Xxxx Xxxxxxx Preferred Income Fund
Auction Preferred Shares
No Par Value
UNDERWRITING AGREEMENT
October 18, 2002
UNDERWRITING AGREEMENT
October 18, 2002
UBS Warburg LLC
as Managing Representative
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Xxxx Xxxxxxx Preferred Income Fund, a voluntary association
with transferable shares organized and existing under and by virtue of the laws
of The Commonwealth of Massachusetts (commonly referred to as a Massachusetts
business trust) (previously named Xxxx Xxxxxxx Preferred Equity Income Fund)
(the "Fund"), proposes to issue and sell to the underwriters named in Schedule A
annexed hereto (the "Underwriters") an aggregate of 2,080 preferred shares of
beneficial interest of the Fund, no par value, designated Series M Auction
Preferred Shares of the Fund, 2,080 preferred shares of beneficial interest of
the Fund, no par value, designated Series T Auction Preferred Shares of the
Fund, 2,080 preferred shares of beneficial interest of the Fund, no par value,
designated Series W Auction Preferred Shares of the Fund, 2,080 preferred shares
of beneficial interest of the Fund, no par value, designated Series TH Auction
Preferred Shares of the Fund, and 2,080 preferred shares of beneficial interest
of the Fund, no par value, designated Series F Auction Preferred Shares of the
Fund, each with a liquidation preference of $25,000 per share (the "Shares") The
Shares are described in the Prospectus which is referred to below.
The Fund has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively called the "Act"), and with the provisions of the Investment
Company Act of 1940, as amended, and the rules and regulations thereunder
(collectively called the "Investment Company Act"), with the Securities and
Exchange Commission (the "Commission") a Registration Statement on Form N-2
(File Nos. 333-99417 and 811-21131), including a prospectus and a statement of
additional information, relating to the Shares. The Fund has furnished to you,
for use by the Underwriters and by dealers, copies of one or more preliminary
prospectuses (including a preliminary statement of additional information) (each
thereof, including such preliminary statement of additional information, being
herein called a "Preliminary Prospectus") relating to the Shares. Except where
the context otherwise requires, the Registration Statement, as amended when it
becomes effective (the "Effective Date"), including all documents filed as a
part thereof or incorporated by reference therein, and including any information
contained in a prospectus subsequently filed with the Commission pursuant to
Rule 497 under the Act and deemed to be part of the Registration Statement at
the time of effectiveness pursuant to Rule 430A under the Act is herein called
the Registration Statement, and the prospectus (including the statement of
additional information), in the form filed by the Fund with the Commission
pursuant to Rule 497 under the Act or, if no such filing is required, the form
of final prospectus (including the form of final statement of additional
information) included in the "Registration Statement" at the time it became
effective, is herein called the "Prospectus." In addition, the Fund has filed a
Notification of Registration on Form N-8A (the "Notification") pursuant to
Section 8 of the Investment Company Act.
Xxxx Xxxxxxx Advisers, LLC ("Xxxx Xxxxxxx Advisers" or the
"Investment Adviser") acts as the Fund's investment adviser pursuant to an
Investment Advisory Agreement by and between the Fund and the Investment
Adviser, dated as of August 22, 2002 (the "Investment Advisory Agreement"). The
Bank of New York acts as the custodian (the "Custodian") of the Fund's cash and
portfolio assets pursuant to a Custody Agreement, dated as of August 22, 2002
(the "Custody Agreement"). Mellon Investor Services, LLC acts as the Fund's
transfer agent and dividend disbursing agent with respect to the common shares
of the Fund (the "Transfer Agent") pursuant to a transfer agency agreement,
dated as of August 22, 2002 (the "Transfer Agency Agreement"). Deutsche Bank
Trust Company Americas will act as the Fund's auction agent (the "Auction
Agent") for the Shares pursuant to an Auction Agency Agreement, dated as of
October 18, 2002 (the "Auction Agency Agreement"). The Fund has entered into a
Letter Agreement, dated as of October 18, 2002, with the Depository Trust
Company (the "DTC Agreement"). The Investment Adviser and UBS Warburg (the
"Managing Representative") have entered into a Shareholder Servicing Agreement
dated August 27, 2002 (the "Shareholder Servicing Agreement") and an Additional
Compensation Agreement dated August 27, 2002 (the "Additional Compensation
Agreement").
The Fund, the Investment Adviser and the Underwriters agree as
follows:
1. Sale and Purchase. Upon the basis of the warranties and
representations and subject to the terms and conditions herein set
forth, the Fund agrees to sell to the respective Underwriters and each
of the Underwriters, severally and not jointly, agrees to purchase from
the Fund the aggregate number of Shares set forth opposite the name of
such Underwriter in Schedule A attached hereto in each case at a
purchase price of $24,750 per Share. The Fund is advised that the
Underwriters intend (i) to make a public offering of their respective
portions of the Shares as soon after the effective date of the
Registration Statement as is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus. The Underwriters may
from time to time increase or decrease the public offering price after
the initial public offering to such extent as they may determine.
2. Payment and Delivery. Payment of the purchase price for the Shares
shall be made by the Underwriters to the Fund by Federal Funds wire
transfer, against delivery of the certificates for the Shares to you
through the facilities of the Depository Trust Company ("DTC") for the
respective accounts of the Underwriters. Such payment and delivery
shall be made at 10:00 A.M., New York City time on the third business
day following the date of this Underwriting Agreement (unless another
date or time shall be agreed to by you and the Fund). The time at which
such payment and delivery are actually made is hereinafter sometimes
called the "Time of Purchase" or the "Closing Date."
2
A certificate in definitive form representing the Shares
registered in the name of Cede & Co., as nominee for DTC, shall be
delivered by or on behalf of the Fund to DTC for the account of the
Underwriters. For the purpose of expediting the checking of the
certificates for the Shares by you, the Fund agrees to make such
certificates available to you for such purpose at least one full
business day preceding the Time of Purchase.
3. Representations and Warranties of the Fund and the Investment
Adviser. Each of the Fund and the Investment Adviser jointly and
severally represents and warrants to each Underwriter as follows:
(a) On (A) the Effective Date and the date on which the
Prospectus is first filed with the Commission pursuant to Rule
497(b), (h) or (j) under the Act, as the case may be, (B) the
date on which any post-effective amendment to the Registration
Statement (except any post-effective amendment which is filed
with the Commission after the later of (x) one year from the
date of this Underwriting Agreement or (y) the date on which
the distribution of the Shares is completed) became or becomes
effective or any amendment or supplement to the Prospectus was
or is filed with the Commission and (C) the Closing Dates, the
Registration Statement, the Prospectus and any such amendment
or supplement thereto and the Notification complied or will
comply in all material respects with the requirements of the
Act and the Investment Company Act, as the case may be. On the
Effective Date and on the date that any post-effective
amendment to the Registration Statement (except any
post-effective amendment which is filed with the Commission
after the later of (x) one year from the date of this
Underwriting Agreement or (y) the date on which the
distribution of the Shares is completed) became or becomes
effective, neither the Registration Statement nor any such
amendment did or will contain any untrue statement of a
material fact or omit to state a material fact required to be
stated in it or necessary to make the statements in it not
misleading. At the Effective Date and, if applicable, the date
the Prospectus or any amendment or supplement to the
Prospectus was or is filed with the Commission and at the
Closing Dates, the Prospectus did not or will not, as the case
may be, contain any untrue statement of a material fact or
omit to state a material fact required to be stated in it or
necessary to make the statements in it, in light of the
circumstances under which they were made, not misleading. The
foregoing representations in this Section 3(a) do not apply to
statements or omissions relating to the Underwriters made in
reliance on and in conformity with information furnished in
writing to the Fund by you expressly for use in the
Registration Statement, the Prospectus, or any amendments or
supplements thereto, as described in Section 9(f) hereof.
3
(b) The Fund has been duly formed, is validly existing as a
Massachusetts business trust, with full power and authority to
conduct its business as described in the Registration
Statement and Prospectus, and the Fund is duly licensed and
qualified to do business and in good standing in each
jurisdiction in which its ownership or leasing of property or
its conducting of business requires such qualification, except
where the failure to be so licensed and qualified, either
alone or in the aggregate, would not result in a Material
Adviser Effect (as defined below in Section 3(n)) and the Fund
owns, possesses or has obtained and currently maintains all
governmental licenses, permits, consents, orders, approvals
and other authorizations, whether foreign or domestic,
necessary to carry on its business as contemplated in the
Prospectus, except such licenses, permits, consents, orders,
approvals and other authorizations of the Fund to obtain,
either alone or in the aggregate, would not result in a
Material Adviser Effect. The Fund has no subsidiaries.
(c) The capitalization of the Fund is as set forth in the
Registration Statement and the Prospectus. The common shares
of beneficial interest of the Fund (the "Common Shares") and
the Shares conform to the description of them in the
Prospectus. All the outstanding Common Shares have been duly
authorized and are validly issued, fully paid and, except to
the extent set forth in the Prospectus, nonassessable. The
Shares to be issued and delivered to and paid for by the
Underwriters in accordance with this Underwriting Agreement
against payment therefor as provided by this Underwriting
Agreement have been duly authorized and when issued and
delivered to the Underwriters will have been validly issued
and will be fully paid and, except to the extent set forth in
the Prospectus, nonassessable. No person is entitled to any
preemptive or other similar rights with respect to the Shares.
(d) The Fund is duly registered with the Commission under the
Investment Company Act as a diversified, closed-end management
investment company, and, subject to the filing of a final
amendment to the Registration Statement, or any required
filing under Rule 430A or Rule 497 under the Securities Act
(the "Final Amendment"), if not already filed, all action
under the Act and the Investment Company Act, as the case may
be, necessary under the federal securities laws on the part of
the Fund to make the public offering and consummate the sale
of the Shares as provided in this Underwriting Agreement has
or will have been taken by the Fund.
(e) The Fund has full power and authority to enter into each
of this Underwriting Agreement, the Investment Advisory
Agreement, the Custody Agreement, the Transfer Agency
Agreement, the Auction Agency Agreement and the DTC Agreement
(collectively, the "Fund Agreements") and to perform all of
the terms and provisions hereof and thereof to be carried out
by it and (i) each Fund Agreement has been duly and validly
authorized, executed and delivered by or on behalf of the
Fund, (ii) each Fund Agreement does not violate in any
material respect any of the applicable provisions of the
Investment Company Act or the Investment Advisers Act of 1940,
as amended, and the rules and regulations thereunder
4
(collectively called the "Advisers Act"), as the case may be,
and (iii) assuming due authorization, execution and delivery
by the other parties thereto, each Fund Agreement constitutes
the legal, valid and binding obligation of the Fund
enforceable in accordance with its terms, (A) subject, as to
enforcement, to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and to general
equitable principles (regardless of whether enforcement is
sought in a proceeding in equity or at law) and (B) except as
rights to indemnity thereunder may be limited by federal or
state securities laws.
(f) None of (i) the execution and delivery by the Fund of the
Fund Agreements, (ii) the issue and sale by the Fund of the
Shares as contemplated by this Underwriting Agreement and
(iii) the performance by the Fund of its obligations under any
of the Fund Agreements or consummation by the Fund of the
other transactions contemplated by the Fund Agreements
conflicts with or will conflict with, or results or will
result in a breach of, the Declaration of Trust of the Fund,
as amended through the date hereof (the "Declaration of
Trust"), the Amended and Restated Bylaws of the Fund, adopted
in connection with the issuance of the Shares and as amended
through the date hereof (the "Amended Bylaws") or any
agreement or instrument to which the Fund is a party or by
which the Fund is bound, or any law, rule or regulation, or
order of any court, governmental instrumentality, securities
exchange or association or arbitrator, whether foreign or
domestic, applicable to the Fund, other than state securities
or "blue sky" laws applicable in connection with the purchase
and distribution of the Shares by the Underwriters pursuant to
this Underwriting Agreement.
(g) The Fund is not currently in breach of, or in default
under, any written agreement or instrument to which it is a
party or by which it or its property is bound or affected,
except for such breaches or defaults that do not, either alone
or in the aggregate, have a Material Adverse Effect.
(h) No person has any right to the registration of any
securities of the Fund because of the filing of the
Registration Statement.
(i) No consent, approval, authorization or order of any court
or governmental agency or body or securities exchange or
association, whether foreign or domestic, is required to be
obtained by the Fund prior to the Closing Date for the
consummation by the Fund of the transactions to be performed
by the Fund or the performance by the Fund of all the terms
and provisions to be performed by or on behalf of it in each
case as contemplated in the Fund Agreements, except such as
(i) have been obtained under the Act, the Investment Company
Act or the Advisers Act, and (ii) may be required under state
securities or "blue sky" laws, in connection with the purchase
and distribution of the Shares by the Underwriters pursuant to
this Underwriting Agreement.
5
(j) Deloitte & Touche LLP, whose report appears in the
Prospectus, are independent public accountants with respect to
the Fund as required by the Act and the Investment Company
Act.
(k) The statement of assets and liabilities included in the
Registration Statement and the Prospectus presents fairly in
all material respects, in accordance with generally accepted
accounting principles in the United States applied on a
consistent basis, the financial position of the Fund as of the
date indicated.
(l) The Fund will 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 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 through an asset reconciliation procedure or otherwise
at reasonable intervals and appropriate action is taken with
respect to any differences.
(m) Since the date as of which information is given in the
Registration Statement and the Prospectus, except as otherwise
stated therein, (i) there has been no material adverse change
in the condition, financial or otherwise, business affairs or
business of the Fund, whether or not arising in the ordinary
course of business (a "Material Adverse Effect"), (ii) there
have been no transactions entered into by the Fund other than
those in the ordinary course of its business and (iii) there
has been no dividend or distribution of any kind declared,
paid or made on any class of its capital shares.
(n) There is no action, suit or proceeding before or by any
court, commission, regulatory body, administrative agency or
other governmental agency or body, foreign or domestic, now
pending, or, to the knowledge of the Fund, threatened against
or affecting the Fund, which (i) might result in any material
adverse change in the condition, financial or otherwise,
business affairs or business prospects of the Fund or might
materially adversely affect the properties or assets of the
Fund or (ii) is of a character required to be described in the
Registration Statement or the Prospectus; and there are no
contracts, franchises or other documents that are of a
character required to be described in, or that are required to
be filed as exhibits to, the Registration Statement that have
not been described or filed as required.
6
(o) The Fund intends to direct the investment of the proceeds
of the offering of the Shares in such a manner as to comply
with the requirements of Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code").
(p) The Common Shares are listed on the New York Stock
Exchange.
(q) The Shares have been, or prior to the Closing Date will
be, assigned a rating of "Aaa" by Xxxxx'x Investors Service,
Inc.
(r) No advertising, sales literature or other promotional
materials (excluding road show slides or road show tapes) were
authorized or prepared by or on behalf of the Fund or the
Investment Adviser or any representative thereof for use in
connection with the public offering or sale of the Shares
(collectively referred to as the "sales materials"); any road
show slides or road show tapes complied and comply in all
material respects with the applicable requirements of the Act
and the rules and interpretations of the NASD; and no broker
kits, road show slides, road show tapes or sales materials
authorized or prepared by the Fund or authorized or prepared
on behalf of the Fund by the Investment Adviser or any
representative thereof for use in connection with the public
offering or sale of the Shares contained or contains any
untrue statement of a material fact or omitted or omits to
state any material fact required to be stated therein or
necessary in order to make the statements therein not
misleading.
4. Representations and Warranties of the Investment Adviser. The
Investment Adviser represents to each Underwriter as follows:
(a) The Investment Adviser has been duly formed, is validly
existing as a limited liability company under the laws of
Delaware with full power and authority to perform its
obligations under this Agreement, the Shareholder Servicing
Agreement, the Investment Advisory Agreement and the
Additional Compensation Agreement, and the Investment Adviser
is duly licensed and qualified to do business and in good
standing in each jurisdiction in which it is required to be so
qualified in order to perform its obligations under this
Agreement, the Shareholder Servicing Agreement the Investment
Advisory Agreement and the Additional Compensation Agreement;
and the Investment Adviser owns, possesses or has obtained and
currently maintains all governmental licenses, permits,
consents, orders, approvals and other authorizations, whether
foreign or domestic, necessary to perform its obligations
under this Agreement, the Shareholder Servicing Agreement, the
Investment Advisory Agreement and the Additional Compensation
Agreement.
7
(b) The Investment Adviser is (i) registered as an investment
adviser under the Advisers Act and (ii) not prohibited by the
Advisers Act or the Investment Company Act from acting as the
investment adviser for the Fund as contemplated by the
Investment Advisory Agreement, the Registration Statement and
the Prospectus.
(c) The Investment Adviser has, or at the relevant time had,
full power and authority to enter into each of this
Underwriting Agreement, the Shareholder Servicing Agreement,
the Investment Advisory Agreement and the Additional
Compensation Agreement (collectively, this Underwriting
Agreement, the Shareholder Servicing Agreement, the Investment
Advisory Agreement and the Additional Compensation Agreement
being referred to as the "Investment Adviser Agreements") and
to carry out all the terms and provisions hereof and thereof
to be carried out by it; and each Investment Adviser Agreement
has been duly and validly authorized, executed and delivered
by the Investment Adviser; none of the Investment Adviser
Agreements violate any of the applicable provisions of the
Investment Company Act or the Advisers Act; and assuming due
authorization, execution and delivery by the other parties
thereto, each Investment Adviser Agreement constitutes a
legal, valid and binding obligation of the Investment Adviser,
enforceable in accordance with its terms, (i) subject, as to
enforcement, to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and to general
equitable principles (regardless of whether enforcement is
sought in a proceeding in equity or at law) and (ii) except as
rights to indemnity thereunder may be limited by federal or
state securities laws.
(d) Neither (i) the execution and delivery by the Investment
Adviser of any Investment Adviser Agreement nor (ii) the
consummation by the Investment Adviser of the transactions
contemplated by, or the performance of its obligations under
any Investment Adviser Agreement conflicts or will conflict
with, or results or will result in a breach of, the limited
liability company agreement or other organizational documents
of the Investment Adviser or any agreement or instrument to
which the Investment Adviser is a party or by which the
Investment Adviser is bound, or any law, rule or regulation,
or order of any court, governmental instrumentality,
securities exchange or association or arbitrator, whether
foreign or domestic, applicable to the Investment Adviser,
except in each case for such conflicts or breaches which do
not, either alone or in the aggregate, have a material adverse
effect upon the Investment Adviser's ability to perform its
obligations under the Investment Adviser Agreements.
(e) No consent, approval, authorization or order of any court,
governmental agency or body or securities exchange or
association, whether foreign or domestic, is required to be
obtained by the Investment Adviser on or prior to the Closing
Date for the consummation of the transactions contemplated in,
or the performance by the Investment Adviser of its
8
obligations under, any Investment Adviser Agreement, as the
case may be, except such as (i) have been obtained under the
Act, the Investment Company Act or the Advisers Act, and (ii)
may be required by the New York Stock Exchange or under state
securities or "blue sky" laws, in connection with the purchase
and distribution of the Shares by the Underwriters pursuant to
this Underwriting Agreement.
(f) The description of the Investment Adviser and its
business, and the statements attributable to the Investment
Adviser, in the Registration Statement and the Prospectus
comply in all material respects with the requirements of the
Act and the Investment Company Act and do 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,
solely with respect to the Prospectus, in the light of the
circumstances under which they were made).
(g) There is no action, suit or proceeding before or by any
court, commission, regulatory body, administrative agency or
other governmental agency or body, foreign or domestic, now
pending or, to the knowledge of the Investment Adviser,
threatened against or affecting the Investment Adviser of a
nature required to be disclosed in the Registration Statement
or Prospectus.
(h) The Investment Adviser has not made available any
promotional materials intended for use only by qualified
broker-dealers and registered representatives thereof by means
of an Internet web site or similar electronic means.
5. Agreements of the Parties.
(a) If the Registration Statement relating to the Shares has
not yet become effective, the Fund will promptly file the
Final Amendment, if not previously filed, with the Commission,
and will use its best efforts to cause such Registration
Statement to become effective and, as soon as the Fund is
advised, will advise the Managing Representative when the
Registration Statement or any amendment thereto has become
effective. If the Registration Statement has become effective
and the Prospectus contained therein omits certain information
at the time of effectiveness pursuant to Rule 430A under the
Act, the Fund will file a 430A Prospectus pursuant to Rule
497(h) under the Act as promptly as practicable, but no later
than the second business day following the earlier of the date
of the determination of the offering price of the Shares or
the date the Prospectus is first used after the Effective
Date. If the Registration Statement has become effective and
9
the Prospectus contained therein does not so omit such
information, the Fund will file a Prospectus pursuant to Rule
497(b) or (j) under the Act as promptly as practicable, but no
later than the fifth business day following the date of the
later of the Effective Date or the commencement of the public
offering of the Shares after the Effective Date. In either
case, the Fund will provide you satisfactory evidence of the
filing. The Fund will not file with the Commission any
Prospectus or any other amendment (except any post-effective
amendment which is filed with the Commission after the later
of (x) one year from the date of this Underwriting Agreement
or (y) the date on which distribution of the Shares is
completed) or supplement to the Registration Statement or the
Prospectus unless a copy has first been submitted to the
Managing Representative a reasonable time before its filing
and the Managing Representative has not objected to it in
writing within a reasonable time after receiving the copy.
(b) For the period of three years from the date hereof, the
Fund will advise the Managing Representative promptly (1) of
the issuance by the Commission of any order in respect of the
Fund or the Investment Adviser or which relates to the
offering of the Shares, (2) of the initiation or threatening
of any proceedings for, or receipt by the Fund of any notice
with respect to, the suspension of the qualification of the
Shares for sale in any jurisdiction or the issuance of any
order by the Commission suspending the effectiveness of the
Registration Statement, (3) of receipt by the Fund, or any
representative or attorney of the Fund, of any other
communication from the Commission relating to the offering of
the Shares, the Registration Statement, the Notification, any
Preliminary Prospectus, the Prospectus or to the transactions
contemplated by this Underwriting Agreement and (4) the
issuance by any court, regulatory body, administrative agency
or other governmental agency or body, whether foreign or
domestic, of any order, ruling or decree, or the threat to
initiate any proceedings with respect thereto, regarding the
offering of the Shares by the Fund. The Fund will make every
reasonable effort to prevent the issuance of any order
suspending the effectiveness of the Registration Statement
and, if any such order is issued, to obtain its lifting as
soon as possible.
(c) If not delivered prior to the date of this Underwriting
Agreement, the Fund will deliver to the Managing
Representative, without charge, a signed copy of the
Registration Statement and the Notification and of any
amendments (except any post-effective amendment which is filed
with the Commission after the later of (x) one year from the
date of this Underwriting Agreement or (y) the date on which
the distribution of the Shares is completed) to either the
Registration Statement or the Notification (including all
exhibits filed with any such document) and as many conformed
copies of the Registration Statement and any amendments
thereto (except any post-effective amendment which is filed
with the Commission after the later of (x) one year from the
date of this Underwriting Agreement or (y) the date on which
the distribution of the Shares is completed) (excluding
exhibits) as the Managing Representative may reasonably
request.
10
(d) During such period as a prospectus is required by law to
be delivered by an underwriter or a dealer, the Fund will
deliver, without charge, to you, the Underwriters and any
dealers, at such office or offices as you may designate, as
many copies of the Prospectus as you may reasonably request,
and, if any event occurs during such period as a result of
which it is necessary to amend or supplement the Prospectus,
in order to make the statements therein, in light of the
circumstances existing when such Prospectus is delivered to a
purchaser of Shares, not misleading in any material respect,
or if during such period it is necessary to amend or
supplement the Prospectus to comply with the Act or the
Investment Company Act, the Fund promptly will prepare, submit
to the Managing Representative, file with the Commission and
deliver, without charge, to the Underwriters and to dealers
(whose names and addresses the Managing Representative will
furnish to the Fund) to whom Shares may have been sold by the
Underwriters, and to other dealers on request, amendments or
supplements to the Prospectus so that the statements in such
Prospectus, as so amended or supplemented, will not, in light
of the circumstances existing when such Prospectus is
delivered to a purchaser, be misleading in any material
respect and will comply with the Act and the Investment
Company Act. Delivery by the Underwriters of any such
amendments or supplements to the Prospectus will not
constitute a waiver of any of the conditions in Section 6
hereof.
(e) The Fund will make generally available to holders of the
Fund's securities, as soon as practicable but in no event
later than the last day of the 18th full calendar month
following the calendar quarter in which the Effective Date
falls, an earnings statement, if applicable, satisfying the
provisions of Section 11(a) of the Act and, at the option of
the Fund, Rule 158 under the Act.
(f) The Fund will take such actions as the Managing
Representative reasonably requests in order to qualify the
Shares for offer and sale under the securities or "blue sky"
laws of such jurisdictions as the Managing Representative
reasonably designates; provided that the Fund shall not be
required in connection therewith or as a condition thereof to
qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction.
(g) The Fund will pay or cause to be paid the following: (i)
the fees, disbursements and expenses of the Fund's counsel and
accountants in connection with the registration of the Shares
and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and amendments and
supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of
11
printing or reproducing this Underwriting Agreement and any
other documents in connection with the offering, purchase,
sale and delivery of the Shares (including advertising
expenses of the Underwriters, if any); (iii) the cost of
preparing share certificates; (iv) the expenses (including,
but not limited to, travel, hotels and other accommodations)
incurred by the Fund's directors, officers, employees and
other personnel in connection with meetings held with
registered brokers in connection with the offering of the
Shares, the preparing to market and the marketing of the
Shares; (v) any fees charged by securities rating services for
rating the Shares; (vi) the fees and expenses of the DTC and
its nominee, the Custodian and the Auction Agent; and (vii)
all other costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically
provided for. It is understood, however, that, except as
provided in this Section 5 and Section 7 hereof, the
Underwriters will pay all of their own costs and expenses,
including the fees of their counsel and stock transfer taxes,
if any, on resale of any of the Shares by them, except any
advertising expenses connected with any offers they may make.
(h) If the transactions contemplated by this Underwriting
Agreement are not consummated, except as otherwise provided
herein, no party will be under any liability to any other
party, except that (i) if this Underwriting Agreement is
terminated by (A) the Fund or the Investment Adviser pursuant
to any of the provisions hereof (otherwise than pursuant to
Section 8 hereof) or (B) by you or the Underwriters because of
any inability, failure or refusal on the part of the Fund or
the Investment Adviser to comply with any material terms or
because any of the conditions in Section 6 are not satisfied,
Xxxx Xxxxxxx Advisers or an affiliate and the Fund, jointly
and severally, will reimburse the Underwriters for all
out-of-pocket expenses (including the reasonable fees,
disbursements and other charges of their counsel) reasonably
incurred by them in connection with the proposed purchase and
sale of the Shares and (ii) no Underwriter who has failed or
refused to purchase the Shares agreed to be purchased by it
under this Underwriting Agreement, in breach of its
obligations pursuant to this Underwriting Agreement, will be
relieved of liability to the Fund and the Investment Adviser
and the other Underwriters for damages occasioned by its
default.
(i) Without the prior written consent of the Managing
Representative, the Fund will not offer, sell or register with
the Commission, or announce an offering of, any equity
securities of the Fund, within 180 days after the Effective
Date, except for the Shares as described in the Prospectus and
any issuances of Common Shares pursuant to the dividend
reinvestment plan established by the Fund.
12
(j) The Fund will direct the investment of the net proceeds of
the offering of the Shares in such a manner as to comply with
the investment objective and policies of the Fund as described
in the Prospectus.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters to purchase the Shares are subject to the accuracy on the
date of this Underwriting Agreement, and on the Closing Date, of the
representations of the Fund and the Investment Adviser in this
Underwriting Agreement, to the accuracy and completeness of all
statements made by the Fund, the Investment Adviser or any of their
respective officers in any certificate delivered to the Managing
Representative or its counsel pursuant to this Underwriting Agreement,
to performance by the Fund and the Investment Adviser of their
respective obligations under this Underwriting Agreement and to each of
the following additional conditions:
(a) The Registration Statement must have become effective by
5:30 p.m., New York City time, on the date of this
Underwriting Agreement or such later date and time as the
Managing Representative consents to in writing. The Prospectus
must have been filed in accordance with Rule 497(b), (h) or
(j), as the case may be, under the Act.
(b) No order suspending the effectiveness of the Registration
Statement may be in effect and no proceedings for such purpose
may be pending before or, to the knowledge of counsel to the
Underwriters, threatened by the Commission, and any requests
for additional information on the part of the Commission (to
be included in the Registration Statement or the Prospectus or
otherwise) must be complied with or waived to the reasonable
satisfaction of the Managing Representative.
(c) Since the dates as of which information is given in the
Registration Statement and the Prospectus, (i) there must not
have been any material adverse change in the number of
outstanding Common Shares or liabilities of the Fund except as
set forth in or contemplated by the Prospectus (provided that
a change in the Fund's net asset value, liabilities or
portfolio securities arising in the course of its normal
investment operations shall not be deemed to be a material
adverse change); (ii) there must not have been any material
adverse change in the general affairs, prospects, management,
business, financial condition or results of operations of the
Fund or the Investment Adviser whether or not arising from
transactions in the ordinary course of business as set forth
13
in or contemplated by the Prospectus (provided that a change
in the Fund's net asset value, liabilities or portfolio
securities arising in the course of its normal investment
operations shall not be deemed to be a material adverse
change); (iii) the Fund must not have sustained any material
interference with its business from any court or from
legislative or other governmental action, order or decree,
whether foreign or domestic, not described in the Registration
Statement and Prospectus; and (iv) there must not have
occurred any event that makes untrue or incorrect in any
material respect any statement or information contained in the
Registration Statement or Prospectus or that is not reflected
in the Registration Statement or Prospectus but should be
reflected therein in order to make the statements or
information therein (in the case of the Prospectus, in light
of the circumstances in which they were made) not misleading
in any material respect; if, in the judgment of the Managing
Representative, any such development referred to in clause
(i), (ii), (iii) or (iv) of this paragraph (c) makes it
impracticable or inadvisable to consummate the sale and
delivery of the Shares pursuant to this Underwriting Agreement
by the Underwriters, at the initial public offering price of
the Shares.
(d) The Managing Representative must have received on the
Closing Date a certificate, dated such date, of the President
or a Vice-President and the chief financial or accounting
officer of each of the Fund and the Investment Adviser
certifying in their capacity as such officers that (i) the
signers have examined the Registration Statement, the
Prospectus, and this Underwriting Agreement, (ii) the
representations of the Fund (with respect to the certificates
from such Fund officers) and the representations of the
Investment Adviser (with respect to the certificates from such
officers of the Investment Adviser) in this Underwriting
Agreement are accurate on and as of the date of the
certificate, (iii) there has not been any material adverse
change in the general affairs, prospects, management,
business, financial condition or results of operations of the
Fund (with respect to the certificates from such Fund
officers) or the Investment Adviser (with respect to the
certificates from such officers of the Investment Adviser),
which change would materially and adversely affect the ability
of the Fund or the Investment Adviser, as the case may be, to
fulfill its obligations under this Underwriting Agreement or
the Investment Advisory Agreement, whether or not arising from
transactions in the ordinary course of business, (iv) with
respect to the Fund only, no order suspending the
effectiveness of the Registration Statement, or prohibiting
the sale of any of the Shares has been issued and no
proceedings for any such purpose are pending before or
threatened by the Commission or any other regulatory body,
whether foreign or domestic, (v) no order having a material
adverse effect on the ability of the Investment Adviser to
fulfill its obligations under this Underwriting Agreement, the
Shareholder Servicing Agreement, the Investment Advisory
Agreement or the Additional Compensation Agreement, as the
case may be, has been issued and no proceedings for any such
purpose are pending before or threatened by the Commission or
any other regulatory body, whether foreign or domestic, and
(vi) each of the Fund (with respect to the certificates from
such Fund officers) and the Investment Adviser (with respect
to the certificates from such officers of the Investment
Adviser) has performed all of its respective agreements that
this Underwriting Agreement requires it to perform by the
Closing Date (to the extent not waived in writing by the
Managing Representative).
14
(e) You must receive on the Closing Date the opinions dated
such Closing Date substantially in the form of Schedules B and
C to this Underwriting Agreement from the counsel identified
in each such Schedules.
(f) You must receive on the Closing Date from Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP or its affiliated entities an
opinion dated the Closing Date with respect to the Fund, the
Shares, the Registration Statement and the Prospectus, this
Underwriting Agreement and the form and sufficiency of all
proceedings taken in connection with the sale and delivery of
the Shares. Such opinion and proceedings shall fulfill the
requirements of this Section 6(f) only if such opinion and
proceedings are satisfactory in all respects to the Managing
Representative. The Fund and the Investment Adviser must have
furnished to such counsel such documents as counsel may
reasonably request for the purpose of enabling them to render
such opinion.
(g) The Managing Representative must receive on the date this
Underwriting Agreement is signed and delivered by you a signed
letter, dated such date, substantially in the form of Schedule
D to this Underwriting Agreement from the firm of accountants
designated in such Schedule. The Managing Representative also
must receive on the Closing Date a signed letter from such
accountants, dated as of the Closing Date, confirming on the
basis of a review in accordance with the procedures set forth
in their earlier letter that nothing has come to their
attention during the period from a date not more than five
business days before the date of this Underwriting Agreement,
specified in the letter, to a date not more than five business
days before the Closing Date, that would require any change in
their letter referred to in the foregoing sentence.
(h) The Shares shall have been accorded a rating of "Aaa" by
Xxxxx'x Investors Service, Inc. and a letter to such effect,
dated on or before the Closing Date, shall have been delivered
to the Managing Representative.
(i) As of the Closing Date, and assuming the receipt of the
net proceeds from the sale of the Shares, the 1940 Act Fund
Preferred Shares Asset Coverage and the Fund Preferred Shares
Basic Maintenance Amount (each as defined in the Prospectus)
each will be met.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Underwriting Agreement will comply only if
they are in form and scope reasonably satisfactory to counsel for the
Underwriters, provided that any such documents, forms of which are
annexed hereto, shall be deemed satisfactory to such counsel if
substantially in such form.
15
7. Termination. This Underwriting Agreement may be terminated by the
Managing Representative by notifying the Fund at any time:
(a) before the later of the effectiveness of the Registration
Statement and the time when any of the Shares are first
generally offered pursuant to this Underwriting Agreement by
the Managing Representative to dealers by letter or telegram;
(b) at or before the Closing Date if, in the sole judgment of
the Managing Representative, payment for and delivery of any
Shares is rendered impracticable or inadvisable because (i)
trading in the equity securities of the Fund is suspended by
the Commission or by the principal exchange that lists the
Common Shares, (ii) trading in securities generally on the New
York Stock Exchange or the Nasdaq Stock Market shall have been
suspended or limited or minimum or maximum prices shall have
been generally established on such exchange or
over-the-counter market, (iii) additional material
governmental restrictions, not in force on the date of this
Underwriting Agreement, have been imposed upon trading in
securities or trading has been suspended on any U.S.
securities exchange, (iv) a general banking moratorium has
been established by U.S. federal or New York authorities or
(v) any material adverse change in the financial or securities
markets in the United States or in political, financial or
economic conditions in the United States or any outbreak or
material escalation of hostilities or declaration by the
United States of a national emergency or war or other calamity
or crisis shall have occurred the effect of any of which is
such as to make it, in the sole judgment of the Managing
Representative, impracticable or inadvisable to market the
Shares on the terms and in the manner contemplated by the
Prospectus; or
(c) at or before the Closing Date, if any of the conditions
specified in Section 6 have not been fulfilled when and as
required by this Underwriting Agreement.
8. Substitution of Underwriters. If one or more of the Underwriters
fails (other than for a reason sufficient to justify the termination of
this Underwriting Agreement) to purchase on the Closing Date the Shares
agreed to be purchased on the Closing Date by such Underwriter or
Underwriters, the Managing Representative may find one or more
substitute underwriters to purchase such Shares or make such other
arrangements as the Managing Representative deems advisable, or one or
more of the remaining Underwriters may agree to purchase such Shares in
such proportions as may be approved by the Managing Representative, in
each case upon the terms set forth in this Underwriting Agreement. If
no such arrangements have been made within 36 hours after the Closing
Date, and
(a) the number of Shares to be purchased by the defaulting
Underwriters on the Closing Date does not exceed 10% of the
Shares that the Underwriters are obligated to purchase on such
Closing Date, each of the nondefaulting Underwriters will be
obligated to purchase such Shares on the terms set forth in
this Underwriting Agreement in proportion to their respective
obligations under this Underwriting Agreement, or
16
(b) the number of Shares to be purchased by the defaulting
Underwriters on the Closing Date exceeds 10% of the Shares to
be purchased by all the Underwriters on the Closing Date, the
Fund will be entitled to an additional period of 24 hours
within which to find one or more substitute underwriters
reasonably satisfactory to the Managing Representative to
purchase such Shares on the terms set forth in this
Underwriting Agreement.
In any such case, either the Managing Representative or the
Fund will have the right to postpone the Closing Date for not more than
five business days in order that necessary changes and arrangements
(including any necessary amendments or supplements to the Registration
Statement or the Prospectus) may be effected by the Managing
Representative and the Fund. If the number of Shares to be purchased on
the Closing Date by such defaulting Underwriter or Underwriters exceeds
10% of the Shares that the Underwriters are obligated to purchase on
the Closing Date, and none of the nondefaulting Underwriters or the
Fund makes arrangements pursuant to this Section within the period
stated for the purchase of the Shares that the defaulting Underwriters
agreed to purchase, this Underwriting Agreement will terminate without
liability on the part of any nondefaulting Underwriter, the Fund or the
Investment Adviser, except as provided in Sections 6(h) and 9 hereof.
This Section will not affect the liability of any defaulting
Underwriter to the Fund or the nondefaulting Underwriters arising out
of such default. A substitute underwriter will become a Underwriter for
all purposes of this Underwriting Agreement.
9. Indemnity and Contribution.
(a) Each of the Fund and the Investment Adviser, jointly and
severally, agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and any
person who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and
the successors and assigns of all of the foregoing persons
from and against any loss, damage, expense, liability or claim
(including the reasonable cost of investigation) which,
jointly or severally, any such Underwriter or any such person
may incur under the Act, the Exchange Act, the Investment
Company Act, the Advisers Act, the common law or otherwise,
insofar as such loss, damage, expense, liability or claim
arises out of or is based upon any untrue statement or alleged
untrue statement of a material fact contained in the
Registration Statement (or in the Registration Statement as
17
amended by any post-effective amendment thereof by the Fund)
or in a Prospectus (the term "Prospectus" for the purpose of
this Section 9 being deemed to include any Preliminary
Prospectus, any sales materials prepared or authorized by the
Fund, the Prospectus and the Prospectus as amended or
supplemented by the Fund), or arises out of or is based upon
any omission or alleged omission to state a material fact
required to be stated in either such Registration Statement or
Prospectus or necessary to make the statements made therein
not misleading, except insofar as any such loss, damage,
expense, liability or claim arises out of or is based upon any
untrue statement or alleged untrue statement of a material
fact contained in and in conformity with information furnished
in writing by or on behalf of any Underwriter through you to
the Fund or the Investment Adviser expressly for use with
reference to such Underwriter in such Registration Statement
or such Prospectus or arises out of or is based upon any
omission or alleged omission to state a material fact in
connection with such information required to be stated in such
Registration Statement or such Prospectus or necessary to make
such information not misleading, provided, however, that the
indemnity agreement contained in this subsection (a) with
respect to any Preliminary Prospectus or amended Preliminary
Prospectus shall not inure to the benefit of any Underwriter
(or to the benefit of any person controlling such Underwriter)
from whom the person asserting any such loss, damage, expense,
liability or claim purchased the Shares which is the subject
thereof if the Prospectus corrected any such alleged untrue
statement or omission and if such Underwriter failed to send
or give a copy of the Prospectus to such person at or prior to
the written confirmation of the sale of such Shares to such
person, unless the failure is the result of noncompliance by
the Fund with Section 5(d) hereof.
If any action, suit or proceeding (together, a
"Proceeding") is brought against an Underwriter or any such
person in respect of which indemnity may be sought against the
Fund or the Investment Adviser pursuant to the foregoing
paragraph, such Underwriter or such person shall promptly
notify the Fund or the Investment Adviser, as the case may be,
in writing of the institution of such Proceeding and the Fund
or the Investment Adviser shall assume the defense of such
Proceeding, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees
and expenses; provided, however, that the omission to so
notify the Fund or the Investment Adviser shall not relieve
the Fund or the Investment Adviser from any liability which
the Fund or the Investment Adviser may have to any Underwriter
or any such person or otherwise and, unless only to the extent
that, such omission results in the forfeiture of substantive
rights or defenses by the indemnifying party. Such Underwriter
or such person shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such
18
counsel shall be at the expense of such Underwriter or of such
person unless the employment of such counsel shall have been
authorized in writing by the Fund or the Investment Adviser,
as the case may be, in connection with the defense of such
Proceeding or the Fund or the Investment Adviser shall not
have, within a reasonable period of time in light of the
circumstances, employed counsel to have charge of the defense
of such Proceeding or such indemnified party or parties shall
have reasonably concluded that there may be defenses available
to it or them which are different from, additional to or in
conflict with those available to the Fund or the Investment
Adviser (in which case the Fund or the Investment Adviser
shall not have the right to direct the defense of such
Proceeding on behalf of the indemnified party or parties), in
any of which events such fees and expenses shall be borne by
the Fund or the Investment Adviser and paid as incurred (it
being understood, however, that the Fund or the Investment
Adviser shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel) in any one
Proceeding or series of related Proceedings in the same
jurisdiction representing the indemnified parties who are
parties to such Proceeding). None of the Fund or the
Investment Adviser shall be liable for any settlement of any
Proceeding effected without its written consent but if settled
with the written consent of the Fund or the Investment
Adviser, the Fund or the Investment Adviser, as the case may
be, agrees to indemnify and hold harmless any Underwriter and
any such person from and against any loss or liability by
reason of such settlement. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel as contemplated by the
second sentence of this paragraph, then the indemnifying party
agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such
settlement is entered into more than 60 business days after
receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the
date of such settlement and (iii) such indemnified party shall
have given the indemnifying party at least 30 days' prior
notice of its intention to settle. No indemnifying party
shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened
Proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of
such Proceeding and does not include an admission of fault,
culpability or a failure to act, by or on behalf of such
indemnified party.
(b) Each Underwriter severally agrees to indemnify, defend and
hold harmless the Fund and the Investment Adviser, its
directors and officers, and any person who controls the Fund
or the Investment Adviser within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, and the successors
and assigns of all of the foregoing persons from and against
any loss, damage, expense, liability or claim (including the
reasonable cost of investigation) which, jointly or severally,
the Fund or the Investment Adviser or any such person may
incur under the Act, the Exchange Act, the Investment Company
Act, the Advisers Act, the common law or otherwise, insofar as
such loss, damage, expense, liability or claim arises out of
or is based upon any untrue statement or alleged untrue
19
statement of a material fact contained in and in conformity
with information furnished in writing by or on behalf of such
Underwriter through you to the Fund or the Investment Adviser
expressly for use with reference to such Underwriter in the
Registration Statement (or in the Registration Statement as
amended by any post-effective amendment thereof by the Fund)
or in a Prospectus, or arises out of or is based upon any
omission or alleged omission to state a material fact in
connection with such information required to be stated in such
Registration Statement or such Prospectus or necessary to make
such information not misleading.
If any Proceeding is brought against the Fund, the
Investment Adviser, or any such person in respect of which
indemnity may be sought against any Underwriter pursuant to
the foregoing paragraph, the Fund or the Investment Adviser or
such person shall promptly notify such Underwriter in writing
of the institution of such Proceeding and such Underwriter
shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such
indemnified party and payment of all fees and expenses;
provided, however, that the omission to so notify such
Underwriter shall not relieve such Underwriter from any
liability which such Underwriter may have to the Fund, the
Investment Adviser, or any such person or otherwise. The Fund,
the Investment Adviser, or such person shall have the right to
employ its own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of the Fund,
the Investment Adviser, or such person, as the case may be,
unless the employment of such counsel shall have been
authorized in writing by such Underwriter in connection with
the defense of such Proceeding or such Underwriter shall not
have, within a reasonable period of time in light of the
circumstances, employed counsel to have charge of the defense
of such Proceeding or such indemnified party or parties shall
have reasonably concluded that there may be defenses available
to it or them which are different from or additional to or in
conflict with those available to such Underwriter (in which
case such Underwriter shall not have the right to direct the
defense of such Proceeding on behalf of the indemnified party
or parties, but such Underwriter may employ counsel and
participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such Underwriter),
in any of which events such fees and expenses shall be borne
by such Underwriter and paid as incurred (it being understood,
however, that such Underwriter shall not be liable for the
expenses of more than one separate counsel (in addition to any
local counsel) in any one Proceeding or series of related
Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). No
Underwriter shall be liable for any settlement of any such
20
Proceeding effected without the written consent of such
Underwriter but if settled with the written consent of such
Underwriter, such Underwriter agrees to indemnify and hold
harmless the Fund or the Investment Adviser and any such
person from and against any loss or liability by reason of
such settlement. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees
and expenses of counsel as contemplated by the second sentence
of this paragraph, then the indemnifying party agrees that it
shall be liable for any settlement of any Proceeding effected
without its written consent if (i) such settlement is entered
into more than 60 business days after receipt by such
indemnifying party of the aforesaid request, (ii) such
indemnifying party shall not have reimbursed the indemnified
party in accordance with such request prior to the date of
such settlement and (iii) such indemnified party shall have
given the indemnifying party at least 30 days' prior notice of
its intention to settle. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any
settlement of any pending or threatened Proceeding in respect
of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all
liability on claims that are the subject matter of such
Proceeding.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and
(b) of this Section 9 in respect of any losses, damages,
expenses, liabilities or claims referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses,
damages, expenses, liabilities or claims (i) in such
proportion as is appropriate to reflect the relative benefits
received by the Fund and the Investment Adviser on the one
hand and the Underwriters on the other hand from the offering
of the Shares or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of
the Fund and the Investment Adviser on the one hand and of the
Underwriters on the other in connection with the statements or
omissions which resulted in such losses, damages, expenses,
liabilities or claims, as well as any other relevant equitable
considerations. The relative benefits received by the Fund or
the Investment Adviser on the one hand and the Underwriters on
the other shall be deemed to be in the same respective
proportions as the total proceeds from the offering (net of
21
underwriting discounts and commissions but before deducting
expenses) received by the Fund and the total underwriting
discounts and commissions received by the Underwriters, bear
to the aggregate public offering price of the Shares. The
relative fault of the Fund and the Investment Adviser on the
one hand and of the Underwriters on the other shall be
determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material
fact or omission or alleged omission relates to information
supplied by the Fund or the Investment Adviser or by the
Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a
party as a result of the losses, damages, expenses,
liabilities and claims referred to in this subsection shall be
deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with
investigating, preparing to defend or defending any
Proceeding.
(d) The Fund and the Investment Adviser and the Underwriters
agree that it would not be just and equitable if contribution
pursuant to this Section 9 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
that does not take account of the equitable considerations
referred to in subsection (c) above. Notwithstanding the
provisions of this Section 9, no Underwriter shall be required
to contribute any amount in excess of the fees and commissions
received by such Underwriter. 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. The
Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to their respective
underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in
this Section 9 and the covenants, warranties and
representations of the Fund contained in this Agreement shall
remain in full force and effect regardless of any
investigation made by or on behalf of any Underwriter, its
partners, directors or officers or any person (including each
partner, officer or director of such person) who controls any
Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, or by or on behalf of the
Fund, the Investment Adviser, its directors or officers or any
person who controls the Fund, the Investment Adviser within
the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and shall survive any termination of this
Agreement or the issuance and delivery of the Shares. The Fund
or the Investment Adviser and each Underwriter agree promptly
to notify each other of the commencement of any Proceeding
against it and, in the case of the Fund, the Investment
Adviser, against any of the Fund's, the Investment Adviser's
officers or directors in connection with the issuance and sale
of the Shares, or in connection with the Registration
Statement or Prospectus.
(f) The Fund and the Investment Adviser each acknowledge that
the statements with respect to (1) the public offering of the
Shares as set forth on the cover page of and (2) the
statements relating to stabilization, to selling concessions
and reallowances of selling concessions and with respect to
discretionary accounts under the caption "Underwriting" in the
22
Prospectus constitute the only information furnished in
writing to the Fund by the Managing Representative on behalf
of the Underwriters expressly for use in such document. The
Underwriters severally confirm that these statements are
correct in all material respects and were so furnished by or
on behalf of the Underwriters severally for use in the
Prospectus.
(g) Notwithstanding any other provisions in this Section 9, no
party shall be entitled to indemnification or contribution
under this Underwriting Agreement against any loss, claim,
liability, expense or damage arising by reason of such
person's willful misfeasance, bad faith, gross negligence or
reckless disregard in the performance of its duties hereunder.
10. Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram
and, if to the Underwriters, shall be sufficient in all respects if
delivered or sent to UBS Warburg LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, XX
00000-0000, Attention: Syndicate Department and, if to the Fund or the
Investment Adviser, shall be sufficient in all respects if delivered or
sent to the Fund or the Investment Adviser, as the case may be, at the
offices of the Fund or the Investment Adviser at 000 Xxxxxxxxxx Xxxxxx,
Xxxxxx, XX 00000-0000, Attention: Xxxxx X. Xxxxxx, Senior Vice
President and General Counsel.
11. Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of
or in any way relating to this Agreement ("Claim"), directly or
indirectly, shall be governed by, and construed in accordance with, the
laws of the State of New York. The Section headings in this Agreement
have been inserted as a matter of convenience of reference and are not
a part of this Agreement.
12. Submission to Jurisdiction. Except as set forth below, no Claim may
be commenced, prosecuted or continued in any court other than the
courts of the State of New York located in the City and County of New
York or in the United States District Court for the Southern District
of New York, which courts shall have jurisdiction over the adjudication
of such matters, and the Fund consents to the jurisdiction of such
courts and personal service with respect thereto. The Fund hereby
consents to personal jurisdiction, service and venue in any court in
which any Claim arising out of or in any way relating to this Agreement
is brought by any third party against UBS Warburg LLC or any
indemnified party. Each of UBS Warburg LLC, the Fund (on its behalf
and, to the extent permitted by applicable law, on behalf of its
stockholders and affiliates) and the Investment Adviser (on its behalf
and, to the extent permitted by applicable law, on behalf of its
23
stockholders and affiliates) waives all right to trial by jury in any
action, proceeding or counterclaim (whether based upon contract, tort
or otherwise) in any way arising out of or relating to this Agreement.
Each of the Fund and the Investment Adviser agrees that a final
judgment in any such action, proceeding or counterclaim brought in any
such court may be enforced in any other courts in the jurisdiction of
which the Fund or the Investment Adviser, as the case may be, is or may
be subject, by suit upon such judgment.
13. Parties at Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters and the Fund and to the
extent provided in Section 9 hereof the controlling persons, directors
and officers referred to in such section, and their respective
successors, assigns, heirs, personal representatives and executors and
administrators. No other person, partnership, association or
corporation (including a purchaser, as such purchaser, from any of the
Underwriters) shall acquire or have any right under or by virtue of
this Agreement.
14. Counterparts. This Agreement may be signed by the parties in one or
more counterparts which together shall constitute one and the same
agreement among the parties.
15. Successors and Assigns. This Agreement shall be binding upon the
Underwriters, the Fund or the Investment Adviser, and any successor or
assign of any substantial portion of the Fund's, the Investment
Adviser's, or any of the Underwriters' respective businesses and/or
assets.
16. Disclaimer of Liability of Trustees and Beneficiaries. A copy of
the Declaration of Trust is on file with the Secretary of The
Commonwealth of Massachusetts, and notice hereby is given that this
Underwriting Agreement is executed on behalf of the Trustees of the
Fund as Trustees and not individually and that the obligations or
arising out of this Underwriting Agreement are not binding upon any of
the Trustees or beneficiaries individually but are binding only upon
the assets and properties of the Fund.
24
If the foregoing correctly sets forth the understanding among the Fund
and the Underwriters, please so indicate in the space provided below for the
purpose, whereupon this letter and your acceptance shall constitute a binding
agreement among the Fund, the Investment Adviser and the Underwriters,
severally.
Very truly yours,
XXXX XXXXXXX PREFERRED INCOME FUND
--------------------------
By:
Title:
XXXX XXXXXXX ADVISERS, LLC
--------------------------
By:
Title:
Accepted and agreed to as of the date first above written, on behalf of
themselves and the other several Underwriters named in Schedule A
UBS WARBURG LLC
XXXXXXX LYNCH, PIERCE, XXXXXX
& XXXXX INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
By: UBS WARBURG LLC
--------------------------
By: Xxxxx Xxxxxxxx
Title: Managing Director
--------------------------
By: Xxxx X. Reit
Title: Executive Director
25
SCHEDULE A
Number of Shares
Name to be Purchased
UBS Warburg................................................. 4,784
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated....................................... 4,056
Prudential Securities Incorporated.......................... 1,560
Total....................................................... 10,400
A-1
SCHEDULE B
FORM OF OPINION OF
XXXX & XXXX REGARDING THE FUND
October , 2002
UBS Warburg LLC
As Representative of the
Several Underwriters
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Xxxx Xxxxxxx Preferred Income Fund
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 6(e) of the
Underwriting Agreement, dated as of October , 2002 (the "Underwriting
Agreement"), among you, as Representative of the several Underwriters, Xxxx
Xxxxxxx Advisers, LLC, a Delaware limited liability company (the "Adviser"), and
Xxxx Xxxxxxx Preferred Income Fund, a Massachusetts business trust (previously
named Xxxx Xxxxxxx Preferred Equity Income Fund) (the "Trust"). Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings ascribed to them in the Underwriting Agreement.
We have acted as counsel for the Trust and the Adviser in connection
with the sale to the Underwriters by the Trust of an aggregate of 2,080
preferred shares of beneficial interest of the Trust, no par value, designated
Series M Auction Preferred Shares of the Trust, 2,080 preferred shares of
beneficial interest of the Trust, no par value, designated Series T Auction
Preferred Shares of the Trust, 2,080 preferred shares of beneficial interest of
the Trust, no par value, designated Series W Auction Preferred Shares of the
Trust, 2,080 preferred shares of beneficial interest of the Trust, no par value,
designated Series TH Auction Preferred Shares of the Trust, and 2,080 preferred
shares of beneficial interest of the Trust, no par value, designated Series F
Auction Preferred Shares of the Trust, each with a liquidation preference of
$25,000 per share (collectively, the "Shares"), all pursuant to the Section 1 of
the Underwriting Agreement. As such counsel, we have assisted in the preparation
and filing with the Securities and Exchange Commission (the "Commission") of the
Trust's Registration Statement on Form N-2 dated September 11, 2002 (File
No.333-99417; 811-21131), and amendments No.1 and No. 2 thereto, which
Registration Statement became effective on October , 2002 (the "Effective
B-1
Date"). Such Registration Statement, in the form in which it became effective,
is referred to herein as the "Registration Statement," and the prospectus dated
October , 2002 and statement of additional information dated August 22, 2002
included therein, as filed pursuant to Rule 497 of the Securities Act of 1933,
as amended (the "Securities Act"), on October , 2002, are referred to herein as
the "Prospectus" and the "Statement of Additional Information."
We have examined and relied upon the Declaration of Trust and Amended
By-laws of the Trust, each as amended to date, records of meetings or written
actions of shareholders and of the Board of Trustees of the Trust, trust
proceedings of the Trust in connection with the authorization and issuance of
the Shares, the Registration Statement, the Prospectus, the Statement of
Additional Information, the Underwriting Agreement, certificates of
representatives of the Trust, certificates of public officials and such other
documents as we have deemed necessary as a basis for the opinions hereinafter
expressed. We have assumed that all corporate or trust records of the Trust and
the Adviser and stock books of the Trust and are complete and accurate.
Insofar as this opinion relates to factual matters, information with
respect to which is in the possession of the Trust or the Adviser, we have
relied, with your permission, upon certificates, statements and representations
of officers and other representatives of the Trust and the Adviser,
representations made in the Underwriting Agreement and statements contained in
the Registration Statement. We have not attempted to verify independently such
facts, although nothing has come to our attention which has caused us to
question the accuracy of such certificates, statements or representations.
In our examination of the documents referred to above, we have assumed
the genuineness of all signatures, the legal capacity of each individual signing
such documents, the authenticity of all documents submitted to us as originals,
the conformity to original documents of all documents submitted to us as copies,
and the authenticity of the originals of such documents.
Any reference to "our knowledge" or "best of our knowledge" or to any
matters "known to us," "of which we are aware" or "coming to our attention" or
any variation of any of the foregoing, shall mean the conscious awareness, as to
the existence or absence of any facts which would contradict the opinions and
statements so expressed, of the attorneys of this firm who have rendered
substantive attention to the transaction to which this opinion relates. Other
than as expressly set forth below, we have not undertaken, for purposes of this
opinion, any independent investigation to determine the existence or absence of
such facts, and no inference as to our knowledge of the existence or absence of
such facts should be drawn from the fact of our representation of the Trust and
the Adviser. Moreover, we have not searched any electronic databases or the
dockets of any court, regulatory body or governmental agency or other filing
office in any jurisdiction.
For purposes of this opinion, we have assumed that the agreements
referred to herein have been duly authorized, executed and delivered by all
parties thereto other than the Trust, and that all such other parties have all
requisite power and authority to effect the transactions contemplated by such
agreements. We have also assumed that each such agreement is the valid and
binding obligation of each party thereto other than the Trust and is enforceable
against all such other parties in accordance with its terms. We do not render
any opinion as to the application of any federal or state law or regulation to
the power, authority or competence of any party to the agreements other than the
Trust.
B-2
Our opinions set forth below are qualified to the extent that they may
be subject to or affected by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws relating to or
affecting the rights of creditors generally, (ii) statutory or decisional law
concerning recourse by creditors to security in the absence of notice or
hearing, (iii) duties and standards imposed on creditors and parties to
contracts, including, without limitation, requirements of good faith,
reasonableness and fair dealing, and (iv) general equitable principles. We
express no opinion as to the availability of any equitable or specific remedy
upon any breach of any of the agreements as to which we are opining herein, or
any of the agreements, documents or obligations referred to therein, or to the
successful assertion of any equitable defenses, inasmuch as the availability of
such remedies or the success of any equitable defense may be subject to the
discretion of a court. Without limiting the foregoing, with respect to our
opinion in paragraph 9 below, (i) we are expressing no opinion as to the
enforceability of the indemnification or contribution provisions of the
Underwriting Agreement, (ii) we note that a court may refuse to enforce, or may
limit the application of, the Underwriting Agreement or certain provisions
thereof, as unconscionable or contrary to public policy, and (iii) we have
assumed compliance by all parties with federal and state securities laws.
We also express no opinion herein as to any provision of any agreement
(a) which may be deemed to or construed to waive any right of the Trust, (b) to
the effect that rights and remedies are not exclusive, that every right or
remedy is cumulative and may be exercised in addition to or with any other right
or remedy and does not preclude recourse to one or more other rights or
remedies, (c) relating to the effect of invalidity or unenforceability of any
provision of any agreement on the validity or enforceability of any other
provision thereof, (d) requiring the payment of penalties, consequential damages
or liquidated damages, (e) which is in violation of public policy, including,
without limitation, any provision relating to non-competition and
non-solicitation or relating to indemnification and contribution with respect to
securities law matters, (f) purporting to indemnify any person against his, her
or its own negligence or intentional misconduct, (g) which provides that the
terms of any agreement may not be waived or modified except in writing or (h)
relating to choice of law or consent to jurisdiction.
Our opinion expressed in paragraph 1 below as to the valid existence
and good standing of the Trust is based solely on a certificate of legal
existence issued by the Secretary of State of the Commonwealth of Massachusetts,
a copy of which has been made available to your counsel, and our opinion with
respect to such matters is rendered as of the date of such certificate and
limited accordingly. We express no opinion as to the tax good standing of the
Trust in any jurisdiction.
In connection with our opinion expressed in paragraph 2 below, insofar
as it relates to full payment for the outstanding Common Shares of the Trust, we
have relied solely on a certificate of an officer of the Trust. Out opinion
expressed in paragraph 2 below as to issued and outstanding shares of capital
stock of the Trust is based solely on a certificate of the Trust's transfer
agent, which we assume to be complete and accurate. Our opinion expressed in
paragraph 2 below as to the due and valid issuance of all outstanding common
shares of the Trust is based solely on a review of the corporate minute books of
the Trust, and a certificate of an officer of the Trust, each of which we assume
to be complete and accurate.
B-3
Our opinion expressed in paragraph 4 below as to the effectiveness of
the Registration Statement under the Securities Act is based solely upon oral
advice from Xx. Xxxxx Xxxxxxxx at the Division of Investment Management of the
Commission that such Registration Statement was declared effective as of [3:30]
p.m. on October , 2002. Our opinion expressed in paragraph 10 below as to the
listing of the Common Shares on the New York Stock Exchange is solely based upon
a letter from the Exchange to the Trust dated August , 2002.
Our opinions in paragraphs 2 and 3 below are qualified to the extent
that, under Massachusetts law, shareholders of a Massachusetts business trust
may be held personally liable for the obligations of the Trust. However, the
Declaration of Trust disclaims shareholders liability for acts or obligations of
the Trust. Also, the Declaration of Trust provides for indemnification out of
Trust property for all loss and expense of any shareholder held personally
liable for the obligations of the Trust.
We have not made any investigation of the laws of any jurisdiction
other than the state laws of the Commonwealth of Massachusetts and the federal
laws of the United States of America. To the extent that any other laws govern
any of the matters as to which we express an opinion below, we have assumed for
purposes of this opinion, with your permission and without independent
investigation, that the laws of such jurisdiction are identical to the state
laws of the Commonwealth of Massachusetts, and we express no opinion as to
whether such assumption is reasonable or correct. We express no opinion with
respect to the securities or Blue Sky laws of any state of the United States,
with respect to state or federal antifraud laws (except to the extent expressly
provided in the third to last paragraph below) or with respect to the approval
by the National Association of Securities Dealers, Inc. of the offering.
On the basis of and subject to the foregoing, we are of the opinion
that:
1. The Trust is validly existing as a business trust in good
standing under the laws of the Commonwealth of Massachusetts
and has business trust power and authority to carry on its
business and own, lease and operate its properties as
described in the Prospectus, and to enter into and perform its
obligations under the Underwriting Agreement.
2. The authorized, issued and outstanding shares of beneficial
interest of the Trust as of the date of the Prospectus are as
set forth in the Prospectus under the caption "The Fund". All
issued and outstanding shares of beneficial interest of the
Trust as of the date hereof have been duly authorized, validly
issued, and fully paid and are not subject to any preemptive
or similar statutory rights under the Massachusetts Business
Trust statute or, to our knowledge, similar contractual rights
granted by the Trust.
B-4
3. The Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor
pursuant to the Underwriting Agreement, will be validly issued
and fully paid.
4. The Registration Statement has been declared effective
under the Securities Act. Any required filing of the
Prospectus pursuant to Rule 497(c) or Rule 497(h) has been
made in the manner and within the time period required by Rule
497. To the best of our knowledge, no stop order suspending
the effectiveness of the Registration Statement has been
issued under the Securities Act. To the best of our knowledge,
no order of suspension or revocation of registration pursuant
to Section 8(e) of the Investment Company Act of 1940, as
amended (the "1940 Act"), has been issued, and no proceedings
for any such purpose have been instituted or are pending or
threatened by the Commission.
5. The Trust is registered with the Commission under the 1940
Act as a closed-end, diversified management investment
company; and to our knowledge, no order of suspension or
revocation of such registration has been issued nor have any
proceedings therefore been initiated or threatened by the
Commission.
6. The Underwriting Agreement has been duly authorized,
executed and delivered by the Trust.
7. Each of the Investment Advisory Agreement between the Trust
and the Adviser, dated August 22, 2002 (the "Investment
Advisory Agreement"), the Custodian Agreement between the
Trust and The Bank of New York, dated August 27, 2002 (the
"Custodian Agreement"), the Transfer Agency Agreement between
the Trust and Mellon Investor Services, LLC, dated August 27,
2002 (the "Transfer Agency Agreement"), the Auction Agency
Agreement between the Trust and Deutsche Bank Trust Company =
Americas, dated October __, 2002 (the "Auction Agency
Agreement"), the Letter Agreement between the Trust and the
Depository Trust Company, dated October __, 2002 (the "DTC
Agreement"), the Underwriting Agreement, the Shareholder
Servicing Agreement between the Adviser and UBS Warburg, LLC,
dated August 27, 2002 and the Additional Compensation
Agreement between the Adviser and UBS Warburg, LLC, dated
August 27, 2002 comply in all material respects with all
applicable provisions of the 1940 Act, the Investment Advisers
Act of 1940, as amended (the "Advisers Act"), and the rules
and regulations of the Commission under the 1940 Act and the
Advisers Act.
B-5
8. Each of the Investment Advisory Agreement, the Custodian
Agreement, the Transfer Agency Agreement, the Auction Agency
Agreement and the DTC Agreement has been duly authorized by
all requisite action on the part of the Trust, executed and
delivered by the Trust, as of the date noted therein. Assuming
due authorization, execution and delivery by the other parties
thereto, each of the Investment Advisory Agreement, the
Custodian Agreement, the Transfer Agency Agreement, the
Auction Agency Agreement and the DTC Agreement constitutes a
valid and binding agreement of the Trust, enforceable against
the Trust in accordance with its terms.
9. The execution, delivery and performance of the Investment
Advisory Agreement, Transfer Agency Agreement, Custodian
Agreement and the Underwriting Agreement by the Trust, the
compliance by the Trust with all the provisions thereof and
the consummation by the Trust of the transactions contemplated
thereby (including the issuance and sale of the Shares and the
use of the proceeds from the sale of the Shares as described
in the Prospectus under the caption "Use of Proceeds") do not
and will not (A) require any consent, approval, authorization
or other order of, or qualification with, any Massachusetts
state or U.S. federal court or governmental body or agency
(except such as may be required under the securities or Blue
Sky laws of the various states or the National Association of
Securities Dealers, Inc. or as have been obtained under the
federal securities laws), (B) conflict with or constitute a
breach of any of the terms or provisions of, or a default
under, or result in the imposition of a lien, charge or
encumbrance upon the assets of the Trust pursuant to any
indenture, loan agreement, mortgage, lease or other agreement
or instrument filed as an exhibit to the Registration
Statement, (C) violate or conflict with the Declaration of
Trust or By-laws, (D) violate or conflict with any applicable
U.S. federal or Massachusetts state law, rule or regulation
which in our experience is normally applicable in transactions
of the type contemplated by the Underwriting Agreement, or (E)
violate or conflict with any judgment, order or decree
specifically naming the Trust or its property of which we are
aware.
10. The Common Shares are listed on the New York Stock
Exchange.
11. To our knowledge, there are no legal or governmental
proceedings pending or threatened against the Trust.
12. The statements in the Prospectus under the caption
"Description of the Shares" and in Item 29 of Part C of the
Registration Statement, insofar as such statements constitute
matters of law or legal conclusions, are correct in all
material respects.
B-6
13. The Trust does not require any tax or other rulings to
enable it to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended.
14. Each of the section in the Prospectus entitled "U.S.
Federal Income Tax Matters" and the section in the Statement
of Additional Information entitled "U.S. Federal Income Tax
Matters" is a fair summary of the principal United States
federal income tax rules currently in effect applicable to the
Trust and to the purchase, ownership and disposition of the
Shares.
15. The Registration Statement, including any Rule 430A
Information, the Prospectus and each amendment or supplement
to the Registration Statement and Prospectus as of their
respective effective or issue dates (other than the financial
statements and supporting schedules including the notes and
schedules thereto, or any other financial or accounting data
included therein or omitted therefrom, as to which we express
no opinion), and the notification on Form N-8A complied as to
form in all material respects with the requirements of the
Securities Act, the 1940 Act and the rules and regulations of
the Commission thereunder.
In connection with the preparation of the Registration Statement, the
Prospectus and the Statement of Additional Information, we have participated in
conferences with officers and representatives of the Trust and the Adviser,
representatives of the Underwriters, counsel for the Underwriters and the
independent accountants of the Trust, at which conferences we made inquiries of
such persons and others and discussed the contents of the Registration Statement
and the Prospectus and the Statement of Additional Information. While the
limitations inherent in the independent verification of factual matters and the
character of determinations involved in the registration process are such that
we are not passing upon and do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus, subject to the foregoing and based on such
participation, inquiries and discussions, no facts have come to our attention
which have caused us to believe that the Registration Statement, as of the
Effective Date (but after giving effect to changes incorporated pursuant to Rule
430A under the Securities Act), contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading (except that we
express no such view with respect to the financial statements, including the
notes and schedules thereto, or any other financial or accounting data included
therein), or that the Prospectus, as of the date it was filed with the
Commission pursuant to Rule 497 under the Securities Act or as of the date
hereof, contained any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading (except that we
express no such view with respect to the financial statements, including the
notes and schedules thereto, or any other financial or accounting data included
therein).
B-7
This opinion is based upon currently existing statutes, rules,
regulations and judicial decisions and is rendered as of the date hereof, and we
disclaim any obligation to advise you of any change in any of the foregoing
sources of law or subsequent developments in law or changes in facts or
circumstances which might affect any matters or opinions set forth herein.
Please note that we are opining only as to the matters expressly set forth
herein, and no opinion should be inferred as to any other matters.
This opinion is being furnished to you, as Representative of the
Underwriters, at the request of the Trust pursuant to the Underwriting
Agreement, is solely for the benefit of the Underwriters, and may not be relied
upon by you for any other purpose, or furnished to, quoted to or relied upon by
any other party for any purpose, without our prior written consent. We
understand that Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois) in delivering
their opinion pursuant to Section 6(f) of the Underwriting Agreement is relying
upon this opinion as to matters of the laws of the Commonwealth of
Massachusetts. We consent to such reliance.
B-8
SCHEDULE C
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING XXXX XXXXXXX ADVISERS, LLC
i. Xxxx Xxxxxxx Advisers, LLC ("Xxxx Xxxxxxx Advisers") has been duly formed and
is validly existing as a limited liability company under the laws of the State
of Delaware. Xxxx Xxxxxxx Advisers has limited liability company power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus and to enter into and perform its obligations
under the Underwriting Agreement, the Shareholder Servicing Agreement, the
Additional Compensation Agreement and the Investment Advisory Agreement.
ii. Xxxx Xxxxxxx Advisers is registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act or the Investment Company
Act from acting as investment adviser and administrator for the Fund as
contemplated by the Investment Advisory Agreement, the Registration Statement
and the Prospectus.
iii. The Underwriting Agreement, the Shareholder Servicing Agreement, the
Investment Advisory Agreement and the Additional Compensation Agreement have
been duly authorized, executed and delivered by Xxxx Xxxxxxx Advisers, and the
Investment Advisory Agreement, the Shareholder Servicing Agreement and the
Additional Compensation Agreement each constitutes a valid and binding
obligation of Xxxx Xxxxxxx Advisers, enforceable in accordance with their
respective terms
iv. The execution, delivery and performance of the Underwriting Agreement by
Xxxx Xxxxxxx Advisers, the compliance by Xxxx Xxxxxxx Advisers with all the
provisions thereof and the consummation by Xxxx Xxxxxxx Advisers of the
transactions contemplated thereby do not and will not (A) require any consent,
approval, authorization or order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states or the National Association of Securities
Dealers, Inc. or as have been obtained under the federal securities laws), (B)
conflict with or constitute a breach of any of the terms or provisions of, or a
default under or result in the imposition of a lien, charge or encumbrance upon
the assets of Xxxx Xxxxxxx Advisers pursuant to, any indenture, loan agreement,
mortgage, lease or other agreement or instrument to which Xxxx Xxxxxxx Adviser
is a party filed as an exhibit to the Registration Statement, (C) violate or
conflict with the Certificate of Limited Liability Company or the Limited
Liability Company Agreement of Xxxx Xxxxxxx Advisers, or (D) violate or conflict
with any applicable federal and Massachusetts law, rule or regulation or the
Delaware Limited Liability Company statute, or (E) violate or conflict with any
judgment, order or decree specifically naming Xxxx Xxxxxxx Advisers or its
property.
vi. To our knowledge, there is no legal or governmental proceeding pending or
threatened against Xxxx Xxxxxxx Advisers that is either: (1) required by the
Securities Act or the 1940 Act and their Rules and Regulations to be described
in the Registration Statement or Prospectus that is not already described, or:
(2) which would, under Section 9 of the 1940 Act, make Xxxx Xxxxxxx Advisers
ineligible to act as the Fund's investment adviser.
C-1
In connection with the registration of the Shares, such counsel has advised Xxxx
Xxxxxxx Advisers as to the requirements of the Securities Act, the Investment
Company Act and the applicable rules and regulations of the Commission
thereunder and has rendered other legal advice and assistance to Xxxx Xxxxxxx
Advisers in the course of the preparation of the registration Statement and the
Prospectus. Rendering such assistance involved, among other things, discussions
and inquiries concerning various legal and related subjects and reviews of
certain corporate records, documents and proceedings. Such counsel has also
participated in conferences with representatives of the Fund and its accountants
and Xxxx Xxxxxxx Advisers at which the contents of the registration and
Prospectus and related matters were discussed. With your permission, such
counsel not undertaken, except as otherwise indicated herein, to determine
independently, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements in the Registration Statement or
Prospectus. On the basis of the information which was developed in the course of
the performance of the services referred to above, no information has come to
such counsel's attention that would lead him to believe that the Registration
Statement, at the time it became effective, contained any 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, as of its date and as of the date hereof, contained or contains an
untrue statement of a material fact or omitted or omits 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 or that any amendment
or supplement to the Prospectus, as of its respective date, and as of the date
hereof, contained any untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements in the
Prospectus, in the light of the circumstances under which they were made, not
misleading (except the financial statements, schedules and other financial data
included therein or any other financial or accounting data included therein, as
to which such counsel expresses no view).
C-2
SCHEDULE D
FORM OF ACCOUNTANT'S LETTER
October , 2002
The Board of Trustees of
Xxxx Xxxxxxx Preferred Income Fund
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
UBS Warburg LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
as Managing Representative of the Underwriters
Ladies and Gentlemen:
We have audited the statement of assets and liabilities of
Xxxx Xxxxxxx Preferred Income Fund (the "Fund") as of __ _, 2002 included in the
Registration Statement on Form N-2 filed by the Fund under the Securities Act of
1933 (the "Act") (File No. 333- ) and under the Investment Company Act of 1940
(the "1940 Act") (File No. 811- ); such statement and our report with respect to
such statement are included in the Registration Statement.
In connection with the Registration Statement:
1. We are independent public accountants with respect to the
Fund within the meaning of the Act and the applicable rules and
regulations thereunder.
2. In our opinion, the statement of assets and liabilities
included in the Registration Statement and audited by us complies as to
form in all respects with the applicable accounting requirements of the
Act, the 1940 Act and the respective rules and regulations thereunder.
3. For purposes of this letter we have read the minutes of all
meetings of the Shareholders, the Board of Trustees and all Committees
of the Board of Trustees of the Fund as set forth in the minute books
at the offices of the Fund, officials of the Fund having advised us
that the minutes of all such meetings through , 2002, were set forth
therein.
4. Fund officials have advised us that no financial statements
as of any date subsequent to , 2002, are available. We have made
inquiries of certain officials of the Fund who have responsibility for
financial and accounting matters regarding whether there was any change
at , 2002, in the capital shares or net assets of the Fund as compared
with amounts shown in the , 2002, statement of assets and liabilities
included in the Registration Statement, except for changes that the
Registration Statement discloses have occurred or may occur. On the
basis of our inquiries and our reading of the minutes as described in
Paragraph 3, nothing came to our attention that caused us to believe
that there were any such changes.
D-1
The foregoing procedures do not constitute an audit made in accordance
with generally accepted auditing standards. Accordingly, we make no
representations as to the sufficiency of the foregoing procedures for your
purposes.
This letter is solely for the information of the addressees and to
assist the underwriters in conducting and documenting their investigation of the
affairs of the Fund in connection with the offering of the securities covered by
the Registration Statement, and is not to be used, circulated, quoted or
otherwise referred to within or without the underwriting group for any other
purpose, including but not limited to the registration, purchase or sale of
securities, nor is it to be filed with or referred to in whole or in part in the
Registration Statement or any other document, except that reference may be made
to it in the underwriting agreement or in any list of closing documents
pertaining to the offering of the securities covered by the Registration
Statement.
Very Truly Yours,
D-2
