1838 BOND-DEBENTURE FUND.
1,224,419 Shares of Common Stock
Issuable Upon Exercise of Transferable Rights
to Subscribe for Such Shares of Common Stock
FORM OF DEALER MANAGER AGREEMENT
October __, 2003
Boenning & Scattergood, Inc.
4 Tower Bridge
000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxxxxxxxx, XX 00000-2979
Ladies and Gentlemen:
1838 Bond-Debenture Fund, a Delaware corporation (the "Company"), confirms its
agreement with and appointment of Xxxxxxxx & Scattergood, Inc. to act as dealer
manager (the "Dealer Manager") in connection with the issuance by the Company to
the holders of record at the close of business on November __, 2003, or such
other date as is established as the record date for such purpose (each a
"Holder" and collectively the "Holders"), of transferable rights entitling such
Holders to subscribe for 1,234,420 shares (each a "Share" and collectively the
"Shares") of common stock, par value $0.01 per share (the "Common Stock"), of
the Company (the "Offer"). Pursuant to the terms of the Offer, the Company is
issuing each Holder one transferable right (each a "Right" and collectively the
"Rights") for each share of Common Stock held by such Holder on the record date
(the "Record Date") set forth in the Prospectus (as defined herein). Such Rights
entitle Holders to acquire during the subscription period (the "Subscription
Period") set forth in the Prospectus, at the price (the "Subscription Price")
set forth in such Prospectus, one Share for each three Rights exercised on the
terms and conditions set forth in such Prospectus. No fractional shares will be
issued. Any Holder who fully exercises all Rights initially issued to such
Holder will be entitled to subscribe for, subject to allotment, any unsubscribed
Shares (the "Over-Subscription Privilege"). The Company also confirms its
agreement with the Dealer Manager that it will offer to the Dealer Manager any
unsubscribed for Shares after the expiration of the Subscription Period as
provided in this agreement and that the Dealer Manager may, but is under no
obligation to, purchase such Shares and resell such Shares to the public or to
members of a selling group.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N- 2 (File Nos. 333-108359 and
811-02201) and a related preliminary prospectus and preliminary statement of
additional information for the registration of the Shares under the Securities
Act of 1933, as amended (the "Securities Act"), the Investment Company Act of
1940, as amended (the "Investment Company Act"), and the rules and regulations
of the Commission under the Securities Act and the Investment Company Act (the
"Rules and Regulations"), and has filed such amendments to such registration
statement on Form N-2, if any, and such amended preliminary prospectuses and
preliminary statements of additional information as may have been required to
the date hereof. If the registration statement has not become effective, a
further amendment to such registration statement, including forms of a final
prospectus and final statement of additional information necessary to permit
such registration statement to become effective will promptly be filed by the
Company with the Commission. If the registration statement has become effective
and any prospectus or statement of additional information constituting a part
thereof omits certain information at the time of effectiveness pursuant to Rule
430A of the Rules and Regulations, a final prospectus and final statement of
additional information containing such omitted information will promptly be
filed by the Company with the Commission in accordance with Rule 497(h) of the
Rules and Regulations. The term "Registration Statement" means the registration
statement, as amended (if applicable), at the time it becomes or became
effective, including financial statements and all exhibits and all documents, if
any, incorporated therein by reference, and any information deemed to be
included by Rule 430A. The term "Prospectus" means the final prospectus and
final statement of additional information in the forms filed with the Commission
pursuant to Rule 497(c), (h) or (j) of the Rules and Regulations, as the case
may be, as from time to time amended or supplemented pursuant to the Securities
Act. The Prospectus and letters to beneficial owners of the shares of Common
Stock of the Company, forms used to exercise rights, any letters from the
Company to securities dealers, commercial banks and other nominees and any
newspaper announcements, press releases and other offering materials and
information that the Company may use or approve or authorize in writing for use
in connection with the Offer are collectively referred to hereinafter as the
"Offering Materials".
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1. Representations and Warranties.
(a) The Company represents and warrants to, and agrees with, the Dealer
Manager as of the date hereof (such date being hereinafter referred to as the
"Representation Date") and as of the Expiration Date (as defined below) that:
(i) The Company meets the requirements for use of Form N-2 under the
Securities Act and the Investment Company Act and the Rules and Regulations. At
the time the Registration Statement becomes effective, the Registration
Statement will contain all statements required to be stated therein in
accordance with and will comply in all material respects with the requirements
of the Securities Act, the Investment Company Act and the Rules and Regulations
and will not contain any 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. From the time the Registration Statement becomes
effective through the expiration date of the Offer set forth in the Prospectus
(the "Expiration Date"), the Prospectus and the other Offering Materials will
not contain an untrue statement of a material fact or omit to state a material
fact required 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; provided, however, that the representations and warranties in this
subsection shall not apply to statements in or omissions from the Registration
Statement, Prospectus or other Offering Materials made in reliance upon and in
conformity with information furnished to the Company by the Dealer Manager
expressly for use in the Registration Statement, Prospectus or other Offering
Materials.
(ii) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware, has full
power and authority (corporate and other) to conduct its business as described
in the Registration Statement and the Prospectus, and is duly qualified to do
business as a foreign corporation in each jurisdiction wherein it owns or leases
real property or in which the conduct of its business requires such
qualification, except where the failure to be so qualified would not result in a
material adverse effect upon the business, properties, financial position or
results of operations of the Company (a "Material Adverse Effect"). The Company
has no subsidiaries.
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(iii) The Company is registered with the Commission under the
Investment Company Act as a closed-end, diversified management investment
company; no order of suspension or revocation of such registration has been
issued or proceedings therefor initiated or threatened by the Commission; all
required action has been taken under the Securities Act and the Investment
Company Act to make the public offering and consummate the issuance of the
Rights and the issuance and sale of the Shares by the Company upon exercise of
the Rights, and the provisions of the Company's charter and by-laws comply as to
form in all material respects with the requirements of the Investment Company
Act.
(iv) Xxxx, Xxxxxx & Xxxxx, the accountants who certified the financial
statements of the Company set forth or incorporated by reference in the
Registration Statement and the Prospectus, are independent public accountants as
required by the Securities Act, the Investment Company Act and the Rules and
Regulations.
(v) The financial statements of the Company, set forth or incorporated
by reference in the Registration Statement and the Prospectus, present fairly in
all material respects the assets and liabilities, results of operations and
changes in net assets of the Company as of the dates or for the periods
indicated in conformity with generally accepted accounting principles applied on
a consistent basis; and the information relating to the Company included in the
Prospectus under the headings "Fee Table" and "Financial Highlights" was
prepared on a basis consistent with such financial statements and the books and
records of the Company.
(vi) The Company has an authorized capitalization as set forth in the
Prospectus; the outstanding shares of Common Stock have been duly authorized and
are validly issued, fully paid and non-assessable and conform in all material
respects to the description thereof in the Prospectus under the heading
"Capitalization"; the Rights have been duly authorized by all requisite action
on the part of the Company for issuance pursuant to the Offer; the Shares have
been duly authorized by all requisite action on the part of the Company for
issuance and sale pursuant to the terms of the Offer and, when issued and
delivered by the Company pursuant to the terms of the Offer against payment of
the consideration set forth in the Prospectus, will be validly issued, fully
paid and non-assessable; the Shares and the Rights conform in all material
respects to all statements relating thereto contained in the Registration
Statement, the Prospectus and the other Offering Materials; and the issuance of
each of the Rights and the Shares is not subject to any preemptive rights.
(vii) Except as set forth in the Registration Statement and Prospectus,
subsequent to the respective date(s) as of which information is given in the
Registration Statement and the Prospectus, (A) the Company has not incurred any
liabilities or obligations, direct or contingent, or entered into any
transactions, other than in the ordinary course of business, that are material
to the Company, (B) there has not been any material change in the Common Stock
or material increase in the short-term or long-term debt of the Company, or any
change that would result in a Material Adverse Effect, or any development
involving or which may reasonably be expected to involve a prospective change
that would result in a Material Adverse Effect, and (C) there have been no
dividends or distributions paid or declared in respect of the Company's capital
stock other than the distribution declared by the Board of Directors in
September 2003, payable on November 4, 2003.
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(viii) There is no pending or, to the knowledge of the Company,
threatened or contemplated action, suit or proceeding affecting the Company or
to which the Company is a party before or by any court or governmental agency,
authority or body or any arbitrator, whether foreign or domestic, which is
likely to have a Material Adverse Effect.
(ix) There are no contracts or other documents of the Company required
to be described in the Registration Statement or the Prospectus, or to be filed
or incorporated by reference as exhibits which are not described or filed or
incorporated by reference therein as permitted by the Securities Act, the
Investment Company Act or the Rules and Regulations.
(x) Each of this agreement (the "Agreement"), the Subscription Agent
Agreement (the "Subscription Agent Agreement") dated as of _____________ between
the Company and EquiServe Trust Company, N.A. (the Subscription Agent"), the
Information Agent Agreement (the "Information Agent Agreement") dated as of
____________ between the Company and Xxxxxxxxx Shareholder Communications (the
"Information Agent"), the Advisory Agreement (the "Advisory Agreement") dated as
of December 31, 2000 between the Company and 1838 Investment Advisors, LLC (the
"Investment Adviser"), the Service Agreement (the "Service Agreement") dated as
of July 1, 1993 between the Company and First Chicago Trust Company of New York;
the Accounting Services Agreement (the "Accounting Services Agreement") between
MBIA Municipal Investors Services Corporation and the Company dated as of
September __, 1999; the Custody Agreement (the "Custodian Agreement") dated as
of _________ between the Company and Wachovia Bank, N.A. (the Subscription Agent
Agreement, Information Agent Agreement, the Advisory Agreement, the Service
Agreement, the Accounting Services Agreement, and the Custodian Agreement are
collectively referred to herein as the "Company Agreements") has been duly
authorized, executed and delivered by the Company; each of this Agreement and
the Company Agreements complies in all material respects with all applicable
provisions of the Investment Company Act and the Rules and Regulations
thereunder; and, assuming due authorization, execution and delivery by the other
parties thereto, each of this Agreement and the Company Agreements constitutes a
legal, valid, binding and enforceable obligation of the Company, subject to the
qualification that the enforceability of the Company's obligations hereunder and
thereunder may be limited by bankruptcy, insolvency, reorganization, moratorium
and similar laws of general applicability relating to or affecting creditors'
rights, and to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law) and except as
enforcement of rights to indemnity and contribution hereunder and thereunder may
be limited by federal or state securities laws or principles of public policy.
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(xi) Neither the issuance of the Rights, nor the issuance and sale of
the Shares, nor the performance and consummation by the Company of any other of
the transactions contemplated in this Agreement and the Company Agreements nor
the consummation of the transactions contemplated in the Registration Statement
will (A) result in a material breach or violation of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company under the charter or
by-laws of the Company, or the terms and provisions of any agreement, indenture,
mortgage, lease or other instrument to which the Company is a party or by which
it may be bound and which is filed as an exhibit or incorporated by reference as
an exhibit into the Registration Statement, or (B) result in any violation of
any order, law, rule or regulation of any court or governmental agency or body,
whether foreign or domestic, having jurisdiction over the Company or any of its
properties.
(xii) No consent, approval, authorization, notification or order of, or
any registration or filing with, any court, regulatory body, administrative or
other governmental agency or body, whether foreign or domestic, is required for
the consummation by the Company of the transactions contemplated by this
Agreement, the Company Agreements or the Registration Statement, except such as
have been obtained, or if the registration statement filed with respect to the
Shares is not effective under the Securities Act as of the time of execution
hereof, such as may be required (and shall be obtained as provided in this
Agreement) under the Securities Act, Investment Company Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and state securities
laws.
(xiii) The Company owns or possesses all material governmental
licenses, permits, consents, orders, approvals or other authorizations, whether
foreign or domestic, to enable the Company to continue to carry on its business
and to invest in securities as contemplated in the Prospectus; the Company has
fulfilled and performed all its material obligations with respect to such
permits and no event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or result in any other material
impairment of the rights of the Company under any such permit, subject in each
case to such qualification as may be set forth in the Registration Statement.
(xiv) The Common Stock has been duly listed on the New York Stock
Exchange and prior to their issuance the Shares will have been duly approved for
listing, subject to official notice of issuance, on the New York Stock Exchange.
(xv) The Company (A) has not taken, directly or indirectly, any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the issuance of the Rights or
the sale or resale of the Shares, (B) has not since the filing of the
Registration Statement sold, bid for or purchased, or paid anyone any
compensation for soliciting purchases of, shares of Common Stock of the Company
and (C) will not, until the later of the expiration of the Rights or the
completion of the distribution (within the meaning of Regulation M under the
Exchange Act) of the Shares, sell, bid for or purchase, pay or agree to pay to
any person any compensation for soliciting another to purchase any other
securities of the Company (except for the solicitation of the exercise of Rights
and the Over-Subscription Privilege pursuant to this Agreement); provided, that
any action in connection with the Company's dividend reinvestment plan will not
be deemed to be within the terms of this Section 1(a)(xv).
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(xvi) The Company intends to direct the investment of the proceeds of
the offering described in the Registration Statement and the Prospectus in such
a manner as to continue to comply with the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended ("Subchapter M of the Code"), and has
at all times since its inception qualified and intends to continue to qualify as
a regulated investment company under Subchapter M of the Code.
(xvii) There are no material restrictions, limitations or regulations
with respect to the ability of the Company to invest its assets as described in
the Prospectus other than as described therein.
(xviii) Neither the filing of the Registration Statement nor the Offer
as contemplated by this Agreement and the Subscription Agency Agreement gives
rise to any rights, other than those which have been waived or satisfied, for or
relating to the registration of any shares of Common Stock or other securities
of the Company.
(xix) The Company 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 Investment Company Act and the Rules and
Regulations thereunder and the Internal Revenue Code of 1986, as amended (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 Investment Company Act and the Rules
and Regulations thereunder; (C) access to assets is permitted only in accordance
with 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.
(xx) The Company, subject to the registration statement having been
declared effective and the filing of the Prospectus under Rule 497 under the
Securities Act Rules and Regulations, has taken all required action under the
Securities Act, the Investment Company Act and the Rules and Regulations to make
the public offering and consummate the sale of the Shares as contemplated by
this Agreement.
(b) The Investment Adviser represents and warrants to, and agrees with,
the Dealer Manager as of the date hereof and as of the Expiration Date that:
(i) The Investment Adviser has been duly formed and is validly existing
and in good standing under the laws of Delaware, with power and authority
(limited liability company and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign limited liability company for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such qualification, other
than where the failure to be so qualified or in good standing would not have a
material adverse effect on the business, properties, financial position or
results of operation of the Investment Adviser and its subsidiaries taken as a
whole (an "Adviser Material Adverse Effect").
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(ii) The Investment Adviser is duly registered as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Advisers Act") and
is not prohibited by any provision of the Advisers Act or the Investment Company
Act, or the rules and regulations under such Acts, from acting as an investment
adviser for the Company as contemplated in the Prospectus and the Advisory
Agreement.
(iii) Each of this Agreement, the Advisory Agreement and any other
Company Agreement to which the Investment Adviser is a party has been duly
authorized, executed and delivered by the Investment Adviser and complies with
all applicable provisions of the Advisers Act, the Investment Company Act, and
the rules and regulations under such Acts.
(iv) Neither the execution, delivery or performance by the Investment
Adviser of its obligations under this Agreement, the Advisory Agreement or any
other Company Agreement to which the Investment Adviser is a party nor the
consummation of the transactions contemplated therein or in the Registration
Statement nor the fulfillment of the terms thereof will conflict with or result
in a breach of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Investment Adviser is a party or by which the Investment
Adviser is bound or to which any of the property or assets of the Investment
Adviser is subject, nor will any such action result in any violation of the
provisions of the organizational documents of the Investment Adviser or any
applicable law or statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Investment Adviser or
any of its properties.
(v) There is no pending or, to the knowledge of the Investment Adviser,
threatened or contemplated action, suit or proceeding affecting the Investment
Adviser or to which the Investment Adviser is a party before or by any court or
domestic governmental agency, authority or body or any arbitrator, whether
foreign or domestic, which is likely to have an Adviser Material Adverse Effect.
(vi) No consent, approval, authorization, order, license, registration
or qualification of, or any filing with, any court or governmental agency or
body, whether foreign or domestic, is required for the consummation by the
Investment Adviser of the transactions contemplated by this Agreement.
(vii) The Investment Adviser owns or possesses all material
governmental licenses, permits, consents, orders, approvals or other
authorizations, whether foreign or domestic, to enable the Investment Adviser to
perform its obligations under the Advisory Agreement.
(viii) The Investment Adviser (a) has not taken, directly or
indirectly, any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the issuance of the Rights or the sale or resale of the Shares, (b)
has not since the filing of the Registration Statement sold, bid for or
purchased, or paid anyone any compensation for soliciting purchases of, shares
of Common Stock of the Company and (c) will not, until the later of the
expiration of the Rights or the completion of the distribution (within the
meaning of Regulation M under the Exchange Act) of the Shares, sell, bid for or
purchase, pay or agree to pay any person any compensation for soliciting another
to purchase any other securities of the Company (except for the solicitation of
the exercise of Rights and the Over- Subscription Privilege pursuant to this
Agreement).
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(ix) The information regarding the Investment Adviser in the
Registration Statement and the Prospectus complies in all material respects with
the requirements of Form N-2 and, as of the date of the Prospectus, such
information regarding the Investment Adviser did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(c) Any certificate required by Section 6 of this Agreement that is
signed by any officer of the Company or the Investment Adviser and delivered to
the Dealer Manager or counsel for the Dealer Manager shall be deemed a
representation and warranty by the Company or the Investment Adviser, as the
case may be, to the Dealer Manager, as to the matters covered thereby.
2. Agreement to Act as Dealer Manager. (a) On the basis of the
representations and warranties contained herein, and subject to the terms and
conditions of the Offer:
(i) The Company appoints the Dealer Manager as the exclusive dealer
manager in connection with the Offer and the Dealer Manager accepts such
appointment. The Company also authorizes the Dealer Manager to form and manage a
group of securities dealers (each, a "Soliciting Dealer" and, collectively, the
"Soliciting Group") to solicit the exercise of Rights pursuant to a Soliciting
Dealer Agreement, in the form attached hereto as Exhibit A. The Dealer Manager
represents and warrants that it is a broker-dealer registered under the Exchange
Act.
(ii) The Dealer Manager agrees to (A) solicit, in accordance with the
Securities Act, the Investment Company Act and the Exchange Act and the rules
and regulations thereunder and its customary practice, the exercise of the
Rights, subject to the terms and conditions of this Agreement, the Subscription
Agent Agreement and the procedures described in the Registration Statement,
Prospectus, and the other Offering Materials; and (B) form and manage the
Soliciting Group to solicit, in accordance with the Securities Act, the
Investment Company Act and the Exchange Act and the Rules and Regulations
thereunder and its customary practice, the exercise of the Rights, subject to
the terms and conditions of this Agreement, the Subscription Agent Agreement and
the procedures described in the Registration Statement, Prospectus, and the
other Offering Materials. No securities dealer shall be considered a Soliciting
Dealer until it shall have entered into a Soliciting Dealer Agreement with the
Dealer Manager in the form of Exhibit A hereto.
(iii) The Company agrees to offer to the Dealer Manager any
unsubscribed for Shares after the expiration of the Subscription Period at the
Offering Price set forth in the Prospectus, less a 3.75% discount. The Dealer
Manager may, but is under no obligation to, purchase the Shares of common stock
offered by the Company under this subparagraph (iii) and may resell such Shares
pursuant to the Prospectus to the public at the Offering Price or to members of
a selling group (which may include Soliciting Dealers) at the Offering Price
less a selling concession. Payment of the purchase price for, and delivery of,
the Shares purchased by the Dealer Manager pursuant to this subparagraph (iii)
shall be made at the offices of the Dealer Manager on the third business day
after the date the Dealer Manager agrees to purchase the Shares or at such other
time not later than ten business days after such date as the Company and the
Dealer Manager shall otherwise agree. Payment to the Company by the Dealer
Manager shall be in the form of a wire transfer of same day funds to an account
or accounts identified by the Company.
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(iv) The Company agrees to furnish, or cause to be furnished, to the
Dealer Manager, lists, or copies of those lists, showing the names and addresses
of, and number of shares of Common Stock held by, Holders as of the Record Date,
and the Dealer Manager agrees to use such information only in connection with
the Offer and not to furnish such information to any other person except for
securities brokers and dealers that have been requested by the Dealer Manager to
solicit exercises of Rights.
(b) The Company and the Dealer Manager agree that the Dealer Manager is
an independent contractor with respect to the solicitation of the exercise of
Rights and the Over-Subscription Privilege and the Dealer Manager represents and
warrants that it is acting on its own behalf in entering into this Agreement and
performing its obligations hereunder.
(c) The Dealer Manager agrees to perform those services with respect to
the Offer as are customarily performed by the Dealer Manager in connection with
offers of a like nature, including (but not limited to) using its reasonable
best efforts to solicit the exercise of Rights pursuant to the Offer and in
communicating with the Soliciting Dealers. In rendering the services
contemplated by this Agreement, the Dealer Manager will not be subject to any
liability to the Company, the Investment Adviser, any of their affiliates or any
other person, for any act or omission on the part of any soliciting broker or
dealer (except with respect to the Dealer Manager acting in such capacity) or
any other person, and the Dealer Manager will not be liable for acts or
omissions in performing its obligations under this Agreement, except as
otherwise set forth in Section 7 hereto and except for any losses, claims,
damages, liabilities and expenses that are finally judicially determined to have
resulted primarily from the bad faith, willful misconduct or gross negligence of
the Dealer Manager or by reason of the reckless disregard of the obligations and
duties of the Dealer Manager under this Agreement.
3. Dealer Manager and Solicitation Fees. In full payment for services
rendered and to be rendered hereunder by the Dealer Manager with respect to (A)
solicitation of the exercise of the Rights and (B) forming and averaging the
Soliciting Group, the Company agrees to pay to the Dealer Manager a fee equal to
3.75% of the aggregate Subscription Price for the Shares issued pursuant to the
exercise of Rights, including those exercised pursuant to the Over-Subscription
Privilege ("the "Dealer Manager Fee"). The Dealer Manager will reallow a portion
of the Dealer Manager Fee to Soliciting Dealers in full payment for their
soliciting efforts. Payment to the Dealer Manager by the Company will be in the
form of a wire transfer of same day funds to an account or accounts identified
by the Dealer Manager. Such payment will be made on each date on which the
Company issues Shares. Payment to a Soliciting Dealer will be made by the Dealer
Manager directly to such Soliciting Dealer by check to an address identified by
such Soliciting Dealer. Such payments shall be made in next day funds on or
before November __, 2003; provided, however, that if the Expiration Date as set
forth in the Prospectus is extended by any number of days, then such payment
date shall be extended by the same number of days.
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4. Other Agreements. (a) The Company covenants with the Dealer Manager,
and the Investment Adviser covenants with the Dealer Manager with respect to
paragraphs (b) and (c), as follows:
(i) The Company will use its best efforts to cause the Registration
Statement to become effective under the Securities Act, and will advise the
Dealer Manager promptly as to the time at which the Registration Statement and
any amendments thereto (including any post-effective amendment) becomes so
effective.
(ii) The Company will notify the Dealer Manager immediately, and
confirm the notice in writing, (A) of the effectiveness of the Registration
Statement and any amendment thereto (including any post-effective amendment),
(B) of the receipt of any comments from the Commission, (C) 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, (D) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose,
(E) of the suspension of the qualification of the Shares or the Rights for
offering or sale in any jurisdiction, or (F) of the occurrence of any event that
necessitates the making of any change in the Registration Statement or the
Prospectus in order to make any statement therein or omission therefrom not
misleading. The Company will make every reasonable effort to prevent the
issuance of any stop order described in clause (D) hereunder and, if any such
stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(iii) The Company will timely file the requisite copies of the
Prospectus with the Commission pursuant to Rule 497(c) or Rule 497(h) of the
Rules and Regulations, whichever is applicable or, if applicable, will timely
file the certification permitted by Rule 497(j) of the Rules and Regulations and
will advise the Dealer Manager of the time and manner of such filing.
(iv) The Company will give the Dealer Manager notice of its intention
to file any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Dealer Manager in connection with the Offer, which differs from the prospectus
on file at the Commission at the time the Registration Statement becomes
effective, whether or not such revised prospectus is required to be filed
pursuant to Rule 497(c) or Rule 497(h) of the Rules and Regulations), whether
pursuant to the Investment Company Act, the Securities Act, or otherwise, and
will furnish the Dealer Manager with copies of any such amendment or supplement
within a reasonable amount of time prior to such proposed filing or use, as the
case may be, and will not file any such amendment or supplement to which the
Dealer Manager or counsel for the Dealer Manager shall reasonably object.
(v) The Company will, without charge, deliver to the Dealer Manager, as
soon as practicable, the number of copies of the Registration Statement as
originally filed and of each amendment thereto as it may reasonably request, in
each case with the exhibits filed therewith.
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(vi) The Company will, without charge, furnish to the Dealer Manager,
from time to time during the period when the Prospectus is required to be
delivered under the Securities Act, such number of copies of the Prospectus (as
amended or supplemented) as the Dealer Manager may reasonably request for the
purposes contemplated by the Securities Act or the Rules and Regulations
thereunder. The Company consents to the use of the Prospectus in accordance with
the provisions of the Securities Act and with the state securities or blue sky
laws of the jurisdictions in which the Shares are offered by the Dealer Manager
and by all Soliciting Dealers in connection with the offering and sale of the
Shares and for such period of time thereafter as the Prospectus is required by
the Securities Act to be delivered in connection therewith.
(vii) If any event shall occur as a result of which it is necessary, in
the judgment of the Company or the reasonable opinion of counsel for the Dealer
Manager, to amend or supplement the Registration Statement or the Prospectus in
order to make the Prospectus not misleading in the light of the circumstances
existing at the time it is delivered to a Holder, the Company will forthwith
amend or supplement the Prospectus by preparing and filing with the Commission
(and furnishing to the Dealer Manager a reasonable number of copies of) an
amendment or amendments of the Registration Statement or an amendment or
amendments of, or a supplement or supplements to, the Prospectus (in form and
substance satisfactory to counsel for the Dealer Manager), at the Company's
expense, which will amend or supplement the Registration Statement or the
Prospectus so that the Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is delivered to a Holder, not
misleading; provided, however, that if the Company does not promptly amend or
supplement the Registration Statement or the Prospectus in form and substance
satisfactory to counsel for the Dealer Manager, then the Dealer Manager may
terminate this Agreement pursuant to Section 9(a)(vi) and the Company shall, at
the Company's expense, amend or supplement the Registration Statement or the
Prospectus to state that the Dealer Manager has terminated this Agreement with
respect to the Offer; and provided, further, that any supplement or amendment of
the Registration Statement or Prospectus required in order that the Registration
Statement or Prospectus will not contain an untrue statement of a material fact
with respect to the Dealer Manager or omit to state a material fact with respect
to the Dealer Manager shall be made at the Dealer Manager's expense.
(viii) The Company will endeavor, in cooperation with the Dealer
Manager and its counsel, to assist such counsel to qualify the Rights and the
Shares for offering and sale under the applicable securities laws of such states
and other jurisdictions of the United States as the Dealer Manager may designate
and maintain such qualifications in effect for the duration of the Offer;
provided, however, that the Company will not be obligated to qualify in any
jurisdiction in which the Company would be required to (x) file any general
consent to service of process, (y) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not now so qualified, or
(z) be subject to taxation in such jurisdiction. The Company will file such
statements and reports as may be required by the laws of each jurisdiction in
which the Rights and the Shares have been qualified as above provided.
11
(ix) The Company will make generally available to its security holders
as soon as practicable, but no later than 60 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Section 11(a) of the Securities Act and Rule 158 of the Rules and Regulations)
covering a twelve-month period beginning not later than the first day of the
Company's fiscal quarter next following the "effective" date (as defined in said
Rule 158) of the Registration Statement.
(x) For a period of 180 days from the date of this Agreement, the
Company will not, without the prior consent of the Dealer Manager, offer or
sell, or enter into any agreement to sell, any equity or equity-related
securities of the Company or securities convertible into such securities, other
than the Rights and the Shares or Common Stock issued pursuant to the Company's
dividend reinvestment plan or to any distribution of dividends or capital gains
payable in Common Stock declared by the Company or pursuant to a Common Stock
split declared by the Company.
(xi) The Company will apply the net proceeds from the Offer as set
forth under "Use of Proceeds" in the Prospectus.
(xii) The Company will use its best efforts to cause the Shares to be
duly authorized for listing by the New York Stock Exchange prior to the time the
Shares are issued.
(xiii) The Company will use its best efforts to maintain its
qualification as a regulated investment company under Subchapter M of the Code.
(xiv) The Company will use its best efforts to perform all of the
agreements required of it and discharge all conditions to closing as set forth
in this Agreement.
(xv) The Company will advise or cause the Subscription Agent to advise
the Dealer Manager and each Soliciting Dealer from day to day during the period
of, and promptly after the termination of, the Offer, as to the names and
addresses of all Holders exercising Rights, the total number of Rights
exercised, and the number of Shares, including Shares requested pursuant to the
Over-Subscription Privilege, related thereto by each Holder during the
immediately preceding day, indicating the total number of Rights verified to be
in proper form for exercise, rejected for exercise, and being processed and, for
the Dealer Manager and each Soliciting Dealer, the number of Rights exercised
and the number of Shares, including Shares requested pursuant to the
Over-Subscription Privilege, related thereto on subscription certificates
indicating the Dealer Manager or such Soliciting Dealer, as the case may be, as
the broker- dealer with respect thereto, and as to such other information as the
Dealer Manager may reasonably request; and will notify the Dealer Manager and
each Soliciting Dealer, not later than 5:00 P.M., New York City time, on the
first business day following the expiration date of the Offer set forth in the
Prospectus (the "Expiration Date"), of the total number of Rights exercised and
the number of Shares, including Shares requested pursuant to the
Over-Subscription Privilege, related thereto, the total number of Rights
verified to be in proper form for exercise, rejected for exercise, and being
processed and, for the Dealer Manager and each Soliciting Dealer, the number of
Rights exercised and the number of Shares, including Shares requested pursuant
to the Over-Subscription Privilege, related thereto on subscription certificates
indicating the Dealer Manager or such Soliciting Dealer, as the case may be, as
the broker-dealer with respect thereto, and as to such other information as the
Dealer Manager may reasonably request.
12
(xvi) The Company will comply with the undertakings contained in Item
33 in Part C of the Registration Statement.
(xvii) In the event that at any time on or prior to the final issuance
and sale of Shares pursuant to the Offer any of the representations, warranties
or agreements of the Company would not be true and correct in all material
respects as if given or made at such time, the Company shall promptly notify the
Dealer Manager thereof. The Company shall also promptly notify the Dealer
Manager of its failure to perform any obligation on its part required to be
performed or to satisfy any condition on its part required to be satisfied on or
before any of the date hereof, the Expiration Date and any date of the issuance
and sale of Shares pursuant to the Offer.
(b) The Company and the Investment Adviser will not take, directly or
indirectly, any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the issuance of the Rights or the sale or resale of the Shares.
(c) In the event that at any time on or prior to the final issuance and
sale of Shares pursuant to the Offer any of the representations, warranties or
agreements of the Investment Adviser would not be true and correct in all
material respects as if given or made at such time, the Investment Adviser shall
promptly notify the Dealer Manager thereof. The Investment Adviser shall also
promptly notify the Dealer Manager of its failure to perform any obligation on
its part required to be performed or to satisfy any condition on its part
required to be satisfied on or before any of the date hereof, the Expiration
Date and any date of issuance and sale of the Shares pursuant to the Offer.
5. Payment of Expenses.
(a) The Company will pay all expenses incident to the performance of
its obligations under this Agreement, including, but not limited to, expenses
relating to (i) the printing and filing of the Registration Statement as
originally filed and of each amendment thereto, (ii) the preparation, issuance
and delivery of the certificates for the Shares and subscription certificates
relating to the Rights, (iii) the fees and disbursements of the Company's
counsel (including the fees and disbursements of local counsel) and accountants,
(iv) the qualification of the Rights and the Shares under securities laws in
accordance with the provisions of Section 4(a)(vii) of this Agreement, including
filing fees and the preparation of the Blue Sky Survey by counsel to the Dealer
Manager, (v) the printing or other production and delivery to the Dealer Manager
of copies of the Registration Statement as originally filed and of each
amendment thereto and of the Prospectus and any amendments or supplements
thereto, except for any amendments or supplements described in the second
proviso of Section 4(a)(vii), (vi) the printing and other production and
delivery of copies of the Blue Sky Survey, (vii) the fees and expenses incurred
with respect to filing with the National Association of Securities Dealers, Inc.
(the "NASD"), (viii) the fees and expenses incurred in connection with the
listing of the Shares on the New York Stock Exchange, (ix) the printing or other
production, mailing and delivery expenses incurred in connection with Offering
Materials, and (x) the fees and expenses incurred with respect to the
Subscription Agent and Information Agent.
13
(b) In addition to any fees that may be payable to the Dealer Manager
under this Agreement, the Company agrees to reimburse the Dealer Manager upon
request made from time to time for its reasonable expenses incurred in
connection with its activities under this Agreement, including the reasonable
fees and disbursements of its legal counsel (excluding Blue Sky and NASD fees
and expenses which are paid directly by the Company), in an amount up to
$100,000.
(c) If this Agreement is terminated by the Company for any reason
(other than a material breach by the Dealer Manager of its duties hereunder) or
by the Dealer Manager in accordance with the provisions of Section 6 or Section
9(a)(i), 9(a)(ii) or 9(a)(iii), the Company agrees to reimburse the Dealer
Manager for all of its reasonable out-of-pocket expenses incurred in connection
with its performance hereunder, including the reasonable fees and disbursements
of counsel for the Dealer Manager. In the event the transactions contemplated
hereunder are not consummated, the Company agrees to pay all of the costs and
expenses set forth in paragraph (a) of this Section 5 which the Company would
have paid if such transactions had been consummated.
6. Conditions of the Dealer Manager's Obligations. The obligations of
the Dealer Manager hereunder are subject to the accuracy of the respective
representations and warranties of the Company and the Investment Adviser
contained herein on the date hereof and as if made on each date up to and
including the final issuance and sale of Shares pursuant to the Offer, to the
performance by the Company and the Investment Adviser of their respective
obligations hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M., New York City time, on the date hereof, or at such later time
and date as may be approved in writing by the Dealer Manager; the Prospectus and
any amendment or supplement thereto shall have been filed with the Commission in
the manner and within the time period required by Rule 497(c), (e) or (h), as
the case may be, under the Rules and Regulations; no stop order suspending the
effectiveness of the Registration Statement or any amendment thereto shall have
been issued, and no proceedings for that purpose shall have been instituted or
threatened or, to the knowledge of the Company, the Investment Adviser or the
Dealer Manager, shall be contemplated by the Commission; and the Company shall
have complied with any request of the Commission for additional information (to
be included in the Registration Statement or the Prospectus or otherwise).
(b) On the Representation Date and on the Expiration Date, the Dealer
Manager shall have received:
(1) The favorable opinion, dated the Representation Date or
the Expiration Date, as the case may be, of Xxxxxx Xxxxxxxx LLP,
counsel for the Company, in form and substance satisfactory to counsel
for the Dealer Manager, to the effect that:
14
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, has full
corporate power and authority to conduct its business as described in the
Registration Statement and Prospectus, except that counsel need express no
opinion as to securities or "blue sky" laws of any state, and is duly qualified
to do business as a foreign corporation in each jurisdiction wherein it owns or
leases real property or in which the conduct of its business requires such
qualification, except where the failure to be so qualified would not result in a
Material Adverse Effect.
(ii) The Company is registered with the Commission under the Investment
Company Act as a closed-end, diversified management investment company; to the
knowledge of such counsel, no order of suspension or revocation of such
registration has been issued or proceedings therefor initiated or threatened by
the Commission; all required action has been taken under the Securities Act and
the Investment Company Act to make the public offering and consummate the
issuance of the Rights and the issuance and sale of the Shares by the Company
upon exercise of the Rights, and the provisions of the Company's charter and
by-laws comply as to form in all material respects with the requirements of the
Investment Company Act.
(iii) The Company has an authorized capitalization as set forth in the
Prospectus under the heading "Capitalization"; the outstanding shares of Common
Stock conform in all material respects to the description thereof in the
Prospectus under the heading "Capitalization"; the Rights have been duly
authorized by all requisite action on the part of the Company for issuance
pursuant to the Offer; the Shares have been duly authorized by all requisite
action on the part of the Company for issuance and sale pursuant to the terms of
the Offer and, when issued and delivered by the Company pursuant to the terms of
the Offer against payment of the consideration set forth in the Prospectus, will
be validly issued, fully paid and non- assessable; the Rights conform in all
material respects to all statements relating thereto contained in the Prospectus
under the heading "The Offering"; and, to the knowledge of such counsel, the
issuance of each of the Rights and the Shares is not subject to any preemptive
rights.
(iv) To the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding affecting the Company or to which the
Company is a party before or by any court or governmental agency, authority or
body or any arbitrator, whether foreign or domestic of a character required to
be disclosed in the Registration Statement or the Prospectus which is not
adequately disclosed therein.
(v) To the knowledge of such counsel, there are no contracts or other
documents of the Company required to be described in the Registration Statement
or the Prospectus, or to be filed or incorporated by reference as exhibits which
are not described or filed or incorporated by reference therein as permitted by
the Securities Act, the Investment Company Act or the Rules and Regulations.
(vi) Each of this Agreement, the Subscription Agent Agreement, the
Information Agent Agreement and the Advisory Agreement has been duly authorized,
executed and delivered by the Company; each of this Agreement, the Subscription
Agent Agreement, the Information Agent Agreement and the Advisory Agreement
complies in all material respects with all applicable provisions of the
Investment Company Act, the Advisers Act and the rules and regulations under
such Acts; and, assuming due authorization, execution and delivery by the other
parties thereto, each of this Agreement, the Subscription Agent Agreement, the
Information Agent Agreement and the Advisory Agreement constitutes a legal,
valid, binding and enforceable obligation of the Company, subject to the
qualification that the enforceability of the Company's obligations thereunder
may be limited by bankruptcy, insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights, and to
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law) and subject to the qualification that the
right to indemnity and/or contribution may be limited by federal or state laws
or principles of public policy.
15
(vii) Neither the issuance of the Rights, nor the issuance and sale of
the Shares, nor the consummation by the Company of any other of the transactions
contemplated in this Agreement, the Subscription Agent Agreement or the
Information Agent Agreement nor the consummation of the transactions
contemplated in the Registration Statement will result in a breach or violation
of, or constitute a default under, the charter or by-laws of the Company, or, to
the knowledge of such counsel, result in a breach or violation of, or constitute
a default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company under the terms and
provisions of any material agreement, indenture, mortgage, lease or other
instrument to which the Company is a party or by which it may be bound or to
which any of the property or assets of the Company is subject, nor, to the
knowledge of such counsel, will such action result in any violation of any
order, law, rule or regulation of any court or governmental agency or body under
the laws of Pennsylvania or Delaware or federal law.
(viii) No consent, approval, authorization, notification or order of,
or any filing with, any court or governmental agency or body is required under
the laws of Pennsylvania or Delaware or federal law for the consummation by the
Company or the Investment Adviser of the transactions contemplated by this
Agreement or the Registration Statement, except (A) such as have been obtained
or will be obtained in a timely manner and (B) such as may be required under the
blue sky laws of any jurisdiction in connection with the transactions
contemplated hereby.
(ix) The Common Stock has been duly listed on the New York Stock
Exchange and the Shares have been duly approved for listing, subject to official
notice of issuance, on the New York Stock Exchange.
(x) The Registration Statement has become effective under the
Securities Act; to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued, and no proceedings
for that purpose have been instituted or threatened; and the Registration
Statement, the Prospectus and each amendment thereof or supplement thereto
(other than the financial statements and the notes thereto and the schedules and
other financial and statistical data contained therein, as to which such counsel
need express no opinion) comply as to form in all material respects with the
applicable requirements of the Securities Act and the Investment Company Act and
the Rules and Regulations.
16
(xi) The statements in the Prospectus under the heading "Taxation of
the Fund", insofar as such statements describe or summarize United States tax
laws, treaties, doctrines or practices, fairly present the information disclosed
therein in all material respects as of the date of Prospectus.
Such counsel shall also have stated that, while they have not
themselves checked the accuracy and completeness of or otherwise verified, and
are not passing upon and assume no responsibility for the accuracy or
completeness of, the statements contained in the Registration Statement or the
Prospectus, in the course of their review and discussion of the contents of the
Registration Statement and Prospectus with certain officers and employees of the
Company and its independent accountants, no facts have come to their attention
which cause them to believe that the Registration Statement (except as to such
financial statements or schedules or other financial or statistical data
included or incorporated by reference in the Registration Statement or the
Prospectus, as to which such counsel expresses no belief), on the date it became
effective, contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements contained therein not misleading or that the Prospectus, as of its
date and on such Representation Date or Expiration Date, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
In rendering such opinion, Xxxxxx Xxxxxxxx LLP may rely as to matters
of fact, to the extent they deem proper, on certificates of responsible officers
of the Company and public officials.
(2) The favorable opinion, dated the Representation Date or
the Expiration Date, as the case may be, of Xxxxxx Xxxxxxxx LLP,
counsel to 1838 Investment Advisors, LLC in form and substance
satisfactory to counsel for the Dealer Manager, to the effect that:
(i) The Investment Adviser has been duly formed and is validly existing
and in good standing under the laws of Delaware, with power and authority
(limited liability company and other) to own its properties and conduct its
business as described in the Prospectus;
(ii) The Investment Adviser has been duly qualified as a foreign
limited liability company for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such qualification, other
than where the failure to be so qualified or in good standing would not have an
Adviser Material Adverse Effect;
(iii) The Investment Adviser is duly registered as an investment
adviser under the Advisers Act and is not prohibited by the Advisers Act, the
Investment Company Act, or the rules and regulations under such Acts, from
acting as an investment adviser for the Company as contemplated in the
Prospectus and the Advisory Agreement.
17
(iv) Each of this Agreement and the Advisory Agreement has been duly
authorized, executed and delivered by the Investment Adviser; each of this
Agreement and the Advisory Agreement complies in all material respects with all
applicable provisions of the Investment Company Act, the Advisers Act and the
rules and regulations under such Acts; and, assuming due authorization,
execution and delivery by the other parties thereto, each of this Agreement and
the Advisory Agreement constitutes a legal, valid, binding and enforceable
obligation of the Investment Adviser, subject to the qualification that the
enforceability of the Investment Adviser's obligations thereunder may be limited
by bankruptcy, insolvency, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights, and to general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law) and except as enforcement of rights to indemnity
and/or contribution may be limited by federal or state laws or principles of
public policy.
(v) Neither the performance by the Investment Adviser of its
obligations under this Agreement nor the consummation of the transactions
contemplated therein or in the Registration Statement nor the fulfillment of the
terms thereof is, or with the giving of notice or lapse of time or both would
be, in violation of or constitute a default under, the limited liability company
agreement of the Investment Adviser or any agreement known to such counsel to
which the Investment Adviser is a party or by which it or any of its properties
is bound, except for violations and defaults which individually and in the
aggregate are not material to the Investment Adviser and its subsidiaries taken
as a whole; or, to the knowledge of such counsel, the terms and provisions of
any agreement, to which the Investment Adviser is a party or by which it may be
bound or to which any of the property or assets of the Investment Adviser is
subject, or any applicable order, law, rule or regulation of any court or
governmental agency or body under the laws of Pennsylvania or Delaware or
federal law.
(vi) To the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding to which the Investment Adviser is a party
before or by any court or governmental agency, authority or body or any
arbitrator, whether foreign or domestic, which reasonably might result in an
Adviser Material Adverse Effect or might materially and adversely affect the
ability of the Investment Adviser to perform its obligations under the Advisory
Agreement. In rendering such opinion, Xxxxxx Xxxxxxxx LLP may rely as to matters
of fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Investment Adviser and public officials.
(c) The Dealer Manager shall have received from Xxxxxx, Xxxxx & Xxxxxxx
LLP, counsel for the Dealer Manager, such opinion, dated the Representation Date
or the Expiration Date, as the case may be, with respect to the Offer, the
Registration Statement, the Prospectus and other related matters as the Dealer
Manager may reasonably require, and the Company shall have furnished to such
counsel such documents as they reasonably request for the purpose of enabling
them to pass upon such matters.
(d) The Company shall have furnished to the Dealer Manager a
certificate of the Company, signed by the Chairman of the Board, the President
or a Vice President of the Company, dated the Representation Date or the
Expiration Date, as the case may be, to the effect that the signers of such
certificate have examined the Registration Statement, the Prospectus, any
supplement to the Prospectus and this Agreement and that, to the best of their
knowledge:
18
(i) The representations and warranties of the Company in this Agreement
are true and correct in all material respects on and as of the Representation
Date or the Expiration Date, as the case may be, and the Company has complied
with all the agreements and satisfied all the conditions in this Agreement on
its part to be performed or satisfied at or prior to such Representation Date or
Expiration Date.
(ii) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Company's knowledge, threatened.
(iii) Since the date of the most recent balance sheet included or
incorporated by reference in the Prospectus, there has been no material adverse
change in the condition (financial or other), earnings, business or properties
of the Company, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus.
(e) The Investment Adviser shall have furnished to the Dealer Manager a
certificate, signed by a senior officer of 1838 Investment Advisors, LLC, dated
the Representation Date or the Expiration Date, as the case may be, to the
effect that the signatory of such certificate has read the Registration
Statement, the Prospectus and this Agreement and, to the best knowledge of such
signatory, the representations and warranties of the Investment Adviser in this
Agreement are true and correct in all material respects on and as of the
Representation Date or the Expiration Date, as the case may be, and the
Investment Adviser has complied with all the agreements and satisfied all the
conditions in this Agreement on its part to be performed or satisfied at or
prior to such Representation Date or Expiration Date.
(f) Xxxx, Xxxxxx & Xxxxx shall have furnished to the Dealer Manager a
Letter, dated the Representation Date or the Expiration Date, as the case may
be, in form and substance satisfactory to the Dealer Manager, and stating in
effect that:
(i) They are independent accountants with respect to the Company within
the meaning of the Securities Act and the Investment Company Act and the
applicable Rules and Regulations.
(ii) In their opinion, the audited financial statements examined by
them and included or incorporated by reference in the Registration Statement
comply as to form in all material respects with the applicable accounting
requirements of the Securities Act and the Investment Company Act and the
respective Rules and Regulations with respect to registration statements on Form
N-2.
(iii) They have performed specified procedures, not constituting an
audit, including a reading of the latest available interim financial information
of the Company, a reading of the minute books of the Company, inquiries of
officials of the Company responsible for financial or accounting matters and
such other inquiries and procedures which shall be specified in such letter, and
on the basis of such inquiries and procedures nothing came to their attention
that caused them to believe that at the date of the latest available financial
information read by such accountants, or at a subsequent specified date not more
than five business days prior to the Representation Date or the Expiration Date,
as the case may be, there was any change in the capital stock, increase in
long-term debt or decrease in net assets of the Company as compared with amounts
shown in the most recent statement of assets and liabilities included or
incorporated by reference in the Registration Statement, except as the
Registration Statement discloses has occurred or may occur or as disclosed in
their letter.
19
(iv) In addition to the procedures referred to in clause (iii) above,
they have performed other specified procedures, not constituting an audit, with
respect to certain amounts, percentages, numerical data and financial
information appearing in the Registration Statement, which have previously been
specified by the Dealer Manager and which shall be specified in such letter, and
have compared such items with, and have found such items to be in agreement
with, the accounting and financial records of the Company.
(g) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, there shall not have been (i)
any change or decrease specified in the letter or letters referred to in
paragraph (f) of this Section 6, (ii) any change, or any development involving a
prospective change, in or affecting the business, condition (financial or
otherwise), properties, net assets or results of operations of the Company, the
effect of which, in any case referred to in clause (i) or (ii) above, makes it,
in the reasonable judgment of the Dealer Manager, impractical or inadvisable to
proceed with the Offer as contemplated by the Registration Statement and the
Prospectus. (h) Prior to the Representation Date or the Expiration Date, as the
case may be, the Company shall have furnished to the Dealer Manager such further
information, certificates and documents as the Dealer Manager may reasonably
request. If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects satisfactory in form and
substance to the Dealer Manager and its counsel, this Agreement and all
obligations of the Dealer Manager hereunder may be canceled on, or at any time
prior to, the Expiration Date by the Dealer Manager. Notice of such cancellation
shall be given to the Company in writing or by telephone or telegraph confirmed
in writing.
7. Indemnification and Contribution. (a) (i) The Company will indemnify
and hold harmless the Dealer Manager, the directors, officers, employees and
agents of the Dealer Manager and each person, if any, who controls the Dealer
Manager within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted), to which they, or any of
them, may become subject under the Securities Act, the Exchange Act, the
Investment Company Act, the Advisers Act or other statutory law or regulation,
at common law or otherwise, whether foreign or domestic, insofar as such losses,
claims, damages or liabilities arise out of or are based on any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, the Prospectus or the Offering Materials, and any amendment or
supplement thereto, or the omission or alleged omission to state in any or all
such documents a material fact required to be stated therein or necessary to
make the statements in it not misleading (in the case of the Prospectus, in
light of the circumstances under which such statements were made); provided that
the Company will not be liable to the extent that such loss, claim, damage or
liability arises from an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
furnished in writing to the Company by the Dealer Manager expressly for use in
the document. The foregoing indemnity agreement is in addition to any liability
which the Company may otherwise have to the Dealer Manager or any controlling
person of the Dealer Manager.
20
(ii) The Investment Adviser will indemnify and hold harmless the Dealer
Manager, the directors, officers, employees and agents of the Dealer Manager and
each person, if any, who controls the Dealer Manager within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
and all losses, claims, damages or liabilities, joint or several (including any
investigation, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act, the Investment Company Act, the Advisers Act
or other statutory law or regulation, at common law or otherwise, whether
foreign or domestic, insofar as such losses, claims, damages or liabilities
arise out of or are based on any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, the Prospectus or the
Offering Materials, and any amendment or supplement thereto, or the omission or
alleged omission to state in any or all such documents a material fact required
to be stated therein or necessary to make the statements in it not misleading
(in the case of the Prospectus, in light of the circumstances under which such
statements were made); provided that the Investment Adviser will not be liable
to the extent that such loss, claim, damage or liability arises from an untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information furnished in writing to the Company by the
Dealer Manager expressly for use in the document; and provided further, that the
Investment Adviser will not be liable to any such indemnified party in any such
case except to the extent that the Company has failed to indemnify and hold
harmless such indemnified party pursuant to paragraph (a)(i) in respect of such
losses, claims, damages or liabilities after such indemnified party has made a
claim of the Company. The foregoing indemnity agreement is in addition to any
liability which the Investment Adviser may otherwise have to the Dealer Manager
or any controlling person of the Dealer Manager.
(b) The Dealer Manager will indemnify and hold harmless the Company,
the Investment Adviser, each director and officer of the Company who signs the
Registration Statement and each person, if any, who controls the Company or the
Investment Adviser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, to the same extent as the foregoing indemnity
from the Company or the Investment Adviser to the Dealer Manager, but only
insofar as losses, claims, damages or liabilities arise out of or are based on
any untrue statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information furnished in writing to the
Company by the Dealer Manager expressly for use in preparation of the documents
in which the statement or omission is made or alleged to be made. This indemnity
agreement will be in addition to any liability that the Dealer Manager might
otherwise have.
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(c) Any party that proposes to assert the right to be indemnified under
this Section 7 will, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section 7, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission to notify such indemnifying party will not,
except to the extent set forth below, relieve it from liability that it may have
to any indemnified party. No indemnification provided for in Sections 7(a) and
(b) hereof shall be available to any party who shall fail to give notice as
provided in this Section 7(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
prejudiced by the failure to give such notice, but the omission to notify such
indemnifying party of such action shall not relieve it from any liability that
it may have to any indemnified party for contribution or otherwise on account of
the provisions in Sections 7(a) or (b). If any such action is brought against
any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in, and, to
the extent that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly notified,
to assume the defense of the action, with counsel reasonably satisfactory to the
indemnified party, and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying party
will not be liable to the indemnified party for any legal or other expenses
except as provided below and except for the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with the defense.
The indemnified party will have the right to employ its counsel in any such
action, but the fees and expenses of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded that there may be legal defenses available to it
or other indemnified parties that are different from or in addition to those
available to the indemnifying party (in which case the indemnifying party will
not have the right to direct the defense of such action on behalf of the
indemnified party) or (3) the indemnifying party has not in fact employed
counsel to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees and expenses of counsel will be at the expense of the
indemnifying party or parties. All such fees and expenses will be reimbursed
promptly as they are incurred. An indemnifying party will not be liable for any
settlement of any action or claim effected without its written consent or, in
connection with any proceeding or related proceeding in the same jurisdiction,
for the fees and expenses of more than one separate counsel for all indemnified
parties except to the extent provided herein.
(d) In no case shall the indemnification provided in this Section 7 be
available to protect any person against any liability to which any such person
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its or his obligations or duties hereunder, or
by reason of its or his reckless disregard of its or his obligations and duties
hereunder.
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(e) If the indemnification provided for in this section 7 is
unavailable to an indemnified party under paragraphs (a) or (b) 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
Company and the Investment Adviser on the one hand (treated jointly for this
purpose as one person) and the Dealer Manager 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 Company and the Investment Adviser on the one hand
(treated jointly for this purpose as one person) and of the Dealer Manager on
the other hand in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Investment Adviser on the one hand (treated jointly for this purpose as
one person) and the Dealer Manager on the other hand shall be deemed to be in
the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company as set forth in the table on the
cover page of the Prospectus bear to the total payments received by the Dealer
Manager with respect to the Shares as set forth in the table on the cover page
of the Prospectus. The relative fault of the Company and the Investment Adviser
on the one hand (treated jointly for this purpose as one person) and of the
Dealer Manager on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company and the Investment Adviser on the one hand
(treated jointly for this purpose as one person) or by the Dealer Manager on the
other hand and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(f) The Company, the Investment Adviser and the Dealer Manager agree
that it would not be just and equitable if contribution pursuant to this Section
7 were determined by pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph (e) 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 (e) 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 defending any such action, suit or proceeding. 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.
(g) 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 from claimants on claims that are the
subject matter of such action, suit or proceeding.
(h) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. A successor
to the Dealer Manager or to the Company, the Investment Adviser or their
trustees, directors or officers or any person controlling any of them shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 7.
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(i) The Company and the Investment Adviser agree to indemnify each
Soliciting Dealer, the directors, officers, employees and agents of each
Soliciting Dealer and controlling persons of each Soliciting Dealer to the same
extent and subject to the same conditions and to the same agreements, including
with respect to contribution, provided for in subsections (a), (b), (c), (d),
(e), (f), (g) and (h) of this Section 7.
(j) The Company and the Investment Adviser acknowledge that the
statements contained in the first two sentences of the first paragraph and the
last paragraph under the caption "Distribution Arrangements" in the Prospectus
constitute the only information furnished in writing to the Company by the
Dealer Manager expressly for use in such document; and the Dealer Manager
confirms that such statements are correct.
8. Representations, Warranties and Agreements to Survive Delivery. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers, of the Investment Adviser and of the
Dealer Manager set forth in or made pursuant to this Agreement shall survive the
Expiration Date and will remain in full force and effect, regardless of any
investigation made by or on behalf of the Dealer Manager, the Company or the
Investment Adviser or any of the officers directors or controlling persons
referred to in Section 7 hereof, and will survive delivery of and payment for
the Shares pursuant to the Offer. The provisions of Section 5 and 7 hereof shall
survive the termination or cancellation of this Agreement.
9. Termination of Agreement. (a) This Agreement shall be subject to
termination in the absolute discretion of the Dealer Manager, by notice given to
the Company prior to the expiration of the Offer, if prior to such time (i)
there has been a material change in general economic, political, social or
financial conditions in the United States or the effect of international
conditions on the financial markets in the United States such that, in the
Dealer Manager's judgment, it is impracticable or inadvisable to proceed with
the Offer, (ii) there has occurred any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which, in the Dealer
Manager's judgment, renders it impracticable or inadvisable to proceed with the
Offer, (iii) trading in the shares of Common Stock shall have been suspended by
the Commission or the New York Stock Exchange, (iv) trading in securities
generally on the New York Stock Exchange shall have been suspended or limited,
(v) a banking moratorium shall have been declared either by Federal or New York
State authorities or (vi) the Company shall fail to amend or supplement the
Registration Statement or the Prospectus as provided in Section 4(a)(vi).
(b) 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 5.
10. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to The Dealer Manager will be mailed,
delivered or telegraphed and confirmed to Boenning & Scattergood Inc., Attn.:
Xxxxx Xxxxx, 0 Xxxxx Xxxxxx, 000 Xxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxx
Xxxxxxxxxxxx, XX 00000-0000, or if sent to the Company or the Investment
Adviser, will be mailed, delivered or telegraphed and confirmed to 1838
Bond-Debenture Fund, Attn: Xxxx X. Xxxxxxxxxx, 0000 Xxxxxxxxxxx Xxxx., 0xx
Xxxxx, Xxxx xx Xxxxxxx, XX 00000 (Company) and 1838 Investment Advisors, LLC
Attn: Xxxx X. Xxxxxxxxx, 0000 Xxxxxxxxxxx Xxxx., 0xx Xxxxx, Xxxx xx Xxxxxxx, XX
00000 (Adviser).
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11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and will inure
to the benefit of the officers and directors and controlling persons referred to
in Section 7 hereof, and no other person will have any right or obligation
hereunder.
12. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument. If the foregoing is in
accordance with your understanding of our agreement, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement among the Company, the Investment Adviser and the Dealer
Manager.
Very truly yours,
1838 BOND-DEBENTURE FUND
By:______________________
Name:
Title:
1838 INVESTMENT ADVISORS, LLC
By: ______________________
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date
first above written.
BOENNING & SCATTERGOOD, INC.
By: ________________________
Name:
Title:
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