XXXXX & STEERS UTILITY FUND, INC.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxx & Steers Securities, LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Underwriting Agreement
Dear Sirs:
Xxxxx & Steers Utility 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 four classes designated as
Class A, Class B Class C and Class I shares, with only the Class A, Class B and
Class C shares ("Shares") subject to this agreement. 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.
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 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 __________, 2004 (as from time to time further amended, supplemented or
modified, the "Prospectus"). You may also purchase as principal Shares
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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.
(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 __________, 2004, 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
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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 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 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
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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 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
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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 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.
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
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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 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 _______________ 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
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
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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 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 UTILITY FUND, INC.
By:
------------------------------------
Name:
Title:
8
The foregoing Agreement is
hereby accepted as of the
date thereof.
XXXXX & STEERS SECURITIES, LLC
By:
------------------------------------
Name:
Title:
9
