EXHIBIT 99(h)
Xxxx Xxxxxxx Income Securities Trust
Auction Preferred Shares
No Par Value
UNDERWRITING AGREEMENT
October [ ], 2003
UNDERWRITING AGREEMENT
October [ ], 2003
UBS Securities LLC
as Managing Representative
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Xxxx Xxxxxxx Income Securities Trust, 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) (the "Fund"), proposes to issue and sell to the underwriters
named in Schedule A annexed hereto (the "Underwriters") an aggregate of [ ]
preferred shares of beneficial interest of the Fund, no par value, designated
Series M Auction Preferred Shares of the Fund, [ ] preferred shares of
beneficial interest of the Fund, no par value, designated Series T Auction
Preferred Shares of the Fund, [ ] preferred shares of beneficial interest of the
Fund, no par value, designated Series W Auction Preferred Shares of the Fund, [
] preferred shares of beneficial interest of the Fund, no par value, designated
Series TH Auction Preferred Shares of the Fund, and [ ] 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. 333-108636 and 811-04186), 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
Amended and Restated Investment Management Contract by and between the Fund and
the Investment Adviser, dated as of [ ], 2003 (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 [
], 2003 (the "Custody Agreement"). Mellon Investor Services, LLC acts as the
Fund's transfer agent, registrar 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 [ ], 2003 (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 [ ], 2003 (the "Auction Agency Agreement"). The Fund has entered into a
Letter Agreement, dated as of [ ], 2003, with the Depository Trust Company (the
"DTC 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."
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
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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.
(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
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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 Adverse Effect
(as defined below in Section 3(m)) 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 Adverse Effect (as defined below in Section 3(m)).
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 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
(collectively called the "Advisers Act"), as the case may be,
and (iii) assuming due authorization, execution and delivery
by
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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 (as defined below in
Section 3(m)).
(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.
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(j) [ ], 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.
(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
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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 and the Investment Advisory
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 and the
Investment Advisory 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 and
the Investment Advisory Agreement.
(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 and the
7
Investment Advisory Agreement (collectively, this Underwriting
Agreement and the Investment Advisory 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
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
8
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 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
9
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.
(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
10
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
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
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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.
(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
12
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
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.
13
(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 or
the Investment Advisory 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).
(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 (Illinois) 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
14
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.
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
15
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
(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
16
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
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,
17
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
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
18
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
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
19
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
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.
20
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
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
21
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
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.
22
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 Securities 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 Securities LLC or any
indemnified party. Each of UBS Securities 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
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.
23
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 INCOME SECURITIES TRUST
____________________________________
By:
Title:
XXXX XXXXXXX ADVISERS, LLC
____________________________________
By:
Title:
25
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 SECURITIES LLC
[ ]
By: UBS SECURITIES LLC
______________________________
By:
Title:
______________________________
By:
Title:
26
SCHEDULE A
Number of Shares to be
Underwriter Purchased
----------- ----------------------
UBS Securities LLC [ ]
[ ]
TOTAL
A-1
SCHEDULE B
FORM OF OPINION OF
XXXX & XXXX REGARDING THE FUND
[ ], 2003
UBS Securities LLC
As Representative of the
Several Underwriters
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Xxxx Xxxxxxx Income Securities Trust
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 6(e) of the
Underwriting Agreement, dated as of [ ], 2003 (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
Income Securities Trust, a Massachusetts business trust (the "Fund").
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 Fund and the Adviser in connection
with the sale to the Underwriters by the Fund of an aggregate of [ ] preferred
shares of beneficial interest of the Fund, no par value, designated Series M
Auction Preferred Shares of the Fund, [ ] preferred shares of beneficial
interest of the Fund, no par value, designated Series T Auction Preferred Shares
of the Fund, [ ] preferred shares of beneficial interest of the Fund, no par
value, designated Series W Auction Preferred Shares of the Fund [ ] preferred
shares of beneficial interest of the Fund, no par value, designated Series TH
Auction Preferred Shares of the Fund and [ ] 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
(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 Fund's
Registration Statement on Form N-2 dated [ ], 2003 (File Nos. 333-108636 and
811-04186), and amendments No. [ ] thereto, which Registration Statement became
effective on [ ], 2003 (the "Effective Date"). Such Registration Statement, in
the form in which it became effective, is referred to herein as the
"Registration Statement," and the prospectus dated [ ], 2003 and statement of
additional information dated [ ], 2003, included therein, as filed pursuant to
Rule 497 of the Securities Act of 1933, as amended (the "Securities Act"), on
[ ], 2003, are referred to herein as the "Prospectus" and the "Statement of
Additional Information."
B-1
We have examined and relied upon the Declaration of Trust and Amended
By-laws of the Fund, each as amended to date, records of meetings or written
actions of shareholders and of the Board of Trustees of the Fund, proceedings of
the Fund 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 Fund,
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 Fund and the Adviser and stock books
of the Fund and are complete and accurate.
Insofar as this opinion relates to factual matters, information with
respect to which is in the possession of the Fund or the Adviser, we have
relied, with your permission, upon certificates, statements and representations
of officers and other representatives of the Fund 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 Fund 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 Fund, 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 Fund 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
Fund.
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 Fund, (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 Fund 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
Fund 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 Fund, we
have relied solely on a certificate of an officer of the Fund. Our opinion
expressed in paragraph 2 below as to issued and outstanding shares of capital
stock of the Fund is based solely on a certificate of the Fund'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
B-3
outstanding common shares of the Fund is based solely on a review of the
corporate minute books of the Fund, and a certificate of an officer of the Fund,
each of which we assume to be complete and accurate.
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 [ ] at the Division of Investment Management of the Commission that
such Registration Statement was declared effective as of [ ] p.m. on [ ], 2003.
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 Fund dated [ ], 2003.
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 Fund. However, the
Declaration of Trust disclaims shareholders liability for acts or obligations of
the Fund. Also, the Declaration of Trust provides for indemnification out of
Fund property for all loss and expense of any shareholder held personally liable
for the obligations of the Fund.
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 Fund 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 Fund 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
Fund 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 Fund.
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 Fund 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 Fund.
7. Each of the Investment Advisory Agreement between the Fund and
the Adviser, dated [ ], 2003 (the "Investment Advisory
Agreement"), the Custodian Agreement between the Fund and The
Bank of New York, dated [ ], 2003 (the "Custodian Agreement"),
the Transfer Agency Agreement between the Fund and Mellon
Investor Services, LLC, dated [ ], 2003 (the "Transfer Agency
Agreement"), the Auction Agency Agreement between the Fund and
Deutsche Bank Trust Company Americas, dated [ ], 2003 (the
"Auction Agency Agreement"), the Letter Agreement between the
Fund and the Depository Trust Company, dated [ ], 2003 (the
"DTC Agreement") and the Underwriting Agreement 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.
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 Fund, executed and
delivered by the Fund, as of the date noted therein. Assuming
due authorization, execution and delivery by the other parties
thereto, each of the Investment Advisory Agreements, the
Custodian Agreement, the Transfer Agency Agreement, the
Auction Agency Agreement and the DTC Agreement constitutes a
valid and
B-5
binding agreement of the Fund, enforceable against the Fund 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 Fund, the
compliance by the Fund with all the provisions thereof and the
consummation by the Fund 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 Fund 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 Fund 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 Fund.
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.
13. The Fund 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
Fund and to the purchase, ownership and disposition of the
Shares.
B-6
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 Fund and the Adviser,
representatives of the Underwriters, counsel for the Underwriters and the
independent accountants of the Fund, 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).
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 Fund 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
B-7
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 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 and the Investment Advisory Agreement have
been duly authorized, executed and delivered by Xxxx Xxxxxxx Advisers, and the
Investment Advisory Agreement constitutes a valid and binding obligation of Xxxx
Xxxxxxx Advisers, enforceable in accordance with its 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 Advisers
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.
v. 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
C-1
9 of the 1940 Act, make Xxxx Xxxxxxx Advisers ineligible to act as the Fund's
investment adviser.
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
[ ], 2003
The Board of Trustees of
Xxxx Xxxxxxx Income Securities Trust
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
UBS Securities 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 ______, 2003 included in
the Registration Statement on Form N-2 filed by the Fund under the Securities
Act of 1933 (the "Act") (File No. 333-108636) and under the Investment Company
Act of 1940 (the "1940 Act") (File No. 811-04186); 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 _______ ,
2003, were set forth therein.
4. Fund officials have advised us that no financial
statements as of any date subsequent to ________, 2003, 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 ______, 2003, in the capital
D-1
shares or net assets of the Fund as compared with amounts shown in the
_______, 2003, 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.
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
