EXHIBIT 2(h)(1)
NEW COLONY EQUITY INCOME FUND
UNITS OF BENEFICIAL INTEREST
MINIMUM OF $20 MILLION
AND A MAXIMUM OF $75 MILLION
BEST EFFORTS UNDERWRITING AGREEMENT
November 18, 2002
Investors Capital Corporation
000 Xxxxxxxx
Xxxxxxxxx, XX 00000
Dear Sirs:
New Colony Equity Income Fund (the "Fund"), the initial series of New
Colony Investment Trust (the "Trust"), proposes to issue and sell to the public
a minimum of $20,000,000 and a maximum of $75,000,000 aggregate principal amount
of units of beneficial interest of the Fund hereinafter referred to as the
"Units". The Fund hereby confirms the arrangement made by it with respect to the
designation of Investors Capital Corp. as the managing underwriter (the
"Managing Underwriter") to offer to the public the Units described and to use
their "best efforts" with regard thereto. The Fund will be registered under the
Investment Company Act of 1940, as amended (the "1940 Act") and the Units under
the Securities Act of 1933, as amended (the "1933 Act"). All funds will be
payable in U.S. dollars. The initial closing is expected to occur, and is to
take place, within 90 days after the effective date of the offering and the
minimum aggregate amount of Units have been sold to the public. This is not a
firm commitment underwriting and neither the Managing Underwriter nor any other
underwriter named in Schedule A hereto (collectively, the "Underwriters"), is
obligated to purchase any of the Units from the Fund.
1. Filing of Registration Statement with S.E.C. and Definitions. A registration
statement and prospectus on Form N-2 (File Nos. 333-88202 and 811-21092) with
respect to the Units has been prepared by the Fund in conformity with the
requirements of the 1940 Act, the 1933 Act and the published rules and
regulations thereunder (the "Rules and Regulations"). Such registration
statement, including the prospectus, Part II, the statement of additional
information and all financial schedules and exhibits thereto, as amended at the
time of effectiveness, is herein referred to as the "Registration Statement,"
and any prospectus included as part of the Registration Statement on file with
the Securities and Exchange Commission (the "Commission") on the effective date
of the Registration Statement, is herein referred to as the "Final Prospectus."
The prospectus included as part of the Registration Statement of the Fund on the
date hereof and in any amendments thereto prior to the effective date of the
Registration Statement is referred to herein as a "Preliminary Prospectus." The
Final Prospectus and the Preliminary Prospectus are hereinafter collectively
referred to as the "Prospectus."
2. Commission, Delivery, and Sale of the Units
(a) Subject to the terms and conditions of this Agreement, and on the
basis of the representations, warranties, and agreements herein
contained, the Underwriters agree to offer and sell said Units at a
public offering price of $20.00 per Unit on a "best efforts" basis
with a requirement that a minimum of $20,000,000 aggregate amount of
said Units be sold within 90 days from the effective date of the
registration statement and if the minimum is sold within the meaning
of Rules 10b-9 and 15c2-4 (under the Securities Exchange Act of 1934
(the "1934 Act")), then the offering may continue as to the unsold
$55,000,000 balance of Units for an additional 60 days. From the gross
proceeds of the offering, the Fund will pay the Managing Underwriter a
commission/selling concession of 5.50%. In addition, the Managing
Underwriter will be further compensated as described in Section 5
herein, including 2.5% for non-accountable expenses with maximum
deductions not to exceed 8%. There is no over-allotment option for
these securities.
(b) Delivery of the Units against payment of the purchase price, by
electronic transfer or bank draft in accordance with the required
Escrow Agreement dated the date hereof between the Fund and State
Street Bank and Trust Company (the Form of which is attached hereto as
Schedule B), shall take place at the offices of the Managing
Underwriter, at the Fund's discretion, within three business days
after the receipt of the minimum funds or at such other location as
the parties may agree.
(c) The Fund shall deliver, or cause to be delivered, to the Managing
Underwriter, for the accounts of the several Underwriters,
certificates for the Units at each closing, against the irrevocable
release of a wire transfer of immediately available funds for the
amount of the purchase price therefor or in such other manner of
payment as the Fund and the Managing Underwriter may agree. The
certificates for the Units shall be in definitive form and registered
in such names and denominations as the Managing Underwriter shall have
requested at least two full business days prior to any closing and
shall be made available for inspection on the business day preceding
such closing at a location reasonably designated by the Managing
Underwriter.
3. Representations and Warranties of the Fund. The Fund represents and warrants
to you as follows:
(a) The Fund has prepared and filed with the Commission a Registration
Statement, and an amendment or amendments thereto, on Form N-2 (File
Nos. 333-88202 and 811-21092), including any related Preliminary
Prospectus for the registration of the Units, which Registration
Statement and amendment or amendments have been prepared by the Fund
in conformity with the requirements of the 1933 Act and the Rules and
Regulations. The Fund will promptly file a further amendment to said
Registration Statement in the form heretofore delivered to the
Managing Underwriter and will not file any other amendment thereto to
which the Managing Underwriter shall have reasonably objected verbally
or in writing after having been furnished with a copy thereof.
(b) Neither the Commission nor any state regulatory authority has issued
any order to the Fund preventing or suspending the use of the
Prospectus or the Registration Statement and no proceeding for an
order suspending the effectiveness of any Prospectus or the
Registration Statement has been instituted or is pending or
threatened. Each such Prospectus and/or any supplement thereto has
conformed in all material respects with the requirements of the 1933
Act and the Rules and Regulations and on its date did not include any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading, in light of
the circumstances under which they were made; and when the Prospectus
and any supplements thereto becomes legally effective and for 90 days
subsequent thereto (i) the Prospectus and/or any supplement thereto
will contain all statements which are required to be stated therein by
the 1933 Act and Rules and Regulations, and (ii) the Prospectus and/or
any supplement thereto will not include 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
light of the circumstances under which they were made; provided,
however, that no representations, warranties or agreements are made
hereunder as to information contained in or omitted from the
Prospectus in reliance upon, and in conformity with, the written
information furnished to the Fund by you.
(c) The New Colony Investment Trust has been duly formed as a trust in
accordance with the Delaware Treatment of Business Trusts and is
validly existing in good standing under the laws of the State of
Delaware, with full power and authority (trust and other) to own its
properties and conduct its businesses as described in the Prospectus
and is duly qualified to do business as a foreign trust in good
standing in all other jurisdictions in which the nature of its
business or the character or location of its properties requires such
qualification, except where the failure to so qualify would not have a
material adverse effect on the business, properties or operations of
the Fund as a whole. The Units are the initial series of units of New
Colony Investment Trust.
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(d) The Fund has full legal right, power and authority to authorize,
issue, deliver and sell the Units, to enter into this Agreement, and
to consummate the transactions provided for in this Agreement, and
this Agreement has been duly and properly authorized, executed and
delivered by the Fund. This Agreement constitutes and on the Closing
of the offering will then constitute a valid and binding agreement of
the Fund enforceable in accordance with their respective terms,
(except as the enforceability thereof may be limited by bankruptcy or
other similar laws affecting the rights of creditors generally or by
general equitable principles and except as the enforcement of
indemnification provisions may be limited by federal or state
securities laws).
(e) Except as disclosed in the Prospectus, the Fund is not in violation of
its respective certificate of trust or bylaws or in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any material bond, debenture, note
or other evidence of indebtedness or in any material contract,
indenture, mortgage, loan agreement, lease, joint venture, partnership
or other agreement or instrument to which the Fund is a party or by
which it may be bound or is not in material violation of any law,
order, rule, regulation, writ, injunction or decree of any
governmental instrumentality or court, domestic or foreign; and the
execution and delivery of this Agreement and the consummation of the
transactions contemplated therein and in the Prospectus and compliance
with the terms of each such agreement will not conflict with, or
result in a material breach of any of the terms, conditions or
provisions of, or constitute a material default under, or result in
the imposition of any material lien, charge or encumbrance upon any of
the property or assets of the Fund pursuant to, any material bond,
debenture, note or other evidence of indebtedness or any material
contract, indenture, mortgage, loan agreement, lease, joint venture,
partnership or other agreement or instrument to which the Fund is a
party nor will such action result in the material violation by the
Fund of any of the provisions of its respective certificate or
articles of incorporation or bylaws or any law, order, rule,
regulation, writ, injunction, decree of any government, governmental
instrumentality or court, domestic or foreign, except where such
violation will not have a material adverse effect on the financial
condition of the Fund.
(f) The number of authorized, issued and outstanding Units of the Fund is
as set forth in the Prospectus and the Fund will have the adjusted
capitalization set forth therein on the initial closing of the
offering; provided that the Fund may issue additional Units to the
extent disclosed in the Final Prospectus; all of the Units of the Fund
set forth therein have been duly authorized, validly issued and are
fully paid and non-assessable; the holders thereof do not have any
rights of rescission with respect thereto and are not subject to
personal liability for any obligations of the Fund by reason of being
beneficial holders under the laws of the State of Delaware; none of
such outstanding Units is subject to or was issued in violation of any
preemptive or similar rights of any beneficial holder of the Fund; and
such Units conform in all material respects to all statements relating
thereto contained in the Prospectus.
(g) The Fund is not a party to or bound by any instrument, agreement or
other arrangement providing for it to issue any Unit, rights,
warrants, options or other Units, except for this Agreement or as
described in the Prospectus. The Units are not and will not be subject
to any preemptive or other similar rights of any beneficial holder,
have been duly authorized and, when issued, paid for and delivered in
accordance with the terms hereof, will be validly issued, fully paid
and non-assessable and will conform in all material respects to the
respective descriptions thereof contained in the Prospectus; all
corporate action required to be taken for the authorization, issue and
sale of the Units has been duly and validly taken; and the
certificates representing the Units will conform with all legal
requirements therefor. Upon the issuance and delivery pursuant to the
terms hereof of the Units sold by the Fund hereunder, the purchasers
will acquire good and marketable title to such Units free and clear of
any lien, charge, claim, encumbrance, pledge, security interest,
defect or other restriction of any kind whatsoever other than
restrictions as may be imposed under the securities laws.
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(h) The Fund has good and marketable title to all properties and assets
described in the Prospectus as owned by it, free and clear of all
liens, charges, encumbrances or restrictions, except such as are
described or referred to in the Prospectus or which are not materially
significant or important in relation to its business or which have
been incurred in the ordinary course of business or for taxes not yet
due and payable and except for a security interest granted to the
Fund's lender; except as described in the Prospectus all of the leases
and subleases under which the Fund holds properties or assets as
lessee or sublessee as described in the Prospectus are in full force
and effect, and the Fund is not in material default in respect of any
of the terms or provisions of any of such leases or subleases, and no
claim has been asserted to the Fund by anyone adverse to the Fund's
rights as lessor, sublessor, lessee or sublessee under any of the
leases or subleases mentioned above or affecting or questioning the
Fund's right to the continued possession of the leased or subleased
premises or assets under any such lease or sublease; and the Fund owns
or leases all such properties as are necessary to its operations as
now conducted and as contemplated to be conducted, except as otherwise
stated in the Prospectus.
(i) The financial statements, together with related notes, set forth in
the Prospectus fairly present in all material respects the financial
position and results of operations of the Fund at the respective dates
and for the respective periods to which they apply. Said statements
and related notes have been prepared in accordance with generally
accepted accounting principles applied on a basis which is consistent
in all material respects during the periods involved but any stub
period has not been audited by an independent accounting firm. There
has been no material adverse change or material development involving
a prospective change in the condition, financial or otherwise, or in
the prospects, value, operation, properties, business or results of
operations of the Fund whether or not arising in the ordinary course
of business, since the date of the financial statements included in
the Registration Statement and the Prospectus.
(j) Subsequent to the respective dates as of which information is given in
the Prospectus as it may be amended or supplemented, and except as
described in the Prospectus, the Fund has not, directly or indirectly,
incurred any liabilities or obligations, direct or contingent, not in
the ordinary course of business or entered into any transactions not
in the ordinary course of business, which are material to the business
of the Fund as a whole and there has not been any change in the Units
of, or any incurrence of long term debts by, the Fund or any issuance
of options, warrants or rights to purchase the Units of the Fund or
declaration or payment of any dividend on the Units of the Fund or any
material adverse change in the condition (financial or other), net
worth or results of operations of the Fund as a whole and the Fund has
not become a party to, any material litigation whether or not in the
ordinary course of business.
(k) To the knowledge of the Fund, except as disclosed in the Prospectus
there is no pending or threatened, action, suit or proceeding to which
the Fund is a party before or by any court or governmental agency or
body, which might result in any material adverse change in the
condition (financial or other), business or prospects of the Fund as a
whole or might materially and adversely affect the properties or
assets of the Fund as a whole nor are there any actions, suits or
proceedings against the Fund related to environmental matters or
related to discrimination on the basis of age, sex, religion or race
which might be expected to materially and adversely affect the conduct
of the business, property, operations, financial condition or earnings
of the Fund as a whole; and no labor disturbance by the employees of
the Fund individually exists or is, to the knowledge of the Fund,
imminent which might be expected to materially and adversely affect
the conduct of the business, property, operations, financial condition
or earnings of the Fund as a whole.
(l) Except as may be disclosed in the Prospectus, the Fund has properly
prepared and filed all necessary federal, state, local and foreign
income and franchise tax returns, has paid all taxes shown as due
thereon, and does not have any tax deficiency or claims outstanding,
proposed or assessed against it.
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(m) Except as may be disclosed in the Prospectus, the Fund has sufficient
licenses, permits, right to use trade or service marks and other
governmental authorizations currently required for the conduct of its
business as now being conducted and as contemplated to be conducted
and the Fund is in all material respects complying therewith. Except
as set forth in the Prospectus, the expiration of any such licenses,
permits, or other governmental authorizations would not materially
affect the Fund's operations. To its knowledge, none of the activities
or businesses of the Fund are in material violation of, or cause the
Fund to materially violate any law, rule, regulations, or order of the
United States, any state, county or locality, or of any agency or body
of the United States or of any state, county or locality the violation
of which would have a material adverse effect on the business
properties or financial condition of the Fund taken as a whole.
(n) The Fund has not at any time (i) made any contributions to any
candidate for political office in violation of law, or failed to
disclose fully any such contribution, or (ii) made any payment to any
state, federal or foreign governmental officer or official, or other
person charged with similar public or quasi public duties, other than
payments required or allowed by applicable law.
(o) Except as set forth in the Prospectus, the Fund knows of no
outstanding claims for services either in the nature of a finder's
fee, brokerage fee or otherwise with respect to this financing for
which the Fund or the Underwriters may be responsible, or which may
affect the Underwriters' compensation as determined by the National
Association of Securities Dealers, Inc. ("NASD") except as known by
the Underwriters.
(p) Except as set forth in the Prospectus, no default exists in the due
performance and observance of any term, covenant or condition of any
material license, contract, indenture, mortgage, installment sale
agreement, lease, deed of trust, voting trust agreement, beneficial
holders agreement, note, loan or credit agreement, purchase order, or
any other agreement or instrument evidencing an obligation for
borrowed money, or any other material agreement or instrument to which
the Fund is a party or by which the Fund may be bound or to which the
property or assets (tangible or intangible) of the Fund is subject or
affected.
(q) Neither of the Fund, nor any of its employees, directors, beneficial
holders, or affiliates (within the meaning of the Rules and
Regulations) has taken or will take, directly or indirectly, any
action designed to or which has constituted or which might be expected
to cause or result in, under the Exchange Act, or otherwise,
stabilization or manipulation of the price of any security of the Fund
to facilitate the sale or resale of the Units.
(r) Except as disclosed in the Prospectus, none of the trademarks, service
marks, trade names, copyrights, and licenses and rights to the
foregoing presently owned or held by the Fund, are in dispute or, to
the knowledge of the Fund's management are in any conflict with the
right of any other person or entity. The Fund (i) except as disclosed
in the Prospectus owns or has the right to use, all, trademarks,
service marks, trade names and copyrights, and licenses and any rights
with respect to the foregoing, used in the conduct of its business as
now conducted or proposed to be conducted without infringing upon or
otherwise acting adversely to the right or claimed right of any
person, corporation or other entity under or with respect to any of
the foregoing, and except as set forth in the Prospectus or otherwise
disclosed to the Underwriters in writing, to the best knowledge of the
Fund's management, the Fund is not obligated or under any liability
whatsoever to make any material payments by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any
patent, trademark, service xxxx, trade name, copyright, or other
intangible asset, with respect to the use thereof or in connection
with the conduct of its business or otherwise.
(s) KPMG LLP, whose reports are filed with the Commission as a part of the
Registration Statement, are independent certified public accountants
as required by the 1933 Act and the Rules and Regulations.
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(t) Any certificate signed by any officer of the Fund, and delivered to
the Underwriters or to the Underwriters' counsel (as defined herein)
shall be deemed a representation and warranty by the Fund to the
Underwriters as to the matters covered thereby.
(u) Each of the minute books of the Fund has been made available to the
Managing Underwriter and contains a complete summary of all meetings
and actions of the directors and beneficial holders of the Fund, since
the time of its inception and reflect all material transactions
referred to in such minutes accurately in all respects.
(v) Except and only to the extent described in the Prospectus or disclosed
in writing to the Managing Underwriter (which writing specifically
refers to this section), no holders of any Units of the Fund or of any
options, warrants or other convertible or exchangeable Units of the
Fund have the right to include any Units issued by the Fund in the
Registration Statement or any registration statement to be filed by
the Fund or to require the Fund to file a registration statement under
the 1933 Act and no person or entity holds any anti-dilution rights
with respect to any Units of the Fund. Except as disclosed in the
Prospectus, all rights so described or disclosed have been waived or
have not been triggered with respect to the transactions contemplated
by this Agreement.
(w) The Fund has not entered into any employment agreements with its
executive officers, except as disclosed in the Prospectus.
(x) No consent, approval, authorization or order of, and no filing with,
any court, regulatory body, government agency or other body, domestic
or foreign, is required for the issuance of the Units pursuant to the
Prospectus and the Registration Statement, and the transactions
contemplated hereby and thereby, including without limitation, any
waiver of any preemptive, first refusal or other rights that any
entity or person may have for the issue and/or sale of any of the
Units, except such as have been or may be obtained under the 1933 Act,
otherwise or may be required under state securities or blue sky laws
in connection with the Underwriters' distribution of the Units to be
sold by the Fund hereunder or may be required by the Rules of the
NASD.
(y) All executed agreements, contracts or other documents or copies of
executed agreements, contracts or other documents filed as exhibits to
the Registration Statement to which the Fund is a party or by which it
may be bound or to which its assets, properties or businesses may be
subject have been duly and validly authorized, executed and delivered
by the Fund and constitute the legal, valid and binding agreements of
the Fund, enforceable against the Fund, in accordance with their
respective terms. The descriptions in the Registration Statement of
agreements, contracts and other documents are accurate and fairly
presented and there are no contracts or other documents which are
required by the 1933 Act to be described in the Registration Statement
or filed as exhibits to the Registration Statement which are not
described or filed as required, and the exhibits which have been filed
are complete and correct copies of the documents of which they purport
to be copies.
4. Covenants of the Fund. The Fund covenants and agrees with you that:
(a) It will cooperate in all respects in making the Registration Statement
effective and will not, at any time, whether before or after the
effective date, file any amendment to or supplement to the
Registration Statement of which you shall not previously have been
advised and furnished with a copy or to which you or your counsel
shall have reasonably objected or which is not in material compliance
with the 1933 Act and the Rules and Regulations or applicable state
law.
The Fund has caused to be delivered to you copies of such Prospectus, and
the Fund has consented and hereby consents to the use of such copies for the
purposes permitted by law. The Fund authorizes the Underwriters to use the
Prospectus and such copies of the Prospectus in connection with the sale of the
Units, for such period as in the opinion of your counsel and our counsel the use
thereof is required to comply with the applicable provisions of
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the 1933 Act and the Rules and Regulations. The Fund will prepare and file with
the states, promptly upon your request, any such amendments or supplements to
the Prospectus, and take any other action, as, in the opinion of your counsel,
may be necessary or advisable in connection with the sale of the Units, and will
use its best efforts to cause the same to become effective as promptly as
possible.
In case of the happening, at any time within such period as a Prospectus is
required under the 1933 Act to be delivered in connection with the initial sale
of the Units, of any event of which the Fund has knowledge and which materially
affects the Fund, or the Units thereof, and which should be set forth in an
amendment of or a supplement to the Prospectus in order to make the statements
therein not then misleading, in light of the circumstances existing at the time
the Prospectus is required under the 1933 Act to be delivered, or in case it
shall be necessary to amend or supplement the Prospectus to comply with the 1933
Act, the Rules and Regulations or any other law, the Fund will forthwith prepare
and furnish to you copies of such amended Prospectus or of such supplement to be
attached to the Prospectus, in such quantities as you may reasonably request, in
order that the Prospectus, as so amended or supplemented, will 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 light of the circumstances under which they are made. The preparation and
furnishing of any such amendment or supplement to the Prospectus or supplement
to be attached to the Prospectus shall be without expense to you.
The Fund will to the best of its ability comply with the 1940 Act, the 1933
Act, the 1934 Act and applicable state securities laws so as to permit the
lawful offer and sales of the Units.
As soon as the Fund is advised thereof, the Fund will advise you, and
confirm the advice in writing, of the receipt of any comments of the Commission
or any state securities department of the effectiveness of any posteffective
amendment to the Registration Statement or Prospectus, or the filing of any
supplement to the Prospectus or any amended Prospectus, of any request made by
the Commission or any state securities department for amendment of the
Prospectus or for supplementing of the Prospectus or for additional information
with respect thereto, of the issuance of any stop order suspending the
effectiveness of the Registration Statement or any order preventing or
suspending the use of any Prospectus or any order suspending trading in the
Units of the Fund, or of the suspension of the qualification of the Units for
offering in any jurisdiction, or of the institution of any proceedings for any
such purposes, and will use its best efforts to prevent the issuance of any such
order and, if issued, to obtain as soon as possible the lifting or dismissal
thereof.
(b) So long as any of the Units remain outstanding in the hands of the
public, the Fund, at its expense, will annually furnish to the holders
of its Units (each, a "Unitholder") a report of its operations to
include financial statements audited by independent public
accountants, and will furnish to the Underwriter as soon as
practicable after the end of each fiscal year, a balance sheet of the
Fund as at the end of such fiscal year, together with statements of
operations, Unitholders' equity, and changes in cash flow of the Fund
for such fiscal year, all in reasonable detail and accompanied by a
copy of the certificate or report thereon of independent public
accountants.
(c) The Fund will deliver to you at or before the initial closing a signed
copy of the signature pages to the Registration Statement evidencing
electronic filing for the original filing and for any amendments. The
Fund will deliver to you on the effective date of the Prospectus and
thereafter for so long as a Prospectus is required to be delivered
under the 1933 Act and the Rules and Regulations as many copies of the
Prospectus, in final form, or as thereafter amended or supplemented,
as you may from time to time reasonably request.
(d) The Fund will apply the net proceeds from the sale of the Units
substantially in the manner set forth under "Use of Proceeds" in the
Prospectus.
(e) As soon as it is practicable, but in any event not later than the
first day of the fifteenth full calendar month following the effective
date of the Registration Statement, the Fund will make available to
its security holders and the Managing Underwriter an earnings
statement (which need not be audited) covering a period of at least
twelve consecutive months beginning after the effective date of the
Registration Statement, which shall satisfy the requirements of
Section 11(a) of the 1933 Act and Rule 15-8(a) of the Rules and
Regulations.
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(f) During the three-year period after the date hereof, the Fund will file
Form N-SAR, and any other required reports and, as soon as practicable
deliver to the Managing Underwriter:
(1) as soon as they are available, copies of all reports (financial
or other) mailed to Unitholders;
(2) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission,
the NASD or any securities exchange;
(3) every press release and every material news item or article of
interest to the financial community in respect of the Fund or its
affairs; and
(4) any additional information of a public nature concerning the Fund
(and any future series of Units) or of its businesses which the
Underwriters may reasonably request.
During such three-year period, if the Fund has active subsidiaries,
the foregoing financial statements will be on a consolidated basis to the
extent that the accounts of the Fund and its subsidiaries are consolidated,
and will be accompanied by similar financial statements for any significant
subsidiary which is not so consolidated.
(g) The Fund will maintain a transfer agent and, if necessary under the
jurisdiction of organization of the Fund, a Registrar (which may be
the same entity as the Transfer Agent) for its Units.
(h) The Fund will furnish to the Managing Underwriter or on an
Underwriter's order, without charge, at such place as the Underwriter
may designate, copies of each Preliminary Prospectus, the Final
Prospectus the Registration Statement and any pre-effective or
post-effective amendments thereto (two of which copies will be signed
and will include all financial statements and exhibits), the
Prospectus, and all amendments and supplements thereto, including any
prospectus prepared after the effective date of the Registration
Statement, in each case as soon as available and in such quantities as
the Underwriters may request.
(i) Neither the Fund nor any of its officers, directors, beneficial
holders or any of its affiliates will take, directly or indirectly,
any action designed to, or which might in the future reasonably be
expected to cause or result in stabilization or manipulation of the
price of any of the Units.
(j) The Fund a Form N-8A with the Commission providing for the
registration under the 1940 Act of the Units.
(k) Until the completion of the distribution of the Units, the Fund shall
not, without the prior written consent of the Managing Underwriter and
its counsel, which consent shall not be unreasonably withheld or
delayed, issue, directly or indirectly, any press release or other
communication or hold any press conference with respect to the Fund or
its activities or the offering contemplated hereby, other than trade
releases issued in the ordinary course of the Fund's business
consistent with past practices with respect to the Fund's operations.
5. Non-Accountable Expense Allowance and other Costs and Expenses. The Fund
shall pay to the Underwriters at the closing date, and to be deducted from the
purchase price for the Units, an amount equal to eight percent (8.0%) of the
total proceeds received by the Fund from the sale of the Units at such closing
date, less in the case of the Closing Date, the sum of $60,000 previously paid
by the Fund. The 8.0% amount from the gross proceeds includes a selling
concession of 5.50%, and a non-accountable fee of 2.50% to the Managing
Underwriter. If the sale of the Units by the Underwriters is not consummated for
any reason not attributable to the Underwriters, or if (i) the Fund withdraws
the Registration Statement from the Commission or does not proceed with the
public offering, or (ii) the representations in Section 3 hereof are not correct
or the covenants cannot be complied with, or (iii) there
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has been a materially adverse change in the condition, prospects or obligations
of the Fund or a materially adverse change in stock market conditions from
current conditions, all as reasonably determined by the Underwriters, then the
Fund shall reimburse the Underwriters for their out of pocket expenses including
without limitation its legal fees and disbursements all on an accountable basis
but not to exceed $60,000 and if any excess remains, such excess will be
returned to the Fund. However, in the event any unaccounted for portion of the
$60,000 advanced to the Managing Underwriter for non-accountable expenses
remains, the Underwriters will reimburse the Fund for any remaining amount.
Costs and Expenses.
Subject to the provisions above, the Fund will pay all costs and expenses
incident to the performance of this Agreement by the Fund including, but not
limited to, the fees and expenses of counsel to the Fund and of the Fund's
accountants; the costs and expenses incident to the preparation, printing,
filing and distribution under the 1933 Act of the Registration Statement and
Prospectus (including the filing fee of the Commission, any securities exchange
and the NASD in connection with the filing required by the NASD relating to the
offering of the Units contemplated hereby); all expenses, including fees of
counsel, which shall be due and payable on any closing date in connection with
the qualification of the Units under the state securities or blue sky laws; the
cost of furnishing to you copies of the Prospectus and this Agreement, the cost
of printing the certificates representing the Units, the cost of two
underwriter's bound volumes, any advertising costs and expenses, including but
not limited to the Fund's reasonable expenses for "road show" information
meetings and presentations, prospectus memorabilia, issue and transfer taxes, if
any. The Fund will also pay all costs and expenses incident to the furnishing of
any amended Prospectus of or any supplement to be attached to the Prospectus.
6. Conditions of the Underwriters' Obligations. The obligation of the
Underwriters to offer and sell the Units is subject to the accuracy in all
material respects (as of the date hereof, and as of any closing dates) of and
compliance in all material respects with the representations and warranties of
the Fund to the performance by it of its agreement and obligations hereunder and
to the following additional conditions:
(a) The Registration Statement shall have become effective as and when
cleared by the Commission, and you shall have received notice thereof,
on or prior to any closing date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that or similar purpose shall have been instituted
or shall be pending, or, to your knowledge or to the knowledge of the
Fund, shall be contemplated by the Commission; any request on the part
of the Commission for additional information shall have been complied
with to the reasonable satisfaction of counsel to the Underwriters;
and qualification, under the laws of such states as you may designate,
of the issue and sale of the Units upon the terms and conditions
herein set forth or contemplated and containing no provision
unacceptable to you shall have been secured, and no stop order shall
be in effect denying or suspending effectiveness of such qualification
nor shall any stop order proceedings with respect thereto be
instituted or pending or threatened under such law.
(b) On any closing date and, with respect to the letter referred to in
subparagraph (iii), as of the date hereof, you shall have received:
(i) the opinion, together with such number of signed or photostatic
copies of such opinion as you may reasonably request, addressed to you
by Shearman & Sterling, counsel for the Fund, in form and substance as
described in Schedule C attached hereto.
In rendering such opinion, to the extent deemed reasonable by
them, such counsel may rely upon certificates of any officer of the
Fund or public officials as to matters of fact of which the maker of
such certificate has knowledge.
(ii) a certificate, signed by the Principal Executive Officer and the
Principal Financial or Accounting Officer of the Fund dated the
initial closing date and subsequent closing dates, if any, to the
effect that with regard to the Fund, each of the conditions set forth
in Section 6(c) have been satisfied.
9
(iii) a letter, addressed to the Underwriters and in form and
substance satisfactory to the Underwriters in all respects (including
the nature of the changes or decreases, if any, referred to in clause
(D) below), from KPMG LLP, dated, respectively, as of the effective
date of the Registration Statement and as of the initial closing date
and any subsequent closing dates, as the case may be:
(A) Confirming that they are independent public accountants with
respect to the Fund and its consolidated subsidiaries, if any,
within the meaning of the 1933 Act and the applicable published
Rules and Regulations.
(B) Stating that, in their opinion, the financial statements, related
notes and schedules of the Fund and its consolidated
subsidiaries, if any, included in the Registration Statement
examined by them comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act and the
published Rules and Regulations thereunder.
(C) Stating that, with respect to the period from the date hereof to
a specified date ("specified date") not earlier than five (5)
business days prior to the date of such letter, they have read
the minutes of meetings of the beneficial holders and board of
directors (and various committees thereof) of the Fund and its
consolidated subsidiaries, if any, for the period from the date
hereof through the specified date, and made inquiries of officers
of the Fund and its consolidated subsidiaries, if any,
responsible for financial and accounting matters and, especially
as to whether there was any decrease in sales, income before
extraordinary items or net income as compared with the
corresponding period in the preceding year; or any change in the
Units of the Fund or any change in the long term debt or any
increase in the short-term bank borrowings or any decrease in net
current assets or net assets of the Fund or of any of its
consolidated subsidiaries, if any, and further stating that while
such procedures and inquiries do not constitute an examination
made in accordance with generally accepted auditing standards,
nothing came to their attention which caused them to believe that
during the period from the date hereof, through the specified
date there were any decreases as compared with the corresponding
period in the preceding year in sales, income before
extraordinary items or net income; or any change in the Units of
the Fund or consolidated subsidiary, if any, or any change in the
long-term debt or any increase in the short-term bank borrowings
(other than any increase in short-term bank borrowings in the
ordinary course of business) of the Fund or any consolidated
subsidiary, if any, or any decrease in the net current assets or
net assets of the Fund or any consolidated subsidiary, if any;
and
(D) Stating that they have carried out certain specified procedures
(specifically set forth in such letter or letters) as specified
by the Underwriters (after consultations with KPMG LLP relating
to such procedures), not constituting an audit, with respect to
certain tables, statistics and other financial data in the
Prospectus specified by the Underwriters and such financial data
not included in the Prospectus but from which information in the
Prospectus is derived, and which have been obtained from the
general accounting records of the Fund or consolidated
subsidiaries, if any, or from such accounting records by analysis
or computation, and having compared such financial data with the
accounting records of the Fund or the consolidated subsidiaries,
if any, stating that they have found such financial data to agree
with the accounting records of the Fund.
(c) At the initial closing date or in the event of subsequent closing
dates, that (i) the representations and warranties of the Fund
contained in this Agreement shall be true and correct in all material
respects with the same effect as if made on and as of such closing
date; (ii) the Prospectus and any amendments or supplements thereto
shall contain all statements which are required to be stated therein
in accordance with the 1933 Act and the Rules and Regulations and in
all material respects conform to the requirements thereof, and neither
the Prospectus nor any amendment or supplement thereto shall contain
any untrue statement of a
10
material fact or omit to state any material fact required to be stated
therein or necessary, in light of the circumstances under which they
were made, in order to make the statements therein not misleading;
(iii) there shall have been since the respective dates as of which
information is given no material adverse change in the business,
properties or condition (financial or otherwise), results of
operations, Units, long-term debt or general affairs of the Fund from
that set forth in the Prospectus, except changes which the Prospectus
indicates might occur after the effective date of the Prospectus, and
the Fund shall not have incurred any material liabilities or material
obligations, direct or contingent, or entered into any material
transaction, contract or agreement not in the ordinary course of
business other than as referred to in the Prospectus and which would
be required to be set forth in the Prospectus; and (iv) except as set
forth in the Prospectus, no action, suit or proceeding at law or in
equity shall be pending or threatened against the Fund which would be
required to be set forth in the Prospectus, and no proceedings shall
be pending or threatened against the Fund or any subsidiary before or
by any commission, board or administrative agency in the United States
or elsewhere, wherein an unfavorable decision, ruling or finding would
materially and adversely affect the business, property, condition
(financial or otherwise), results of operations or general affairs of
the Fund.
If any condition to the Underwriters obligations hereunder to be fulfilled
prior to or at the initial closing date or any subsequent closing date, as the
case may be, is not so fulfilled, the Underwriters may terminate this Agreement
or, if the Underwriters so elect, they may waive any such conditions which have
not been fulfilled or extend the time for their fulfillment.
7. Conditions of the Fund's Obligations. The obligation of the Fund to sell and
deliver the Units is subject to the following:
(a) The provisions regarding the effective date, as described in
Section 10.
(b) At the Initial Closing as well as any subsequent Closing Dates, no
stop order suspending the effectiveness of the Prospectus shall have
been issued under the 1933 Act or any proceedings therefor initiated
or threatened by the Commission or by any state securities department.
(c) Listing of the Units on the American Stock Exchange.
(d) Completion of all corporate and other matters, in the Fund's sole
discretion.
8. Indemnification.
(a) The Fund agrees to indemnify and hold harmless each Underwriter and
its employees and each person, if any, who controls any Underwriter
within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, (which shall, for any purposes of this
Agreement, include, but not be limited to, all reasonable costs of
defense and investigation and the attorneys' fees of the counsel
chosen by the Underwriters), to which each Underwriter or such
controlling person may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained
in the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission made in the
Prospectus, or such amendment or supplement to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, which is in reliance upon and in conformity
with written information furnished by the Fund to you specifically for
use in the preparation thereof, and provided further that the
indemnity agreement contained in this subsection (a) shall not inure
to the benefit of you with respect to any person asserting any such
loss, claim, damage or liability who has purchased the Units which are
the subject thereof if you or any participants failed to send or give
a copy of the Prospectus to such person at or prior to the written
confirmation of the sale of such Units to such person and except that,
with respect to any untrue statement or
11
omission or any alleged untrue statement or omission, made in any
pre-effective Prospectus, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Underwriter (or
to any person controlling any such underwriter) from whom the person
asserting any such loss, claim, damage or liability purchased the
Units concerned to the extent that such untrue statement or omission,
or alleged untrue statement or omission, has been corrected in a later
pre-effective Prospectus or in the Final Prospectus unless the
Underwriter circulated a later pre-effective Prospectus or the Final
Prospectus to such person; provided, however, that in no event shall
anything contained herein be so construed as to protect any
Underwriter or related party against any liability to which such
Underwriter or related party would otherwise be subject by reason of
its gross negligence, willful misfeasance or bad faith or reckless
disregard of its obligations and duties under this Agreement, or
violation of any applicable law by such Underwriter or related party
in connection with the distribution of Units. In addition, any
determination by the Fund under this Section will be made in
accordance with Section 17 of the 1940 Act.
(b) Each Underwriter will indemnify and hold harmless the Fund, each of
its trustees or any directors, each of its officers and employees,
each person, if any, who controls the Fund within the meaning of the
1933 Act against any losses, claims, damages or liabilities, (which
shall, for all purposes of this Agreement, include, but not be limited
to, all costs of defense and investigation and all attorneys' fees) to
which the Fund or any such director, officer or controlling person may
become subject under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission was made in the Prospectus, or such amendment or supplement,
in reliance upon and in conformity with written information furnished
to the Fund by you specifically for use in the preparation thereof and
from and against any and all losses caused by an untrue statement or
alleged untrue statement of a material fact contained in the
Prospectus (if used within the applicable period and as amended or
supplemented if the Fund shall have furnished any amendments or
supplements thereto), or caused by 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, if the person
asserting such losses purchased Units from such Underwriter and a copy
of the Final Prospectus (as then amended or supplemented if the Fund
shall have furnished any amendments or supplements thereto) was not
sent or given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Units to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage or liability. This indemnity
will be in addition to any liability which any Underwriter may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying
party under this Section, notify the indemnifying party of the
commencement thereof, but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under this Section. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party, similarly notified,
to assume the defense thereof, subject to the provisions herein
stated, with counsel satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section for any
legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable
costs of investigation. The indemnified party shall have the right to
employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall not
be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that, if the
indemnified party is you or a person who controls you, the fees and
expenses of such counsel shall be at the expense of the indemnifying
party if (i) the employment of such counsel has been specifically
authorized in
12
writing by the indemnifying party or (ii) the named parties to any
such action (including any impleaded parties) include both you or such
controlling person and the indemnifying party and you or such
controlling person shall have been advised by such counsel that there
is a conflict of interest which would prevent counsel for the
indemnifying party from representing the indemnifying party and you or
such controlling person (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of
you or such controlling person, it being understood, however, that the
indemnifying party shall not, in connection with any one such action
or separate but substantially similar or related actions in the same
jurisdiction or which are consolidated into the same jurisdiction
arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate
firm of attorneys for you and all such controlling persons, which firm
shall be designated in writing by you). No settlement of any action
against an indemnified party shall be made without the consent of the
indemnified party, which shall not be unreasonably withheld in light
of all factors of importance to such indemnified party.
9. Contribution. In order to provide for just and equitable contribution under
the 1933 Act in any case in which (i) the indemnifying party makes a claim for
indemnification pursuant to Section 8 hereof but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that the express provisions of Section 8 provide for indemnification in such
case, or (ii) contribution under the 1933 Act may be required on the part of the
Underwriters, then the Fund and the Underwriters in the aggregate shall
contribute to the aggregate losses, claims, damages, or liabilities to which
they may be subject (which shall, for all purposes of this Agreement, include,
but not be limited to, all reasonable costs of defense and investigation and all
reasonable attorneys' fees) in either such case (after contribution from others)
in such proportions that the Underwriters are responsible in the aggregate for
that portion of such losses, claims, damages or liabilities determined by
multiplying the total amount of such losses, claims, damages or liabilities
times the difference between the public offering price and the commission to the
Underwriters and dividing the product thereof by the public offering price, and
the Fund, if applicable, shall be responsible for that portion of such losses,
claims, damages or liabilities times the commission to the Underwriters and
dividing the product thereof by the public offering price; provided, however,
that the Underwriters shall not be required to so contribute any amount in
excess of the underwriting discount applicable to the Units purchased by the
Underwriters hereunder if such allocation is not permitted by applicable law,
then the relative fault of the Fund and the Underwriters in connection with the
statements or omissions which resulted in such damages and other relevant
equitable considerations shall also be considered. No person guilty of a
fraudulent misrepresentation (within the meaning of Section 12(2) of the 0000
Xxx) shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. The foregoing contribution agreement shall in no
way affect the contribution liabilities of any person having liability under
Section 12 of the 1933 Act other than the Fund and the Underwriter. As used in
this paragraph, the term "Underwriters" includes any person who controls the
Underwriters within the meaning of Section 15 of the 1933 Act. If the full
amount of the contribution specified in this paragraph is not permitted by law,
then any Underwriter and each person who controls any Underwriter shall be
entitled to contribution from the Fund, to the full extent permitted by law.
10. Effective Date. This Agreement shall become effective on the later of its
execution by the parties or at 10:00 a.m. New York time on the next full
business day following the effective date of the Registration Statement, or at
such other time after the effective date of the Prospectus as you in your
discretion shall first commence the public offering of any of the Units covered
thereby, provided, however, that at all times the provisions of Sections 8, 9,
10 and 12 shall be effective.
11. Duration. This Agreement shall remain in force for a period of two years
from the day that it becomes effective under Section 10, and from year to year
thereafter so long as such continuance is specifically approved at least
annually (i) by either the vote of the Board of Trustees of The Trust, or by
the affirmative vote of a majority of the outstanding voting securities (as
defined in the 0000 Xxx) of the Fund, and (ii) by the vote of a majority of the
members of the Board of Trustees of The Trust who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
12. Termination. This Agreement may be terminated at any time prior to the
initial closing date by you if in your judgment it is impracticable to offer for
sale or to enforce contracts made by you for the sale of the Units agreed to be
sold hereunder by reason of (i) the Fund as a whole having sustained a material
loss, whether or not insured, by reason of fire, earthquake, flood, accident or
other calamity, or from any labor dispute or court or government action, order
or decree, (ii) trading in Units of the Fund having been suspended by a state
Units administrator or by the Commission, (iii) material governmental
restrictions having been imposed on trading in Units generally (not in force and
effect on the date hereof) or trading on the New York Stock Exchange, American
Stock Exchange, or in the over-the-counter market shall have been suspended,
(iv) a banking moratorium having
13
been declared by federal or New York State authorities, (v) an outbreak or
escalation of hostilities or other national or international calamity having
occurred, (vi) the passage by the Congress of the United States or by any state
legislative body, of any act or measure, or the adoption of any orders, rules or
regulations by any governmental body or any authoritative accounting institute
or board, or any governmental executive, which is believed likely by you to have
a material impact on the business, financial condition or financial statements
of the Fund; or (vii) any material adverse change having occurred, since the
respective dates as of which information is given in the Prospectus, in the
condition, financial or otherwise, of the Fund as a whole, whether or not
arising in the ordinary course of business; if you elect to prevent this
Agreement from becoming effective or to terminate this Agreement as provided in
this Section, the Fund shall be promptly notified by you, by telephone or
telegram, and confirmed by letter. This Agreement shall automatically terminate
in the event of its assignment (as defined by the 1940 Act). The Board of
Trustees of The Trust shall promptly notify the Underwriter of any transaction
or other event that results in an assignment of this Agreement within the
meaning of the 1940 Act.
13. Representations, Warrants and Agreements to Survive Delivery. The respective
indemnities, agreements, representations, warranties and other statements of the
Fund (or its officers) and the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Underwriters, the Fund, or any of
their officers or directors and will survive delivery of and payment for the
Units.
14. Notices. All communications hereunder will be in writing and, except as
otherwise expressly provided herein if sent to you, will be mailed, delivered or
telephoned and confirmed to you at Investors Capital Corporation, 000 Xxxxxxxx,
Xxxxxxxxx, XX 00000 Attn: Xxxxxxxx X. Xxxxxxx, Chairman of the Board; and to the
Fund, to Xxxx Xxxxxxxx, President, New Colony Investment Trust, 000 Xxxx Xxxxxx
Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx, X0X 0X0.
15. Parties in Interest. This Agreement is made solely for the benefit of the
Underwriter(s) and the Fund, and their respective controlling persons, trustees
or directors and officers, and their respective successors, assigns, executors
and administrators. No other person shall acquire or have any right under or by
virtue of this Agreement.
16. Headings. The Section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
17. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Massachusetts, without giving effect to
conflict of law principles.
18. Counterparts. This Agreement may be executed in any number of counterparts,
each of which together shall constitute one and the same instrument.
14
If the foregoing correctly sets forth the understanding between the Fund
and you, please so indicate in the space provided below for such purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
between us.
Very truly yours,
New Colony Investment Trust
By: /s/ Xxxx Xxxxxxxx
-------------------------------------
Xxxx Xxxxxxxx, President
Accepted as of the date first above written:
Investors Capital Corporation
As Exclusive Managing Underwriter
By: /s/ C. Xxxxx Xxxxxx
-------------------------------------
C. Xxxxx Xxxxxx
Vice President
SCHEDULE A
UNDERWRITERS
Underwriter
Investors Capital Corporation
TOTAL
-----------
SCHEDULE B
FORM OF ESCROW AGREEMENT
SCHEDULE C
FORM OF LEGAL OPINION
