XXXXX & STEERS EQUITY INCOME FUND, INC.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Amended and Restated
as of January 6, 1998
Xxxxx & Steers Securities, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Underwriting Agreement
Dear Sirs:
Xxxxx & Steers Equity Income Fund, Inc. (the "Company"), a Maryland
corporation, is engaged in the business of an investment company. The Company
currently offers its shares of common stock in one series containing three
classes designated as Class A, Class B and Class C shares ("Shares"). In the
future, the Company may authorize and issue other series and classes of shares.
The Company's Board of Directors has selected you to act as principal
underwriter (as such term is defined in Section 2(a)(29) of the Investment
Company Act of 1940, as amended (the "1940 Act")) of the Company's Shares and
you are willing to act as such principal underwriter and to perform the duties
and functions of underwriter in the manner and on the conditions hereinafter set
forth. Accordingly, the Company hereby agrees with you as follows:
1. Copies of Corporate Documents. The Company will furnish you promptly
with copies of any registration statements filed by it with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, and the 1940
Act, together with any financial statements and exhibits included therein, and
all amendments or supplements thereto hereafter filed.
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2. Registration and Sale of Additional Shares. The Company will from
time to time use its best efforts to register under the Securities Act of 1933,
as amended, such authorized Shares not already so registered as you may
reasonably be expected to sell as agent on behalf of the Company. To the end
that there will be available for sale such number of Shares as you may
reasonably be expected to sell, the Company will, from time to time as may be
necessary, increase the number of authorized shares. This Agreement relates to
the issue and sale of Shares that are duly authorized and registered and
available for sale by the Company, including repurchased and redeemed Shares if
and to the extent that they may be legally sold and if, but only if, the Company
sees fit to sell them. You and the Company will cooperate in taking such action
as may be necessary from time to time to qualify Shares for sale in New York and
in any other states mutually agreeable to you and the Company, and to maintain
such qualification, provided that such Shares are duly registered under the
Securities Act of 1933, as amended.
3. Solicitation of Orders. You will use your best efforts (but only in
states in which you may lawfully do so) to obtain from investors orders for
Shares authorized for issue by the Company and registered under the Securities
Act of 1933, as amended, provided that you may in your discretion refuse to
accept orders for Shares from any particular applicant. You may, as agent for
the Company, solicit dealers for orders to purchase Shares and may enter into
selling agreements to be as mutually agreed upon, from time to time, by you and
the Company. Each dealer must be a member of the National Association of
Securities Dealers, Inc. (the "NASD") or a foreign dealer not eligible for
membership in the NASD who has agreed in acting under the selling agreement to
abide by the rules and regulations of the NASD and not to use the United States
mails or any means of interstate commerce in connection with the sales of such
Shares unless such foreign dealer is registered under the Securities Exchange
Act of 1934.
4. Sale of Shares. Subject to the provisions of paragraph 5 hereof and
to such minimum purchase requirements as may from time to time be currently
indicated in the
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Company's Prospectus (as hereinafter defined), you are authorized to sell as
agent on behalf of the Company authorized and unissued Shares registered under
the Securities Act of 1933, as amended. Such sales may be made by you on behalf
of the Company by accepting orders to purchase such Shares placed with you by
investors. The sales price of such Shares shall be the public offering price as
defined in paragraph 6 hereof.
5. Sale of Shares to Investors. Any right granted to you to accept
orders for Shares or make sales on behalf of the Company will not apply to
Shares issued in connection with the merger or consolidation of any other
investment company with the Company or its acquisition, by purchase or
otherwise, of all or substantially all the assets of any investment company or
substantially all the outstanding Shares of any such company, and such right
shall not apply to Shares that may be offered by the Company to shareholders by
virtue of their being shareholders of the Company, including Shares issued in
payment of any dividend or distribution by the Company.
6. Public Offering Price. All Shares sold to investors by you as agent
for the Company will be sold at the public offering price in effect at the time
of such sale, as described in the Company's then-current prospectus and
statement of additional information. The public offering price for all accepted
orders will be the net asset value per Share next computed after receipt of such
an order, plus any applicable sales charge adjusted to the nearest full cent, as
may from time to time be currently indicated in the Company's Prospectus with
respect to such order. Net asset value per Share shall be computed in the manner
provided in the Company's then-current prospectus. The time of receipt of such
an order shall be the time of its receipt by you or by a dealer selected by you
as provided in paragraph 3 if transmitted on the day of receipt by such dealer
to you prior to the close of your business on that day. The Company will not,
without your prior consent, change the sales charges or dealer discounts
applicable to the sales of its Shares from those set forth in its prospectus
dated August 27, 1997 ( as amended as of January 6, 1998,
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and as from time to time further amended, supplemented or modified, the
"Prospectus")). You may also purchase as principal Shares at net asset value and
sell such Shares at the public offering price.
7. Underwriting Discount. The Company shall receive from you the
applicable net asset value on all orders for sales of Shares accepted by you as
agent of the Company if the net sale price thereof has been deemed, in
accordance with the Company's Articles of Incorporation, to be an asset of the
Company in connection with a computation of net asset value for the sale of any
other Shares or the purchase or redemption of any Shares. You shall be entitled
to retain so much of the difference between the public offering price and the
applicable net asset value of Class A Shares as is not reallowed by you as a
discount to dealers. Such reallowance shall be the same for all dealers and
shall conform to such dealer discounts, if any, as may from time to time be
currently indicated in the Company's Prospectus. You will reimburse the Company
for any increase in any issue tax paid by it which is attributable to such sales
charge.
8. Class B Shares - Special Provisions.
(a) In accordance with the provisions of the Company's Distribution Plan
(the "Plan") in respect of Class B Shares, the Company agrees: (I) to pay to you
or, at your direction, to a third party, monthly in arrears on or prior to the
10th business day of the following calendar month, your "Allocable Portion" (as
hereinafter defined) of a fee (the "Distribution Fee") computed in respect of
the Class B Shares at an annual rate not to exceed 0.75% of the average daily
net assets attributable to the Class B Shares, and (II) to withhold from
redemption proceeds in respect of Class B Shares your Allocable Portion of the
Contingent Deferred Sales Charges ("CDSCs") payable in respect of such
redemption as provided in the Company's Prospectus and to pay the same over to
you or, at your direction, to a third party, at the time the redemption proceeds
in respect of such redemption are payable to the holder of the Class B Shares
redeemed.
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(b) You will be deemed to have performed all services required to be
performed in order to be entitled to receive your Allocable Portion of the
Distribution Fee payable in respect of the Class B Shares upon the settlement
date of each sale of a "Commission Share" (as defined in the Allocation Schedule
attached hereto as Exhibit A) taken into account in determining your Allocable
Portion of such Distribution Fees.
(c) Notwithstanding anything to the contrary set forth in this Agreement
or in applicable law, the Company's obligation to pay your Allocable Portion of
the Distribution Fees payable in respect of the Class B Shares shall not be
terminated or modified for any reason (including a termination of this
Agreement) except to the extent required by a change in the 1940 Act, the rules
thereunder or the Conduct Rules of the NASD, in each case enacted or promulgated
after December 31, 1997, or in connection with a "Complete Termination" (as
hereinafter defined) of the Plan.
(d) The Company will not take any action to waive or change any CDSC in
respect of the Class B Shares, except as provided in the Company's prospectus or
statement of additional information as in effect as of the date hereof, without
the prior consent of you and the permitted assigns of all or any portion of your
rights to your Allocable Portion of the CDSCs.
(e) Notwithstanding anything to the contrary in this Agreement, none of
the termination of your role as principal underwriter of the Class B Shares, the
termination of this Agreement, or the termination of the Plan will terminate
your right to your Allocable Portion of the CDSCs in respect of the Class B
Shares.
(f) Notwithstanding anything to the contrary in this Agreement, you may
assign, sell or pledge (collectively, "Transfer") your rights to your Allocable
Portion of the Distribution Fees and CDSCs (but not your obligations to the
Company under this Agreement) to raise funds to
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make the expenditures related to the distribution of Class B Shares and in
connection therewith, upon receipt of notice of such Transfer, the Company shall
pay, or cause to be paid, to the assignee, purchaser or pledgee (collectively
with their subsequent transferees, "Transferees") such portion of your Allocable
Portion of the Distribution Fees and CDSCs in respect of the Class B Shares so
Transferred. Except as provided in (c) above and notwithstanding anything to the
contrary set forth elsewhere in this Agreement, to the extent you have
Transferred your rights thereto to raise funds as aforesaid, the Company's
obligation to pay your Allocable Portion of the Distribution Fees and CDSCs
payable in respect of the Class B Shares shall be absolute and unconditional and
shall not be subject to dispute, offset, counterclaim or any defense whatsoever,
at law or equity, including, without limitation, any of the foregoing based on
your insolvency or bankruptcy (it being understood that such provision is not a
waiver of the Company's right to pursue you and enforce such claims against your
assets other than your right to the Distribution Fees and CDSCs in respect of
the Class B Shares, which have been so transferred in connection with such
Transfer). The Company agrees that each such Transferee is a third party
beneficiary of the provisions of this clause (f) but only insofar as those
provisions relate to Distribution Fees and CDSCs transferred to such Transferee.
(g) Except as provided in the Company's prospectuses and statements of
additional information, until you have been paid your Allocable Portion of the
Distribution Fees in respect of the Class B Shares of each series, the Company
will not adopt a plan of liquidation in respect of such series without your
consent (or the consent of your assigns), which consent will not be unreasonably
withheld.
(h) For purposes of this Agreement, the term "Allocable Portion" of
Distribution Fees and CDSCs payable in respect of the Class B Shares shall mean
the portion of such Distribution
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Fees and CDSCs allocated to you in accordance with the Allocation Schedule
attached hereto as Exhibit A.
(i) For purposes of this Agreement, the term "Complete Termination" of
the Plan in respect of the Company means a termination of the Plan involving the
complete cessation of the payment of Distribution Fees in respect of all Class B
Shares, and the termination of the distribution plans and the complete cessation
of the payment of distribution fees pursuant to every other distribution plan
pursuant to Rule 12b-1 under the 1940 Act in respect of the Class B Shares and
any successor fund or any fund acquiring a substantial portion of the assets of
the Company and for every future class of shares of the Company which has
substantially similar characteristics to the Class B Shares taking into account
the manner of payment and amount of sales charge, contingent deferred sales
charge or other similar charges borne directly or indirectly by the holders of
such shares, it being understood that the existing Class A and Class C Shares do
not have substantially similar economic characteristics to the Class B Shares.
(j) You may fix quantity discounts and other similar variances or
waivers of the CDSC not inconsistent with the provisions of the 1940 Act;
provided however, that you shall not impose any commission, permit any quantity
discount, or impose any other similar waiver or variance in connection with the
sale of Class B Shares except as disclosed in the prospectus.
9. Notice of Sale; Delivery of Payments. You will promptly notify the
Company's transfer agent of any orders for sales of Shares accepted by you, and
you will deliver to the Company's transfer agent all payments pursuant to orders
for sales accepted by you no later than the first business day following the
receipt by you in your home office of such payments, and, unless payment is not
required under paragraph 7, in no event later than seven days after the
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receipt by you of such order, or, in case an extension of time is granted by the
NASD, to the dealer submitting the order, in no event later than the expiration
of such extension of time.
10. Purchase of Shares. You are authorized to purchase, as agent on
behalf of the Company, Shares from record holders thereof. Such purchases may be
made by you on behalf of the Company by accepting orders placed with you by such
holders. The purchase price per Share for all accepted orders will be the net
asset value per Share next computed after receipt of such an order, in the
manner provided in the Company's Articles of Incorporation, as now in effect or
as it may be amended, less any applicable CDSC or redemption charge. The time of
receipt of such an order shall be the time of its receipt by you or by a dealer
selected by you, as provided in paragraph 3, if transmitted on the day of
receipt by such dealer to the Company's transfer agent prior to the close of its
business on that day. You will promptly notify the Company's transfer agent of
any such order accepted by you and will, if the Shares subject to such order
have been deemed to be no longer outstanding in connection with a computation of
net asset value for the sale of any Shares by the Company or the purchase or
redemption of any Shares by it, deliver to such agent a proper request for
purchase of such Shares by the Company and any stock certificates for such
Shares not later than the first business day following the receipt by you in
your home office of such request and certificates, and in no event later than
seven days after the receipt by you of such order.
11. Suspension of Sales and Purchases. If and whenever the determination
of net asset value is suspended pursuant to the Company's Articles of
Incorporation, and such suspension has become effective, until such suspension
is terminated, no further orders for the sale or purchase of Shares shall be
accepted by you except such orders placed with you before you had knowledge of
the suspension. In addition, the Company reserves the right to suspend sales and
purchases and your authority to accept orders for sales and purchases of Shares
on behalf of the Company if, in the judgment of a majority of its Board of
Directors or a majority of the Executive Committee of
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its Board of Directors, if such Committee exists, it is in the best interests of
the Company to do so, such suspension to continue for such period as may be
determined by such majority; and in that event, no Shares will be sold or
purchased by the Company or by you on behalf of the Company while such
suspension remains in effect except for Shares necessary to cover orders
accepted by you before you had knowledge of the suspension. The Company will
notify you promptly of any such suspension of the determination of net asset
value or of any such suspension of sales and purchases of Shares.
12. Expenses. The Company will pay all fees and expenses in connection
with the preparation and filing of any registration statement and prospectus or
amendments thereto under the Securities Act of 1933, as amended, covering the
issue and sale of its Shares and in connection with the qualification of such
Shares for sale in the various states and countries in which the Company shall
determine it advisable to qualify such Shares for sale, the costs of all stock
certificates and the fees and expenses of its transfer agent or registrar. It
will also pay any issue taxes (subject to partial reimbursement under paragraph
7 hereof). You will pay all expenses of printing prospectuses and other sales
literature (except copies of prospectuses and other sales literature which may
from time to time be sent to existing shareholders of the Fund and except as may
otherwise be provided pursuant to a plan of distribution adopted by the Company
pursuant to Rule 12b-1 under the 1940 Act), all fees and expenses in connection
with your qualification as a dealer in the various states and countries, and all
other expenses in connection with the sale and offering for sale of the Shares
of the Company which are not payable by the Company pursuant to the provisions
of this paragraph 12.
13. Conformity with Law. You agree that in selling and purchasing the
Shares you will duly conform in all respects with the laws of the United States
and any state or country in which such Shares may be offered for sale by you
pursuant to this Agreement.
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14. Indemnification. You agree to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act of
1933, as amended, against any and all losses, claims, damages, liabilities or
litigation expenses (including legal and other expenses) to which the Company or
such directors, officers or controlling person may become subject under such
Act, under any other statute, at common law or otherwise, arising out of the
acquisition of any Shares by any person or the sale of any Shares by any person
to the Company through you which (i) may be based upon any wrongful act by you
or any of your employees or representatives, or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
registration statement or prospectus covering Shares of the Company or any
amendment thereof or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading if such statement or omission was made in
reliance upon information furnished or confirmed in writing to the Company by
you, provided, however, that in no case is your indemnity in favor of a director
or officer or any other person deemed to protect such director or officer or
other 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 his duties or by reason of his reckless disregard of obligations
and duties under this Agreement.
The Company agrees to indemnify and hold harmless you and each of your
directors and officers and each person, if any, who controls you within the
meaning of Section 15 of the Securities Act of 1933, as amended, against any and
all losses, claims, damages, liabilities or litigation expenses (including legal
and other expenses) to which you or such directors, officers or controlling
person may become subject under such Act, under any other statute, at common law
or otherwise, arising out of the acquisition of any Shares by any person or the
sale of any Shares by any person to the Company through you which (i) may be
based upon any wrongful act by the
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Company or any of its employees or representatives, or (ii) except as described
in clause (ii) of the preceding paragraph, may be based upon any untrue
statement or alleged untrue statement or a material fact contained in a
registration statement or prospectus covering Shares of the Company or any
amendment thereof or supplement thereto or omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, provided, however, that in no case is the
Company's indemnity in favor of a director or officer or any other person deemed
to protect such director or officer or other 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 his duties or
by reason of his reckless disregard of obligations and duties under this
Agreement. You hereby waive any rights to indemnification concerning your
obligations and duties hereunder to which you might be entitled under the
Company's By-Laws.
You are not authorized to give any information or to make any
representations on behalf of the Company in connection with the sale or purchase
of Shares of the Company other than the information and representations
contained in a registration statement or prospectus covering Shares of the
Company, as such registration statement and prospectus may be amended or
supplemented from time to time. No person other than you is authorized to act as
agent for the Company in connection with the offering or sale of Shares of the
Company to the public or otherwise.
15. Duration and Termination of This Agreement. This Agreement shall
remain in force until December 31, 1998 and from year to year thereafter, but
only so long as such continuance is specifically approved at least annually by
the Board of Directors of the Company or by vote of a majority of the
outstanding voting securities of the Company. In addition, the Company may not
renew or perform this Agreement unless the terms thereof and any renewal thereof
have been approved by the vote of a majority of directors of the Company, who
are not
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interested persons of you or of the Company, cast in person at a meeting called
for the purpose of voting on such approval. This Agreement may, on 60 days'
written notice, be terminated at any time without the payment of any penalty, by
the Board of Directors of the Company, by vote of a majority of the outstanding
voting securities of the Company, or by you. This Agreement shall automatically
terminate in the event of its assignment. In interpreting the provisions of this
paragraph 15, the definitions contained in Section 2(a) of the 1940 Act, and
rules promulgated thereunder (particularly the definitions of "interested
person," "assignment," "voting security" and "vote of a majority of the
outstanding voting securities") shall be applied.
16. Amendment of This Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver
discharge or termination is sought. If the Company should at any time deem it
necessary or advisable in the best interests of the Company that any amendment
of this Agreement be made in order to comply with the recommendations or
requirements of the Securities and Exchange Commission or other governmental
authority or to obtain any advantage under state or federal tax laws and should
notify you of the form of such amendment, and the reasons therefor, and if you
should decline to assent to such amendment, the Company may terminate this
Agreement forthwith. If you should at any time request that a change be made in
the Company's Articles of Incorporation or By-Laws, or in its methods of doing
business, in order to comply with any requirements of federal law or regulations
of the Securities and Exchange Commission or of a national securities
association of which you are or may be a member, relating to the sale of Shares
of the Company, and the Company should not make such necessary change within a
reasonable time, you may terminate this Agreement forthwith.
17. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect
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their construction or effect. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Company, whereupon this letter shall become a binding
contract.
Yours very truly,
XXXXX & STEERS EQUITY INCOME FUND, INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxx Xxxxx
Title: President
The foregoing Agreement is
hereby accepted as of the
date thereof.
XXXXX & STEERS SECURITIES, INC.
By: /s/ Xxxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
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