4,000,000 Shares
ROYCE VALUE TRUST, INC.
% Tax-Advantaged Cumulative Preferred Stock
Liquidation Preference $25.00 Per Share
UNDERWRITING AGREEMENT
May , 1998
PAINEWEBBER INCORPORATED
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
PRUDENTIAL SECURITIES INCORPORATED
0 Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Royce Value Trust, Inc., a Maryland corporation (the "Fund"),
proposes, subject to the terms and upon the conditions set forth herein, to
issue and sell to you, the Underwriters named in Schedule I hereto (the
"Underwriters"), an aggregate of 4,000,000 shares of its % Tax-Advantaged
Cumulative Preferred Stock, par value $.001 per share and liquidation preference
$25.00 per share (the "Shares"). The Shares will be authorized by, and subject
to the terms and conditions of, the Articles Supplementary to be adopted in
connection with the issuance of the Shares (the "Articles Supplementary").
The Fund and its investment adviser, Royce & Associates, Inc., a New
York corporation (the "Adviser"), wish to confirm as follows their agreement
with the Underwriters in connection with the purchases of the Shares by you.
The Fund has entered into (i) an investment advisory agreement, dated
as of June 30, 1996, with the Adviser (the "Investment Advisory Agreement"),
(ii) a custodian contract, dated as of October 20, 1986, with State Street Bank
& Trust Company (the "Custodian Contract"), and (iii) the registrar, transfer
agency and paying agency agreements with State Street Bank & Trust Company with
respect to the Common Stock, the 7.80% Cumulative Preferred and the Shares,
dated as of October 20, 1986, August 21, 1996 and , respectively (the
"Registrar, Transfer Agency and Paying Agency Agreements") (collectively,
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the "Fund Agreements"). This Underwriting Agreement is hereinafter referred to
as the "Agreement".
1. Registration Statement and Prospectus. The Fund has prepared in
conformity with the provisions of the Securities Act of 1933, as amended (the
"1933 Act"), the Investment Company Act of 1940, as amended (the "1940 Act" and,
together with the 1933 Act, the "Acts") and the rules and regulations of the
Securities and Exchange Commission (the "Commission") promulgated under the 1933
Act (the "1933 Act Rules and Regulations") and the 1940 Act (the "1940 Act Rules
and Regulations" and, together with the 1933 Act Rules and Regulations, the
"Rules and Regulations") a registration statement on Form N-2 (File No.
333-51295 and 811-4875) under the Acts (the "registration statement"), including
a prospectus relating to the Shares, and has filed the registration statement
and prospectus in accordance with the Acts. The Fund also has filed a
notification of registration of the Fund as an investment company under the 1940
Act on Form N-8A (the "1940 Act Notification"). The term "Registration
Statement" as used in this Agreement means the registration statement (including
all financial schedules and exhibits), as amended at the time it becomes
effective under the 1933 Act or, if the registration statement became effective
under the 1933 Act prior to the execution of this Agreement, as amended or
supplemented at the time it became effective, prior to the execution of this
Agreement. If it is contemplated, at the time this Agreement is executed, that a
post-effective amendment to the registration statement will be filed under the
1933 Act and must be declared effective before the offering of the Shares may
commence, the term "Registration Statement" as used in this Agreement means the
registration statement as amended by said post-effective amendment. If the Fund
has filed an abbreviated registration statement to register an additional amount
of Shares pursuant to Rule 462(b) under the 1933 Act (the "Rule 462 Registration
Statement"), then any reference herein to the term "Registration Statement"
shall include such Rule 462 Registration Statement. The term "Prospectus" as
used in this Agreement means the prospectus and statement of additional
information in the forms included in the Registration Statement or, if the
prospectus and statement of additional information included in the Registration
Statement omit information in reliance on Rule 430A under the 1933 Act Rules and
Regulations and such information is included in a prospectus and statement of
additional information filed with the Commission pursuant to Rule 497(h) under
the 1933 Act, the term "Prospectus" as used in this Agreement means the
prospectus and statement of additional information in the forms included in the
Registration Statement as supplemented by the addition of the information
contained in the prospectus filed with the Commission pursuant to Rule 497(h).
The term "Prepricing Prospectus" as used in this Agreement means the prospectus
and statement of additional information subject to completion in the forms
included in the registration statement at the time of filing of Amendment No. 1
to the registration statement with the Commission on May , 1998 and as such
prospectus and statement of additional information shall have been amended from
time to time prior to the date of the Prospectus, together with any other
prospectus and statement of additional information relating to the Fund other
than the Prospectus approved in writing by or prepared by the Fund or the
Adviser. It being understood that the definition of Prepricing Prospectus above
shall not include any Prepricing Prospectus prepared by any Underwriter unless
approved in writing by the Fund or Adviser. The terms "Registration Statement",
"Prospectus" and "Prepricing Prospectus" shall also include any financial
statements incorporated by reference therein.
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The Fund has furnished the Underwriters with copies of such
registration statement, each amendment to such registration statement filed with
the Commission and each Prepricing Prospectus.
2. Agreements to Sell and Purchase. On the basis of the
representations, warranties and agreements contained herein and subject to the
terms and conditions set forth herein, the Fund agrees to issue and sell to the
Underwriters and, each Underwriter agrees, severally and not jointly, to
purchase from the Fund, at a purchase price of $ per Share, the number of
Shares set forth opposite such Underwriter's name on Schedule I hereto (or such
number of Shares increased as set forth in Section 14 hereof).
3. Terms of Public Offering. The Fund and the Adviser have been
advised by you that the Underwriters propose to make a public offering of the
Shares as soon after the Registration Statement and this Agreement have become
effective as in your judgment is advisable and initially to offer the Shares
upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriters of and payment of the purchase price for the Shares shall be made
at the office of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, at 10:00 A.M., New York City time, on May , 1998 (the "Closing
Date"). The place of closing for the Shares and the Closing Date may be varied
by agreement between you and the Fund.
Payment shall be made to the Fund by wire transfer in same day funds,
against delivery to you of certificates for the Shares to be purchased by you.
Upon delivery, the Shares shall be represented by one certificate registered in
the name of Cede & Co., as nominee for The Depository Trust Company ("DTC"). The
Fund shall make the certificate representing the Shares available for inspection
by you in New York at least one full business day prior to the Closing Date.
5. Agreements of the Fund and the Adviser. The Fund and the Adviser,
jointly and severally, agree that:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective under the 1933 Act before the offering of the Shares
may commence, the Fund will endeavor to cause the Registration Statement or such
post-effective amendment to become effective under the 1933 Act as soon as
possible and will advise you promptly and, if requested by you, will confirm
such advice in writing when the Registration Statement or such post-effective
amendment has become effective.
(b) The Fund will advise you promptly and, if requested by you, will
confirm such advice in writing: (i) of any request made by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus (or any amendment or supplement to any of the
foregoing) or for additional information, (ii) of the issuance by the
Commission, any state securities commission, any national securities exchange,
any arbitrator, any court or any other governmental, regulatory, self-regulatory
or
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administrative agency or any official of any order suspending the effectiveness
of the Registration Statement, prohibiting or suspending the use of the
Prospectus or any Prepricing Prospectus, of any notice pursuant to Section 8(e)
of the 1940 Act, of the suspension of qualification of the Shares for offering
or sale in any jurisdiction, or the initiation of any proceeding for any such
purposes, (iii) of receipt by the Fund, the Adviser, any affiliate of the Fund
or the Adviser or any representative or attorney of the Fund or the Adviser of
any other material communication from the Commission, any state securities
commission, any national securities exchange, any arbitrator, any court or any
other governmental, regulatory, self-regulatory or administrative agency or any
official relating to the Fund (if such communication relating to the Fund is
received by such person within the period of time referred to in paragraph (f)
below), the Registration Statement, the Prospectus, any Prepricing Prospectus
(or any amendment or supplement to any of the foregoing) or this Agreement and
(iv) within the period of time referred to in paragraph (f) below, of any
material adverse change in the condition (financial or other), business,
property, net assets or results of operations of the Fund or of the happening of
any other event which makes any statement of a material fact made in the
Registration Statement or the Prospectus (or any amendment or supplement to any
of the foregoing) untrue or which requires the making of any additions to or
changes in the Registration Statement or the Prospectus, or any Prepricing
Prospectus (or any amendment or supplement to any of the foregoing) in order to
state a material fact required by the Acts or the Rules and Regulations 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 or of the necessity
to amend or supplement the Registration Statement, the Prospectus, or any
Prepricing Prospectus (or any amendment or supplement to any of the foregoing)
to comply with the Acts, the Rules and Regulations or any other law or order of
any court or regulatory body. If at any time the Commission, any state
securities commission, any national securities exchange, any arbitrator, any
court or any other governmental, regulatory, self-regularity or administrative
agency or any official shall issue any order suspending the effectiveness of the
Registration Statement, prohibiting or suspending the use of the Prospectus (or
any amendment or supplement to any of the foregoing) or suspending the
qualification of the Shares for offering or sale in any jurisdiction, the Fund
will make every reasonable effort to obtain the withdrawal of such order at the
earliest possible time.
(c) The Fund will furnish to you, without charge, three signed copies
of the registration statement as originally filed with the Commission and of
each amendment thereto, including financial statements and all exhibits thereto,
and will also furnish to you, without charge, such number of conformed copies of
the registration statement as originally filed and of each amendment thereto,
but without exhibits, as you may request.
(d) The Fund will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus of which you
shall not previously have been advised or to which you shall reasonably object
after being so advised or (ii) so long as, in the opinion of counsel for the
Underwriters, a Prospectus is required by the 1933 Act to be delivered in
connection with sales by any Underwriter or dealer, file any information,
documents or reports pursuant to the Securities Exchange Act of 1934, as amended
(the "1934
5
Act"), without delivering a copy of such information, documents or reports to
the Underwriters prior to or concurrently with such filing.
(e) Prior to the execution and delivery of this Agreement, the Fund
has delivered to you, without charge, in such quantities as you have requested,
copies of each form of the Prepricing Prospectus. The Fund consents to the use,
in accordance with the provisions of the 1933 Act and with the state securities
or Blue Sky laws of the jurisdictions in which the Shares are offered by the
Underwriters and by dealers, prior to the date of the Prospectus, of each
Prepricing Prospectus so furnished by the Fund.
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriters a prospectus is required by the 1933 Act to be
delivered in connection with sales by any Underwriter or dealer, the Fund will
expeditiously deliver to each Underwriter and each dealer, without charge, as
many copies of the Prospectus (and of any amendment or supplement thereto) as
you may request. The Fund consents to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the 1933
Act and with the state securities or Blue Sky laws of the jurisdictions in which
the Shares are offered by the Underwriters and by all dealers to whom Shares may
be sold, both in connection with the offering and sale of the Shares and for
such period of time thereafter as the Prospectus is required by the 1933 Act to
be delivered in connection with sales by any Underwriter or dealer. If during
such period of time any event shall occur that in the judgment of the Fund or in
the opinion of counsel for the Underwriters is required to be set forth in the
Registration Statement or the Prospectus (as then amended or supplemented) or
should be set forth therein in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or if it
is necessary to supplement or amend the Registration Statement or the Prospectus
to comply with the Acts, the Rules and Regulations or any other federal law,
rule or regulation, or any state securities or Blue Sky disclosure laws, rules
or regulations, the Fund will forthwith prepare and, subject to the provisions
of paragraph (d) above, promptly file with the Commission an appropriate
supplement or amendment thereto, and will expeditiously furnish to the
Underwriters and dealers, without charge, a reasonable number of copies thereof.
In the event that the Fund and you agree that the Registration Statement or the
Prospectus should be amended or supplemented, the Fund, if requested by you,
will promptly issue a press release announcing or disclosing the matters to be
covered by the proposed amendment or supplement.
(g) The Fund will make generally available to its security holders an
earnings statement, which need not be audited, covering a twelve-month period
ending December 31, 1998, as soon as practicable after the end of such period,
which earnings statement shall satisfy the provisions of Section 11(a) of the
1933 Act and Rule 158 of the 1933 Act Rules and Regulations.
(h) During the period of five years hereafter, the Fund will furnish
to you (i) as soon as available, a copy of each report of the Fund mailed to
stockholders or filed with the Commission or furnished to the New York Stock
Exchange other than reports on Form
6
N-SAR, and (ii) from time to time such other information concerning the Fund as
you may reasonably request.
(i) The Fund will apply the net proceeds from the sale of the Shares
substantially in accordance with the description set forth in the Prospectus and
in such a manner as to comply with the investment objective, policies and
restrictions of the Fund as described in the Prospectus.
(j) The Fund will timely file the requisite copies of the Prospectus
with the Commission pursuant to Rule 497(c) or Rule 497(h) of the 1933 Act Rules
and Regulations, whichever is applicable or, if applicable, will timely file the
certification permitted by Rule 497(j) of the 1933 Act Rules and Regulations and
will advise you of the time and manner of such filing.
(k) Except as provided in this Agreement, the Fund will not sell,
contract to sell, or otherwise dispose of any senior securities of the Fund, or
grant any options or warrants to purchase senior securities of the Fund, for a
period of 60 days after the date of the Prospectus, without the prior written
consent of PaineWebber Incorporated.
(l) Except as stated in this Agreement and in the Prepricing
Prospectus and Prospectus, neither the Fund nor the Adviser has taken, nor will
it take, directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the price of
any securities issued by the Fund to facilitate the sale or resale of the
Shares.
(m) The Fund will use its best efforts to cause the Shares, prior to
the Closing Date, to be assigned a rating of "aaa" by Xxxxx'x Investors Service,
Inc. (the "Rating Agency").
(n) The Fund and the Adviser will use their best efforts to perform
all of the agreements required of them and discharge all conditions to closing
as set forth in this Agreement.
6. Representations and Warranties of the Fund and the Adviser. The
Fund and the Adviser, jointly and severally, represent and warrant that:
(a) Each Prepricing Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement thereto,
or filed pursuant to Rule 497 of the 1933 Act Rules and Regulations, complied
when so filed in all material respects with the provisions of the Acts and the
Rules and Regulations. The Commission has not issued any order preventing or
suspending the use of any Prepricing Prospectus.
(b) The registration statement in the form in which it became or
becomes effective and also in such form as it may be when any post-effective
amendment thereto shall become effective and the Prospectus and any supplement
or amendment thereto when filed with the Commission under Rule 497 of the 1933
Act Rules and Regulations and the 1940
7
Act Notification when originally filed with the Commission and any amendment or
supplement thereto when filed with the Commission, complied or will comply in
all material respects with the provisions of the Acts and the Rules and
Regulations and did not or will not at any such times contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except that this representation and warranty does not apply to statements in or
omissions from the registration statement or the Prospectus made in reliance
upon and in conformity with information relating to any Underwriter furnished to
the Fund in writing by or on behalf of any Underwriter through you expressly for
use therein.
(c) The Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable and free of
any preemptive or similar rights and will conform to the description thereof in
the Registration Statement and the Prospectus (and any amendment or supplement
to either of them).
(d) All the outstanding shares of the Fund's Common Stock and 7.80%
Cumulative Preferred have been duly authorized and validly issued, are fully
paid and nonassessable and are free of any preemptive or similar rights, and
conform to the description thereof in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them).
(e) The Fund is a corporation duly organized and validly existing in
good standing under the laws of the State of Maryland with full corporate power
and authority to own, lease and operate its property or assets and to conduct
its business as described in the Registration Statement and the Prospectus (and
any amendment or supplement to either of them), and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its property or assets or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify does not have a material adverse effect on the
condition (financial or other), business, prospects, property, net assets or
results of operations of the Fund, or on the ability of the Fund to perform its
obligations under this Agreement or any of the Fund Agreements. The Fund has no
subsidiaries.
(f) There are no legal or governmental proceedings pending or, to the
knowledge of the Fund, threatened, against the Fund, or to which the Fund or any
of its property or assets is subject, that are required to be described in the
Registration Statement or the Prospectus (and any amendment or supplement to
either of them) but are not described as required, and there are no agreements,
contracts, indentures, leases or other instruments that are required to be
described in the Registration Statement or the Prospectus (and any amendment or
supplement to either of them) or to be filed as an exhibit to the Registration
Statement that are not described or filed as required by the Acts or the Rules
and Regulations.
(g) The Fund is not in violation of its articles of incorporation, as
amended, including the 7.80% Cumulative Preferred Articles and the Articles
Supplementary (collectively, the "Charter") or by-laws (the "By-Laws"), or of
any law, ordinance,
8
administrative or governmental rule or regulation applicable to the Fund or of
any decree of the Commission, any state securities commission, any national
securities exchange, any arbitrator, any court or governmental agency, body or
official having jurisdiction over the Fund, or in default in any material
respect in the performance of any obligation, agreement or condition contained
in any bond, debenture, note or any other evidence of indebtedness or in any
material agreement, indenture, lease or other instrument to which the Fund is a
party or by which it or any of its property or assets may be bound.
(h) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or any of the Fund Agreements by the
Fund, nor the consummation by the Fund of the transactions contemplated hereby
or thereby (i) requires any consent, approval, authorization or other order of
or registration or filing with, the Commission, any state securities commission,
any national securities exchange, any arbitrator, any court, regulatory body,
administrative agency or other governmental body, agency or official (except for
the registration of the Shares under the 1933 Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
applicable state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by you and the required rating agency confirmation),
(ii) violates or will violate or conflicts or will conflict with any provision
of the Charter or By-Laws of the Fund or any statute, law, regulation or
judgment, injunction, order or decree applicable to the Fund or any of its
property or assets, or (iii) conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, any agreement, indenture, lease
or other instrument to which the Fund is a party or by which it or any of its
property or assets may be bound, or will result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Fund pursuant
to the terms of any agreement or instrument to which it is a party or by which
it may be bound or to which any of its property or assets is subject. The Fund
is not subject to any order of any court or of any arbitrator, governmental
authority or administrative agency.
(i) The accountants, Xxxx, Xxxxxx & Xxxxx, who will audit the
financial statements of the Fund for the year ending December 31, 1998, are
independent public accountants as required by the Acts and the Rules and
Regulations.
(j) The accountants, Xxxxx & Young LLP, who have certified or shall
certify the financial statements included in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them) are independent
public accountants as required by the Acts and the Rules and Regulations.
(k) The accountants, Xxxxxxx & Xxxxxxx L.L.P., who have audited the
financial information for the seven years ended December 31, 1994 included in
the Registration Statement and the Prospectus (or any amendment or supplement to
either of them) are independent public accountants as required by the Acts and
the Rules and Regulations.
(l) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement and
the Prospectus (and
9
any amendment or supplement to either of them), present fairly the financial
position, results of operations and changes in financial position of the Fund on
the basis stated or incorporated by reference in the Registration Statement at
the respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; and the other financial and
statistical information and data included in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them) are accurately
presented and prepared on a basis consistent with such financial statements and
the books and records of the Fund.
(m) The execution and delivery of, and the performance by the Fund of
its obligations under, this Agreement and the Fund Agreements have been duly and
validly authorized by the Fund, and this Agreement and the Fund Agreements have
been duly executed and delivered by the Fund and constitute the valid and
legally binding agreements of the Fund, enforceable against the Fund in
accordance with their terms, except as rights to indemnity and contribution
hereunder and thereunder may be limited by federal or state securities laws.
(n) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement to either of them),
the Fund has not incurred any liability or obligation, direct or contingent, or
entered into any transaction, not in the ordinary course of business, that is
material to the Fund, and there has not been any change in the capital stock, or
material increase in the short-term debt or long-term debt, of the Fund, or any
material adverse change, or any development involving or which may reasonably be
expected to involve, a prospective material adverse change, in the condition
(financial or other), business, prospects, property, net assets or results of
operations of the Fund taken as a whole, whether or not arising in the ordinary
course of business.
(o) The Fund has not distributed and, prior to the later to occur of
the Closing Date and the completion of the distribution of the Shares will not
distribute, any offering material in connection with the offering and sale of
the Shares other than the Registration Statement, the Prepricing Prospectus, the
Prospectus or other materials, if any, permitted by the Acts or the Rules and
Regulations.
(p) The Fund has such permits, licenses, franchises and authorizations
of governmental or regulatory authorities ("permits") as are necessary to own
its property and assets and to conduct its business in the manner described in
the Prospectus (and any amendment or supplement thereto), subject to such
qualifications as may be set forth in the Prospectus; the Fund has fulfilled and
performed all its material obligations with respect to such permits and no event
has occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material impairment of
the rights of the Fund under any such permit, subject in each case to such
qualification as may be set forth in the Prospectus (and any amendment or
supplement thereto); and, except as
10
described in the Prospectus (and any amendment or supplement thereto), none of
such permits contains any restriction that is materially burdensome to the Fund.
(q) The Fund maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization and with the
applicable requirements of the 1940 Act, the 1940 Act Rules and Regulations and
the Internal Revenue Code of 1986, as amended (the "Code"); (ii) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets and to maintain compliance with the books and records
requirements under the 1940 Act and the 1940 Act Rules and Regulations; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(r) 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 in violation of any law, rule or regulation, which payment,
receipt or retention of funds is of a character required to be disclosed in the
Prospectus.
(s) The Fund has filed all tax returns required to be filed, which
returns are complete and correct, and the Fund is not in default in the payment
of any taxes which were payable pursuant to said returns or any assessments with
respect thereto.
(t) No holder of any security of the Fund has any right to require
registration of shares of Common Stock, 7.80% Preferred, Cumulative Preferred
Stock or any other security of the Fund because of the filing of the
registration statement or consummation of the transactions contemplated by this
Agreement.
(u) The Fund, subject to the registration statement having been
declared effective and the filing of the Prospectus under Rule 497 under the
Rules and Regulations, has taken all required action under the Acts and the
Rules and Regulations to make the public offering and consummate the sale of the
Shares as contemplated by this Agreement.
(v) The conduct by the Fund of its business (as described in the
Prospectus) does not require it to be the owner, possessor or licensee of any
patents, patent licenses, trademarks, service marks or trade names which it does
not own, possess or license.
(w) The Fund is registered under the 1940 Act as a closed-end,
diversified management investment company and the 1940 Act Notification has been
duly filed with the Commission and, at the time of filing thereof and any
amendment or supplement thereto, conformed in all material respects with all
applicable provisions of the 1940 Act and the Rules and Regulations. The Fund
is, and at all times through the completion of the transactions contemplated
hereby will be, in compliance in all material respects with the terms and
conditions of the Acts. 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
11
the 1940 Act Rules and Regulations and the Investment Advisers Act of 1940, as
amended (the "Advisers Act"), and the rules and regulations of the Commission
promulgated under the Advisers Act (the "Advisers Act Rules and Regulations").
(x) Except as stated in this Agreement and in the Prospectus (and any
amendment or supplement thereto), the Fund has not taken, nor will it take,
directly or indirectly, any action designed to or which might reasonably be
expected to cause or result in stabilization or manipulation of the price of any
securities issued by the Fund to facilitate the sale or resale of the Shares,
and the Fund is not aware of any such action taken or to be taken by any
affiliates of the Fund.
(y) The Fund has filed in a reasonably timely manner each document or
report required to be filed by it pursuant to the 1934 Act and the rules and
regulations of the Commission promulgated thereunder (the "1934 Act Rules and
Regulations"); each such document or report at the time it was filed conformed
to the requirements of the 1934 Act and the 1934 Act Rules and Regulations; and
none of such documents or reports contained an untrue statement of any material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(z) Each of the Fund Agreements and the Fund's and the Adviser's
obligations under this Agreement and each of the Fund Agreements comply in all
material respects with all applicable provisions of the 1940 Act, the 1940 Act
Rules and Regulations, the Advisers Act and the Advisers Act Rules and
Regulations.
(aa) The Shares have been, or prior to the Closing Date will be,
assigned a rating of "aaa" by the Rating Agency.
(ab) At all times since its inception, as required by Subchapter M of
the Code, the Fund has complied with the requirements to qualify as a regulated
investment company under the Code.
(z) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), no director of
the Fund is an "interested person" (as defined in the 1940 Act) of the Fund or
an "affiliated person" (as defined in the 1940 Act) of any Underwriter.
(aa) The Shares have been, or prior to the Closing Date will be, duly
approved for listing upon notice of issuance on the New York Stock Exchange.
7. Representations and Warranties of the Adviser. The Adviser
represents and warrants that:
(a) The Adviser is a corporation duly incorporated and validly
existing in good standing under the laws of the State of New York, with full
corporate power and authority to own, lease and operate its property or assets
and to conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement to either of
12
them), and is duly registered and qualified to conduct its business and is in
good standing in each jurisdiction or place where the nature of its property or
assets or the conduct of its business requires such registration or
qualification, except where the failure so to register or to qualify does not
have a material adverse effect on the condition (financial or other), business,
prospects, property, net assets or results of operations of the Adviser, or on
the ability of the Adviser to perform its obligations under this Agreement and
the Investment Advisory Agreement.
(b) The Adviser is duly registered with the Commission as an
investment adviser under the Advisers Act and is not prohibited by the Advisers
Act, the Advisers Act Rules and Regulations, the 1940 Act or the 1940 Act Rules
and Regulations from acting under the Investment Advisory Agreement for the Fund
as contemplated by the Prospectus (or any amendment or supplement thereto).
There does not exist any proceeding or, to the Adviser's knowledge, any facts or
circumstances the existence of which could lead to any proceeding which might
adversely affect the registration of the Adviser with the Commission.
(c) There are no legal or governmental proceedings pending or, to the
knowledge of the Adviser, threatened against the Adviser, or to which the
Adviser or any of its property or assets is subject, that are required to be
described in the Registration Statement or the Prospectus (or any amendment or
supplement to either of them) but are not described as required or that may
reasonably be expected to involve a prospective material adverse change, in the
condition (financial or other), business, prospects, property, net assets or
results of operations of the Adviser or on the ability of the Adviser to perform
its obligations under this Agreement and the Investment Advisory Agreement.
(d) Neither the execution, delivery or performance of this Agreement
or the Investment Advisory Agreement by the Adviser, nor the consummation by the
Adviser of the transactions contemplated hereby or thereby (i) requires the
Adviser to obtain any consent, approval, authorization or other order of or
registration with, the Commission, any state securities commission, any national
securities exchange, any arbitrator, any court, regulatory body, administrative
agency or other governmental body, agency or official, (ii) violates or will
violate or conflicts or will conflict with any provision of the certificate of
incorporation or by-laws or other organizational documents of the Adviser or any
statute, law, regulation or judgment, injunction, order or decree applicable to
the Adviser or any of its property or assets, or (iii) conflicts or will
conflict with or constitutes or will constitute a breach of or a default under,
any agreement, indenture, lease or other instrument to which the Adviser is a
party or by which it or any of its property or assets may be bound, or will
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Adviser pursuant to the terms of any agreement or
instrument to which it is a party or by which it may be bound or to which any of
the property or assets of the Adviser is subject. The Adviser is not subject to
any order of any court or of any arbitrator, governmental authority or
administrative agency.
(e) The execution and delivery of, and the performance by the Adviser
of its obligations under, this Agreement and the Investment Advisory Agreement
have been duly and validly authorized by the Adviser, and this Agreement and the
Investment Advisory
13
Agreement have been duly executed and delivered by the Adviser and each
constitutes the valid and legally binding agreement of the Adviser, enforceable
against the Adviser in accordance with its terms except as rights to indemnity
and contribution hereunder may be limited by federal or state securities laws.
(f) The Adviser has the financial resources available to it necessary
for the performance of its services and obligations as contemplated in the
Prospectus (or any amendment or supplement thereto) and under this Agreement and
the Investment Advisory Agreement.
(g) The description of the Adviser in the Registration Statement and
the Prospectus (and any amendment or supplement thereto) complied and comply in
all material respects with the provisions the Acts, the Advisers Act, the Rules
and Regulations and the Advisers Act Rules and Regulations and did not and will
not contain an untrue statement of a material fact 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.
(h) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement to either of them),
the Adviser has not incurred any liability or obligation, direct or contingent,
or entered into any transaction, not in the ordinary course of business, that is
material to the Fund, and there has not been any material adverse change, or any
development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the condition (financial or other),
business, prospects, property, net assets or results of operations of the
Adviser, whether or not arising in the ordinary course of business, or which, in
each case, could have a material adverse effect on the ability of the Adviser to
perform its obligations under this Agreement and the Investment Advisory
Agreement.
(i) The Adviser has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its property and assets and to conduct its business in the
manner described in the Prospectus (and any amendment thereto); the Adviser has
fulfilled and performed all its material obligations with respect to such
permits, and to the Adviser's knowledge no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the Adviser under any
such permit; and, except as described in the Prospectus (and any amendment or
supplement thereto), none of such permits contains any restriction that is
materially burdensome to the Adviser.
(j) Except as stated in this Agreement and in the Prospectus (and in
any amendment or supplement thereto), the Adviser has not taken, nor will it
take, directly or indirectly, any action designed to or which might reasonably
be expected to cause or result in, stabilization or manipulation of the price of
any securities issued by the Fund to facilitate the
14
sale or resale of the Shares, and the Adviser is not aware of any such action
taken or to be taken by any affiliates of the Adviser.
(k) Xxxxxxx X. Xxxxx is the validly appointed President and Chief
Investment Officer of the Adviser and is the sole voting shareholder of the
Adviser.
8. Indemnification and Contribution. (a) The Fund and the Adviser,
jointly and severally, agree, to the extent permitted by applicable law, to
indemnify and hold harmless you, your directors, officers and employees and each
person, if any, who controls you within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation),
joint and several, arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing Prospectus or in
the Registration Statement or the Prospectus or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission which has been
made therein or omitted therefrom in reliance upon and in conformity with the
information relating to any Underwriter furnished in writing to the Fund by or
on behalf of any Underwriter through you expressly for use in connection
therewith; provided, however, that the indemnification contained in this
paragraph (a) with respect to any Prepricing Prospectus shall not inure to the
benefit of any Underwriter (or to the benefit of any director, officer or
employee of any Underwriter or any person controlling any Underwriter) on
account of any such loss, claim, damage, liability or expense arising from the
sale of the Shares by such Underwriter to any person if a copy of the Prospectus
shall not have been delivered or sent to such person within the time required by
the 1933 Act and the 1933 Act Rules and Regulations, and the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in such Prepricing Prospectus was corrected in the Prospectus,
provided that the Fund has delivered the Prospectus to the Underwriters in
requisite quantity on a timely basis to permit such delivery or sending. The
foregoing indemnity agreement shall be in addition to any liability which the
Fund or the Adviser may otherwise have.
(b) If any action, suit or proceeding shall be brought against you,
your directors, officers or employees or any person controlling you in respect
of which indemnity may be sought against the Fund or the Adviser, such
indemnified party shall promptly notify the Fund or the Adviser, and the Fund or
the Adviser shall assume the defense thereof, including the employment of
counsel and payment of all fees and expenses. Such indemnified party shall have
the right to employ separate counsel in any such action, suit or proceeding and
to participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the Fund or the
Adviser has agreed in writing to pay such fees and expenses, (ii) the Fund and
the Adviser have failed to assume the defense and employ counsel, (iii) the
indemnified party has reasonably concluded (based on advice of counsel) 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 Fund and
15
the Adviser, or (iv) the named parties to any such action, suit or proceeding
(including any impleaded parties) include both such indemnified party and the
Fund or the Adviser and such indemnified party shall have been advised by its
counsel that representation of such indemnified party and the Fund or the
Adviser by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the Fund and the Adviser shall not have the right to assume the
defense of such action, suit or proceeding on behalf of such indemnified party).
It is understood, however, that the Fund and the Adviser shall, in connection
with any one such action, suit or proceeding or separate but substantially
similar or related actions, suits or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of only one separate firm of attorneys (in addition
to any local counsel) at any time for all such indemnified parties, which firm
shall be designated in writing by PaineWebber Incorporated, and that all such
fees and expenses shall be reimbursed as they are incurred and billed. The Fund
and the Adviser shall not be liable for any settlement of any such action, suit
or proceeding effected without their written consent, but if settled with such
written consent, or if there be a final judgment for the plaintiff in any such
action, suit or proceeding, the Fund and the Adviser agree to indemnify and hold
harmless any indemnified party, to the extent provided in the preceding
paragraph, from and against any loss, claim, damage, liability or expense by
reason of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Fund and the Adviser, their directors, any officers who
sign the Registration Statement, and any person who controls the Fund or the
Adviser within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act, to the same extent as the foregoing indemnity from the Fund and the
Adviser to each Underwriter, but only with respect to information relating to
such Underwriter furnished in writing by or on behalf of such Underwriter
through you expressly for use in the Registration Statement, the Prospectus or
any Prepricing Prospectus, or any amendment or supplement thereto. If any
action, suit or proceeding shall be brought against the Fund or the Adviser, any
of their directors, any such officer, or controlling person based on the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto, and in respect of which indemnity may be sought
against any Underwriter pursuant to this paragraph (c), such Underwriter shall
have the rights and duties given to the Fund and the Adviser by paragraph (b) of
this Section 8 (except that if the Fund or the Adviser shall have assumed the
defense thereof such Underwriter shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof, but the fees
and expenses of such counsel shall be at such Underwriter's expense), and the
Fund and the Adviser, their directors, any such officer, and any such
controlling person shall have the rights and duties given to the Underwriters by
paragraph (b) of this Section 8. The foregoing indemnity agreement shall be in
addition to any liability which the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall, to the extent permitted by applicable law,
16
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Fund and the
Adviser on the one hand (treated jointly for this purpose as one person) and the
Underwriters on the other hand from the offering of the Shares, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Fund and the
Adviser on the one hand (treated jointly for this purpose as one person) and the
Underwriters on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Fund and the Adviser on the one hand (treated jointly for this purpose as
one person) and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Fund bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault of the Fund and the
Adviser on the one hand (treated jointly for this purpose as one person) and the
Underwriters 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 Fund and the Adviser on the one hand (treated jointly for this
purpose as one person) or by the Underwriters on the other hand and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(e) The Fund, the Adviser and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 8 were determined
by a pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) of this
Section 8 shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 8, no Underwriter
shall be required to contribute any amount in excess of the the underwriting
discounts and commissions received by such Underwriter. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 8 are several in proportion to the respective numbers
of Shares set forth opposite their names in Schedule I hereto (or such numbers
of Shares increased as set forth in Section 14 hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such
17
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred and billed.
The indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Fund and the Adviser set forth in this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of any Underwriter, any director, officer
or employee of any Underwriter or any person controlling any Underwriter, the
Fund, the Adviser, the directors or officers of the Fund or the Adviser or any
person controlling the Fund or the Adviser, (ii) acceptance of any Shares and
payment therefor hereunder, and (iii) any termination of this Agreement. A
successor to any Underwriter, any director, officer or employee of any
Underwriter, or any person controlling any Underwriter, or to the Fund, the
Adviser, their directors or officers, or any person controlling the Fund or the
Adviser, shall be entitled to the benefits of the indemnity, contribution, and
reimbursement agreements contained in this Section 8.
9. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters to purchase the Shares hereunder are subject to the following
conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
registration statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 497 and 430A under the 1933 Act and the 1933
Act Rules and Regulations shall have been timely made; no stop order suspending
the effectiveness of the Registration Statement or order pursuant to Section
8(e) of the 1940 Act shall have been issued and no proceeding for those purposes
shall have been instituted or, to the knowledge of the Fund, the Adviser or any
Underwriter, threatened by the Commission, and any request of the Commission for
additional information (to be included in the registration statement or the
prospectus or otherwise) shall have been complied with to your satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change or any development involving a prospective
change in or affecting the condition (financial or other), business, prospects,
property, net assets, or results of operations of the Fund or the Adviser not
contemplated by the Prospectus, which in your opinion would materially adversely
affect the market for the Shares, (ii) any event or development relating to or
involving the Fund or the Adviser or any officer or director of the Fund or the
Adviser which makes any statement made in the Prospectus untrue or which, in the
opinion of the Fund and its counsel or the Underwriters and their counsel,
requires the making of any addition to or change in the Prospectus in order to
state a material fact required by the Acts or the Rules and Regulations or any
other law to be stated therein or
18
necessary in order to make the statements therein not misleading, if amending or
supplementing the Prospectus to reflect such event or development would, in your
opinion, materially adversely affect the market for the Shares, or (iii) any
downgrading, nor shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not indicate the
direction of a possible change, in the rating accorded any of the Fund's
preferred stock by any "nationally recognized statistical rating organization,"
as such term is defined for purposes of Rule 436(g)(2) of the 1933 Act Rules and
Regulations.
(c) You shall have received on the Closing Date an opinion of Xxxxx &
Wood LLP, special counsel to the Fund, dated the Closing Date and addressed to
you, to the effect that:
(i) the Fund is qualified to do business and is in good standing
as a foreign corporation in the State of New York, and, to such
counsel's knowledge, owns, possesses or has obtained and currently
maintains, all material governmental licenses, permits, consents,
orders, approvals and other authorizations under the Federal laws of
the United States and the laws of the State of New York necessary to
carry on its business as contemplated by the Prospectus;
(ii) this Agreement has been duly authorized, executed and
delivered by the Fund and complies with the provisions of the 1940 Act
and the 1940 Act Rules and Regulations applicable to the Fund;
(iii) each of the Investment Advisory Agreement and the Custodian
Contract has been duly authorized, executed and delivered by the Fund
and each complies as to form in all material respects with all
applicable provisions of the 1940 Act and the 1940 Act Rules and
Regulations;
(iv) the Registration Statement is effective under the 1933 Act
and the 1933 Act Rules and Regulations and, to such counsel's
knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act or the 1933
Act Rules and Regulations or proceedings therefor initiated or
threatened by the Commission;
(v) at the time the Registration Statement became effective, the
Registration Statement (other than the financial statements and other
financial or statistical information included therein, as to which no
opinion need be rendered) complied as to form in all material respects
with the requirements of the Acts and the Rules and Regulations;
(vi) to such counsel's knowledge, (A) there are no contracts,
indentures, mortgages, loan agreements, notes, leases or other
instruments of the Fund required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto other than
those described or referred to therein or filed as exhibits thereto,
(B) the descriptions thereof are correct in all material respects, (C)
references thereto
19
are correct, and (D) no default exists in the due performance or
observance by the Fund of any material obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument so described, referred to
or filed as an exhibit to the Registration Statement;
(vii) no consent, approval, authorization or order of any court or
governmental authority or agency is required in connection with the
performance by the Fund of its obligations under this Agreement,
except for (A) such as may be required under state securities or Blue
Sky laws in connection with the purchase and distribution of the
Shares by you and the required rating agency confirmation (as to which
such counsel need express no opinion) and (B) such as have been made
or obtained under the 1933 Act; and to such counsel's knowledge, the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein will not conflict with or constitute
a breach of, or a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Fund pursuant to, any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which the Fund is a
party or by which it may be bound or to which any of the property or
assets of the Fund is subject, nor will such action result in any
violation of the provisions of the Charter or the By-Laws of the Fund,
or, to such counsel's knowledge, any Federal or New York law or
administrative regulation, or administrative or court decree;
(viii) the Fund is registered with the Commission under the 1940
Act and the 1940 Act Rules and Regulations as a closed-end,
diversified management investment company, and all required action has
been taken by the Fund under the Acts and the Rules and Regulations to
make the public offering and consummate the sale of the Shares
pursuant to this Agreement; the provisions of the Charter and the
By-Laws of the Fund comply as to form in all material respects with
the requirements of the 1940 Act and the 1940 Act Rules and
Regulations; and, to such counsel's knowledge, no order of suspension
or revocation of such registration under the 1940 Act and the 1940 Act
Rules and Regulations, has been issued or proceedings therefor
initiated or threatened by the Commission; and
(ix) the information in the Prospectus under the caption
"Taxation", to the extent that it constitutes matters of Federal
income tax law or legal conclusions relating to Federal income tax
matters, has been reviewed by them and is correct in all material
respects.
In rendering such opinion, Brown & Wood LLP shall additionally state that
nothing has come to their attention that would lead them to believe that the
Registration Statement or any amendment or supplement thereto, at the time it
became effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus or any amendment or
supplement thereto, as of the time it was first provided to the Underwriters or
as of the Closing Date, included an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the
20
circumstances under which they were made, not misleading, except that such
counsel need not express any belief with respect to the financial statements and
other financial and statistical information included in the Registration
Statement and the Prospectus (and any amendment or supplement to either of the
foregoing). In addition, Brown & Wood LLP (A) may state that they express no
opinion as to the laws of any jurisdiction other than the laws of the State of
New York and the Federal laws of the United States of America, (B) may rely as
to matters involving the laws of the State of Maryland upon the opinion of
Xxxxxxx, Xxxxxxx and Xxxxxx, LLP referred to in paragraph (d) of this Section 9,
and (C) may rely, as to matters of fact, upon the representations and warranties
made by the Fund and the Adviser herein and on certificates and written
statements of officers and employees of and accountants for the Fund and the
Adviser and of public officials. Except as otherwise specifically provided
herein, when giving their opinions to their "knowledge", Xxxxx & Wood LLP have
relied solely upon an inquiry of the attorneys of that firm who have worked on
matters for the Fund, on certificates or written statements of officers of the
Fund and, where appropriate, a review of the Registration Statement, Prospectus,
exhibits to the Registration Statement, the Charter and By-Laws of the Fund and
a review of the minute books of the Fund and have made no other investigation or
inquiry.
(d) You shall have received on the Closing Date an opinion of Xxxxxxx,
Xxxxxxx and Xxxxxx, LLP, special Maryland counsel to the Fund, dated the Closing
Date and addressed to you, to the effect that:
(i) the Fund has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of
Maryland;
(ii) the Fund has corporate power and authority, under the laws of
the State of Maryland, to own, lease and operate its property or
assets and conduct its business as described in the Registration
Statement and in the Prospectus;
(iii) the authorized capital stock of the Fund conforms as to
legal matters in all material respects to the description thereof in
the Registration Statement under the captions "Description of
Cumulative Preferred Stock" and "Description of Capital Stock";
(iv) the Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of the
Shares will not be subject to preemptive or other similar rights
pursuant to the Charter or By-Laws of the Fund or the Maryland General
Corporation Law; and the form of certificate used to evidence the
Shares is in due and proper form and complies with all provisions of
applicable Maryland law;
(v) the Fund has full corporate power to enter into the Investment
Advisory Agreement and the Custodian Contract and each has been duly
and validly authorized, executed and delivered by the Fund;
21
(vi) to such counsel's knowledge, the execution and delivery of
this Agreement and the consummation of the transactions contemplated
herein will not conflict with or constitute a breach of the Charter or
the By-Laws of the Fund, or any Maryland law (other than Maryland
securities laws) or regulation, or, to their knowledge, any order of
any Maryland court, governmental instrumentality or arbitrator; and
(vii) all descriptions in the Prospectus of Maryland statutes and
regulations or legal or governmental proceedings, if any, under the
laws of the State of Maryland are accurate in all material respects.
In rendering such opinion, Xxxxxxx, Xxxxxxx and Xxxxxx, LLP may rely, as to
matters of fact, upon the representations and warranties made by the Fund and
the Adviser herein and on certificates and written statements of officers and
employees of and accountants for the Fund and the Adviser and of public
officials. Except as otherwise specifically provided herein, when giving their
opinions to their "knowledge", Xxxxxxx, Xxxxxxx and Xxxxxx, LLP have relied
solely upon an inquiry of the attorneys of that firm who have worked on matters
for the Fund, on certificates or written statements of officers of the Fund and,
where appropriate, a review of the Registration Statement, Prospectus, exhibits
to the Registration Statement, the Charter and By-Laws of the Fund and have made
no other investigation or inquiry.
(e) You shall have received on the Closing Date an opinion of either
Xxxxxx X. Xxxxxxx, Esq., General Counsel for the Adviser, or Xxxx X. Xxxxxxx,
Esq., Associate General Counsel for the Adviser, dated the Closing Date and
addressed to you, to the effect that:
(i) the Adviser has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of New
York, with corporate power and authority to conduct its business as
described in the Registration Statement and in the Prospectus;
(ii) the Adviser is duly registered as an investment adviser under
the Advisers Act and the Advisers Act Rules and Regulations and,
subject to the matters covered by the no-action letters of the
Commission in Quest Advisory Corp.; Royce Value Trust, Inc. (pub.
avail. December 22, 1986) and Royce Value Trust, Inc. (pub. avail.
July 29, 1988) (collectively, the "No-Action Letters"), is not
prohibited by the Advisers Act, the Advisers Act Rules and
Regulations, the 1940 Act or the 1940 Act Rules and Regulations, from
acting under the Investment Advisory Agreement for the Fund as
contemplated by the Prospectus;
(iii) this Agreement and the Investment Advisory Agreement each
has been duly authorized, executed and delivered by the Adviser and,
subject to the matters covered by the No-Action Letters, constitutes a
valid and binding obligation of the Adviser, enforceable in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization or other laws relating to or affecting creditors'
rights generally and to general equitable principles (except as to
those provisions
22
relating to indemnity or contribution for liabilities arising under
such agreement, as to which no opinion need be expressed); and, to his
knowledge, neither the execution and delivery of this Agreement or the
Investment Advisory 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 without the giving of notice or the lapse of time or both, a
default under, any agreement or instrument to which the Adviser is a
party or by which the Adviser is bound, or, except as set forth in the
No-Action Letters, any law, order, rule or regulation applicable to
the Adviser 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
property or assets or operations; and
(iv) to his knowledge, the description of the Adviser in the
Registration Statement and in the Prospectus (and any amendment or
supplement to either of the foregoing) does not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading.
In rendering such opinion, such counsel (A) may state that he expresses no
opinion as to the laws of any jurisdiction other than the laws of the State of
New York and the federal laws of the United States of America and (B) may rely,
as to matters of fact, upon the representations and warranties made by the Fund
and the Adviser herein and on certificates and written statements of officers
and employees of and accountants for the Fund and the Adviser and of public
officials.
(f) You shall have received on the Closing Date an opinion of Xxxxxxx
Xxxxxxx & Xxxxxxxx, counsel to the Underwriters, dated the Closing Date and
addressed to you, with respect to such matters as the Underwriters may
reasonably request.
(g) You shall have received letters addressed to you and dated the
date hereof and the Closing Date from Xxxx, Xxxxxx & Xxxxx, independent
certified public accountants, substantially in the forms heretofore approved by
you.
(h) You shall have received a letter addressed to you and dated the
date hereof from Ernst & Young LLP, independent certified public accountants,
substantially in the forms heretofore approved by you.
(i) (i) No order suspending the effectiveness of the registration
statement or the Registration Statement or prohibiting or suspending the use of
the Prospectus (or any amendment or supplement thereto) or any Prepricing
Prospectus shall have been issued and no proceedings for such purpose or for the
purpose of commencing an enforcement action against the Fund, the Adviser or,
with respect to the transactions contemplated by the Prospectus (or any
amendment or supplement thereto) and this Agreement, any Underwriter, may be
pending before or, to the knowledge of the Fund, the Adviser or any Underwriter
or in the reasonable view of counsel to the Underwriters, shall be threatened or
contemplated by
23
the Commission at or prior to the Closing Date and that any request for
additional information on the part of the Commission (to be included in the
Registration Statement, the Prospectus or otherwise) be complied with to the
satisfaction of the Underwriters; (ii) there shall not have been any change in
the capital stock of the Fund nor any material increase in the short-term or
long-term debt of the Fund (other than in the ordinary course of business) from
that set forth or contemplated in the Registration Statement or the Prospectus
(or any amendment or supplement thereto); (iii) there shall not have been,
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto), except as may otherwise be stated in the Registration Statement and
Prospectus (or any amendment or supplement thereto), any material adverse change
in the condition (financial or other), business, prospects, property, net assets
or results of operations of the Fund or the Adviser; (iv) the Fund shall not
have any liabilities or obligations, direct or contingent (whether or not in the
ordinary course of business), that are material to the Fund, other than those
reflected in the Registration Statement or the Prospectus (or any amendment or
supplement to either of them); and (v) all the representations and warranties of
the Fund and the Adviser contained in this Agreement shall be true and correct
on and as of the date hereof and on and as of the Closing Date as if made on and
as of the Closing Date, and you shall have received a certificate of the Fund
and the Adviser, dated the Closing Date and signed by the chief executive
officer and the chief financial officer of each of the Fund and the Adviser (or
such other officers as are acceptable to you), to the effect set forth in this
Section 9(i) and in Section 9(j) hereof.
(j) That neither the Fund nor the Adviser shall have failed at or
prior to the Closing Date to have performed or complied in all material respects
with any of its agreements herein contained and required to be performed or
complied with by it hereunder at or prior to the Closing Date.
(k) The Fund shall have delivered and you shall have received evidence
satisfactory to you that the Shares are rated "aaa" by the Rating Agency as of
the Closing Date, and there shall not have been given any notice of any intended
or potential downgrading, or of any review for a potential downgrading, in the
rating accorded to the Shares by the Rating Agency.
(l) The Shares shall have been listed or approved for listing upon
notice of issuance on the New York Stock Exchange.
(m) The Fund and the Adviser shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.
Any certificate or document signed by any officer of the Fund or the
Adviser and delivered to you or your counsel shall be deemed a representation
and warranty by the Fund or the Adviser to each Underwriter as to the statements
made therein.
24
10. Expenses. The Fund agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by it of its
obligations hereunder: (a) the preparation, printing or reproduction, and filing
with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the Prospectus and
each amendment or supplement to any of them (including, without limitation, the
filing fees prescribed by the Acts and the Rules and Regulations); (b) the
printing (or reproduction) and delivery (including postage, air freight charges
and charges for counting and packaging) of such copies of the Registration
Statement, each Prepricing Prospectus, the Prospectus and all amendments or
supplements to any of them as may be reasonably requested for use in connection
with the offering and sale of the Shares; (c) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, including
any stamp taxes in connection with the original issuance and sale of the Shares;
(d) the reproduction and delivery of this Agreement, any dealer agreements, the
preliminary Blue Sky memorandum and all other agreements or documents reproduced
and delivered in connection with the offering of the Shares; (e) the
registration of the Shares under the 1934 Act and the listing of the Shares on
the New York Stock Exchange; (f) the reasonable fees (not to exceed $2,000),
expenses and disbursements of counsel for the Underwriters relating to the
preparation, reproduction, and delivery of the preliminary Blue Sky memorandum;
(g) fees paid to the Rating Agency; (h) the transportation and other expenses
incurred by or on behalf of Fund representatives in connection with
presentations to prospective purchasers of the Shares; and (i) the fees and
expenses of the Fund's accountants and the fees and expenses of counsel
(including local and special counsel) for the Fund and of the transfer agent.
11. Information Furnished by the Underwriters. The statements set
forth in [the last paragraph on the cover page, the last paragraph on the inside
cover page, and the statements in the first, third, and fifth paragraphs under
the caption "Underwriting" in any Prepricing Prospectus and in the Prospectus],
constitute the only information furnished by or on behalf of the Underwriters
through you as such information is referred to in Sections 6(b) and 8 hereof.
12. Effective Date of Agreement. This Agreement shall become effective
(a) upon the execution and delivery of this Agreement by the parties or (b) if,
at the time this Agreement is executed and delivered, it is necessary for the
registration statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of the registration statement or such post-effective amendment
has been released by the Commission. Until this Agreement becomes effective as
aforesaid, it may be terminated by the Fund by notifying you and the Adviser, or
by you by notifying the Fund and the Adviser.
13. Termination of Agreement. (a) This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Fund or the Adviser, by notice to the Fund or the Adviser, if
prior to the Closing Date:
25
(i) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market
shall have been suspended or materially limited;
(ii) a general moratorium on commercial banking activities in New
York shall have been declared by either federal or state authorities;
(iii) any "nationally recognized statistical rating organization"
(as defined for purposes of Rule 436(g)(2) under the 1933 Act Rules
and Regulations) has downgraded the rating of any of the Fund's
preferred stock, or any such organization has publicly announced that
it has under surveillance or review (other than an announcement with
positive implications of a possible upgrading), its rating of the
Fund's preferred stock; or
(iv) there shall have occurred any outbreak or escalation of
hostilities or other international or domestic calamity, crisis or
change in political, financial or economic conditions, the effect of
which on the financial markets of the United States is sufficiently
materially adverse as to make it, in your judgment, impracticable or
inadvisable to commence or continue the offering of the Shares at the
offering price to the public set forth on the cover page of the
Prospectus or to enforce contracts for the resale of the Shares by the
Underwriters.
(b) Any notice of termination pursuant to this Section 13 shall be
given to the Fund or the Adviser by telegram, telecopy or telephone and shall be
subsequently confirmed by letter.
(c) If this Agreement shall be terminated pursuant to any provisions
hereof (other than pursuant to notification by you as provided in Sections 12,
13(a) or 14(b) hereof) or if the sale of the Shares provided for herein is not
consummated because of any condition to your obligations set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Fund or the Adviser to perform any agreement herein or comply with the any
provision hereof, the Fund and the Adviser will reimburse you for all reasonable
out-of-pocket expenses (including reasonable fees and expenses of your counsel)
incurred by you in connection herewith.
14. Defaulting Underwriter. (a) If, on the Closing Date, any
Underwriter shall fail or refuse to purchase Shares which it is obligated
hereunder to purchase and the aggregate number of Shares which such defaulting
Underwriter is obligated to purchase is not more than one-tenth of the aggregate
number of Shares which the Underwriters are obligated to purchase on the Closing
Date, the non-defaulting Underwriters shall be obligated to purchase the Shares
which such defaulting Underwriter is obligated, but fail or refuses to purchase.
If, however, on the Closing Date, any Underwriter shall fail or refuse to
purchase Shares which it is obligated hereunder to purchase and the aggregate
number of Shares which such defaulting Underwriter is obligated to purchase is
more than one-tenth of the aggregate number of Shares which the Underwriters are
obligated to purchase on the Closing Date and arrangements satisfactory to you
and the Fund for the purchase of such Shares by the non-
26
defaulting Underwriters or other party or parties approved by you and the Fund
are not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter, the Adviser or
the Fund. In any such case which does not result in termination of this
Agreement, either you or the Fund shall have the right to postpone the Closing
Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and the Prospectus or any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve the defaulting Underwriter from liability in respect of any
such default of such Underwriter under this Agreement. The term "Underwriter" as
used in this Agreement includes, for all purposes of this Agreement, any party
not listed in Schedule I hereto which, pursuant to this Section 14, purchases
Shares which a defaulting Underwriter agreed but failed or refused to purchase.
(b) Any notice under this Section 14 may be given by telegram,
telecopy or telephone but shall be subsequently confirmed by letter.
15. Notice. Except as otherwise provided in Sections 5, 11 and 12
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Fund or the Adviser, at the office
of the Fund at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx X. Xxxxxxx, Esq., General Counsel; or (ii) if to you, care of PaineWebber
Incorporated, 0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, New York 10019,
Attention: Corporate Finance Department.
16. Persons Entitled to Benefit of Agreement. This Agreement has been
and is made solely for the benefit of the Underwriters, the officers and
employees of the Underwriters, the Fund, the Adviser, the directors and officers
of the Fund and the Adviser, and the other controlling persons referred to in
Section 8 hereof and their respective successors and assigns, to the extent
provided herein, and no other person shall acquire or have any right under or by
virtue of this Agreement. Neither the term "successor" nor the term "successors
and assigns" as used in this Agreement shall include a purchaser from any
Underwriter of any of the Shares in his status as such purchaser.
17. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed within the State of New York.
18. Counterparts. This Agreement may be signed in various counterparts
which together constitute one and the same instrument. If signed in
counterparts, this Agreement shall not become effective unless at least one
counterpart hereof shall have been executed and delivered on behalf of each
party hereto.
Please confirm that the foregoing correctly sets forth the agreement
among the Fund, the Adviser and the Underwriters.
Very truly yours,
ROYCE VALUE TRUST, INC.
By:
--------------------------------
Name:
Title:
ROYCE & ASSOCIATES, INC.
By:
--------------------------------
Name:
Title:
Confirmed as of the date first
above mentioned.
PAINEWEBBER INCORPORATED
By:
---------------------------------
Name:
Title:
XXXXX XXXXXX INC.
By:
---------------------------------
Name:
Title:
PRUDENTIAL SECURITIES INCORPORATED
By:
---------------------------------
Name:
Title:
SCHEDULE I
ROYCE VALUE TRUST, INC.
Number of
Underwriter Shares
----------- ---------
PaineWebber Incorporated.........................................
Xxxxx Xxxxxx Inc.................................................
Prudential Securities Incorporated. .............................
---------
Total............................................................ 4,000,000
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