H&Q Healthcare Investors
(a Massachusetts business trust)
2,115,336* Shares of Beneficial Interest Issuable Upon
Exercise of Non-Transferable Rights to Subscribe for
Such Shares of Beneficial Interests
(Shares of Beneficial Interest)
DEALER MANAGER AGREEMENT
[ , 1997]
PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza, 18th Floor
New York, NY 10292
Ladies and Gentlemen:
H&Q Healthcare Investors, a Massachusetts business trust (the "Trust"), and
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ Capital Management Incorporated (the "Investment Adviser"), a
California corporation and an indirect wholly-owned subsidiary of ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇ Group, each confirms its agreement with and appointment of Prudential
Securities Incorporated ("Prudential") to act as dealer manager (the "Dealer
Manager") in connection with the issuance by the Trust, to the holders of record
(the "Holders") of shares of beneficial interest of the Trust (the "Shares"), of
non-transferable rights (each a "Right" and collectively, the "Rights")
entitling such Holders to subscribe for an aggregate of 2,115,336 Shares at the
rate of one Share for each three Rights held and, for Holders who have fully
exercised their Rights, an over-subscription privilege to subscribe for
additional Shares, subject to certain limitations and subject to allotment, for
any Shares not acquired by exercise of primary subscription Rights (the
"Offer"). Pursuant to the terms of the Offer, the Trust is issuing to each
Holder one Right for each Share held on the Record Date (as defined herein and
as set forth in the Prospectus). Such Rights entitle Holders to acquire during
the subscription period set forth in the Prospectus (the "Subscription Period"),
at the price set forth in the Prospectus (the "Subscription Price"), one Share
for each three Rights exercised on the terms and conditions set forth in the
Prospectus. Pursuant to the terms of the Offer, such Rights also entitle Holders
to acquire during the Subscription Period at the Subscription Price certain
additional Shares on the terms and conditions of the over-subscription privilege
as set forth in the Prospectus.
------------------------
* Pursuant to the over-subscription privilege in connection with the Offer,
the Trust may, at its discretion, increase the number of Shares subject to
subscription by up to 25%.
The Trust has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-19247) and a related
preliminary prospectus for the registration of the Shares under the Securities
Act of 1933 (the "1933 Act") and has filed such amendments to such registration
statement on Form N-2, if any, and such amended preliminary prospectuses as may
have been required to the date hereof. The Trust will prepare and file such
additional amendments thereto and such amended prospectuses as may hereafter be
required. The Trust previously filed a notification on Form N-8A of registration
of the Trust as an investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"), and the rules and regulations of the Commission
under the 1940 Act (together with the rules and regulations under the 1933 Act,
the "Rules and Regulations"). The registration statement, and the prospectus
constituting a part thereof, each as from time to time amended or supplemented
pursuant to the 1933 Act, are herein referred to as the "Registration Statement"
and the "Prospectus," respectively, except that if any revised prospectus shall
be provided to the Dealer Manager by the Trust for use in connection with the
Offer that differs from the Prospectus on file at the Commission at the time the
Registration Statement becomes effective (whether such revised prospectus is
required to be filed by the Trust pursuant to Rule 497(b) or Rule 497(h) of the
Rules and Regulations), the term "Prospectus" shall refer to each such revised
prospectus from and after the time it is first provided to the Dealer Manager
for such use. The Prospectus and letters to beneficial owners of the Shares,
forms used to exercise rights, any letters from the Trust to securities dealers,
commercial banks, trust companies and other nominees and any newspaper
announcements, press releases and other offering materials and information that
the Trust may use, approve, prepare or authorize for use in connection with the
Offer, are collectively referred to hereinafter as the "Offering Materials."
SECTION 1. Representations and Warranties.
(a) The Trust and the Investment Adviser each severally represents and
warrants to the Dealer Manager as of the date hereof and as of the date of the
commencement of the Offer (such later date being hereinafter referred to as the
"Representation Date") as follows:
(i) At the time the Registration Statement becomes effective and at
the Representation Date, the Registration Statement will comply in all
material respects with the requirements of the 1933 Act, the 1940 Act and
the Rules and Regulations and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. From
the time the Registration Statement becomes effective through the
expiration date of the Offer set forth in the Prospectus (the "Expiration
Date"), the Prospectus (unless the term "Prospectus" refers to a prospectus
that has been provided to the Dealer Manager by the Trust for use in
connection with the Offer but which differs from the Prospectus on file
with the Commission at the time the Registration Statement becomes
effective, in which case at the time such prospectus is first provided to
the Dealer Manager for such use) and the other Offering Materials will not
contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which
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they were made, not misleading; provided, however, that the representations
and warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Trust in writing
by the Dealer Manager expressly for use in the Registration Statement or
Prospectus.
(ii) The accountants who certified the financial statements included
in the Registration Statement, to the knowledge of the Trust and the
Investment Adviser, are independent public accountants as required by the
1933 Act, the 1940 Act and the Rules and Regulations.
(iii) The financial statements included in the Registration Statement
present fairly the financial position of the Trust as at the date indicated
and the results of its operations for the period specified; such financial
statements have been prepared in conformity with generally accepted
accounting principles; and the information in the Prospectus under the
heading "Financial Highlights and Investment Performance" sets forth the
composition of the investment portfolio of the Trust as of its date.
(iv) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change, or any development
involving a prospective material adverse change, in the condition
(financial or otherwise) or management of the Trust, or in the earnings,
business affairs or business prospects of the Trust, whether or not arising
in the ordinary course of business, (B) there have been no transactions
entered into by the Trust that are material to the Trust, other than those
in the ordinary course of business, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Trust on any class
of its capital stock.
(v) The Trust has been duly organized and is validly existing as a
business trust in good standing under the laws of the Commonwealth of
Massachusetts with trust power and authority to own, lease and operate its
properties and conduct its business as described in the Registration
Statement and the Prospectus; the Trust is duly qualified as a foreign
trust to transact business and is in good standing in each jurisdiction in
which the failure to so qualify, either individually or in the aggregate,
would have a material adverse effect upon the operations or financial
condition of the Trust, and the Trust has no subsidiaries.
(vi) The Trust is registered with the Commission under the 1940 Act as
a diversified, closed-end management investment company, and no order of
suspension or revocation of such registration has been issued or
proceedings therefor initiated or threatened by the Commission.
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(vii) The number of authorized, issued and outstanding shares of
beneficial interest of the Trust as of the date hereof is as set forth in
the Prospectus under the caption "Description of Trust"; the outstanding
Shares have been duly authorized by all requisite corporate action on the
part of the Trust and are validly issued and fully paid and non-assessable
by the Trust; the Rights and the Shares have been duly authorized by all
requisite corporate action on the part of the Trust for issuance pursuant
to the Offer; and, when issued and delivered by the Trust pursuant to the
terms of the Offer against payment of the consideration set forth in the
Prospectus, will be validly issued and fully paid and non-assessable by the
Trust; the Rights and the Shares conform in all material respects to the
descriptions thereof set forth in the Prospectus under the captions
"Description of Trust" and "The Offer"; and the issuance of each of the
Rights and the Shares is not subject to preemptive rights.
(viii) (A) The Trust is not in any material violation of its Amended
and Restated Agreement and Declaration of Trust (the "Declaration"), or as
supplemented by its by-laws (the "By-Laws") or in default in the
performance or observance of any material obligation, agreement, covenant
or condition contained in any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party or by
which it or its properties may be bound; (B)(i) the execution and delivery
of each of this Agreement, the Investment Advisory Agreement between the
Trust and the Investment Adviser (the "Advisory Agreement"), the Custodian
Contract between the Trust and State Street Bank and Trust Company and the
Subscription Rights Agency Agreement between the Trust and State Street
Bank and Trust Company and the consummation of the transactions
contemplated herein and therein have been duly authorized by all necessary
trustee action of the Trust and will not conflict with or constitute a
breach of, or, with or without giving notice or the lapse of time or both,
a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Trust pursuant to
any material contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Trust is a party or by which it may be bound
or to which any of the property or assets of the Trust is subject, nor will
such action result in any violation of the provisions of the Declaration or
By-laws or, to the best knowledge of the Trust and the Investment Adviser,
any law, administrative regulation or administrative or court decree
applicable to the Trust, and no consent, approval, authorization or order
of any court or governmental authority or agency is required for the
consummation by the Trust of the transactions contemplated by this
Agreement and the Subscription Rights Agency Agreement except such as has
been obtained under the 1940 Act or as may be required under the 1933 Act,
state securities or Blue Sky laws or foreign securities laws in connection
with the Offer, (ii) each complies with all applicable provisions of the
1940 Act, except that with respect to this Agreement, no representation is
made as to compliance with Section 17(i) of the 1940 Act, and (iii) each is
in full force and effect and constitutes a valid and binding obligation of
the Trust, enforceable in accordance with its terms, except that with
respect to this Agreement, no representation is made as to compliance with
Section 17(i) of the 1940 Act,
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and subject, as to enforcement, to bankruptcy, insolvency, reorganization,
or other similar laws relating to or affecting creditors' rights generally
and to general principles of equity.
(ix) The Trust owns or possesses or has obtained all material
governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to lease or own, as the case may be, and to
operate its properties and to carry on its businesses as contemplated in
the Prospectus, and the Trust has not received any notice of proceedings
relating to the revocation or modification of any such licenses, permits,
consents, orders, approvals or authorizations.
(x) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Trust or the Investment Adviser, threatened against or
affecting the Trust, which might result in any material adverse change in
the condition, financial or otherwise, business affairs or business
prospects of the Trust or materially and adversely affect the properties or
assets of the Trust; and there are no material contracts or documents of
the Trust that are required to be filed as exhibits to the Registration
Statement by the 1933 Act, the 1940 Act or the Rules and Regulations that
have not been so filed.
(xi) The Trust owns or possesses, or can acquire on reasonable terms,
adequate trademarks, service marks and trade names necessary to conduct its
business as described in the Registration Statement, and the Trust has not
received any notice of infringement of or conflict with asserted rights of
others with respect to any trademarks, service marks or trade names that,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially adversely affect the conduct of the
business, operations, financial condition or income of the Trust.
(xii) Since the date of its organization, the Trust has qualified as a
regulated investment company that is entitled to the benefits of Subchapter
M of the Internal Revenue Code of 1986, as amended ("Subchapter M of the
Code") and intends to continue so to qualify. In addition, the Trust
intends to direct the investment of the proceeds of the Offer in such a
manner as to comply with the requirements of Subchapter M of the Code.
(xiii) The Shares shall have been approved for listing, subject to
official notice of issuance, on the New York Stock Exchange by the
Expiration Date.
(xiv) The Trust has not, directly or indirectly, (i) taken any action
designed to cause or result in, or that has constituted or might reasonably
be expected to constitute, the stabilization or manipulation of the price
of any security of the Trust to facilitate the sale or resale of the Shares
or (ii) since the filing of the Registration Statement, (A) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases of, the
Shares or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase
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any other securities of the Trust (except for the solicitation of exercises
of Rights pursuant to this Agreement).
(b) The Investment Adviser represents and warrants to the Dealer Manager as
of the date hereof and as of the Representation Date as follows:
(i) The Investment Adviser has been duly organized as a corporation
under the laws of the State of California with corporate power and
authority to conduct its business as described in the Prospectus; the
Investment Adviser is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which the failure
to so qualify, either individually or in the aggregate, would have a
material adverse effect upon the operations or financial condition of the
Investment Adviser.
(ii) The Investment Adviser is duly registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and is not prohibited by the Advisers Act or the 1940 Act,
or the rules and regulations under such acts, from acting as Investment
Adviser to the Trust under the terms of the Advisory Agreement as
contemplated by the Prospectus.
(iii) The description of the Investment Adviser in the Prospectus is
true and correct in all material respects and does not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading; and there are no pending legal proceedings that would be
required to be described under Item 12 of Form N-2.
(iv) Each of this Agreement and the Advisory Agreement has been duly
authorized, executed and delivered by the Investment Adviser; each of this
Agreement and the Advisory Agreement is in full force and effect and
constitutes a valid and binding obligation of the Investment Adviser,
enforceable in accordance with its terms, except that no representation is
made as to compliance with Section 17(i) of the 1940 Act and subject, as to
enforcement, to bankruptcy, insolvency, reorganization or other similar
laws relating to or affecting creditors' rights generally and to general
principles of equity; and neither the execution and delivery of this
Agreement nor the performance by the Investment Adviser of its obligations
hereunder or under the Advisory Agreement will conflict with, or result in
a breach of, any of the terms and provisions of, or constitute, with or
without giving notice or lapse of time or both, a material default under
any agreement or instrument to which the Investment Adviser is a party or
by which the Investment Adviser is bound, or any law, order, rule or
regulation applicable to it of any jurisdiction, court, federal or state
regulatory body, administrative agency or other governmental body, stock
exchange or securities association having jurisdiction over the Investment
Adviser or its properties or operations.
(v) The Investment Adviser has the financial resources available to it
necessary for the performance of its services and obligations as
contemplated in the Prospectus.
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(vi) The Investment Adviser has not, directly or indirectly, (i) taken
any action designed to cause or result in, or that has constituted or
reasonably might be expected to constitute, the stabilization or
manipulation of the price of any security of the Trust to facilitate the
sale or resale of the Shares or (ii) since the filing of the Registration
Statement, (A) sold, bid for, purchased, or paid anyone any compensation
for soliciting purchases of the Shares or (B) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other
securities of the Trust (except for the solicitation of exercises of Rights
pursuant to this Agreement).
(vii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, there has been no material adverse change, or any development
involving a prospective material adverse change, in the condition
(financial or otherwise) or management of the Investment Adviser, or in the
earnings, business affairs or business prospects of the Investment Adviser,
whether or not arising in the ordinary course of business.
(viii) There is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Investment Adviser, threatened against or affecting
the Investment Adviser, which might result in any material adverse change
in the condition, financial or otherwise, business affairs or business
prospects of the Investment Adviser or materially and adversely affect the
properties or assets of the Investment Adviser; and there are no material
contracts or documents of the Investment Adviser that are required to be
disclosed in the Registration Statement by the 1933 Act, the 1940 Act or by
the Rules and Regulations that have not been so disclosed therein.
(c) Any certificate signed by any officer of the Trust or the Investment
Adviser and delivered to the Dealer Manager or counsel for the Dealer Manager
shall be deemed a representation and warranty by the Trust or the Investment
Adviser, as the case may be, to the Dealer Manager, as to the matters covered
thereby.
SECTION 2. Agreement to Act as Dealer Manager.
(a) On the basis of the representations and warranties contained herein,
and subject to the terms and conditions of this Agreement and the Offer:
(i) The Trust hereby appoints the Dealer Manager and other soliciting
dealers entering into a Soliciting Dealer Agreement with the Dealer Manager
(together, the "Soliciting Dealers") in the form attached hereto as Exhibit
A (the "Soliciting Dealer Agreement") to solicit, in accordance with the
1933 Act, the 1940 Act, the Securities Exchange Act of 1934 (the "Exchange
Act"), and the Conduct Rules of the National Association of Securities
Dealers, Inc. (the "NASD"), and their customary practice, the exercise of
the Rights, sub-
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ject to the terms and conditions of this Agreement and the procedures
described in the Registration Statement; and
(ii) The Trust agrees to furnish, or cause to be furnished, to the
Dealer Manager, lists, or copies of those lists, showing the names and
addresses of, and number of Shares held by, Holders as of the Record Date,
and the Dealer Manager agrees to use such information only in connection
with the Offer, and not to furnish the information to any other person
except for securities brokers and dealers that the Dealer Manager has
requested to solicit exercises of Rights and then subject to agreement to
use such information in connection with the offer.
(b) The Dealer Manager agrees to provide to the Trust, in addition to the
services described in paragraph (a) of this Section 2, financial, advisory and
marketing services in connection with the Offer.
(c) The Trust and the Dealer Manager agree that the Dealer Manager is an
independent contractor with respect to the solicitation of the exercise of
Rights and the performance of financial, advisory and marketing services to the
Trust contemplated by this Agreement.
(d) In rendering the services contemplated by this Agreement, the Dealer
Manager will be subject to any liability to the Trust and the Investment
Adviser, or to any of their respective affiliates, for any act or omission on
the part of any securities broker or dealer (except with respect to the Dealer
Manager acting in such capacity) or any other person, and the Dealer Manager
will be liable for any of its respective acts or omissions in performing any of
its respective obligations under this Agreement, except for any losses, claims,
damages, liabilities and expenses determined in a final judgment by a court of
competent jurisdiction to have resulted from the Dealer Manager's reckless
disregard of its obligations and duties under this Agreement or the Dealer
Manager's bad faith, gross negligence or willful misconduct in such acts or
omissions.
SECTION 3. The Dealer Manager Fee and Reallowance. In full payment for
services rendered and to be rendered hereunder by the Dealer Manager, the Trust
agrees to pay the Dealer Manager a fee for its financial advisory, marketing and
soliciting services equal to 3.50% of the aggregate Subscription Price for the
Shares issued pursuant to the Offer (the "Dealer Manager Fee"). The Dealer
Manager agrees with the Trust that the Dealer Manager will reallow a concession
of 2.25% of the Subscription Price per Share for each Share issued pursuant to
the Offer (a "Reallowance") to the broker-dealer designated on the Exercise Form
used by the Holder of such Share to exercise Rights, provided, however, that the
Dealer Manager will pay such Reallowance only if the designated broker-dealer
has executed a confirmation accepting the terms and conditions of, and subject
to the conditions and restrictions in, the Soliciting Dealer Agreement. Payment
to the Dealer Manager by the Trust will be by wire transfer of same day funds to
an account or accounts identified by the Dealer Manager. Such payment will be
made on the day after the final payment for Shares is due as set forth in the
Prospectus. Payment of the Reallowance to Soliciting Dealers that executed a
confirmation will be made by the Dealer Manager or its agent directly to such
Soliciting Dealers,
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as the case may be, by U.S. dollar checks drawn upon an account at a bank in New
York. Such payments to such Soliciting Dealers shall be made as soon as
practicable after payment of the Dealer Manager Fee is made to the Dealer
Manager.
In addition, the Trust has agreed to reimburse the Dealer Manager for its
out-of-pocket expenses incurred as provided in Section 5(b) hereof.
SECTION 4. Covenants of the Trust and the Dealer Manager. The Trust
covenants with the Dealer Manager as follows:
(a) The Trust will use its best efforts (i) to cause the Registration
Statement to become effective under the 1933 Act, and (ii) if required, to cause
the issuance of any orders exempting the Trust from any provisions of the 1940
Act and will advise the Dealer Manager promptly as to the time at which any such
orders are granted.
(b) The Trust will orally notify the Dealer Manager promptly, and confirm
the notice in writing, of the (i) effectiveness of the Registration Statement
and any amendment thereto (including any post-effective amendment), (ii) receipt
of any comments from the Commission, (iii) request by the Commission for any
amendment to the Registration Statement, any amendment or supplement to the
Prospectus or additional information, (iv) issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (v) issuance by the Commission
of an order of suspension or revocation of the notification on Form N-8A of
registration of the Trust as an investment company under the 1940 Act or the
initiation of any proceeding for that purpose and (vi) suspension of the
qualification of the Shares or the Rights for offering or sale in any
jurisdiction. The Trust will make every reasonable effort to prevent the
issuance of any stop order described in subsection (iv) hereunder or any order
of suspension or revocation described in subsection (v) or subsection (vi)
hereunder and, if any such stop order or order of suspension or revocation is
issued, to obtain the lifting thereof at the earliest possible moment.
(c) The Trust will give the Dealer Manager notice of its intention to file
any amendment to the Registration Statement (including any post-effective
amendment) or any amendment or supplement to the Prospectus (including any
revised prospectus that the Trust proposes for use by the Dealer Manager in
connection with the Offer, which differs from the prospectus on file at the
Commission at the time the Registration Statement becomes effective, whether
such revised prospectus is required to be filed pursuant to Rule 497(c) or Rule
497(h) of the Rules and Regulations), whether pursuant to the 1940 Act, the 1933
Act, or otherwise, and will furnish the Dealer Manager with copies of any such
amendment or supplement within a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file any such amendment
or supplement to which the Dealer Manager or counsel for the Dealer Manager
reasonably shall object.
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(d) The Trust will deliver to the Dealer Manager, as soon as practicable,
two copies of the Registration Statement as originally filed and of each
amendment thereto, in each case with two sets of the exhibits filed therewith.
(e) The Trust will furnish to the Dealer Manager, from time to time during
the period when the Prospectus is required to be delivered under the 1933 Act,
such number of copies of the Prospectus (as amended or supplemented) as the
Dealer Manager reasonably may request for the purposes contemplated by the 1933
Act or the Rules and Regulations.
(f) If any event shall occur as a result of which it is necessary, in the
reasonable opinion of counsel for the Dealer Manager, to amend or supplement the
Registration Statement or the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered to a Holder, the Trust will forthwith amend or supplement the
Prospectus by preparing and filing with the Commission (and furnishing to the
Dealer Manager a reasonable number of copies of) an amendment or amendments of
the Registration Statement or an amendment or amendments of, or a supplement or
supplements to, the Prospectus (in form and substance satisfactory to counsel
for the Dealer Manager) that will amend or supplement the Registration Statement
or the Prospectus so that the Prospectus will not contain an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time the
Prospectus is delivered to a Holder, not misleading.
(g) The Trust will endeavor, in cooperation with the Dealer Manager, to
qualify the Rights and the Shares for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States as
the Dealer Manager may designate, and will maintain such qualifications in
effect for as long as may be necessary to complete the distribution of the
Shares. The Trust will file such statements and reports as may be required by
the laws of each jurisdiction in which the Shares have been qualified as above
provided.
(h) The Trust will make generally available to its Holders as soon as
practicable, but no later than 60 days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions of Rule
158 of the Rules and Regulations) covering a twelve-month period beginning not
later than the first day of the Trust's fiscal quarter next following the
"effective" date (as defined in said Rule 158) of the Registration Statement.
(i) For a period of 180 days from the date of this Agreement, the Trust
will not, without your prior consent, offer or sell, or enter into any agreement
to sell, any equity or equity-related securities of the Trust other than the
Shares issued in reinvestment of dividends or distributions or the related
Dividend Reinvestment Plan (including distributions that give Holders the option
either to reinvest their distributions or receive such distributions in cash).
(j) The Trust will use its best efforts to maintain its qualification as a
regulated investment company entitled to the benefits of Subchapter M of the
Code.
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(k) The Trust will advise or cause the subscription agent for the Offer
(the "Subscription Agent") to advise the Dealer Manager and each Soliciting
Dealer from day to day during the period of, and promptly after the termination
of, the Offer, as to all names and addresses of Holders exercising Rights, the
total number of Rights exercised by each Holder during the immediately preceding
day, indicating the total number of Rights verified to be in proper form for
exercise, rejected for exercise and being processed and, for the Dealer Manager
and each Soliciting Dealer, the number of Rights exercised for Shares on
exercise forms indicating the Dealer Manager or such Soliciting Dealer as the
broker-dealer with respect to such exercise, and as to such other information as
the Dealer Manager may reasonably request. The Trust also will notify the Dealer
Manager and each Soliciting Dealer, not later than 5:00 P.M., New York City
time, on the first business day following the Expiration Date, of the total
number of Rights exercised and Shares related thereto, the total number of
Rights verified to be in proper form for exercise, rejected for exercise and
being processed and, for the Dealer Manager and each Soliciting Dealer, the
number of Rights exercised for Shares on exercise forms indicating the Dealer
Manager or such Soliciting Dealer as the broker-dealer with respect to such
exercise, and as to such other information as the Dealer Manager may reasonably
request.
(l) The Trust and the Investment Adviser will not, directly or indirectly,
(i) take any action designed to cause or result in, or that has constituted or
might reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Trust to facilitate the sale or resale of the
Shares or (ii) sell, bid for, purchase, or pay anyone any compensation for
soliciting purchases of the Shares or pay or agree to pay any person any
compensation for soliciting another to purchase any other securities of the
Trust (except for the sale of Shares under this Agreement)
(m) The Dealer Manager is and will remain during the period of the Offer
registered as a broker dealer under the Exchange Act and is and will remain
during the period of the Offer a member in good standing of the NASD.
SECTION 5. Payment of Expenses.
(a) The Trust will pay all expenses incident to the performance of its
obligations under this Agreement, including, but not limited to, expenses
relating to (i) the printing and filing of the registration statement as
originally filed and of each amendment thereto, (ii) the preparation, issuance
and delivery of the certificates for the Shares, (iii) the reasonable fees and
disbursements of the Trust's counsel and accountants, the Information Agent and
the Subscription Agent, (iv) the qualification of the Rights and the Shares
under securities laws in accordance with the provisions of Section 4(g) of this
Agreement, including filing fees and any reasonable fees or disbursements of
counsel for the Dealer Manager in connection therewith and in connection with
the preparation of the Blue Sky Survey, (v) the printing and delivery to the
Dealer Manager of copies of the registration statement as originally filed and
of each amendment thereto, of the preliminary prospectus, of the Prospectus and
any amendments or supplements thereto, of this Agreement and of the Soliciting
Dealer Agreement, (vi) the printing and delivery of copies of the Blue Sky
Survey,
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(vii) the fees and expenses incurred in connection with the listing of the
Shares on the New York Stock Exchange, (viii) the filing fees of the Commission
and the NASD, (ix) the printing, mailing and delivery expenses incurred in
connection with the Offering Materials and (x) the out-of-pocket expenses
incurred by the Officers of the Trust in connection with the Offer.
(b) In addition to any fees that may be payable to the Dealer Manager under
this Agreement, the Trust agrees to reimburse the Dealer Manager upon request
made from time to time for its reasonable expenses incurred in connection with
its activities under this Agreement, in an aggregate amount not to exceed
$150,000, including the fees and disbursements of its legal counsel.
(c) If this Agreement is terminated by the Dealer Manager in accordance
with the provisions of Section 6 or Section 9(a)(i) or 9(a)(ii), the Trust shall
reimburse the Dealer Manager for all of its reasonable out-of-pocket expenses,
including the fees and disbursements of counsel for The Dealer Manager. In the
event the transactions contemplated hereunder are not consummated, the Trust
agrees to pay all of the costs and expenses set forth in paragraphs (a) and (b)
of this Section 5 that the Trust would have paid if such transactions had been
consummated.
(d) The Investment Adviser agrees that, to the extent the Trust fails to
fulfill its obligations in paragraphs (b) and (c) of this Section 5, the
Investment Adviser will pay all the costs and expenses set forth in this Section
5. The Investment Adviser hereby abandons and waives any right that the
Investment Adviser may have at any time under any applicable laws, existing or
future, to require that recourse be made to the assets of the Trust before any
claim is enforced against the Investment Adviser in respect of the Investment
Adviser's obligations under this paragraph (d) of this Section 5. The Investment
Adviser agrees that if at any time the Investment Adviser is sued in respect of
its obligations under this paragraph (d) of this Section 5 and the Trust is not
also sued in respect of its obligations under this Section 5, the Investment
Adviser shall not claim that the Trust be made a party to such proceedings
against the Investment Adviser.
SECTION 6. Conditions of Dealer Manager's Obligations. The obligations of
the Dealer Manager hereunder are subject to the accuracy of the respective
representations and warranties of each of the Trust and the Investment Adviser,
herein contained, to the performance by each of them of each of their respective
obligations hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective not later than
5:30 P.M., New York City time, on the date of this Agreement, or at a later time
and date not later, however, than 5:30 P.M. on the first business day following
the date hereof, or at such later time and date as may be approved by the Dealer
Manager, and, at the commencement of the Offer, no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission.
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(b) On the date of this Agreement, the Dealer Manager shall have received:
(1) The favorable opinion, dated as of the date of this Agreement, of
Dechert Price & ▇▇▇▇▇▇, general counsel for the Trust, in form and substance
satisfactory to counsel for the Dealer Manager, which opinion may rely, in part,
as to matters of California law, upon an opinion from other counsel to the Trust
or the Investment Adviser subject to the approval of such counsel by the Dealer
Manager, to the effect that:
(i) The Trust has been duly established and is validly existing as a
business trust in good standing under the laws of the Commonwealth of
Massachusetts, and the Investment Adviser has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
State of Massachusetts.
(ii) Each of the Trust and the Investment Adviser has the trust and
corporate power and authority, respectively, to own, lease and operate its
respective properties and conduct its respective business as described in
the Registration Statement and the Prospectus.
(iii) Each of the Trust and the Investment Adviser is duly qualified
as a foreign trust and corporation, respectively, to transact business and
is in good standing in the jurisdiction of its principal place of business.
(iv) The Trust has an authorized, issued and outstanding
capitalization as set forth in the Prospectus. All of the outstanding
Shares have been duly authorized by requisite corporate action on the part
of the Trust and validly issued, are fully paid and non-assessable by the
Trust and conform to the description thereof in the Prospectus.
(v) The Rights and the Shares have been duly authorized for issuance
pursuant to the Offer; the Shares have been duly authorized for sale
pursuant to the Offer and, when the Shares are issued and delivered by the
Trust pursuant to the Offer against payment of the consideration set forth
in the Prospectus, the Shares will be validly issued and fully paid and
non-assessable by the Trust; the issuance of the Rights and the Shares is
not subject to any preemptive or other rights to subscribe for any of the
Shares under any indenture, mortgage, deed of trust, lease or other
agreement or instrument to which the Trust is a party or by which the Trust
or any of its properties are bound, or under the Declaration or By-Laws of
the Trust, or under Massachusetts General Laws; the statements set forth in
the Prospectus under the headings "Description of the Trust" and "The Offer
-- Employee Plan Considerations", insofar as such statements constitute a
summary of legal matters or documents referred to therein, are accurate and
provide a fair summary of such legal matters or documents.
(vi) This Agreement has been duly authorized, executed and delivered
by the Trust and the Investment Adviser, complies with all applicable
provisions of the 1940 Act, the Advisers Act and the rules and regulations
under such acts and constitutes a valid
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and binding agreement of the Trust and the Investment Adviser, enforceable
in accordance with its terms (except that with respect to this Agreement,
no representation is made as to compliance with Section 17(i) of the 1940
Act), subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
(vii) The Advisory Agreement has been duly authorized, executed and
delivered by the Trust and the Investment Adviser, complies as to form in
all material respects with all applicable provisions of the 1940 Act, the
Advisers Act and the rules and regulations under such acts and constitutes
the valid and binding obligation of each of the Trust and the Investment
Adviser, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles.
(viii) Each of the Subscription Rights Agency Agreement and the
Custodial Agreement has been duly authorized, executed and delivered by the
Trust and complies as to form in all material respects with all applicable
provisions of the 1940 Act and the rules and regulations thereunder, and
each constitutes the valid and binding obligation of the Trust, enforceable
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
(ix) The Registration Statement is effective under the 1933 Act and,
to the best of such counsel's knowledge and information, no stop order
suspending the effectiveness of the Registration Statement has been issued
under the 1933 Act and no proceedings therefor have been initiated or
threatened by the Commission.
(x) The Registration Statement and the Prospectus (other than the
financial statements and other financial information included therein, as
to which no opinion need be rendered) comply as to form in all material
respects with the requirements of the 1933 Act and the 1940 Act and the
Rules and Regulations.
(xi) To the best of such counsel's knowledge and information, there
are no legal or governmental proceedings pending or threatened against the
Trust or the Investment Adviser that are required to be disclosed in the
Registration Statement and the Prospectus, other than those disclosed
therein.
(xii) To the best of such counsel's knowledge and information, there
are no contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments of the Trust or the Investment Adviser that are required
to be described or referred to in the Registration Statement or to be filed
as exhibits thereto other than those respectively described or referred to
therein or filed as exhibits thereto, the descriptions thereof and
references thereto are correct in all material respects, and no default
exists in the due performance or
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observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, loan agreement, note or lease so
described, referred to or filed.
(xiii) No consent, approval, authorization or order of any court or
governmental authority or agency is required in connection with the sale of
the Shares pursuant to the Offer, except such as has been obtained under
the 1933 Act, the 1940 Act or the Rules and Regulations or such as may be
required under state securities laws; and to the best of such counsel's
knowledge and information, the execution, delivery and performance of, and
the consummation of the transactions contemplated by, (x) this Agreement by
the Trust and the Investment Adviser, (y) the Advisory Agreement by the
Trust and the Investment Adviser or (z) the Custodial Agreement by the
Trust, will not conflict with, or constitute or result in a breach or
violation by the Trust or the Investment Adviser of or a default under, any
of the terms or provisions of, (i) any contract, indenture, mortgage, loan
agreement, note, lease or other instrument known to such counsel to which
the Trust or the Investment Adviser is a party or by which any of them is
bound or to which any of their property or assets are subject, (ii) the
provisions of the Declaration or By-Laws of the Trust and the charter and
by-laws of the Investment Adviser or (iii) any statute or any order, rule
or regulation known to such counsel of any court or governmental agency or
body applicable to the Trust or the Investment Adviser or any of their
properties.
(xiv) The Trust is registered with the Commission under the 1940 Act
as a closed-end diversified management investment company, and all required
action has been taken by the Trust under the 1933 Act, the 1940 Act and the
Rules and Regulations to make and consummate the Offer; the provisions of
the Declaration and By-Laws of the Trust comply in all material respects
with the requirements of the 1940 Act and the rules and regulations
thereunder; and, to the best of such counsel's knowledge and information,
no order of suspension or revocation of such registration under the 1940
Act, pursuant to Section 8(e) of the 1940 Act, has been issued or
proceedings there for initiated or threatened by the Commission.
(xv) The information in the Prospectus under the captions "The Offer
-Certain Federal Income Tax Consequences of the Offer" and "Taxation", to
the extent that it constitutes matters of law or legal conclusions
thereunder, has been reviewed by such counsel and is accurate and correct
in all material respects.
(2) The opinion, dated as of the date of this Agreement, of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, Esq., counsel to the Investment Adviser, in form and substance
satisfactory to counsel for the Dealer Manager, to the effect that:
(i) The Investment Adviser is duly registered as an investment adviser
under the Advisers Act and is not prohibited by the Advisers Act or the
1940 Act, or the rules and regulations under such acts, from acting under
the Advisory Agreement for the Trust as contemplated by the Registration
Statement and the Prospectus.
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(3) In giving their opinions required by subsection (b)(1) and (2) of this
Section, Dechert Price & ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall additionally state
that nothing has come to such counsel's attention that would lead them to
believe that the Registration Statement (other than the financial statements and
other financial information included therein, as to which no belief need be
stated), at the date of this Agreement, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus (other than the financial statements and other financial information
included therein, as to which no belief need be stated), at the date of this
Agreement, included an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(4) The favorable opinion, dated as of the date of this Agreement, of
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the Dealer Manager, with respect to the
issuance and sale of the Shares, and such other related matters as the Dealer
Manager may reasonably require.
(c) At the date of this Agreement, (i) the Registration Statement and the
Prospectus shall contain all statements that are required to be stated therein
in accordance with the 1933 Act, the 1940 Act and the Rules and Regulations and
in all material respects shall conform to the requirements of the 1933 Act, the
1940 Act and the Rules and Regulations and the Registration Statement and the
Prospectus shall not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and no action,
suit or proceeding at law or in equity shall be pending or, to the knowledge of
the Trust or the Investment Adviser, threatened against the Trust or the
Investment Adviser, that would be required to be set forth in the Registration
Statement and the Prospectus other than as set forth therein, (ii) there shall
not have been, since the respective dates as of which information is given in
the Registration Statement and the Prospectus, any material adverse change in
the condition, financial or otherwise, of the Trust or in its earnings, business
affairs or business prospects, whether or not arising in the ordinary course of
business, from that set forth in the Registration Statement and Prospectus,
(iii) the Investment Adviser shall have the financial resources available to it
necessary for the performance of its services and obligations as contemplated in
the Registration Statement and the Prospectus and (iv) no proceedings shall be
pending or, to the knowledge of the Trust or the Investment Adviser, threatened
against the Trust or the Investment Adviser, before or by any federal, state or
other commission, board or administrative agency wherein an unfavorable
decision, ruling or finding would materially and adversely affect the business,
property, financial condition or income of either the Trust or the Investment
Adviser, other than as set forth in the Registration Statement and the
Prospectus; and the Dealer Manager shall have received, at the commencement date
of the Offer, a certificate of the President or Treasurer of each of the Trust
and the Investment Adviser, dated as of such date, confirming the respective
representations and warranties contained in Section 1 of this Agreement and
evidencing, to the best of his or her respective knowledge and belief, after
reasonable investigation, compliance with the appropriate provisions of this
subsection (c).
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(d) At the time of execution of this Agreement, the Dealer Manager shall
have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, a letter dated such date in form and
substance satisfactory to the Dealer Manager, to the effect that:
(i) They are independent public accountants with respect to the Trust
within the meaning of the 1933 Act, the 1940 Act and the Rules and
Regulations;
(ii) In their opinion, the audited financial statements examined by
them and included in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the 1933
Act and the 1940 Act and the Rules and Regulations;
(iii) They have performed specified procedures, not constituting an
audit, including a reading of the latest available interim financial
statements of the Trust, a reading of the minute books of the Trust,
inquiries of officials of the Trust responsible for financial accounting
matters and such other inquiries and procedures as may be specified in such
letter, and on the basis of such inquiries and procedures nothing came to
their attention that caused them to believe that (A) the unaudited
financial statements as of December 31, 1996 included in the Registration
Statement do not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations applicable to unaudited interim financial statements included
in registration statements or are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that
of the audited financial statements included in the Registration Statement
and (B) at the date of the latest available financial statements read by
such accountants, or at a subsequent specified date not more than three
days prior to the date of this Agreement, there was any change in the
capital stock or net assets of the Trust as compared with amounts shown on
the statement of net assets included in the Prospectus; and
(iv) In addition to the procedures referred to in clause (iii) above,
they have performed other specified procedures, not constituting an audit,
with respect to certain amounts, percentages, numerical data, financial
information and financial statements appearing in the Registration
Statement, which have previously been specified by you and which shall be
specified in such letter, and have compared certain of such items with, and
have found such items to be in agreement with, the accounting and financial
records of the Trust.
(e) On (i) the date of this Agreement and (ii) the day immediately
preceding the commencement of the Offer, the Trust, the Investment Adviser, and
any other party affiliated to the Investment Adviser that the Trust and the
Dealer Manager may agree to include, shall have furnished to the Dealer Manager
such further information, certificates and documents, dated as of the date of
this Agreement, as the Dealer Manager reasonably may request to evidence the
fulfillment of any of the agreements contained in Section 7 hereof.
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(f) On (i) the date of this Agreement and (ii) the day immediately
preceding the commencement date of the Offer, the Trust, the Investment Adviser
and Dechert Price & ▇▇▇▇▇▇ shall have furnished to the Dealer Manager such
information, certificates, documents and opinions, dated as of, respectively,
(i) the date of this Agreement and (ii) the day immediately preceding the
commencement date of the Offer, as the Dealer Manager reasonably may require for
the purpose of enabling counsel for the Dealer Manager to pass upon the issuance
of the Rights and the Shares and the sale of the Shares as contemplated herein
and in the Registration Statement and the Prospectus and to pass upon related
proceedings, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Trust and the Investment Adviser in connection
with the issuance of the Rights and the Shares and sale of the Shares as
contemplated herein and in the Registration Statement shall be satisfactory in
form and substance to the Dealer Manager and counsel for the Dealer Manager.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Dealer Manager by notice to the Trust at any time at or prior to the termination
of the Offer, and such termination shall be without liability of any party to
any other party except as provided in Section 5.
SECTION 7. Indemnification and Contribution.
(a) Each of the Trust and the Investment Adviser (together, the
"Indemnifying Parties") jointly and severally, agree to indemnify and hold
harmless the Dealer Manager and each of their affiliates, directors, officers,
employees, agents and controlling persons (the Dealer Manager and each of such
persons being an "Indemnified Party") as follows:
(i) from and against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, joint or several, to which such
Indemnified Party may become subject under any applicable federal or state
law, or otherwise, and related to or arising out of (A) an untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto) and the Prospectus or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, (B) an untrue statement or alleged untrue statement of a
material fact contained in the Offering Materials (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, (C) any breach by any of the Indemnifying Parties of
any of their respective representations, warranties and agreements
contained in this Agreement or in any certificate or document furnished
pursuant to Section 6(c), 6(e) and 6(f) hereof, (D) the Trust's failure to
make the Offer, or its withdrawal, termination or extension of the Offer or
any other failure on its part to comply with the terms and conditions
specified in the Registration Statement or the Offering Materials, or (E)
the Offer, the engagement of the Dealer Manager pursuant to, and the
performance by the Dealer Manager of the services contemplated by, this
Agreement;
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(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon the occurrence of any matter described in clause (i)
above, if such settlement is effected with the written consent of any of
the Indemnifying Parties; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Dealer Manager),
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon the
occurrence of any matter described in clause (i) above, whether or not such
Indemnified Party is a party and whether or not such claim, action or
proceeding is initiated or brought by or on behalf of any of the
Indemnifying Parties, to the extent that any such expense is not paid under
clause (i) or (ii) above.
This indemnity agreement will be in addition to any liability that any of the
Indemnifying Parties may otherwise have.
The Indemnifying Parties shall not, however, be liable to an Indemnified
Party for any loss, liability, claim, settlement, damage or expense under (A)
clauses(i)(A) and (B) of this subsection 7(a) to the extent arising out of an
untrue statement or omission or alleged untrue statement or omission made in the
Registration Statement or the Offering Materials in reliance upon and in
conformity with written information furnished to the Trust by or on behalf of
the Dealer Manager expressly for use in the Registration Statement (or any
amendment thereto) or any Offering Materials (or any amendment or supplement
thereto) and (B) clause (i)(E) of this subsection 7(a) that is found in a final
judgment by a court of competent jurisdiction to have resulted from the bad
faith, willful misconduct or gross negligence of the Dealer Manager or the
reckless disregard by the Dealer Manager of its obligations and duties
hereunder.
Each of the Indemnifying Parties also agrees that no Indemnified Party
shall have any liability (whether direct or indirect, in contract or tort or
otherwise) to any of the Indemnifying Parties or their respective security
holders or creditors related to or arising out of the Offer or the engagement of
the Dealer Manager pursuant to, or the performance by the Dealer Manager of the
services contemplated by, this Agreement except to the extent that any loss,
▇▇▇▇▇▇▇▇▇, claim, damage or expense is found in a final judgment by a court of
competent jurisdiction to have resulted from the bad faith, willful misconduct
or gross negligence of such Indemnified Party or the reckless disregard by the
Indemnified Party of its obligations and duties under the Dealer Manager
Agreement.
Each of the Indemnifying Parties agrees that, without the Dealer Manager's
prior written consent, it will not settle, compromise or consent to the entry of
any judgment in any pending or threatened claim, action or proceeding in respect
of which indemnification could be sought under
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the indemnification provisions of this Section 7 (whether or not the Dealer
Manager or any other Indemnified Party is an actual or potential party to such
claim, action or proceeding), unless such settlement, compromise or consent
includes an unconditional release of each Indemnified Party from all liability
arising out of such claim, action or proceeding.
(b) In circumstances in which the indemnity agreement provided for in the
preceding paragraphs of this Section 7 is unavailable or insufficient, for any
reason, to hold harmless an indemnified party in respect of any losses, claims,
damages or liabilities (or actions in respect thereof), each Indemnifying Party,
in order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect (i) the relative benefits received by
the indemnifying party or parties on the one hand and the indemnified party on
the other from the Offer or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the one hand
and the indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Indemnifying Parties on the one hand and the Dealer Manager on the other shall
be deemed to be in the same proportion as the total proceeds from the Offer
(before deducting expenses) received by the Trust bear to the total compensation
received by the Dealer Manager. The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Trust or the Dealer
Manager, the parties' relative intents, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances. The Indemnifying
Parties and the Dealer Manager agree that it would not be equitable if the
amount of such contribution were determined by pro rata or per capita allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to above in this paragraph (b).
Notwithstanding any other provision of this paragraph (b), the Dealer Manager
shall be obligated to make contributions hereunder that in the aggregate exceed
the respective amount of the compensation paid to it under this Agreement, less
the aggregate amount of any damages that it has otherwise been required to pay
in respect of the same or any substantially similar claim and the aggregate
amount of any Reallowance paid by the Dealer Manager to the Soliciting Dealers,
and no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of this
paragraph (b), each person, if any, who controls any of the Indemnifying Parties
or the Dealer Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Indemnifying Parties or the Dealer Manager, as the case may be.
(c) In the event that an Indemnified Party is requested or required to
appear as a witness in any action brought by or on behalf of or against the
Trust in which such Indemnified Party is not named as a defendant, each of the
Indemnifying Parties, jointly and severally, agrees to
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reimburse the Dealer Manager for all reasonable expenses incurred by it in
connection with such Indemnified Party's appearing and preparing to appear as a
witness, including, without limitation, the reasonable fees and disbursements of
its legal counsel, and to compensate the Dealer Manager in an amount to be
mutually agreed upon.
(d) Each of the Indemnifying Parties agrees to notify the Dealer Manager
promptly of the assertion against any of them or any other person of any claim
or the commencement of any action or proceeding relating to a transaction
contemplated by this Agreement. Promptly after receipt by an Indemnified Party
of written notice of any claim or commencement of any action or proceeding with
respect to which indemnification is being sought hereunder, such Indemnified
Party will notify the Trust and the Investment Adviser in writing of such claim
or of the commencement of such action or proceeding, but failure so to notify
the Trust will not relieve any of the Indemnifying Parties from any liability
that they may have to such Indemnified Party under this indemnification
agreement except to the extent that any of the Indemnifying Parties are
materially prejudiced by such failure, and will not relieve any of the
Indemnifying Parties from any other liability that they may have to such
Indemnified Party.
(e) Each of the Indemnifying Parties, jointly and severally, agrees to
indemnify each Soliciting Dealer and its affiliates and their respective
directors, officers, employees, agents and controlling persons to the same
extent and subject to the same conditions and to the same agreements, including
with respect to contribution, provided for in subsections (a), (b) and (c) of
this Section 7. This indemnity agreement will be in addition to any liability
that any of the Indemnifying Parties may otherwise have.
SECTION 8. Representations. Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement, or
contained in certificates of officers of the Trust or the Investment Adviser
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the Dealer Manager or
any controlling person, or by or on behalf of the Trust or the Investment
Adviser and shall survive delivery of the Shares pursuant to the Offer.
SECTION 9. Termination of Agreement.
(a) This Agreement may be terminated in the sole discretion of the Dealer
Manager by notice to the Trust given at or prior to the termination of the Offer
in the event that the Trust and the Investment Adviser shall have failed,
refused or been unable to perform all material obligations and satisfy all
material conditions on its part to be performed or satisfied hereunder at or
prior thereto or, if at or prior to the termination of the Offer,
(i) the Trust or the Investment Adviser shall have sustained any
material loss or interference with its business or properties from fire,
accident or other calamity, whether or not covered by insurance, or from
any labor dispute or any legal or governmental proceeding or there shall
have been any material adverse change or any development involv-
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ing a prospective material adverse change (including without limitation a
change in management or control of the Trust or the Investment Adviser, as
the case may be), in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Trust or the
Investment Adviser except in each case as described in or contemplated by
the Registration Statement and the Prospectus (exclusive of any amendment
or supplement thereto) and except for changes in the Trust's net asset
value due to its normal investment operations,
(ii) trading in the Shares shall have been suspended by the Commission
or the New York Stock Exchange,
(iii) there has occurred any material adverse change in the existing
political or economic conditions or in the financial markets in the United
States or elsewhere or any outbreak of hostilities or other calamity or
crisis or any escalation of existing hostilities the effect of which is
such as to make it, in the Dealer Manager's judgment, impracticable to
market the Shares or enforce contracts for the sale of the Shares, or
(iv) trading generally on the New York Stock Exchange or the National
Association of Securities Dealers Automated Quotations System shall have
been suspended, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices for securities have been required, by any of
said exchanges or by order of the Commission or any other governmental
authority, or if a banking moratorium shall have been declared by United
States or New York authorities.
(b) This Agreement may be terminated in the sole discretion of the Trust or
the Investment Adviser by notice to the Dealer Manager given at or prior to the
termination of the Offer in the event that the Dealer Manager shall have failed,
refused or been unable to perform all material obligations and satisfy all
material considerations on its part to be performed or satisfied hereunder at or
prior thereto.
(c) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 5.
SECTION 10. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of written telecommunications. Notices to the
Dealer Manager shall be directed to Prudential Securities Incorporated -
Investment Banking, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; notices
to the Trust and the Investment Adviser shall be sent to each of them at ▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇.
SECTION 11. Parties. This Agreement shall inure to the benefit of and be
binding upon the Dealer Manager, the Trust and the Investment Adviser and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the parties hereto and their respective successors and the controlling
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persons and officers and directors referred to in Section 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties hereto and thereto and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation.
As required by the Trust's Declaration, a copy of the Trust's Declaration
is on file with the Secretary of the Commonwealth of Massachusetts, and notice
is hereby given that this Agreement has been executed on behalf of the Trust by
officers and/or trustees of the Trust in their capacity as such and not
individually. The obligations of this Agreement shall be binding upon the assets
and property of the Trust and shall not be binding upon any trustee, officer or
shareholder of the Trust individually.
SECTION 12. Governing Law and Time. This Agreement shall be governed by the
laws of the Commonwealth of Massachusetts applicable to agreements made and to
be performed in said State. Specified times of day refer to New York City time.
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If the foregoing is in accordance with your understanding of our Agreement,
please sign and return to us a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a single binding agreement among the
Dealer Manager, the Trust and the Investment Adviser in accordance with its
terms.
Very truly yours,
H&Q HEALTHCARE INVESTORS
By:
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Name:
--------------------------
Title:
-------------------------
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ CAPITAL
MANAGEMENT
INCORPORATED
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
Confirmed and Accepted, as of the
date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By:
----------------------------------
Name:
Title:
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