____________ Shares(1)
RMR Hospitality and Real Estate Fund
Common Shares of Beneficial Interest
($0.001 Par Value)
EQUITY UNDERWRITING AGREEMENT
____________, 2004
RBC Capital Markets Corporation
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
As the Representatives of the several
underwriters named in Schedule I hereto
▇/▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
RMR Hospitality and Real Estate Fund, a Massachusetts business trust (the
"Company"), proposes to sell to the several underwriters (the "Underwriters")
named in SCHEDULE I hereto for whom you are acting as Representatives (the
"Representatives") an aggregate of _______ shares of the Company's Common Shares
of Beneficial Interest ("Common Shares"), $0.001 par value (the "Firm Shares").
The respective amounts of the Firm Shares to be so purchased by the several
Underwriters are set forth opposite their names in SCHEDULE I hereto. The
Company also proposes to sell at the Underwriters' option an aggregate of up to
______ additional shares of the Company's Common Shares (the "Option Shares") as
set forth below.
As the Representatives, you have advised the Company (a) that you are
authorized to enter into this Agreement on behalf of the several Underwriters,
and (b) that the several Underwriters are willing, acting severally and not
jointly, to purchase the numbers of Firm Shares set forth opposite their
respective names in SCHEDULE I, plus their pro rata portion of the Option Shares
if RBC Capital Markets Corporation elects to exercise the over-allotment option
in whole or in part for the accounts of the several Underwriters. The Firm
Shares and the Option Shares (to the extent the aforementioned option is
exercised) are herein collectively called the "Shares."
The Company and the Company's investment advisor, RMR Advisors, Inc., a
Massachusetts corporation (the "Advisor") wish to confirm their agreement
concerning the purchase of the Shares from the Company. The Company has entered
into an Investment Advisory Agreement with the Advisor dated _____________, 2004
(the "Advisory Agreement"), an Administration Agreement dated __________, 2004
with the Advisor (the "Administration Agreement"),
-----------------------------
(1) Plus an option to purchase up to __________ additional shares to cover
over-allotments.
a custody agreement with State Street Bank and Trust Company dated ____________,
2004 (the "Custody Agreement"), and a Transfer Agency Agreement with EquiServe
Trust Company, N.A. dated ___________, 2004 (the "Transfer Agency Agreement").
The Advisor has entered into a sub-administration agreement with State Street
Bank and Trust Company dated _____________, 2004 (the "Sub-administration
Agreement"). Collectively, the Advisory Agreement, the Administration Agreement,
the Custody Agreement, the Transfer Agency Agreement and the Sub-administration
Agreement are referred to herein as the "Company Agreements." The Lead Managing
Underwriters Additional Compensation Agreement dated _________, 2004 by and
among the Advisor, RBC Capital Markets Corporation and ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated (the "Additional Compensation Agreement"), each of
the Company Agreements to which the Advisor is a party and this Agreement are
collectively referred to herein as the "Advisor Agreements."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Underwriters as follows:
(a) A registration statement on Form N-2 (File No. 333-112389) with
respect to the Shares has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "1933 Act"), the
Investment Company Act of 1940, as amended (the "1940 Act", and collectively
with the 1933 Act, the "Acts"), and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
promulgated under the 1933 Act and the 1940 Act and has been filed with the
Commission. Copies of such registration statement, including any amendments
thereto, the preliminary prospectuses (meeting the requirements of the Rules and
Regulations) contained therein and the exhibits, financial statements and
schedules, as finally amended and revised, have heretofore been delivered by the
Company to you. Such registration statement, as amended from time to time,
together with any registration statement filed by the Company pursuant to Rule
462(b) of the 1933 Act, is herein referred to as the "Registration Statement,"
which shall be deemed to include all information omitted therefrom in reliance
upon Rule 430A of the Rules and Regulations under the 1933 Act and contained in
the Prospectus referred to below, has become effective under the Acts and no
post-effective amendment to the Registration Statement has been filed as of the
date of this Agreement. "Prospectus" means the form of prospectus first filed
with the Commission pursuant to Rule 497(h) of the Rules and Regulations under
the 1933 Act. Each preliminary prospectus or statement of additional information
included in the Registration Statement prior to the time it becomes effective or
any Omitting Prospectus is herein referred to as a "Preliminary Prospectus."
"Omitting Prospectus" means any advertisement or sales material authorized by
the Company for use in the public offering of the Shares pursuant to Rule 482 of
the Rules and Regulations under the ▇▇▇▇ ▇▇▇.
(b) A notification of registration of the Company as an investment
company under the 1940 Act on Form N-8A (the "1940 Act Notification") has been
prepared by the Company in conformity with the 1940 Act and has been filed with
the Commission.
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(c) The Commission has not issued an order preventing or suspending
the use of any Prospectus relating to the proposed offering of the Shares nor
instituted proceedings for that purpose. The Registration Statement contains,
and the Prospectus and any amendments or supplements thereto will contain, all
statements which are required to be stated therein by, and will conform to, the
requirements of the Acts and the Rules and Regulations. The Registration
Statement and any amendment thereto do not contain, and will not contain, any
untrue statement of a material fact and do not omit, and will not omit, to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus and any amendments and
supplements thereto do not contain, and will not contain, any untrue statement
of material fact; and do not omit, and will not omit, to state any 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;
provided, however, that the Company makes no representations or warranties as to
information contained in or omitted from the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of
any Underwriter through the Representatives, specifically for use in the
preparation thereof. The 1940 Act Notification complied in all material respects
with the requirements of the 1940 Act and the Rules and Regulations thereunder
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading. There are no contracts or documents that are required to
be filed as exhibits to the Registration Statement or described in the
Registration Statement or the Prospectus which are not so filed or described as
required, and such contracts and documents as are summarized in the Registration
Statement or the Prospectus are fairly summarized in all material respects.
(d) This Agreement and each of the Company Agreements (to which the
Company is a party) has been duly authorized, executed and delivered by the
Company, and constitute a valid, legal, and binding obligation of the Company,
enforceable in accordance with its terms, except as rights to indemnity
hereunder may be limited by federal or state securities laws and except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally, and subject to general
principles of equity. The Company has full power and authority to enter into
this Agreement and each of the Company Agreements (to which the Company is a
party) and to authorize, issue and sell the Shares as contemplated by this
Agreement.
(e) The Company has been duly formed and is validly existing under the
laws of The Commonwealth of Massachusetts as a trust with transferable shares of
the type commonly called a Massachusetts business trust. The Declaration of
Trust of the Company, as amended (the "Declaration of Trust"), pursuant to which
the Company was established, confers upon the Trustees named therein, and their
successors in trust, power and authority to own or lease its properties and
conduct its business as described in the Registration Statement. The Company has
no direct or indirect subsidiaries. The Company is duly qualified to transact
business and is in good standing in all jurisdictions in which the conduct of
its business requires such qualification; except where the failure to be so
qualified or to be in good standing would not have a material adverse effect on
the condition (financial or otherwise), properties, assets, liabilities, rights,
operations, earnings, business, management or prospects of the Company,
3
whether or not arising from transactions in the ordinary course of business (a
"Material Adverse Effect").
(f) The outstanding Common Shares of the Company have been duly
authorized and validly issued and are fully paid and non-assessable (except as
described in the Registration Statement); the Shares to be issued and sold by
the Company have been duly authorized and when issued and paid for as
contemplated herein will be validly issued, fully paid and non-assessable
(except as described in the Registration Statement); and no preemptive rights of
Shareholders exist with respect to any of the Shares or the issue and sale
thereof. Neither the filing of the Registration Statement nor the offering or
sale of the Shares as contemplated by this Agreement gives rise to any rights,
other than those which have been waived or satisfied, for or relating to the
registration of any Common Shares.
(g) The Company has an authorized capital as set forth in the
Registration Statement and Prospectus. All of the Shares conform to the
description thereof contained in the Registration Statement. The form of
certificates, if any, for the Shares conforms to the corporate law of the
jurisdiction of the Company's organization. Immediately after the issuance and
sale of the Shares to the Underwriters, no preferred shares of the Company shall
be issued and outstanding and no holder of any shares of capital stock,
securities convertible into or exchangeable or exercisable for capital stock or
options, warrants or other rights to purchase capital stock or any other
securities of the Company shall have any existing or future right to acquire any
preferred shares of the Company. No holders of securities of the Company have
rights to the registration of such securities under the Registration Statement
that have not been waived.
(h) The Company has not distributed and will not distribute any
prospectus or other offering material (including, without limitation, content on
the Company's website that may be deemed to be a prospectus or other offering
material) in connection with the offering and sale of the Shares other than any
Preliminary Prospectus or the Prospectus or other materials permitted by the
Acts to be distributed by the Company.
(i) The financial statements of the Company, together with related
notes and schedules as set forth or incorporated by reference in the
Registration Statement, present fairly the financial position and the results of
operations and cash flows of the Company, at the indicated dates and for the
indicated periods. Such financial statements and related schedules have been
prepared in accordance with U.S. generally accepted accounting principles,
consistently applied throughout the periods involved, except as disclosed
therein, and all adjustments necessary for a fair presentation of results for
such periods have been made. The summary financial and statistical data included
or incorporated by reference in the Registration Statement presents fairly the
information shown therein and such data has been compiled on a basis consistent
with the financial statements presented therein and the books and records of the
Company.
(j) The Company maintains, or causes its custodian, State Street Bank
and Trust Company, to maintain, a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation
4
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(k) Ernst & Young, LLP which has certified certain financial
statements of the Company and delivered its opinion with respect to the audited
financial statements and schedules included in the Registration Statement and
the Prospectus, are independent public accountants with respect to the Company
within the meaning of the Acts and the Rules and Regulations.
(l) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company before any court or
administrative agency or otherwise which if determined adversely to the Company
might have a Material Adverse Effect or prevent the consummation of the
transactions contemplated hereby, except as set forth in the Registration
Statement and the Prospectus.
(m) The Company has good and marketable title to all of the assets
reflected in the financial statements (or as described in the Registration
Statement) hereinabove described, subject to no lien, mortgage, pledge, charge
or encumbrance of any kind except those reflected in such financial statements
(or as described in the Registration Statement) or which are not material in
amount.
(n) The Company has filed all federal, state, local and foreign tax
returns which have been required to be filed and has paid all taxes whether or
not indicated on such returns and all assessments received by it. All tax
liabilities have been adequately provided for in the financial statements of the
Company, and the Company does not know of any actual or proposed additional tax
assessments. There are no transfer taxes or other similar fees or charges under
federal law or the laws of any state, or any political subdivision thereof,
required to be paid in connection with the execution and delivery of this
Agreement or the issuance by the Company or sale by the Company of the Shares.
(o) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, as it may be amended or supplemented,
there has not been any material adverse change or any development involving a
prospective change which has had or is reasonably likely to have a Material
Adverse Effect, whether or not occurring in the ordinary course of business, and
there has not been any material transaction entered into or any material
transaction that is probable of being entered into by the Company, other than
transactions in the ordinary course of business and changes and transactions
described in the Registration Statement and the Prospectus, as it may be amended
or supplemented. The Company has no material contingent obligations that are not
disclosed in the Company's financial statements in the Registration Statement
and the Prospectus.
(p) The Company is not, and with the giving of notice or lapse of time
or both, will not be, in violation of or in default under its Declaration of
Trust or By-Laws or under any agreement, lease, contract, indenture or other
instrument or obligation to which it is a party or by which it, or any of its
properties, is bound and which default has had or is reasonably likely
5
to have a Material Adverse Effect. The execution and delivery of this Agreement
and the consummation of the transactions herein contemplated and the fulfillment
of the terms hereof will not (i) conflict with or otherwise violate any of the
terms or provisions of the Declaration of Trust or By-Laws of the Company or
(ii) conflict with or result in a breach of any of the terms or provisions of,
or constitute a default under, any contract, indenture, mortgage, deed of trust
or other agreement or instrument to which the Company is a party or any order,
rule or regulation applicable to the Company of any court or of any regulatory
body or administrative agency or other governmental body having jurisdiction,
which breach or default has had or is likely to have a Material Adverse Effect.
(q) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Shares for public offering
by the Underwriters under state securities or Blue Sky laws) has been obtained
or made and is in full force and effect.
(r) The Company has all material licenses, certifications, permits,
franchises, approvals, clearances and other regulatory authorizations
("Permits") from governmental authorities as are necessary to conduct its
businesses as currently conducted and to own, lease and operate its properties
in the manner described in the Prospectus. There is no claim, proceeding or
controversy, pending or, to the knowledge of the Company, threatened, involving
the status of or sanctions under any of the Permits. The Company has fulfilled
and performed all of its material obligations with respect to the Permits, and
no event has occurred which allows, or after notice or lapse of time would
allow, the revocation, termination, modification or other impairment of the
rights of the Company under such Permit. None of the Permits contains any
restriction that is materially burdensome on the Company.
(s) To the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's officers,
trustees or security holders, except as set forth in the Registration Statement
or as disclosed in writing to the Underwriters.
(t) Neither the Company, nor to the Company's knowledge, any of its
affiliates, has taken or may take, directly or indirectly, any action designed
to cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Common Shares to facilitate the sale or resale of the Shares.
(u) The Company is duly registered under the 1940 Act as a closed-end,
non-diversified management investment company and the 1940 Act Notification has
been duly filed with the Commission, and, at the time of filing thereof and at
the time of filing any amendment or supplement thereto, conformed in all
material respects with all applicable provisions of the 1940 Act and the Rules
and Regulations under the ▇▇▇▇ ▇▇▇. The Company has not received any notice from
the Commission pursuant to Section 8(e) of the 1940 Act with respect to the 1940
6
Act Notification or the Registration Statement (or any amendment or supplement
to either of them).
(v) The Company carries a fidelity bond sufficient to satisfy the
requirements of Rule 17g-1 under the 1940 Act.
(w) Other than as contemplated by this Agreement, the Company has not
incurred any liability for any finder's or broker's fee, or agent's commission
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(x) The Company has not sent or received any notice indicating the
termination of or intention to terminate any of the contracts or agreements
referred to or described in the Registration Statement or the Prospectus, or
filed as an exhibit to the Registration Statement, and no such termination has
been threatened by the Company or any other party to any such contract or
agreement.
(y) The Company owns, licenses, or otherwise has rights in all United
States and foreign patents, trademarks, service marks, tradenames, copyrights,
trade secrets and other proprietary rights necessary for the conduct of its
respective business as currently carried on and as proposed to be carried on as
described in the Registration Statement and the Prospectus (collectively and
together with any applications or registrations for the foregoing, the
"Intellectual Property"). Except as specifically described in the Registration
Statement or the Prospectus, (i) no third parties have obtained rights to any
such Intellectual Property from the Company, other than licenses granted in the
ordinary course and those that would not have a Material Adverse Effect; (ii) to
the Company's knowledge, there is no infringement or misappropriation by the
Company or third parties of any such Intellectual Property; (iii) there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim by others challenging the Company's rights in or to any such Intellectual
Property, and the Company is unaware of any facts which would form a basis for
any such claim; and (iv) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the validity,
enforceability, or scope of any such Intellectual Property, and the Company is
unaware of any facts which would form a basis for any such claim. None of the
technology employed by the Company has been obtained or, to the Company's
knowledge, is being used by the Company in violation of the rights of any person
or third party. The Company knows of no infringement or misappropriation by
others of Intellectual Property.
(z) The conduct of business by the Company complies, and at all times
has complied, in all material respects with federal, state, local and foreign
laws, statutes, ordinances, rules, regulations, decrees, orders, Permits and
other similar items ("Laws") applicable to its business, including, without
limitation, licensing and certification Laws covering any aspect of the business
of the Company. The Company has not received any notification asserting, or has
knowledge of, any present or past failure to comply with or violation of any
such Laws.
(aa) The information contained in the Registration Statement and the
Prospectus regarding the Company's expectations, plans and intentions, and any
other information that constitutes "forward-looking" information within the
meaning of the Securities
7
Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
were made by the Company on a reasonable basis and reflect the Company's good
faith belief and/or estimate of the matters described therein.
(bb) Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters in connection
with the offering of the Shares contemplated hereby shall be deemed a
representation and warranty by the Company to each Underwriter and shall be
deemed to be a part of this Section 1 and incorporated herein by this reference.
(cc) The Company has taken all required action under the Acts and the
Rules and Regulations to make the public offering and consummate the sale of the
Shares as contemplated by this Agreement.
(dd) All advertising, sales literature, promotional materials or any
other materials or information (including "prospectus wrappers", "broker kits"
and any roadshow or investor presentations), whether in oral, printed or
electronic form, authorized, provided or prepared by the Company or the Advisor
in connection with the offering and sale of the Shares (collectively, the
"Marketing Materials") complied and comply in all material respects with the
applicable requirements of the 1933 Act, the 1940 Act, the Rules and Regulations
and the rules and interpretations of the NASD and if required to be filed with
the NASD under the NASD's conduct rules were so filed. No Marketing Materials
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Any Omitting Prospectus complied with the requirements of Rule
482 of the Rules and Regulations under the 1933 Act.
(ee) This Agreement and each of the Company Agreements comply in all
material respects with all applicable provisions of the 1940 Act, the Rules and
Regulations thereunder, the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and the rules and regulations adopted by the Commission under
the Advisers Act (the "Advisers Act Rules and Regulations").
(ff) The Company intends and expects to qualify as a regulated
investment company under Subchapter M of the Code from and after the Closing and
to distribute timely all of its investment company taxable income and net
capital gain so as to avoid any corporate or excise tax, and the Company has and
will take all actions and omit to take all actions as necessary consistent with
the foregoing, including, but not limited to, with respect to the investment of
the proceeds of the offering of Shares contemplated by this Agreement.
(gg) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), no trustee or
officer of the Company is an "interested person" (as defined in the ▇▇▇▇ ▇▇▇) of
the Company or the Advisor or an "affiliated person" (as defined in the ▇▇▇▇
▇▇▇) of you.
8
2. REPRESENTATIONS AND WARRANTIES OF THE ADVISOR.
The Advisor represents and warrants to each of the Underwriters as follows:
(a) The Advisor has been duly organized and is validly existing as a
corporation in good standing under the laws of The Commonwealth of
Massachusetts, with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement. The Advisor
is duly qualified to transact business and is in good standing in all
jurisdictions in which the conduct of its business requires such qualification;
except where the failure to be so qualified or to be in good standing would not
have a Material Adverse Effect.
(b) Each Advisor Agreement has been duly authorized, executed and
delivered by the Advisor, and constitutes a valid, legal, and binding obligation
of the Advisor, enforceable in accordance with its terms, except as rights to
indemnity hereunder may be limited by federal or state securities laws and
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally, and
subject to general principles of equity. The Advisor has full power and
authority to enter into each Advisor Agreement, each of the Company Agreements
(to which the Advisor is a party) and the Additional Compensation Agreement.
(c) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Advisor, threatened against the Advisor before any court or
administrative agency or otherwise which if determined adversely to the Advisor
might have a Material Adverse Effect or prevent the consummation of the
transactions contemplated hereby, except as set forth in the Registration
Statement and the Prospectus.
(d) Neither the Advisor, nor to the Advisor's knowledge, any of its
affiliates, has taken or may take, directly or indirectly, any action designed
to cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Common Shares to facilitate the sale or resale of the Shares.
(e) The Advisor carries, or is covered by, insurance, including, at a
minimum, errors and omissions insurance, in such amounts and covering such risks
as is adequate for the conduct of its businesses and the value of its properties
and as is customary for companies engaged in similar industries. All policies of
insurance insuring the Advisor or its respective businesses, assets, employees,
officers and directors are in full force and effect, and the Advisor is in
compliance with the terms of such policies in all material respects. There are
no claims by the Advisor under any such policy or instrument as to which an
insurance company is denying liability or defending under a reservation of
rights clause.
(f) Other than as contemplated by this Agreement and the Additional
Compensation Agreement, the Advisor has not incurred any liability for any
finder's or broker's fee, or agent's commission in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
9
(g) The Advisor is not, and with the giving of notice or lapse of time
or both, will not be, in violation of or in default under its Articles of
Organization ("Charter") or By-Laws or under any agreement, lease, contract,
indenture or other instrument or obligation to which it is a party or by which
it, or any of its properties, is bound and which default has had or is
reasonably likely to have a Material Adverse Effect. The execution and delivery
of each Advisor Agreement and the consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not (i) conflict with
or otherwise violate the terms and provisions of the Charter or By-Laws of the
Advisor or (ii) conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any contract, indenture, mortgage,
deed of trust or other agreement or instrument to which the Advisor is a party
or any order, rule or regulation applicable to the Advisor of any court or of
any regulatory body or administrative agency or other governmental body having
jurisdiction, which breach or default has had or is reasonably likely to have a
Material Adverse Effect.
(h) The Advisor is duly registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act, the 1940 Act, the
Advisers Act Rules and Regulations or the Rules and Regulations under the 1940
Act from acting under the Company Agreements (to which such Advisor is a party)
as contemplated by the Registration Statement and the Prospectus (or any
amendment or supplement thereto).
(i) The Advisor has the financial resources available to it necessary
for the performance of its services and obligations as contemplated in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto) and under this Agreement and the Company Agreements (to which the
Advisor is a party).
(j) The description of the Advisor, Reit Management & Research LLC,
and their affiliates and their respective businesses, and the statements
attributable to the Advisor, in the Registration Statement and the Prospectus
(and any amendment or supplement thereto) or any Preliminary Prospectus complied
and comply in all material respects with the provisions of the Acts, the
Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations and did not and will not contain an untrue statement of a material
fact necessary to make the statements therein (in the case of a prospectus, in
light of the circumstances under which they were made) not misleading.
(k) Since the date as of which information is given in the
Registration Statement and the Prospectus through the date hereof, and except as
may otherwise be disclosed in the Prospectus, there have been no transactions
entered into by the Advisor which are material to the Advisor other than in the
ordinary course of its business.
(l) Each Advisor Agreement complies in all material respects with all
applicable provisions of the 1940 Act, the Rules and Regulations under the 1940
Act, the Advisers Act and the Advisers Act Rules and Regulations.
3. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Company
agrees to sell to the
10
Underwriters and each Underwriter agrees, severally and not jointly, to
purchase, at a price of $______ per share, the number of Firm Shares set forth
opposite the name of each Underwriter in Schedule I hereof, subject to
adjustments in accordance with Section 10 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be made in
New York Clearing House funds by federal (same day) funds against delivery of
the Firm Shares to the Representatives for the several accounts of the
Underwriters. Such payment and delivery are to be made through Full Fast
Delivery through the facilities of the Depository Trust Company, New York, New
York at 9:00 a.m., New York time, on the fourth business day after the date of
this Agreement or at such other time and date not later than five business days
thereafter as you and the Company shall agree upon, such time and date being
herein referred to as the "Closing Date." As used herein, "business day" means a
day on which the American Stock Exchange is open for trading and on which banks
in New York are open for business and are not permitted by law or executive
order to be closed. The Firm Shares will be delivered in such denominations and
in such registrations as the Representatives request in writing not later than
the second full business day prior to the Closing Date.
(c) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the several Underwriters to purchase the
Option Shares at the price per share as set forth in the first paragraph of this
Section. The option granted hereby may be exercised in whole or in part by
giving written notice (i) at any time before the Closing Date and (ii) only once
thereafter within 45 days after the date of this Agreement, by RBC Capital
Markets Corporation, on behalf of the several Underwriters, to the Company
setting forth the number of Option Shares as to which the several Underwriters
are exercising the option, the names and denominations in which the Option
Shares are to be registered and the time and date at which such certificates are
to be delivered. The time and date at which the Option Shares are to be
delivered shall be determined by RBC Capital Markets Corporation but shall not
be earlier than three nor later than 10 full business days after the exercise of
such option, nor in any event prior to the Closing Date (such time and date
being herein referred to as the "Option Closing Date"). If the date of exercise
of the option is three or more days before the Closing Date, the notice of
exercise shall set the Closing Date as the Option Closing Date. The number of
Option Shares to be purchased by each Underwriter shall be in the same
proportion to the total number of Option Shares being purchased as the number of
Firm Shares being purchased by such Underwriter bears to the total number of
Firm Shares, adjusted by you in such manner as to avoid fractional shares. The
option with respect to the Option Shares granted hereunder may be exercised only
to cover over-allotments in the sale of the Firm Shares by the Underwriters. RBC
Capital Markets Corporation, on behalf of the several Underwriters, may cancel
such option at any time prior to its expiration by giving written notice of such
cancellation to the Company. To the extent, if any, that the option is
exercised, payment for the Option Shares shall be made on the Option Closing
Date in federal (same day) funds through the facilities of the Depository Trust
Company in New York, New York drawn to the order of the Company.
4. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so. The Firm Shares are to be
11
initially offered to the public at the initial public offering price set forth
in the Prospectus. The Representatives may from time to time thereafter change
the public offering price and other selling terms. To the extent, if at all,
that any Option Shares are purchased pursuant to Section 3 hereof, the
Underwriters will offer them to the public on the foregoing terms.
It is further understood that you will act as the Representatives for the
Underwriters in the offering and sale of the Shares in accordance with a Master
Agreement Among Underwriters entered into by you and the several other
Underwriters.
5. COVENANTS OF THE COMPANY AND THE ADVISOR.
(a) The Company covenants and agrees with the several Underwriters
that:
(i) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A of
the Rules and Regulations under the 1933 Act is followed, to prepare and timely
file with the Commission under Rule 497 of the Rules and Regulations under the
1933 Act a Prospectus in a form approved by the Representatives containing
information previously omitted at the time of effectiveness of the Registration
Statement in reliance on Rule 430A of the Rules and Regulations under the 1933
Act; (B) not file any amendment to the Registration Statement or supplement to
the Prospectus of which the Representatives shall not previously have been
advised and furnished with a copy or to which the Representatives shall have
reasonably objected in writing or which is not in compliance with the Rules and
Regulations; and (C) file on a timely basis all reports and any definitive proxy
or information statements required to be filed by the Company with the
Commission subsequent to the date of the Prospectus and prior to the termination
of the offering of the Shares by the Underwriters.
(ii) The Company will not take, directly or indirectly, 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 securities of the Company.
(iii) The Company will advise the Representatives promptly (A)
when the Registration Statement or any post-effective amendment thereto shall
have become effective; (B) of receipt of any comments from the Commission; (C)
of any request of the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information; and (D) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the use of the Prospectus or of the institution of
any proceedings for that purpose. The Company will use its best efforts to
prevent the issuance of any such stop order preventing or suspending the use of
the Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(iv) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or
12
required to file such a consent. The Company will, from time to time, prepare
and file such statements, reports, and other documents, as are or may be
required to continue such qualifications in effect for so long a period as the
Representatives may reasonably request for distribution of the Shares.
(v) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Acts, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or before
the Closing Date, four signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith, and will deliver to
the Representatives such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that may
reasonably be requested) and of all amendments thereto, as the Representatives
may reasonably request.
(vi) The Company will comply with the Acts and the Rules and
Regulations, and the Exchange Act, and the rules and regulations of the
Commission thereunder, so as to permit the completion of the distribution of the
Shares as contemplated in this Agreement and the Prospectus. If during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the Underwriters, it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading, or, if it is necessary
at any time to amend or supplement the Prospectus to comply with any law, the
Company promptly will prepare and file with the Commission an appropriate
amendment to the Registration Statement or supplement to the Prospectus so that
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with the law.
(vii) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an earning
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earning statement shall satisfy the requirements
of Section 11(a) of the 1933 Act and Rule 158 of the Rules and Regulations
thereunder and will advise you in writing when such statement has been so made
available.
(viii) No offering, sale, short sale or other disposition of any
Common Shares or other securities convertible into or exchangeable or
exercisable for Common Shares or derivative of Common Shares (or agreement for
such) will be made for a period of 90 days after the date of this Agreement,
directly or indirectly, by the Company otherwise than hereunder or with the
prior written consent of RBC Capital Markets Corporation.
(ix) The Company will use its best efforts to list, subject to
notice of issuance, the Shares on the American Stock Exchange.
13
(x) The Company shall invest or otherwise use the net proceeds of
its sale of the Shares as described under the heading "Use of Proceeds" in the
Prospectus in such a manner as to comply with the investment restrictions and
the 1940 Act and shall report with the Commission with respect to the sale of
the Shares and the application of the proceeds therefrom as may be required in
accordance with Rule 463 under the 1933 Act.
(xi) The Company intends and expects to qualify as a regulated
investment company under Subchapter M of the Code from and after the Closing and
to distribute timely all of its investment company taxable income and net
capital gain so as to avoid any corporate or excise tax, and the Company has and
will take all actions and omit to take all actions as necessary consistent with
the foregoing, including, but not limited to, with respect to the investment of
the proceeds of the offering of Shares contemplated by this Agreement.
(xii) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of organization of the Company, a registrar for
the Common Shares.
(b) The Advisor covenants and agrees with the several Underwriters
that no offering, sale, short sale or other disposition of any Common Shares or
other securities convertible into or exchangeable or exercisable for Common
Shares or derivative of Common Shares (or agreement for such) will be made for a
period of 90 days after the date of this Agreement, directly or indirectly, by
the Advisor otherwise than hereunder or with the prior written consent of RBC
Capital Markets Corporation.
6. COSTS AND EXPENSES.
The Company and the Advisor will pay all costs, expenses and fees incident
to the performance of the obligations of the Company under this Agreement,
including, without limiting the generality of the foregoing, the following:
accounting fees of the Company; the fees and disbursements of counsel for the
Company; the cost of printing and delivering to, or as requested by, the
Underwriters copies of the Registration Statement, Preliminary Prospectuses, the
Prospectus, the Underwriters' Selling Memorandum and the Underwriters'
Invitation Letter, if any, the listing application of the American Stock
Exchange, the Blue Sky Survey and any supplements or amendments thereto; the
filing fees of the Commission; the filing fees and expenses (including legal
fees and disbursements) incident to securing any required review by the NASD of
the terms of the sale of the Shares; the listing fee of the American Stock
Exchange; and the expenses, including the fees and disbursements of counsel for
the Underwriters up to a maximum amount of $3,000, incurred in connection with
the qualification of the Shares under state securities or Blue Sky laws. The
Company also agrees to pay all costs and expenses of the Underwriters, including
the fees and disbursements of counsel for the Underwriters, incident to the
offer and sale of directed shares of the Common Shares by the Underwriters to
employees and persons having business relationships with the Company.
The Company shall not, however, be required to pay for any of the
Underwriters' expenses (other than those related to qualification under NASD
regulation and state securities or Blue Sky laws) except that, if this Agreement
shall not be consummated because the conditions in Section 7 hereof are not
satisfied, or because this Agreement is terminated by the Representatives
pursuant to Section 12 hereof, or by reason of any failure, refusal or inability
on
14
the part of the Company to perform any undertaking or satisfy any condition of
this Agreement or to comply with any of the terms hereof on its part to be
performed, unless such failure to satisfy said condition or to comply with said
terms be due to the default or omission of any Underwriter, then the Company
shall reimburse the several Underwriters for reasonable out-of-pocket expenses,
including all fees and disbursements of counsel, reasonably incurred in
connection with investigating, marketing and proposing to market the Shares or
in contemplation of performing their obligations hereunder; but the Company
shall not in any event be liable to any of the several Underwriters for damages
on account of loss of anticipated profits from the sale by them of the Shares.
7. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm Shares on
the Closing Date and the Option Shares, if any, on the Option Closing Date are
subject to the accuracy, as of the Closing Date and the Option Closing Date, if
any, of the representations and warranties of the Company and the Advisor
contained herein, and to the performance by the Company of its covenants and
obligations hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 497
and Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company, shall be contemplated by the Commission and no
injunction, restraining order, or order of any nature by a federal or state
court of competent jurisdiction shall have been issued as of the Closing Date
which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date and
the Option Closing Date, if any, the opinion of ▇▇▇▇▇▇▇▇ & Worcester LLP,
counsel for the Company, dated the Closing Date or the Option Closing Date, if
any, addressed to the Underwriters (and stating that it may be relied upon by
▇▇▇▇▇▇▇ Procter LLP, counsel for the Underwriters) to the effect that:
(i) The Company has been duly formed and is validly existing
under the laws of The Commonwealth of Massachusetts as a trust with transferable
shares of the type commonly called a Massachusetts business trust. The
Declaration of Trust confers upon the Trustees named therein, and their
successors in trust, power and authority to own or lease its properties and
conduct its business as described in the Registration Statement; and the Company
is duly qualified to transact business in all jurisdictions in which the conduct
of its business requires such qualification, or in which the failure to qualify
would have a Material Adverse Effect.
(ii) The Company has authorized and outstanding capital stock as
set forth under the caption "Description of Shares" in the Prospectus; the
outstanding Common Shares have been duly authorized and validly issued and are
fully paid and non-assessable
15
(except as set forth in the Registration Statement); all of the Shares conform
in all material respects to the description thereof contained in the Prospectus;
the Common Shares, including the Option Shares, if any, to be sold by the
Company pursuant to this Agreement have been duly authorized and will be validly
issued, fully paid and non-assessable (except as set forth in the Registration
Statement) when issued and paid for as contemplated by this Agreement; and no
preemptive rights of shareholders exist with respect to any of the Shares or the
issue or sale thereof pursuant to the Company's Declaration of Trust any By-Laws
or any other agreement or instrument known to such counsel.
(iii) Except as described in or contemplated by the Prospectus,
to the knowledge of such counsel, there are no outstanding securities of the
Company convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and there are no
outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and except as described in the
Prospectus, to the knowledge of such counsel, no holder of any securities of the
Company or any other person has the right, contractual or otherwise, which has
not been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any of the
Shares or the right to have any Common Shares or other securities of the Company
included in the Registration Statement or the right, as a result of the filing
of the Registration Statement, to require registration under the Acts of any
Common Shares or other securities of the Company.
(iv) The Registration Statement has become effective under the
Acts and, to the knowledge of such counsel, no stop order proceedings with
respect thereto have been instituted or are pending or threatened under the
Acts.
(v) The Registration Statement, at the time it became effective
under the Acts, the Prospectus, as of its date, and each amendment or supplement
thereto, as of its respective date, complied as to form in all material respects
with the requirements of the Acts and the applicable rules and regulations
thereunder (except that such counsel need express no opinion as to the financial
statements, related schedules and other financial data therein).
(vi) The statements under the captions "Management of the Fund -
Advisory Agreement," "Management of the Fund - Administration Agreement"
"Dividend Reinvestment Plan," "Description of Shares" and "Certain Provisions in
the Declaration of Trust" in the Prospectus, insofar as such statements
constitute a summary of documents referred to therein or matters of law, fairly
summarize in all material respects the information called for with respect to
such documents and matters by Form N-2.
(vii) The statements made in the Registration Statement and the
Prospectus (and any amendment or supplement thereto through the date of the
opinion) under the caption "Tax Matters" have been reviewed by such counsel and
to the extent they describe or summarize tax laws, legal conclusions, doctrines
or practices of the United States, present a fair and accurate description or
summary thereof as of the date of the opinion.
16
(viii) This Agreement and each Company Agreement (to which the
Company is a party) has been duly authorized, executed and delivered by the
Company and complies in all material respects with all applicable provisions of
the 1940 Act, the Advisers Act, the Rules and Regulations under the 1940 Act and
the Advisers Act Rules and Regulations;
(ix) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or described in
the Registration Statement or the Prospectus which are not so filed or described
as required, and such contracts and documents as are summarized in the
Registration Statement or the Prospectus are fairly summarized in all material
respects.
(x) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company except as set forth in the
Prospectus.
(xi) The execution and delivery of this Agreement and the Company
Agreements (to which the Company is a party) and the consummation of the
transactions herein contemplated do not and will not conflict with or result in
a breach of any of the terms or provisions of, or constitute a default under,
the Declaration of Trust or By-Laws of the Company, or any agreement or
instrument known to such counsel to which the Company is a party or by which the
Company may be bound.
(xii) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery of
this Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by state securities
and Blue Sky laws as to which such counsel need express no opinion) except such
as have been obtained or made, specifying the same.
(xiii) The Company is duly registered under the 1940 Act as a
closed-end, non-diversified management investment company and the 1940 Act
Notification has been duly filed with the Commission, and, at the time of filing
thereof and at the time of filing any amendment or supplement thereto, conformed
in all material respects with all applicable provisions of the 1940 Act and the
Rules and Regulations thereunder and, to such counsel's knowledge, the Company
has not received any notice from the Commission pursuant to Section 8(e) of the
1940 Act with respect to the 1940 Act Notification or the Registration Statement
(or any amendment or supplement to either of them).
The opinion in paragraph 7(b)(ii) will be subject to the qualification that
the shareholders of a Massachusetts business trust may, under some
circumstances, be subject to assessment at the insistence of creditors to pay
the obligations of such trust in the event that its assets are insufficient for
the purpose.
(c) The Representatives shall have received on the Closing Date and
the Option Closing Date, if any, the opinion of ▇▇▇▇▇▇▇▇ & Worcester LLP,
counsel for the Advisor, dated the Closing Date or the Option Closing Date, if
any, addressed to the Underwriters (and stating that it may be relied upon by
▇▇▇▇▇▇▇ Procter LLP, counsel for the Underwriters) to the effect that:
17
(i) The Advisor has been duly organized and is validly existing
as a corporation in good standing under the laws of The Commonwealth of
Massachusetts with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement; and the
Advisor is duly qualified to transact business in all jurisdictions in which the
conduct of its business requires such qualification.
(ii) The Advisor is duly registered as an investment adviser
under the Advisers Act and is not prohibited by the Advisers Act, the 1940 Act,
the Advisers Act Rules and Regulations or the Rules and Regulations under the
1940 Act from acting under the Company Agreements (to which the Advisor is a
party) as contemplated by the Registration Statement and the Prospectus (or any
amendment or supplement thereto).
(iii) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Advisor except as set forth in the
Prospectus.
(iv) The execution and delivery of each Advisor Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the Charter or By-Laws of the Advisor, or any
agreement or instrument known to such counsel to which the Advisor is a party or
by which the Advisor may be bound.
(v) Each Advisor Agreement has been duly authorized, executed and
delivered by the Advisor and complies in all material respects with all
applicable provisions of the 1940 Act, the Advisers Act, the Rules and
Regulations under the 1940 Act and the Advisers Act Rules and Regulations.
(vi) The description of the Advisor and its business, and the
statements attributable to the Advisor, in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) complied and comply in all
material respects with the provisions of the Acts, the Advisers Act, the Rules
and Regulations and the Advisers Act Rules and Regulations;
In addition to the matters set forth in Subsection (b) and (c) of this
Section, the opinions delivered pursuant to Subsection (b) and (c) of this
Section shall also include a statement to the effect that nothing has come to
the attention of such counsel which leads them to believe that (i) the
Registration Statement, at the time it became effective under the Acts (but
after giving effect to any modifications incorporated therein pursuant to Rule
430A under the ▇▇▇▇ ▇▇▇) and as of the Closing Date or the Option Closing Date,
if any, 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, and (ii) the Prospectus, or any supplement thereto, on
the date it was filed pursuant to the Rules and Regulations and as of the
Closing Date or the Option Closing Date, if any, contained an untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements, in the light of the circumstances under which they are
made, not misleading (except that such counsel need express no view as to
financial statements and related schedules therein). With respect to such
statement, ▇▇▇▇▇▇▇▇ & Worcester LLP may state that their belief is based upon
the procedures set forth therein, but is without independent check and
verification.
18
(d) The Representatives shall have received from ▇▇▇▇▇▇▇ Procter LLP,
counsel for the Underwriters, an opinion dated the Closing Date and the Option
Closing Date, if any, with respect to the formation of the Company, the validity
of the Shares and other related matters as the Representatives reasonably may
request, and such counsel shall have received such papers and information as
they request to enable them to pass upon such matters.
(e) You shall have received, on each of the dates hereof, the Closing
Date and the Option Closing Date, if any, a letter dated the date hereof, the
Closing Date or the Option Closing Date, if any, in form and substance
satisfactory to you, of Ernst & Young, LLP confirming that they are independent
public accountants within the meaning of the Acts and the applicable published
Rules and Regulations thereunder and stating that in their opinion the financial
statements and schedules examined by them and included in the Registration
Statement comply in form in all material respects with the applicable accounting
requirements of the Acts and the related published Rules and Regulations; and
containing such other statements and information as is ordinarily included in
accountants' "comfort letters" to Underwriters with respect to the financial
statements and certain financial and statistical information contained in the
Registration Statement and the Prospectus.
(f) The Representatives shall have received on the Closing Date and
the Option Closing Date, if any, a certificate or certificates of the Company's
President and Treasurer to the effect that, as of the Closing Date or the Option
Closing Date, if any, each of them severally represents as follows:
(i) The Registration Statement has become effective under the
1933 Act and 1940 Act and no stop order suspending the effectiveness of the
Registrations Statement has been issued, and no proceedings for such purpose
have been taken or are, to his knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company contained
in Section 1 hereof are true and correct as of the Closing Date or the Option
Closing Date, if any;
(iii) All filings required to have been made pursuant to Rules
497 or 430A under the 1933 Act have been made;
(iv) They have carefully examined the Registration Statement and
the Prospectus and, in their opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration Statement
were true and correct, and such Registration Statement and Prospectus did not
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment; and
(v) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been any
material adverse change or any development involving a prospective change, which
has had or is reasonably likely to have a Material Adverse Effect, whether or
not arising in the ordinary course of business.
19
(g) The Representatives shall have received on the Closing Date and
the Option Closing Date, if any, a certificate or certificates of the Advisor's
President and Treasurer to the effect that, as of the Closing Date or the Option
Closing Date, if any, each of them severally represents as follows:
(i) The representations and warranties of the Advisor contained
in Section 2 hereof are true and correct as of the Closing Date or the Option
Closing Date, if any;
(ii) They have carefully examined the Registration Statement and
the Prospectus and, in their opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration Statement
were true and correct, and such Registration Statement and Prospectus did not
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment; and
(iii) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been any
material adverse change or any development involving a prospective change, which
has had or is reasonably likely to have a Material Adverse Effect, whether or
not arising in the ordinary course of business.
(h) The Company shall have furnished to the Representatives such
further certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related matters as the
Representatives may reasonably have requested.
(i) The Firm Shares and Option Shares, if any, have been approved for
designation upon notice of issuance on the American Stock Exchange.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects satisfactory to the Representatives and to ▇▇▇▇▇▇▇ Procter LLP, counsel
for the Underwriters.
If any of the conditions hereinabove provided for in this Section shall not
have been fulfilled when and as required by this Agreement to be fulfilled, the
obligations of the Underwriters hereunder may be terminated by the
Representatives by notifying the Company of such termination in writing on or
prior to the Closing Date or the Option Closing Date, if any.
In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 6 and 9
hereof).
8. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion of the
Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing Date,
if any, no stop order suspending the effectiveness of
20
the Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
9. INDEMNIFICATION.
(a) The Company and the Advisor, jointly and severally, agree:
(i) to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of the 1933 Act,
against any losses, claims, damages or liabilities to which such Underwriter or
any such controlling person may become subject under the 1933 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (iii) any alleged act or failure to act by
any Underwriter in connection with, or relating in any manner to, the Shares or
the offering contemplated hereby, and which is included as part of or referred
to in any loss, claim, damage, liability or action arising out of or based upon
matters covered by clause (i) or (ii) above (provided, however, that neither the
Company nor the Advisor shall be liable under this clause (iii) to the extent
that it is determined in a final judgment by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly from any
such acts or failures to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct); provided,
however, that neither the Company nor the Advisor will be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement, or omission or
alleged omission made in the Registration Statement, any Preliminary Prospectus,
the Prospectus, or such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by or through the
Representatives specifically for use in the preparation thereof.
(ii) to reimburse each Underwriter and each such controlling
person upon demand for any legal or other out-of-pocket expenses reasonably
incurred by such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage or liability, action or
proceeding or in responding to a subpoena or governmental inquiry related to the
offering of the Shares, whether or not such Underwriter or controlling person is
a party to any action or proceeding. In the event that it is finally judicially
determined that the Underwriters were not entitled to receive payments for legal
and other expenses pursuant to this subparagraph, the Underwriters will promptly
return all sums that had been advanced pursuant hereto.
(b) Each Underwriter severally and not jointly will indemnify and hold
harmless the Company, each of its trustees, each of its officers who have signed
the Registration Statement, and each person, if any, who controls the Company
within the meaning of the 1933 Act, against any losses, claims, damages or
liabilities to which the Company or any such trustee, officer, or controlling
person may become subject under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact
21
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or (ii) the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made; and will reimburse any legal or other
expenses reasonably incurred by the Company or any such trustee, officer, or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding; PROVIDED, HOWEVER, that each
Underwriter will be liable in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by or through
the Representatives specifically for use in the preparation thereof.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
9(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Subsection if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 9(a) or (b). In case any
such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 30 days of presentation) the
fees and expenses of the counsel retained by the indemnified party in the event
(i) the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action.
It is understood that the indemnifying party shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing by you in the case
of parties indemnified pursuant to Section 9(a) and by the Company in the case
of parties indemnified pursuant to Section 9(b). The indemnifying party shall
not be liable for any settlement of any proceeding effected without its written
consent but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such
22
settlement or judgment. In addition, the indemnifying party will not, without
the prior written consent of the indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action
or proceeding of which indemnification may be sought hereunder (whether or not
any 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.
(d) If the indemnification provided for in this Section is unavailable
to or insufficient to hold harmless an indemnified party under Section 9(a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Advisor (treated as one
person for this purpose) on the one hand and the Underwriters on the other from
the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company or the Advisor on
the one hand and the Underwriters on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Advisor (treated as one person for this purpose) on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault 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 Company or the Advisor on the one hand or the Underwriters on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, the Advisor and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Subsection were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Subsection. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to above in this Subsection shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Subsection, (i) no Underwriter shall be required to
contribute any amount in excess of the underwriting discounts and commissions
applicable to the Shares purchased by such Underwriter and (ii) no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the ▇▇▇▇
▇▇▇) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations
23
in this Subsection to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section shall be paid by the indemnifying party to the indemnified party as such
losses, claims, damages, liabilities or expenses are incurred. The indemnity and
contribution agreements contained in this Section and the representations and
warranties of the Company and the Advisor set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its trustees or officers or any persons
controlling the Company, or the Advisor, or its directors or officers or any
persons controlling the Advisor (ii) acceptance of any Shares and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
any Underwriter, or to the Company or the Advisor, their respective directors or
officers, or any person controlling the Company or the Advisor, shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section.
10. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, if any, any Underwriter
shall fail to purchase and pay for the portion of the Shares which such
Underwriter has agreed to purchase and pay for on such date (otherwise than by
reason of any default on the part of the Company), you, as the Representatives
of the Underwriters, shall use your reasonable efforts to procure within 36
hours thereafter one or more of the other Underwriters, or any others, to
purchase from the Company such amounts as may be agreed upon and upon the terms
set forth herein, the Firm Shares or Option Shares, as the case may be, which
the defaulting Underwriter or Underwriters failed to purchase. If during such 36
hours you, as such Representatives, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option Shares, as
the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm Shares or
Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Shares or Option Shares, as the case may
be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company or you
as the Representatives of the Underwriters, will have the right, by written
notice given within the next 36-hour period to the parties to this Agreement, to
terminate this Agreement without liability on
24
the part of the non-defaulting Underwriters or of the Company except to the
extent provided in Section 9 hereof. In the event of a default by any
Underwriter or Underwriters, as set forth in this Section, the Closing Date or
Option Closing Date, if any, may be postponed for such period, not exceeding
seven days, as you, as Representatives, may determine in order that the required
changes in the Registration Statement or in the Prospectus or in any other
documents or arrangements may be effected. The term "Underwriter" includes any
person substituted for a defaulting Underwriter. Any action taken under this
Section shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
11. NOTICES.
All communications hereunder shall be in writing and, except as otherwise
provided herein, will be mailed, delivered, or faxed and confirmed as follows:
if to the Underwriters, to RBC Capital Markets Corporation
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Syndicate Director
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company, to RMR Real Estate Fund
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Advisor, to RMR Advisors, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
12. TERMINATION.
(a) This Agreement may be terminated by you by notice to the Company
at any time prior to the Closing Date if any of the following has occurred: (i)
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change or any development
involving a prospective change, which has had or is reasonably likely to have a
Material Adverse Effect; (ii) any outbreak or escalation of hostilities or
declaration of war or national emergency or other national or international
calamity or crisis or change in economic or political conditions if the effect
of such outbreak, escalation, declaration, emergency, calamity, crisis or change
on the financial markets of the United States would, in your reasonable
judgment, make it impracticable or inadvisable to market the Shares or
24
to enforce contracts for the sale of the Shares; (iii) suspension of trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange or limitation on prices (other than limitations on hours or numbers of
days of trading) for securities on either such Exchange; (iv) the enactment,
publication, decree or other promulgation of any statute, regulation, rule or
order of any court or other governmental authority which in your opinion
materially and adversely affects or may materially and adversely affect the
business or operations of the Company; (v) declaration of a banking moratorium
by United States or New York State authorities; (vi) the suspension of trading
of the Company's Common Shares by the American Stock Exchange, the Commission,
or any other governmental authority; (vii) the taking of any action by any
governmental body or agency in respect of its monetary or fiscal affairs which
in your reasonable opinion has a material adverse effect on the securities
markets in the United States; or (viii) the failure of the conditions set forth
in Section 7 of this Agreement to be fulfilled when required to be fulfilled.
(b) This Agreement may be terminated by either you or the Company as
provided in Section 10 of this Agreement.
13. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the Company,
the Advisor and Underwriters and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
14. INFORMATION PROVIDED BY UNDERWRITERS.
The Company, and the Underwriters acknowledge and agree that the only
information furnished or to be furnished by any Underwriter to the Company for
inclusion in any Prospectus or the Registration Statement consists of the
information contained in the first and third sentences of the first paragraph
under the heading "Commissions and Discounts," and the first and second
paragraphs under the heading "Price Stabilization and Short Positions" under the
caption "Underwriting" in the Prospectus.
15. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements contained in
this Agreement and the representations, warranties and covenants in this
Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
the Advisor or any of their respective directors or officers and (c) delivery of
and payment for the Shares under this Agreement.
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
26
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof.
This Agreement may only be amended or modified in writing, signed by all of
the parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
27
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Advisor and
the several Underwriters in accordance with its terms.
Very truly yours,
RMR HOSPITALITY AND REAL
ESTATE FUND
By:
--------------------------------
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
President
RMR ADVISORS, INC.
By:
--------------------------------
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
President
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
RBC CAPITAL MARKETS CORPORATION
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
As the Representatives of the several
Underwriters listed on Schedule I
By: RBC Capital Markets Corporation
By:
-----------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Managing Director
28
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of
Firm Shares to
Underwriter Be Purchased
----------- --------------
RBC Capital Markets Corporation
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Advest, Inc.
BB&T Capital Markets, a division of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated
▇▇▇▇▇▇ Investor Services, LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated
SunTrust Capital Markets, Inc.
Wachovia Capital Markets, LLC
Wedbush ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇ Fargo Securities, LLC
Total