Xxxx Xxxxxxx Preferred Income Fund III
Auction Preferred Shares
No Par Value
UNDERWRITING AGREEMENT
August , 2003
UNDERWRITING AGREEMENT
August , 2003
UBS Securities LLC
as Managing Representative
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Xxxx Xxxxxxx Preferred Income Fund III, 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 2,800 preferred shares of beneficial interest of the Fund, no par
value, designated Series M Auction Preferred Shares of the Fund, 2,800 preferred
shares of beneficial interest of the Fund, no par value, designated Series T
Auction Preferred Shares of the Fund, 2,800 preferred shares of beneficial
interest of the Fund, no par value, designated Series W Auction Preferred Shares
of the Fund, 2,800 preferred shares of beneficial interest of the Fund, no par
value, designated Series Th Auction Preferred Shares of the Fund, and 2,800
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. 333-107015 and 811-21287), including a prospectus and a statement of
additional information, relating to the Shares. The Fund has furnished to you,
for use by the Underwriters and by dealers, copies of one or more preliminary
prospectuses (including a preliminary statement of additional information) (each
thereof, including such preliminary statement of additional information, being
herein called a "Preliminary Prospectus") relating to the Shares. Except where
the context otherwise requires, the Registration Statement, as amended when it
becomes effective (the "Effective Date"), including all documents filed as a
part thereof or incorporated by reference therein, and including any information
contained in a prospectus subsequently filed with the Commission pursuant to
Rule 497 under the Act and deemed to be part of the Registration Statement at
the time of effectiveness pursuant to Rule 430A under the Act is herein called
the Registration Statement, and the prospectus (including the statement of
additional information), in the form filed by the Fund with the Commission
pursuant to Rule 497 under the Act or, if no such filing is required, the form
of final prospectus (including the form of final statement of additional
information) included in the "Registration Statement" at the time it became
effective, is herein called the "Prospectus." In addition, the Fund has filed a
Notification of Registration on Form N-8A (the "Notification") pursuant to
Section 8 of the Investment Company Act.
Xxxx Xxxxxxx Advisers, LLC ("Xxxx Xxxxxxx Advisers" or the
"Investment Adviser") acts as the Fund's investment adviser pursuant to an
Investment Advisory Agreement by and between the Fund and the Investment
Adviser, dated as of June 19, 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 June 19, 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 June 19, 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
Investment Adviser and UBS Securities LLC (the "Managing Representative") have
entered into a Shareholder Servicing Agreement, dated as of June 19, 2003 (the
"Shareholder Servicing Agreement"). The Investment Adviser has entered into a
Lead Managing Underwriter Additional Compensation Agreement with UBS Securities
LLC, dated as of June 16, 2003; a Lead Managing Underwriter Additional
Compensation Agreement with Merrill, Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated,
dated as of June 16, 2003; and a Qualifying Underwriter Additional Compensation
Agreement, dated as of June 16, 2003 (collectively, the "Additional Compensation
Agreements").
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
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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 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.
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(b) The Fund has been duly formed, is validly existing as a
Massachusetts business trust, with full power and authority to conduct
its business as described in the Registration Statement and
Prospectus, and the Fund is duly licensed and qualified to do business
and in good standing in each jurisdiction in which its ownership or
leasing of property or its conducting of business requires such
qualification, except where the failure to be so licensed and
qualified, either alone or in the aggregate, would not result in a
Material 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
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the case may be, and (iii) assuming due authorization, execution and
delivery by the other parties thereto, each Fund Agreement constitutes
the legal, valid and binding obligation of the Fund enforceable in
accordance with its terms, (A) subject, as to enforcement, to
applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general equitable principles
(regardless of whether enforcement is sought in a proceeding in equity
or at law) and (B) except as rights to indemnity thereunder may be
limited by federal or state securities laws.
(f) None of (i) the execution and delivery by the Fund of the Fund
Agreements, (ii) the issue and sale by the Fund of the Shares as
contemplated by this Underwriting Agreement and (iii) the performance
by the Fund of its obligations under any of the Fund Agreements or
consummation by the Fund of the other transactions contemplated by the
Fund Agreements conflicts with or will conflict with, or results or
will result in a breach of, the Declaration of Trust of the Fund, as
amended through the date hereof (the "Declaration of Trust"), the
Amended and Restated Bylaws of the Fund, adopted in connection with
the issuance of the Shares and as amended through the date hereof (the
"Amended Bylaws") or any agreement or instrument to which the Fund is
a party or by which the Fund is bound, or any law, rule or regulation,
or order of any court, governmental instrumentality, securities
exchange or association or arbitrator, whether foreign or domestic,
applicable to the Fund, other than state securities or "blue sky" laws
applicable in connection with the purchase and distribution of the
Shares by the Underwriters pursuant to this Underwriting Agreement.
(g) The Fund is not currently in breach of, or in default under, any
written agreement or instrument to which it is a party or by which it
or its property is bound or affected, except for such breaches or
defaults that do not, either alone or in the aggregate, have a
Material Adverse Effect (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
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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.
(j) Deloitte & Touche LLP, whose report appears in the Prospectus, are
independent public accountants with respect to the Fund as required by
the Act and the Investment Company Act. (k) The statement of assets
and liabilities included in the Registration Statement and the
Prospectus presents fairly in all material respects, in accordance
with generally accepted accounting principles in the United States
applied on a consistent basis, the financial position of the Fund as
of the date indicated.
(l) The Fund will maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets through an
asset reconciliation procedure or otherwise at reasonable intervals
and appropriate action is taken with respect to any differences.
(m) Since the date as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated
therein, (i) there has been no material adverse change in the
condition, financial or otherwise, business affairs or business of the
Fund, whether or not arising in the ordinary course of business (a
"Material Adverse Effect"), (ii) there have been no transactions
entered into by the Fund other than those in the ordinary course of
its business and (iii) there has been no dividend or distribution of
any kind declared, paid or made on any class of its capital shares.
(n) There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending, or, to
the knowledge of the Fund, threatened against or affecting the Fund,
which (i) might result in any material adverse change in the
condition, financial or otherwise, business affairs or business
6
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 Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code").
(p) The Common Shares are listed on the New York Stock Exchange.
(q) The Shares have been, or prior to the Closing Date will be,
assigned a rating of "Aaa" by Xxxxx'x Investors Service, Inc.
(r) No advertising, sales literature or other promotional materials
(excluding road show slides or road show tapes) were authorized or
prepared by or on behalf of the Fund or the Investment Adviser or any
representative thereof for use in connection with the public offering
or sale of the Shares (collectively referred to as the "sales
materials"); any road show slides or road show tapes complied and
comply in all material respects with the applicable requirements of
the Act and the rules and interpretations of the NASD; and no broker
kits, road show slides, road show tapes or sales materials authorized
or prepared by the Fund or authorized or prepared on behalf of the
Fund by the Investment Adviser or any representative thereof for use
in connection with the public offering or sale of the Shares contained
or contains any untrue statement of a material fact or omitted or
omits to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
4. Representations and Warranties of the Investment Adviser. The Investment
Adviser represents to each Underwriter as follows:
(a) The Investment Adviser has been duly formed, is validly existing
as a limited liability company under the laws of Delaware with full
power and authority to perform its obligations under this Agreement,
the Shareholder Servicing Agreement, the Investment Advisory Agreement
and the Additional Compensation Agreements, and the Investment Adviser
is duly licensed and qualified to do business and in good standing in
each jurisdiction in which it is required to be so qualified in order
to perform its obligations under this Agreement, the Shareholder
Servicing Agreement, the Investment Advisory Agreement and the
Additional Compensation Agreements; and the Investment Adviser owns,
possesses or has obtained and currently maintains all governmental
licenses, permits, consents, orders, approvals and other
authorizations, whether foreign or domestic, necessary to perform its
obligations under this Agreement, the Shareholder Servicing Agreement,
the Investment Advisory Agreement and the Additional Compensation
Agreements.
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(b) The Investment Adviser is (i) registered as an investment adviser
under the Advisers Act and (ii) not prohibited by the Advisers Act or
the Investment Company Act from acting as the investment adviser for
the Fund as contemplated by the Investment Advisory Agreement, the
Registration Statement and the Prospectus.
(c) The Investment Adviser has, or at the relevant time had, full
power and authority to enter into each of this Underwriting Agreement,
the Shareholder Servicing Agreement, the Investment Advisory Agreement
and the Additional Compensation Agreements (collectively, this
Underwriting Agreement, the Shareholder Servicing Agreement, the
Investment Advisory Agreement and the Additional Compensation
Agreements 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.
8
(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 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
9
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 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
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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 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
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documents in connection with the offering, purchase, sale and delivery
of the Shares (including advertising expenses of the Underwriters, if
any); (iii) the cost of preparing share certificates; (iv) the
expenses (including, but not limited to, travel, hotels and other
accommodations) incurred by the Fund's directors, officers, employees
and other personnel in connection with meetings held with registered
brokers in connection with the offering of the Shares, the preparing
to market and the marketing of the Shares; (v) any fees charged by
securities rating services for rating the Shares; (vi) the fees and
expenses of the DTC and its nominee, the Custodian and the Auction
Agent; and (vii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise
specifically provided for. It is understood, however, that, except as
provided in this Section 5 and Section 7 hereof, the Underwriters will
pay all of their own costs and expenses, including the fees of their
counsel and stock transfer taxes, if any, on resale of any of the
Shares by them, except any advertising expenses connected with any
offers they may make.
(h) If the transactions contemplated by this Underwriting Agreement
are not consummated, except as otherwise provided herein, no party
will be under any liability to any other party, except that (i) if
this Underwriting Agreement is terminated by (A) the Fund or the
Investment Adviser pursuant to any of the provisions hereof (otherwise
than pursuant to Section 8 hereof) or (B) by you or the Underwriters
because of any inability, failure or refusal on the part of the Fund
or the Investment Adviser to comply with any material terms or because
any of the conditions in Section 6 are not satisfied, Xxxx Xxxxxxx
Advisers or an affiliate and the Fund, jointly and severally, will
reimburse the Underwriters for all out-of-pocket expenses (including
the reasonable fees, disbursements and other charges of their counsel)
reasonably incurred by them in connection with the proposed purchase
and sale of the Shares and (ii) no Underwriter who has failed or
refused to purchase the Shares agreed to be purchased by it under this
Underwriting Agreement, in breach of its obligations pursuant to this
Underwriting Agreement, will be relieved of liability to the Fund and
the Investment Adviser and the other Underwriters for damages
occasioned by its default.
(i) Without the prior written consent of the Managing Representative,
the Fund will not offer, sell or register with the Commission, or
announce an offering of, any equity securities of the Fund, within 180
days after the Effective Date, except for the Shares as described in
the Prospectus and any issuances of Common Shares pursuant to the
dividend reinvestment plan established by the Fund.
12
(j) The Fund will direct the investment of the net proceeds of the
offering of the Shares in such a manner as to comply with the
investment objective and policies of the Fund as described in the
Prospectus.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters to purchase the Shares are subject to the accuracy on the date
of this Underwriting Agreement, and on the Closing Date, of the
representations of the Fund and the Investment Adviser in this Underwriting
Agreement, to the accuracy and completeness of all statements made by the
Fund, the Investment Adviser or any of their respective officers in any
certificate delivered to the Managing Representative or its counsel
pursuant to this Underwriting Agreement, to performance by the Fund and the
Investment Adviser of their respective obligations under this Underwriting
Agreement and to each of the following additional conditions:
(a) The Registration Statement must have become effective by 5:30
p.m., New York City time, on the date of this Underwriting Agreement
or such later date and time as the Managing Representative consents to
in writing. The Prospectus must have been filed in accordance with
Rule 497(b), (h) or (j), as the case may be, under the Act.
(b) No order suspending the effectiveness of the Registration
Statement may be in effect and no proceedings for such purpose may be
pending before or, to the knowledge of counsel to the Underwriters,
threatened by the Commission, and any requests for additional
information on the part of the Commission (to be included in the
Registration Statement or the Prospectus or otherwise) must be
complied with or waived to the reasonable satisfaction of the Managing
Representative.
(c) Since the dates as of which information is given in the
Registration Statement and the Prospectus, (i) there must not have
been any material adverse change in the number of outstanding Common
Shares or liabilities of the Fund except as set forth in or
contemplated by the Prospectus (provided that a change in the Fund's
net asset value, liabilities or portfolio securities arising in the
course of its normal investment operations shall not be deemed to be a
material adverse change); (ii) there must not have been any material
adverse change in the general affairs, prospects, management,
business, financial condition or results of operations of the Fund or
the Investment Adviser whether or not arising from transactions in the
ordinary course of business as set forth 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
13
interference with its business from any court or from legislative or
other governmental action, order or decree, whether foreign or
domestic, not described in the Registration Statement and Prospectus;
and (iv) there must not have occurred any event that makes untrue or
incorrect in any material respect any statement or information
contained in the Registration Statement or Prospectus or that is not
reflected in the Registration Statement or Prospectus but should be
reflected therein in order to make the statements or information
therein (in the case of the Prospectus, in light of the circumstances
in which they were made) not misleading in any material respect; if,
in the judgment of the Managing Representative, any such development
referred to in clause (i), (ii), (iii) or (iv) of this paragraph (c)
makes it impracticable or inadvisable to consummate the sale and
delivery of the Shares pursuant to this Underwriting Agreement by the
Underwriters, at the initial public offering price of the Shares.
(d) The Managing Representative must have received on the Closing Date
a certificate, dated such date, of the President or a Vice-President
and the chief financial or accounting officer of each of the Fund and
the Investment Adviser certifying in their capacity as such officers
that (i) the signers have examined the Registration Statement, the
Prospectus, and this Underwriting Agreement, (ii) the representations
of the Fund (with respect to the certificates from such Fund officers)
and the representations of the Investment Adviser (with respect to the
certificates from such officers of the Investment Adviser) in this
Underwriting Agreement are accurate on and as of the date of the
certificate, (iii) there has not been any material adverse change in
the general affairs, prospects, management, business, financial
condition or results of operations of the Fund (with respect to the
certificates from such Fund officers) or the Investment Adviser (with
respect to the certificates from such officers of the Investment
Adviser), which change would materially and adversely affect the
ability of the Fund or the Investment Adviser, as the case may be, to
fulfill its obligations under this Underwriting Agreement or the
Investment Advisory Agreement, whether or not arising from
transactions in the ordinary course of business, (iv) with respect to
the Fund only, no order suspending the effectiveness of the
Registration Statement, or prohibiting the sale of any of the Shares
has been issued and no proceedings for any such purpose are pending
before or threatened by the Commission or any other regulatory body,
whether foreign or domestic, (v) no order having a material adverse
14
effect on the ability of the Investment Adviser to fulfill its
obligations under this Underwriting Agreement, the Shareholder
Servicing Agreement, the Investment Advisory Agreement or the
Additional Compensation Agreements, 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 LLP or its affiliated entities an opinion dated the
Closing Date with respect to the Fund, the Shares, the Registration
Statement and the Prospectus, this Underwriting Agreement and the form
and sufficiency of all proceedings taken in connection with the sale
and delivery of the Shares. Such opinion and proceedings shall fulfill
the requirements of this Section 6(f) only if such opinion and
proceedings are satisfactory in all respects to the Managing
Representative. The Fund and the Investment Adviser must have
furnished to such counsel such documents as counsel may reasonably
request for the purpose of enabling them to render such opinion.
(g) The Managing Representative must receive on the date this
Underwriting Agreement is signed and delivered by you a signed letter,
dated such date, substantially in the form of Schedule D to this
Underwriting Agreement from the firm of accountants designated in such
Schedule. The Managing Representative also must receive on the Closing
Date a signed letter from such accountants, dated as of the Closing
Date, confirming on the basis of a review in accordance with the
procedures set forth in their earlier letter that nothing has come to
their attention during the period from a date not more than five
business days before the date of this Underwriting Agreement,
specified in the letter, to a date not more than five business days
before the Closing Date, that would require any change in their letter
referred to in the foregoing sentence.
(h) The Shares shall have been accorded a rating of "Aaa" by Xxxxx'x
Investors Service, Inc. and a letter to such effect, dated on or
before the Closing Date, shall have been delivered to the Managing
Representative.
(i) As of the Closing Date, and assuming the receipt of the net
proceeds from the sale of the Shares, the 1940 Act Fund Preferred
Shares Asset Coverage and the Fund Preferred Shares Basic Maintenance
Amount (each as defined in the Prospectus) each will be met.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Underwriting Agreement will comply only if they are in
form and scope reasonably satisfactory to counsel for the Underwriters,
provided that any such documents, forms of which are annexed hereto, shall
be deemed satisfactory to such counsel if substantially in such form.
15
7. Termination. This Underwriting Agreement may be terminated by the Managing
Representative by notifying the Fund at any time:
(a) before the later of the effectiveness of the Registration
Statement and the time when any of the Shares are first generally
offered pursuant to this Underwriting Agreement by the Managing
Representative to dealers by letter or telegram;
(b) at or before the Closing Date if, in the sole judgment of the
Managing Representative, payment for and delivery of any Shares is
rendered impracticable or inadvisable because (i) trading in the
equity securities of the Fund is suspended by the Commission or by the
principal exchange that lists the Common Shares, (ii) trading in
securities generally on the New York Stock Exchange or the Nasdaq
Stock Market shall have been suspended or limited or minimum or
maximum prices shall have been generally established on such exchange
or over-the-counter market, (iii) additional material governmental
restrictions, not in force on the date of this Underwriting Agreement,
have been imposed upon trading in securities or trading has been
suspended on any U.S. securities exchange, (iv) a general banking
moratorium has been established by U.S. federal or New York
authorities or (v) any material adverse change in the financial or
securities markets in the United States or in political, financial or
economic conditions in the United States or any outbreak or material
escalation of hostilities or declaration by the United States of a
national emergency or war or other calamity or crisis shall have
occurred the effect of any of which is such as to make it, in the sole
judgment of the Managing Representative, impracticable or inadvisable
to market the Shares on the terms and in the manner contemplated by
the Prospectus; or
(c) at or before the Closing Date, if any of the conditions specified
in Section 6 have not been fulfilled when and as required by this
Underwriting Agreement.
8. Substitution of Underwriters. If one or more of the Underwriters fails
(other than for a reason sufficient to justify the termination of this
Underwriting Agreement) to purchase on the Closing Date the Shares agreed
to be purchased on the Closing Date by such Underwriter or Underwriters,
the Managing Representative may find one or more substitute underwriters to
purchase such Shares or make such other arrangements as the Managing
Representative deems advisable, or one or more of the remaining
Underwriters may agree to purchase such Shares in such proportions as may
be approved by the Managing Representative, in each case upon the terms set
forth in this Underwriting Agreement. If no such arrangements have been
made within 36 hours after the Closing Date, and
(a) the number of Shares to be purchased by the defaulting
Underwriters on the Closing Date does not exceed 10% of the Shares
that the Underwriters are obligated to purchase on such Closing Date,
each of the nondefaulting Underwriters will be obligated to purchase
16
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 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
17
Registration Statement or Prospectus or necessary to make the
statements made therein not misleading, except insofar as any such
loss, damage, expense, liability or claim arises out of or is based
upon any untrue statement or alleged untrue statement of a material
fact contained in and in conformity with information furnished in
writing by or on behalf of any Underwriter through you to the Fund or
the Investment Adviser expressly for use with reference to such
Underwriter in such Registration Statement or such Prospectus or
arises out of or is based upon any omission or alleged omission to
state a material fact in connection with such information required to
be stated in such Registration Statement or such Prospectus or
necessary to make such information not misleading, provided, however,
that the indemnity agreement contained in this subsection (a) with
respect to any Preliminary Prospectus or amended Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or to
the benefit of any person controlling such Underwriter) from whom the
person asserting any such loss, damage, expense, liability or claim
purchased the Shares which is the subject thereof if the Prospectus
corrected any such alleged untrue statement or omission and if such
Underwriter failed to send or give a copy of the Prospectus to such
person at or prior to the written confirmation of the sale of such
Shares to such person, unless the failure is the result of
noncompliance by the Fund with Section 5(d) hereof.
If any action, suit or proceeding (together, a "Proceeding") is
brought against an Underwriter or any such person in respect of which
indemnity may be sought against the Fund or the Investment Adviser
pursuant to the foregoing paragraph, such Underwriter or such person
shall promptly notify the Fund or the Investment Adviser, as the case
may be, in writing of the institution of such Proceeding and the Fund
or the Investment Adviser shall assume the defense of such Proceeding,
including the employment of counsel reasonably satisfactory to such
indemnified party and payment of all fees and expenses; provided,
however, that the omission to so notify the Fund or the Investment
Adviser shall not relieve the Fund or the Investment Adviser from any
liability which the Fund or the Investment Adviser may have to any
Underwriter or any such person or otherwise and, unless only to the
extent that, such omission results in the forfeiture of substantive
rights or defenses by the indemnifying party. Such Underwriter or such
person shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such 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
18
different from, additional to or in conflict with those available to
the Fund or the Investment Adviser (in which case the Fund or the
Investment Adviser shall not have the right to direct the defense of
such Proceeding on behalf of the indemnified party or parties), in any
of which events such fees and expenses shall be borne by the Fund or
the Investment Adviser and paid as incurred (it being understood,
however, that the Fund or the Investment Adviser shall not be liable
for the expenses of more than one separate counsel (in addition to any
local counsel) in any one Proceeding or series of related Proceedings
in the same jurisdiction representing the indemnified parties who are
parties to such Proceeding). None of the Fund or the Investment
Adviser shall be liable for any settlement of any Proceeding effected
without its written consent but if settled with the written consent of
the Fund or the Investment Adviser, the Fund or the Investment
Adviser, as the case may be, agrees to indemnify and hold harmless any
Underwriter and any such person from and against any loss or liability
by reason of such settlement. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and
expenses of counsel as contemplated by the second sentence of this
paragraph, then the indemnifying party agrees that it shall be liable
for any settlement of any Proceeding effected without its written
consent if (i) such settlement is entered into more than 60 business
days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of
such settlement and (iii) such indemnified party shall have given the
indemnifying party at least 30 days' prior notice of its intention to
settle. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or
threatened Proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder
by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such Proceeding and does not
include an admission of fault, culpability or a failure to act, by or
on behalf of such indemnified party.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Fund and the Investment Adviser, its directors and
officers, and any person who controls the Fund or the Investment
Adviser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, and the successors and assigns of all of the
foregoing persons from and against any loss, damage, expense,
liability or claim (including the reasonable cost of investigation)
which, jointly or severally, the Fund or the Investment Adviser or any
such person may incur under the Act, the Exchange Act, the Investment
Company Act, the Advisers Act, the common law or otherwise, insofar as
19
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 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
20
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. 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
21
commissions received by the Underwriters, bear to the aggregate public
offering price of the Shares. The relative fault of the Fund and the
Investment Adviser on the one hand and of the Underwriters on the
other shall be determined by reference to, among other things, whether
the untrue statement or alleged untrue statement of a material fact or
omission or alleged omission relates to information supplied by the
Fund or the Investment Adviser or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, damages, expenses,
liabilities and claims referred to in this subsection shall be deemed
to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating, preparing to defend or
defending any Proceeding.
(d) The Fund and the Investment Adviser and the Underwriters agree
that it would not be just and equitable if contribution pursuant to
this Section 9 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in subsection (c) above. Notwithstanding
the provisions of this Section 9, no Underwriter shall be required to
contribute any amount in excess of the fees and commissions received
by such Underwriter. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several in proportion to their
respective underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this
Section 9 and the covenants, warranties and representations of the
Fund contained in this Agreement shall remain in full force and effect
regardless of any investigation made by or on behalf of any
Underwriter, its partners, directors or officers or any person
(including each partner, officer or director of such person) who
controls any Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, or by or on behalf of the Fund, the
Investment Adviser, its directors or officers or any person who
controls the Fund, the Investment Adviser within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and shall
survive any termination of this Agreement or the issuance and delivery
of the Shares. The Fund or the Investment Adviser and each Underwriter
agree promptly to notify each other of the commencement of any
Proceeding against it and, in the case of the Fund, the Investment
Adviser, against any of the Fund's, the Investment Adviser's officers
or directors in connection with the issuance and sale of the Shares,
or in connection with the Registration Statement or Prospectus.
(f) The Fund and the Investment Adviser each acknowledge that the
statements with respect to (1) the public offering of the Shares as
set forth on the cover page of and (2) the statements relating to
stabilization, to selling concessions and reallowances of selling
concessions and with respect to discretionary accounts under the
22
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.
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.
23
13. Parties at Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters and the Fund and to the
extent provided in Section 9 hereof the controlling persons, directors and
officers referred to in such section, and their respective successors,
assigns, heirs, personal representatives and executors and administrators.
No other person, partnership, association or corporation (including a
purchaser, as such purchaser, from any of the Underwriters) shall acquire
or have any right under or by virtue of this Agreement.
14. Counterparts. This Agreement may be signed by the parties in one or
more counterparts which together shall constitute one and the same
agreement among the parties.
15. Successors and Assigns. This Agreement shall be binding upon the
Underwriters, the Fund or the Investment Adviser, and any successor or
assign of any substantial portion of the Fund's, the Investment Adviser's,
or any of the Underwriters' respective businesses and/or assets.
16. Disclaimer of Liability of Trustees and Beneficiaries. A copy of the
Declaration of Trust is on file with the Secretary of The Commonwealth of
Massachusetts, and notice hereby is given that this Underwriting Agreement
is executed on behalf of the Trustees of the Fund as Trustees and not
individually and that the obligations or arising out of this Underwriting
Agreement are not binding upon any of the Trustees or beneficiaries
individually but are binding only upon the assets and properties of the
Fund.
24
If the foregoing correctly sets forth the understanding among the Fund
and the Underwriters, please so indicate in the space provided below for the
purpose, whereupon this letter and your acceptance shall constitute a binding
agreement among the Fund, the Investment Adviser and the Underwriters,
severally.
Very truly yours,
XXXX XXXXXXX PREFERRED INCOME FUND III
--------------------------
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: Xxxxx Xxxxxxxx
Title: Managing Director
--------------------------
By: Xxxx X. Reit
Title: Executive Director
26
SCHEDULE A
Number of Shares to be
Underwriter Purchased
----------- ---------
UBS Securities LLC
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Wachovia Capital Markets, LLC
======
TOTAL
A-1
SCHEDULE B
FORM OF OPINION OF
XXXX & XXXX REGARDING THE FUND
August [ ], 2003
UBS Securities LLC
As Representative of the
Several Underwriters
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Xxxx Xxxxxxx Preferred Income Fund III
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 6(e) of the
Underwriting Agreement, dated as of August [ ], 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 Preferred Income Fund III, 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 July 14, 2003 (File Nos.
333-107015 and 811-21287), and amendments No. 1 and No. 2 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
B-3
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 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 June 19, 2003 (the "Investment Advisory
Agreement"), the Custodian Agreement between the Fund and The
Bank of New York, dated June 19, 2003 (the "Custodian
Agreement"), the Transfer Agency Agreement between the Fund and
Mellon Investor Services, LLC, dated June 19, 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"), the Underwriting Agreement, the Shareholder
Servicing Agreement between the Adviser and UBS Securities, LLC,
dated June 19, 2003, the Lead Managing Underwriter Additional
Compensation Agreement between the Adviser and UBS Securities
LLC, dated June 16, 2003, the Lead Managing Underwriter
Additional Compensation Agreement between the Adviser and
Merrill, Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated, dated June
16, 2003, and the Qualifying Underwriter Additional Compensation
Agreement, dated June 16, 2003 comply in all material respects
with all applicable provisions of the 1940 Act, the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), and the
rules and regulations of the Commission under the 1940 Act and
the Advisers Act.
B-5
8. Each of the Investment Advisory Agreement, the Custodian
Agreement, the Transfer Agency Agreement, the Auction Agency
Agreement and the DTC Agreement has been duly authorized by all
requisite action on the part of the 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
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.
B-6
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.
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).
B-7
This opinion is based upon currently existing statutes, rules,
regulations and judicial decisions and is rendered as of the date hereof, and we
disclaim any obligation to advise you of any change in any of the foregoing
sources of law or subsequent developments in law or changes in facts or
circumstances which might affect any matters or opinions set forth herein.
Please note that we are opining only as to the matters expressly set forth
herein, and no opinion should be inferred as to any other matters.
This opinion is being furnished to you, as Representative of the
Underwriters, at the request of the 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 prior written consent. We understand that
Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois) in delivering their opinion
pursuant to Section 6(f) of the Underwriting Agreement is relying upon this
opinion as to matters of the laws of the Commonwealth of Massachusetts. We
consent to such reliance.
B-8
SCHEDULE C
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING XXXX XXXXXXX ADVISERS, LLC
i. Xxxx Xxxxxxx Advisers, LLC ("Xxxx Xxxxxxx Advisers") has been duly formed and
is validly existing as a limited liability company under the laws of the State
of Delaware. Xxxx Xxxxxxx Advisers has limited liability company power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus and to enter into and perform its obligations
under the Underwriting Agreement, the Shareholder Servicing Agreement, the
Additional Compensation Agreements and the Investment Advisory Agreement.
ii. Xxxx Xxxxxxx Advisers is registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act or the Investment Company
Act from acting as investment adviser and administrator for the Fund as
contemplated by the Investment Advisory Agreement, the Registration Statement
and the Prospectus.
iii. The Underwriting Agreement, the Shareholder Servicing Agreement, the
Investment Advisory Agreement and the Additional Compensation Agreements have
been duly authorized, executed and delivered by Xxxx Xxxxxxx Advisers, and the
Investment Advisory Agreement, the Shareholder Servicing Agreement and the
Additional Compensation Agreements each constitutes a valid and binding
obligation of Xxxx Xxxxxxx Advisers, enforceable in accordance with their
respective terms
iv. The execution, delivery and performance of the Underwriting Agreement by
Xxxx Xxxxxxx Advisers, the compliance by Xxxx Xxxxxxx Advisers with all the
provisions thereof and the consummation by Xxxx Xxxxxxx Advisers of the
transactions contemplated thereby do not and will not (A) require any consent,
approval, authorization or order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states or the National Association of Securities
Dealers, Inc. or as have been obtained under the federal securities laws), (B)
conflict with or constitute a breach of any of the terms or provisions of, or a
default under or result in the imposition of a lien, charge or encumbrance upon
the assets of Xxxx Xxxxxxx Advisers pursuant to, any indenture, loan agreement,
mortgage, lease or other agreement or instrument to which Xxxx Xxxxxxx 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 9 of the 1940 Act, make Xxxx Xxxxxxx Advisers
ineligible to act as the Fund's investment adviser.
C-1
In connection with the registration of the Shares, such counsel has advised Xxxx
Xxxxxxx Advisers as to the requirements of the Securities Act, the Investment
Company Act and the applicable rules and regulations of the Commission
thereunder and has rendered other legal advice and assistance to Xxxx Xxxxxxx
Advisers in the course of the preparation of the registration Statement and the
Prospectus. Rendering such assistance involved, among other things, discussions
and inquiries concerning various legal and related subjects and reviews of
certain corporate records, documents and proceedings. Such counsel has also
participated in conferences with representatives of the Fund and its accountants
and Xxxx Xxxxxxx Advisers at which the contents of the registration and
Prospectus and related matters were discussed. With your permission, such
counsel not undertaken, except as otherwise indicated herein, to determine
independently, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements in the Registration Statement or
Prospectus. On the basis of the information which was developed in the course of
the performance of the services referred to above, no information has come to
such counsel's attention that would lead him to believe that the Registration
Statement, at the time it became effective, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus, as of its date and as of the date hereof, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading or that any amendment
or supplement to the Prospectus, as of its respective date, and as of the date
hereof, contained any untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements in the
Prospectus, in the light of the circumstances under which they were made, not
misleading (except the financial statements, schedules and other financial data
included therein or any other financial or accounting data included therein, as
to which such counsel expresses no view).
C-2
SCHEDULE D
FORM OF ACCOUNTANT'S LETTER
[ ], 2003
The Board of Trustees of
Xxxx Xxxxxxx Preferred Income Fund III
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. 333-107015) and under the Investment Company Act of
1940 (the "1940 Act") (File No. 811-21287); 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 shares or net assets of the Fund as compared
with amounts shown in the , 2003, statement of assets and liabilities
D-1
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
