EXHIBIT (k)(5)
(Subscription Agent)
SUBSCRIPTION AGENT AGREEMENT
This Subscription Agent Agreement (the "Agreement") is made as of
January ___, 2003 between The Royce Value Trust, Inc. (the "Fund") and
EquiServe Trust Company, N.A., as subscription agent (the "Agent"). All terms
not defined herein shall have the meaning given in the prospectus (the
"Prospectus") included in the Registration Statement on Form N-2 (File No.
333-______) filed by the Fund with the Securities and Exchange Commission on
January ___, 2003, as amended by any amendment filed with respect thereto (the
"Registration Statement").
WHEREAS, the Fund proposes to make a subscription offer by issuing
certificates or othe evidences of subscription rights, in the form designated
by the Fund (the "Subscription Certificates") to shareholders of record (the
"Shareholders") of its Common Stock, par value $0.001 per share ("Common
Stock"), as of a record date specified by the Fund (the "Record Date"),
pursuant to which each Shareholder will have certain rights (the "Rights") to
subscribe for shares of Common Stock, as described in and upon such terms as
are set forth in the Prospectus, a final copy of which has been or, upon
availability will promptly be, delivered to the Agent; and
WHEREAS, the Fund wishes the Agent to perform certain acts on behalf
of the Fund, and the Agent is willing to so act, in connection with the
distribution of the Subscription Certificates and the issuance and exercise of
the Rights to subscribe therein set forth, all upon the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements set forth herein, the parties agree as follows:
1. Appointment. The Fund hereby appoints the Agent to act as subscription
agent in connection with the distribution of Subscription Certificates and the
issuance and exercise of the Rights in accordance with the terms set forth in
this Agreement and the Agent hereby accepts such appointment.
2. Form and Execution of Subscription Certificates.
(a) Each Subscription Certificate shall be irrevocable and non-transferable.
The Agent shall, in its capacity as Transfer Agent of the Fund, maintain a
register of Subscription Certificates and the holders of record thereof (each
of whom shall be deemed a "Shareholder" hereunder for purposes of determining
the rights of holders of Subscription Certificates). Each Subscription
Certificate shall, subject to the provisions thereof, entitle the Shareholder
in whose name it is recorded to the following [only if non-transferable]:
(1) With respect to Record Date Shareholders only, the right
to acquire during the Subscription Period, as defined in the Prospectus, at
the Subscription Price, as defined in the Prospectus, a number of shares of
Common Stock equal to one share of Common Stock for every ten Rights held (the
"Primary Subscription Right"); and
(2) With respect to Record Date Shareholders only, the right
to subscribe for additional shares of Common Stock, subject to the
availability of such shares and to the allotment of such shares as may be
available among Record Date Shareholders who exercise Over-Subscription Rights
on the basis specified in the Prospectus; provided, however, that such Record
Date Shareholder has exercised all Primary Subscription Rights issued to him
or her (the "Over-Subscription Privilege"). Fractional Shares will not be
issued upon the exercise of Rights.
2
3. Rights and Issuance of Subscription Certificates.
(a) Each Subscription Certificate shall evidence the Rights of the
Shareholder therein named to purchase Common Stock upon the terms and
conditions therein and herein set forth.
(b) Upon the written advice of the Fund, signed by any of its duly
authorized officers, as to the Record Date, the Agent shall, from a list of
the Fund Shareholders as of the Record Date to be prepared by the Agent in its
capacity as Transfer Agent of the Fund, prepare and record Subscription
Certificates in the names of the Shareholders, setting forth the number of
Rights to subscribe for the Fund's Common Stock calculated on the basis of one
Right for each share of Common Stock recorded on the books in the name of each
such Shareholder as of the Record Date. The number of Rights that are issued
to Record Date Shareholders will be rounded down by the Agent, to the nearest
number of Full Rights as Fractional Rights will not be issued. Each
Subscription Certificate shall be dated as of the Record Date and shall be
executed manually or by facsimile signature of a duly authorized officer of
the Subscription Agent. Upon the written advice, signed as aforesaid, as to
the effective date of the Registration Statement, the Agent shall promptly
countersign and deliver the Subscription Certificates, together with a copy of
the Prospectus, instruction letter and any other document as the Fund deems
necessary or appropriate, to all Shareholders with record addresses in the
United States (including its territories and possessions and the District of
Columbia). Delivery shall be by first class mail (without registration or
insurance), except for those Shareholders having a registered address outside
the United States (who will only receive copies of the Prospectus, instruction
letter and other documents as the Fund deems necessary or appropriate, if
any), delivery shall be by air mail (without registration or insurance) and by
first class mail (without registration or insurance)
3
to those Shareholders having APO or FPO addresses. No Subscription Certificate
shall be valid for any purpose unless so executed.
(c) The Agent will mail a copy of the Prospectus, instruction letter,
a special notice and other documents as the Fund deems necessary or
appropriate, if any, but not Subscription Certificates to Record Date
Shareholders whose record addresses are outside the United States (including
its territories and possessions and the District of Columbia) ("Foreign Record
Date Shareholders"). The Rights to which such Subscription Certificates relate
will be held by the Agent for such Foreign Record Date Shareholders' accounts
until instructions are received to exercise the Rights.
4. Exercise.
(a) Record Date Shareholders may acquire shares of Common Stock on
Primary Subscription and pursuant to the Over-Subscription Privilege by
delivery to the Agent as specified in the Prospectus of (i) the Subscription
Certificate with respect thereto, duly executed by such Shareholder in
accordance with and as provided by the terms and conditions of the
Subscription Certificate, together with (ii) the estimated purchase price, as
disclosed in the Prospectus, for each share of Common Stock subscribed for by
exercise of such Rights, in U.S. dollars by money order or check drawn on a
bank in the United States, in each case payable to the order of the Fund.
(b) Rights may be exercised at any time after the date of issuance of
the Subscription Certificates with respect thereto but no later than 5:00 P.M.
Eastern time on such date as the Fund shall designate to the agent in writing
(the "Expiration Date"). For the purpose of determining the time of the
exercise of any Rights, delivery of any material to the Agent shall be
4
deemed to occur when such materials are received at the Shareholder Services
Division of the Agent specified in the Prospectus.
(c) Notwithstanding the provisions of Section 4(a) ad 4(b) regarding
delivery of an executed Subscription Certificate to the Agent prior to 5:00
P.M. Eastern time on the Expiration Date, if prior to such time the Agent
receives a Notice of Guaranteed Delivery by facsimile (telecopy) or otherwise
from a bank, a trust company or a New York Stock Exchange member guaranteeing
delivery of (i) payment of the full Subscription Price for the shares of
Common Stock subscribed for on Primary Subscription and any additional shares
of Common Stock subscribed for pursuant to the Over-Subscription Privilege,
and (ii) a properly completed and executed Subscription Certificate, then such
exercise of Primary Subscription Rights and Over-Subscription Rights shall be
regarded as timely, subject, however, to receipt of the duly executed
Subscription Certificate and full payment for the Common Stock by the Agent
within three Business Days (as defined below) after the Expiration Date (the
"Protect Period") and full payment for their Common Stock within ten Business
Days after the Confirmation Date (as defined in Section 4(d)). For the
purposes of the Prospectus and this Agreement, "Business Day" shall mean any
day on which trading is conducted on the New York Stock Exchange.
(d) The Fund will determine the Subscription Price by taking the
lower of (i) [$0.50] below the last reported sale price of a share of the
Fund's Common Stock on the New York Stock Exchange on March 23, 2003 (the
"Pricing Date") , or (ii) the net asset value of a share of the Fund's Common
Stock on such a date. Within _____ business days following the Expiration Date
(the "Confirmation Date") the Agent shall send to each exercising shareholder
(or, if shares of Common Stock on the Record Date are held by Code & Co. or
any other depository or nominee, to Cede & Co. or such other depository or
nominee) a confirmation showing the
5
number of shares of Common Stock acquired pursuant to the Primary
Subscription, and, if applicable, the Over-Subscription Privilege the per
share and total purchase price for such shares, and any additional amount
payable to the Fund by such shareholder or any excess to be refunded by the
Fund to such shareholder in the form of a check and stub, along with a letter
explaining the allocation of shares of Common Stock pursuant to the
Over-Subscription Privilege.
(e) Any additional payment required from a shareholder must be
received by the Agent within ten Business Days after the Confirmation Date and
any excess payment to be refunded by the Fund to a shareholder will be mailed
by the Agent within ten Business days after the Confirmation Date. If a
shareholder does not make timely payment of any additional amounts due in
accordance with Section 4(d), the Agent will consult with the Fund in
accordance with Section 5 as to the appropriate action to be taken. The Agent
will not issue or deliver certificates for shares subscribed for until payment
in full therefore has been received, including collection of checks and
payment pursuant to notices of guaranteed delivery.
5. Validity of Subscriptions. Irregular subscriptions not otherwise covered by
specific instructions herein shall be submitted to an appropriate officer of
the Fund (or the Fund's administrator) and handled in accordance with his or
her instructions. Such instructions will be documented by the Agent indicating
the instructing officer and the date thereof.
6. Over-Subscription. If, after allocation of shares of Common Stock to Record
Date Shareholders, there remain unexercised Rights, then the Agent shall allot
the shares issuable upon exercise of such unexercised Rights (the "Remaining
Shares") to shareholders who have exercised all the Rights initially issued to
them and who wish to acquire more than the number of shares for which the
Rights issued to them are exercisable. Shares subscribed for pursuant to the
6
Over-Subscription Privilege will be allocated in the amounts of such
over-subscriptions. If the number of shares for which the Over-Subscription
Privilege has been exercised is greater than the Remaining Shares, the Agent
shall allocate the Remaining Shares to Record Date Shareholders exercising
Over-Subscription Privilege based on the number of shares of Common Stock
owned by them on the Record Date. The percentage of Remaining Shares each
over-subscribing Record Date Shareholder or other Rights holder may acquire
will be rounded up or down to result in delivery of whole shares of Common
Stock. The Agent shall advise the Fund immediately upon the completion of the
allocation set forth above as to the total number of shares subscribed and
distributable.
7. Delivery of Certificates. The Agent will deliver (i) certificates
representing those shares of Common Stock purchased to exercise of Primary
Subscription Rights as soon as practicable after the corresponding Rights have
been validly exercised and full payment for such shares has been received and
cleared and (ii) certificates representing those shares purchased to the
exercise of the Over-Subscription Privilege as soon as practicable after the
Expiration Date and after all allocations have been effected.
8. Holding Proceeds of Rights Offering.
(a) All proceeds received by the Agent from Shareholders in respect
of the exercise of Rights shall be held by the Agent, on behalf of the Fund,
in a segregated, interest-bearing account (the "Account"). Such interest shall
accrue to the Fund (and not to the benefit of the shareholders who have
submitted Subscription Certificates) pending disbursement in the manner
described in Section 4(e) above.
7
(b) The Agent shall deliver all proceeds received in respect of the
exercise of Rights to the Fund as promptly as practicable, but in no event
later than ten business days after the Confirmation Date. Proceeds held in
respect of Excess Payments (including interest and earned thereon) shall
belong to the Fund.
9. Reports. Daily, during the period commencing on February ___, 2003, until
termination of the Subscription Period, the Agent will report by telephone or
telecopier, confirmed by letter, to an Officer of the Fund, data regarding
Rights exercised, the total number of shares of Common Stock subscribed for,
and payments received therefor, bringing forward the figures from the previous
day's report in each case so as to show the cumulative totals and any such
other information as may be mutually determined by the Fund and the Agent.
10. Loss or Mutilation. If any Subscription Certificate is lost, stolen,
mutilated or destroyed, the Agent may, on such terms which will indemnify and
protect the Fund and the Agent as the Agent may in its discretion impose
(which shall, in the case of a mutilated Subscription Certificate include the
surrender and cancellation thereof), issue a new Subscription Certificate of
like denomination in substitution for the Subscription Certificate so lost,
stolen, mutilated or destroyed.
11. Compensation for Services. The Fund agrees to pay to the Agent
compensation for its services as such in accordance with its Fee Schedule to
act as Agent, dated January ___, 2003, and attached hereto as Exhibit A. The
Fund further agrees that it will reimburse the Agent for its reasonable
out-of-pocket expenses incurred in the performance of its duties as such.
12. Instructions and Indemnification. The Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions:
8
(a) The Agent shall be entitled to rely upon any instructions or
directions furnished to it by an appropriate officer of the Fund, whether in
conformity with the provisions of this Agreement or constituting a
modification hereof or a supplement hereto. Without limiting the generality of
the foregoing or any other provision of this Agreement, the Agent, in
connection with its duties hereunder, shall not be under any duty or
obligation to inquire into the validity or invalidity or authority or lack
thereof of any instruction or direction from an officer of the Fund which
conforms to the applicable requirements of this Agreement and which the Agent
reasonably believes to be genuine and shall not be liable for any delays,
errors or loss of data occurring by reason of circumstances beyond the Agent's
control.
(b) The Fund will indemnify the Agent and its nominees against, and
hold it harmless from, all liability and expense which may arise out of or in
connection with the services described in this Agreement or the instructions
or directions furnished to the Agent relating to this Agreement by an
appropriate officer of the Fund, except for any liability or expense which
shall arise out of the gross negligence, bad faith or willful misconduct of
the Agent or such nominees.
13. Limitation of Liability. The Agent shall be responsible for and shall
indemnify and hold the Fund harmless from and against any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liability
arising out of or attributable to Agent's refusal or failure to comply with
the terms of this Agreement, or which arise out of Agent's negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of Agent hereunder, for which Agent is not entitled to
indemnification under this Agreement; provided, however, that Agent's
aggregate liability during any term of this Agreement with respect to, arising
from, or arising in connection with this Agreement, or from all services
provided or
9
omitted to be provided under this Agreement, whether in contract, or in tort,
or otherwise, is limited to, and shall not exceed, the amounts paid hereunder
by the Fund to Agent as fees and charges, but not including reimbursable
expenses.
14. Changes in Subscription Certificate. The Agent may, without the consent or
concurrence of the Shareholders in whose names Subscription Certificates are
registered, by supplemental agreement or otherwise, concur with the Fund in
making any changes or corrections in a Subscription Certificate that it shall
have been advised by counsel (who may be counsel for the Fund) is appropriate
to cure any ambiguity or to correct any defective or inconsistent provision or
clerical omission or mistake or manifest error therein or herein contained,
and which shall not be inconsistent with the provision of the Subscription
Certificate except insofar as any such change may confer additional rights
upon the Shareholders.
15. Assignment, Delegation; No Third Party Beneficiaries.
(a) Except as provided in Section 15(c) below, neither this Agreement
nor any rights or obligations hereunder may be assigned or delegated by either
party without the written consent of the other party.
(b) This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns. Nothing in
this Agreement is intended or shall be construed to confer upon any other
person any right, remedy or claim or to impose upon any other person any duty,
liability or obligation.
(c) The Agent may, without further consent on the part of the Fund,
(i) subcontract for the performance hereof with EquiServe Limited Partnership
or (ii) subcontract with other
10
subcontractors for systems, processing, telephone and mailing services, and
clean up activities, as may be required from time to time; provided, however,
that the Agent shall be as fully responsible to the Fund for the acts and
omissions of any subcontractor as it is for its own acts and omissions.
16. Governing Law. The validity, interpretation and performance of this
Agreement shall be governed by the law of the Commonwealth of Massachusetts.
17. No Joint Venture. This Agreement does not constitute an agreement for a
partnership or joint venture between the Agent and the Fund. Neither party
shall make any commitments with third parties that are binding on the other
party without the other party's prior written consent.
18. Force Majeure. In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God, strikes,
terrorism, equipment or transmission failure or damage reasonably beyond its
control, or other cause reasonably beyond its control, such party shall not be
liable for damages to the other for any damages resulting from such failure to
perform or otherwise from such causes. Performance under this Agreement shall
resume when the affected party or parties are able to perform substantially
that party's duties.
19. Consequential Damages. Neither party to this Agreement shall be liable to
the other party for any consequential, indirect, special or incidental damages
under any provisions of this Agreement or for any consequential, indirect,
penal, special or incidental damages arising out of any act or failure to act
hereunder even if that party has been advised of or has foreseen the
possibility of such damages.
11
20. Severability. If any provisions of this Agreement shall be held invalid,
unlawful, or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired.
21. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
22. Captions. The captions and descriptive headings herein are for the
convenience of the parties only. They do not in any way modify, amplify, alter
or give full notice of the provisions hereof.
23. Confidentiality. The Agent and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement including the fees for services set forth in the attached schedule
shall remain confidential, and shall not be voluntarily disclosed to any other
person, except as may be required by law.
24. Term. This Agreement shall remain in effect until 30 days' written notice
has been provided by either party to the other. Upon termination of the
Agreement, the Agent shall retain all canceled Certificates and related
documentation as required by applicable law.
25. Notices. Until further notice in writing by either party hereto to the
other party, all written reports, notices and other communications between the
Agent and the Fund required or permitted hereunder shall be delivered or
mailed by first class mail, postage prepaid, addressed as follows:
12
If to the Fund, to:
Royce Value Trust, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
Royce & Associates, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
If to the Agent, to:
EquiServe Trust Company, N.A.
c/o EquiServe Limited Partnership
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Reorganization Department
26. Survival. The provisions of ▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇, ▇▇ - ▇▇, ▇▇, ▇▇ - ▇▇ shall
survive any termination, for any reason, of this Agreement.
27. Merger of Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supercedes any prior agreement with respect to
the subject matter hereof whether oral or written.
13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, hereunto duly authorized, as of the day
and year first above written.
EQUISERVE TRUST COMPANY, N.A. ROYCE VALUE TRUST, INC.
---------------------------- -----------------------------
Signature Signature
---------------------------- -----------------------------
Title Title