with the same force and effect as though expressly
made at and as of Closing Time, (iii) the Fund or the Adviser, as applicable,
has complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time, and (iv) no stop order
suspending the effectiveness of the Registration Statement, or order of
suspension or revocation of registration pursuant to Section 8(e) of the 1940
Act, has been issued and no proceedings for any such purpose have been
instituted or, to the knowledge of the Fund or the Adviser, are pending or are
contemplated by the Commission.
(e) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the Representatives shall have received from PricewaterhouseCoopers
("PwC") a letter dated such date, in form and substance satisfactory to the
Representatives, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(f) BRING-DOWN COMFORT LETTER. At Closing Time, the Representatives shall
have received from PwC a letter, dated as of Closing Time, to the effect that
they reaffirm the statements made in the letter furnished pursuant to subsection
(e) of this Section, except that the specified date referred to shall be a date
not more than three (3) business days prior to Closing Time.
(g) APPROVAL OF LISTING. At Closing Time, the Shares shall have been
approved for listing on the NYSE, subject only to official notice of issuance.
(h) EXECUTION OF ADDITIONAL COMPENSATION AGREEMENT. At Closing Time,
Xxxxxx Xxxxxx shall have received the Additional Compensation Agreement, dated
the date of the Closing Time, as executed by the Adviser.
(i) NO OBJECTION. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
15
terms and arrangements.
(j) CONDITIONS TO PURCHASE OF OPTION SHARES. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Shares, the representations and warranties of
the Fund contained herein and the statements in any certificates furnished by
the Fund hereunder shall be true and correct as of each Date of Delivery and, at
the relevant Date of Delivery, the Representatives shall have received:
(i) OFFICERS' CERTIFICATES. Certificates, dated such Date of
Delivery, of a duly authorized officer of the Fund and of the chief
financial or chief accounting officer of the Fund and of the President or
a Vice President or Managing Director of the Adviser confirming that the
information contained in the certificate delivered by each of them at the
Closing Time pursuant to Section 5(d) hereof remains true and correct as
of such Date of Delivery.
(ii) OPINIONS OF COUNSEL FOR THE FUND AND THE ADVISER. The favorable
opinion of Xxxxxxxxxxx & Xxxxxxxx LLP, counsel for the Fund and Xxxxxx
Xxxxxxxx, Esq., counsel for the Adviser, dated such Date of Delivery,
relating to the Option Shares to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(b)
hereof.
(iii) OPINION OF COUNSEL FOR THE UNDERWRITERS. The favorable opinion
of Bass, Xxxxx & Xxxx PLC, counsel for the Underwriters, dated such Date
of Delivery, relating to the Option Shares to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Section 5(c) hereof.
(iv) BRING-DOWN COMFORT LETTER. A letter from PwC, in form and
substance satisfactory to the Representatives and dated such Date of
Delivery, substantially in the same form and substance as the letter
furnished to the Representatives pursuant to Section 5(f) hereof, except
that the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than five (5) days prior to such Date
of Delivery.
(k) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may reasonably require for the purpose of enabling them to pass
upon the issuance and sale of the Shares as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions herein contained; and all proceedings taken
by the Fund and the Adviser in connection with the organization and registration
of the Fund under the 1940 Act and the issuance and sale of the Shares as herein
contemplated shall be reasonably satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(l) TERMINATION OF AGREEMENT. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option Shares, on
a Date of Delivery which is after the Closing Time, the obligations of the
several Underwriters to purchase the relevant Option Shares, may be terminated
by the Representatives by notice to the Fund at any time at or prior to Closing
Time or such Date of Delivery, as the case may be, and such termination shall be
without liability of any party to any other party except as provided in Section
4 and except that Sections 1, 6, 7, 8 and 13 shall survive any such termination
and remain in full force and effect.
16
SECTION 6. INDEMNIFICATION.
--------- ---------------
(a) INDEMNIFICATION OF UNDERWRITERS. The Fund and the Adviser agree to
indemnify and hold harmless each Underwriter 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, and any director, officer, employee or affiliate
thereof as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information
and the Rule 434 Information, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(e) below) any such settlement is effected with the written consent of
the Fund; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Xxxxxx Xxxxxx), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above; provided, however, that this indemnity agreement shall not
apply to any loss, liability, claim, damage or expense to the extent
arising out of any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Fund or the Adviser by any Underwriter
through Xxxxxx Xxxxxx or its counsel expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information
and the Rule 434 Information, if applicable, or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto); and provided
further that the Fund or the Adviser will not be liable to any Underwriter
with respect to any Prospectus to the extent that the Fund or the Adviser
shall sustain the burden of proving that any such loss, liability, claim,
damage or expense resulted from the fact that such Underwriter, in
contravention of a requirement of this Agreement or applicable law, sold
Shares to a person to whom such Underwriter failed to send or give, at or
prior to the Closing Time, a copy of the final Prospectus, as then amended
or supplemented if: (i) the Fund has previously furnished copies thereof
(sufficiently in advance of the Closing Time to allow for distribution by
the Closing Time) to the Underwriter and the loss, liability, claim,
damage or expense of such Underwriter resulted from an untrue statement or
omission of a material fact contained in or omitted from the preliminary
Prospectus which was corrected in the final Prospectus as, if applicable,
amended or supplemented prior to the Closing Time and such final
Prospectus was required by law to be delivered at or prior to the written
17
confirmation of sale to such person and (ii) such failure to give or send
such final Prospectus by the Closing Time to the party or parties
asserting such loss, liability, claim, damage or expense would have
constituted a defense to the claim asserted by such person.
(b) INDEMNIFICATION OF FUND, ADVISER, DIRECTORS AND OFFICERS. Each
Underwriter severally agrees to indemnify and hold harmless the Fund and the
Adviser, their respective directors, each of the Fund's officers who signed the
Registration Statement, and each person, if any, who controls the Fund or the
Adviser within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Fund or the Adviser by such Underwriter
through Xxxxxx Xxxxxx or its counsel expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) INDEMNIFICATION FOR MARKETING MATERIALS. In addition to the foregoing
indemnification, the Fund and the Adviser also agree to indemnify and hold
harmless each Underwriter 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,
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 6(a), as limited by the proviso set forth
therein, with respect to any Sales Material in the form approved by the Fund and
the Adviser for use by the Underwriters and securities firms to whom the Fund or
the Adviser shall have disseminated materials in connection with the public
offering of the Shares.
(d) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Xxxxxx Xxxxxx, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Fund and the Adviser. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
19
(e) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement; provided that an indemnifying party shall not be liable for any such
settlement effected without its consent if such indemnifying party, prior to the
date of such settlement, (1) reimburses such indemnified party in accordance
with such request for the amount of such fees and expenses of counsel as the
indemnifying party believes in good faith to be reasonable, and (2) provides
written notice to the indemnified party that the indemnifying party disputes in
good faith the reasonableness of the unpaid balance of such fees and expenses.
(f) LIMITATIONS ON INDEMNIFICATION. Any indemnification by the Fund shall
be subject to the requirements and limitations of Section 17(i) of the 1940 Act
and 1940 Act Release 11330.
SECTION 7. CONTRIBUTION.
--------- -------------
If the indemnification provided for in Section 6 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Fund and the Adviser on the one hand and the
Underwriters on the other hand from the offering of the Shares pursuant to this
Agreement or (ii) if the allocation provided by clause (i) 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 Adviser on the one hand and of the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Fund and the Adviser on the one hand
and the Underwriters on the other hand in connection with the offering of the
Shares pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Shares pursuant
to this Agreement (before deducting expenses) received by the Fund and the total
underwriting discount received by the Underwriters (whether from the Fund or
otherwise), in each case as set forth on the cover of the Prospectus or, if Rule
434 is used, the corresponding location on the Term Sheet, bear to the aggregate
initial public offering price of the Shares as set forth on such cover.
The relative fault of the Fund and the Adviser on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Fund or the Adviser or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Fund, the Adviser and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
19
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of any 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 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Fund and each director of the Adviser, respectively, each
officer of the Fund who signed the Registration Statement, and each person, if
any, who controls the Fund or the Adviser, within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Fund and the Adviser, respectively. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Primary Shares set forth opposite their respective
names in Schedule A hereto and not joint.
Any contribution by the Fund shall be subject to the requirements and
limitations of Section 17(i) of the 1940 Act and 1940 Act Release 11330.
SECTION 8. REPRESENTATIONS AND WARRANTIES TO SURVIVE DELIVERY.
--------- --------------------------------------------------
All representations, warranties and agreements contained in this Agreement
or in certificates of officers of the Fund or the Adviser submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or controlling person, or
by or on behalf of the Fund or the Adviser, and shall survive delivery of the
Shares to the Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
--------- ------------------------
(a) TERMINATION; GENERAL. The Representatives may terminate this
Agreement, by notice to the Fund, at any time at or prior to Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund or the Adviser,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or the international financial markets, any material outbreak of
hostilities or material escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national or
20
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Representatives,
impracticable or inadvisable to market the Shares or to enforce contracts for
the sale of the Shares, or (iii) if trading in the Common Shares of the Fund has
been suspended or materially limited by the Commission or the NYSE, or if
trading generally on the American Stock Exchange or in the NASDAQ National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the NASD
or any other governmental authority, or a material disruption has occurred in
commercial banking or securities settlement or clearance services in the United
States, or (iv) if a banking moratorium has been declared by either Federal or
Tennessee authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7, 8 and 13 shall survive such termination and remain in full force and effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS.
---------- ------------------------------------------
If one or more of the Underwriters shall fail at Closing Time or any Date
of Delivery to purchase the Shares which it or they are obligated to purchase
under this Agreement (the "Defaulted Shares"), the Representatives shall have
the right, within 24 hours thereafter, to make arrangements for one or more of
the non-defaulting Underwriters, or any other underwriters, to purchase all, but
not less than all, of the Defaulted Shares in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representatives shall not
have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Shares does not exceed 10% of the number of
Shares to be purchased on such date, each of the non-defaulting Underwriters
shall be obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Shares exceeds 10% of the number of Shares
to be purchased on such date, this Agreement or, with respect to any Date of
Delivery which occurs after the Closing Time, the obligation of the Underwriters
to purchase and of the Fund to sell the Option Shares to be purchased and sold
on such Date of Delivery shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Fund to sell the relevant Option Shares, as the
case may be, either the Representatives or the Fund shall have the right to
postpone Closing Time or the relevant Date of Delivery, as the case may be, for
a period not exceeding seven (7) days in order to effect any required changes in
the Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
21
SECTION 11. TAX DISCLOSURE.
---------- --------------
Notwithstanding any other provision of this Agreement, from the
commencement of discussions with respect to the transactions contemplated
hereby, the Fund and the Advisers (and each employee, representative or other
agent of the Fund or the Advisers) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure (as such terms are
used in Sections 6011, 6111 and 6112 of the U.S. Code and the Treasury
Regulations promulgated thereunder) of the transactions contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided relating to such tax treatment and tax structure.
SECTION 12. NOTICES.
---------- --------
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representatives, Xxxxxx Xxxxxx & Company, Inc., 00 Xxxxx Xxxxx Xxxxxx, 00xx
Xxxxx, Xxxxxxx, Xxxxxxxxx 00000, attention of Equity Capital Markets; and
notices to the Fund or the Adviser shall be directed, as appropriate, to the
office of Xxxxxx Asset Management, Inc., Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx
00000, attention of Xxxxxxx X. Xxxxxxx.
SECTION 13. PARTIES.
---------- -------
This Agreement shall each inure to the benefit of and be binding upon the
Underwriters, the Fund, the Adviser and their respective partners and
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Fund, the Adviser and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters, the Fund, the
Adviser and their respective partners and successors, and said controlling
persons and officers, directors and their heirs and legal representatives, and
for the benefit of no other person, firm or corporation. No purchaser of Shares
from any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 14. GOVERNING LAW AND TIME.
---------- ----------------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TENNESSEE APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SAID STATE. UNLESS OTHERWISE EXPLICITLY PROVIDED, SPECIFIED TIMES OF DAY
REFER TO MEMPHIS CITY TIME.
SECTION 15. EFFECT OF HEADINGS.
---------- ------------------
The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.
22
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriters, the Fund and the Adviser in accordance with its terms.
Very truly yours,
RMK STRATEGIC INCOME FUND, INC.
By:
----------------------------------------
Name:
Title:
XXXXXX ASSET MANAGEMENT, INC.
By:
----------------------------------------
Name:
Title:
Confirmed and accepted in Memphis, Tennessee
as of the date first above written, by Xxxxxx Xxxxxx & Company, Inc.
on behalf of the Underwriters named in Schedule A hereto.
By:
------------------------------------------------------
Name:
Title:
23
SCHEDULE A
Number of
Name of Underwriter Primary Shares
------------------- --------------
Xxxxxx Xxxxxx & Company, Inc.
Advest, Inc.
BB&T Capital Markets, a division of Xxxxx & Xxxxxxxxxxxx, Inc.
Xxxxxx, Xxxxx Xxxxx, Incorporated
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
McDonald Investments Inc., a KeyCorp Company
Xxxxxxxxxxx & Co. Inc.
RBC Capital Markets Corporation
Xxxxxxxx Inc.
Sterne, Agee & Xxxxx, Inc.
Xxxxxx, Xxxxxxxx & Company, Incorporated
SunTrust Capital Markets, Inc.
X.X. Xxxxxxxxx, Towbin
Wedbush Xxxxxx Securities Inc.
TOTAL 21,000,000
-----------
24
SCHEDULE B
RMK Strategic Income Fund, Inc.
Common Shares
1. The initial public offering price per share for the Shares, determined
as provided in said Section 2, shall be $15.00.
2. The purchase price per share for the Shares to be paid by the several
Underwriters shall be $14.325, being an amount equal to the initial public
offering price set forth above less $0.675 per share; provided that the purchase
price per share for any Option Shares purchased upon the exercise of the
over-allotment option described in Section 2(b) shall be reduced by an amount
per share equal to any dividends or distributions declared by the Fund and
payable on the Primary Shares but not payable on the Option Shares.
25
Schedule C
Form of Opinion for the Fund
26
Schedule D
Form of Opinion for the Adviser
27
