Xxxx Xxxxxxx Preferred Income Fund
[ ] Common Shares of Beneficial Interest
No Par Value
UNDERWRITING AGREEMENT
August , 2002
UNDERWRITING AGREEMENT
August , 2002
UBS Warburg LLC
as Managing Representative
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Xxxx Xxxxxxx Preferred Income Fund, a voluntary association with
transferable shares organized and existing under and by virtue of the laws of
The Commonwealth of Massachusetts (commonly referred to as a Massachusetts
business trust) (formerly Xxxx Xxxxxxx Preferred Equity Income Fund, the
"Fund"), proposes to issue and sell to the underwriters named in Schedule A
annexed hereto (the "Underwriters") an aggregate of common shares of
beneficial interest (the "Firm Shares"), no par value (the "Common Shares"), of
the Fund. In addition, solely for the purpose of covering over-allotments, the
Fund proposes to grant to the Underwriters the option to purchase from the Fund
up to an additional ___ Common Shares (the "Additional Shares"). The Firm Shares
and the Additional Shares are hereinafter collectively sometimes referred to as
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. 333-91324 and
811-21131), including a prospectus and a statement of additional information,
relating to the Shares. The Fund has furnished to you, for use by the
Underwriters and by dealers, copies of one or more preliminary prospectuses
(including a preliminary statement of additional information) (each thereof,
including such preliminary statement of additional information, being herein
called a "Preliminary Prospectus") relating to the Shares. Except where the
context otherwise requires, the Registration Statement, as amended when it
becomes effective (the "Effective Date"), including all documents filed as a
part thereof or incorporated by reference therein, and including any information
contained in a prospectus subsequently filed with the Commission pursuant to
Rule 497 under the Act and deemed to be part of the Registration Statement at
the time of effectiveness pursuant to Rule 430A under the Act is herein called
the Registration Statement, and the prospectus (including the statement of
additional information), in the form filed by the Fund with the Commission
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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") will act as the Fund's investment adviser pursuant to an
Investment Advisory Agreement by and between the Fund and the Investment
Adviser, dated as of , 2002 (the "Investment Advisory Agreement"). The
Bank of New York will act as the custodian (the "Custodian") of the Fund's cash
and portfolio assets pursuant to a Custody Agreement, dated as of , 2002
(the "Custody Agreement"). Mellon Investor Services, LLC will act as the Fund's
transfer agent and dividend disbursing agent (the "Transfer Agent") pursuant to
a transfer agency agreement, dated as of , 2002 (the "Transfer Agency
Agreement"). The Investment Adviser and UBS Warburg (the "Managing
Representative") have entered into a Shareholder Servicing Agreement dated
August , 2002 (the "Shareholder Servicing Agreement") and an Additional
Compensation Agreement dated August , 2002 (the "Additional Compensation
Agreement"). In addition, the Fund has adopted a dividend reinvestment plan (the
"Dividend Reinvestment Plan") pursuant to which holders of Shares may elect to
reinvest their dividends in additional Common Shares of the Fund.
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 Firm Shares set forth opposite the name of such Underwriter in
Schedule A attached hereto in each case at a purchase price of $[ ]
per Share. The Fund is advised that the Underwriters intend (i) to make a
public offering of their respective portions of the Firm Shares as soon
after the effective date of the Registration Statement as is advisable and
(ii) initially to offer the Firm 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.
In addition, the Fund hereby grants to the several Underwriters the
option to purchase, and upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth,
the Underwriters shall have the right to purchase, severally and not
jointly, from the Fund, ratably in accordance with the number of Firm
Shares to be purchased by each of them, all or a portion of the Additional
Shares as may be necessary to cover over-allotments made in connection
with the offering of the Firm Shares, at the same purchase price per share
to be paid by the Underwriters to the Fund for the Firm Shares. This
option may be exercised by you on behalf of the several Underwriters at
any time and from time to time on or before the forty-fifth day following
the date hereof, by
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written notice to the Fund. Such notice shall set forth the aggregate
number of Additional Shares as to which the option is being exercised, and
the date and time when the Additional Shares are to be delivered (such
date and time being herein referred to as the "Additional Time of
Purchase"); provided, however, that the Additional Time of Purchase shall
not be earlier than the Time of Purchase (as defined below) nor earlier
than the second business day after the date on which the option shall have
been exercised nor later than the tenth business day after the date on
which the option shall have been exercised. The number of Additional
Shares to be sold to each Underwriter shall be the number which bears the
same proportion to the aggregate number of Additional Shares being
purchased as the number of Firm Shares set forth opposite the name of such
Underwriter on Schedule A hereto bears to the total number of Firm Shares
(subject, in each case, to such adjustment as you may determine to
eliminate fractional shares).
2. PAYMENT AND DELIVERY. Payment of the purchase price for the Firm Shares
shall be made to the Fund by Federal Funds wire transfer, against delivery
of the certificates for the Firm Shares to you through the facilities of
the Depository Trust Company ("DTC") for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 10:00 A.M., New
York City time on the third business day following the date of this
Underwriting Agreement (unless another date or time shall be agreed to by
you and the Fund). The time at which such payment and delivery are
actually made is hereinafter sometimes called the Time of Purchase.
Certificates for the Firm Shares shall be delivered to you in definitive
form in such names and in such denominations as you shall specify on the
second business day preceding the Time of Purchase. For the purpose of
expediting the checking of the certificates for the Firm 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.
Payment of the purchase price for the Additional Shares shall be
made at the Additional Time of Purchase in the same manner and at the same
office as the payment for the Firm Shares. Certificates for the Additional
Shares shall be delivered to you in definitive form in such names and in
such denominations as you shall specify no later than the second business
day preceding the Additional Time of Purchase. For the purpose of
expediting the checking of the certificates for the Additional Shares by
you, the Fund agrees to make such certificates available to you for such
purpose at least one full business day preceding the Additional Time of
Purchase. The Time of Purchase and the Additional Time of Purchase are
sometimes referred to herein as the "Closing Dates."
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
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amendment to the Registration Statement (except any post-effective
amendment which is filed with the Commission after the later of (x)
one year from the date of this Underwriting Agreement or (y) the
date on which the distribution of the Shares is completed) became or
becomes effective or any amendment or supplement to the Prospectus
was or is filed with the Commission and (C) the Closing Dates, the
Registration Statement, the Prospectus and any such amendment or
supplement thereto and the Notification complied or will comply in
all material respects with the requirements of the Act and the
Investment Company Act, as the case may be. On the Effective Date
and on the date that any post-effective amendment to the
Registration Statement (except any post-effective amendment which is
filed with the Commission after the later of (x) one year from the
date of this Underwriting Agreement or (y) the date on which the
distribution of the Shares is completed) became or becomes
effective, neither the Registration Statement nor any such amendment
did or will contain any untrue statement of a material fact or omit
to state a material fact required to be stated in it or necessary to
make the statements in it not misleading. At the Effective Date and,
if applicable, the date the Prospectus or any amendment or
supplement to the Prospectus was or is filed with the Commission and
at the Closing Dates, the Prospectus did not or will not, as the
case may be, contain any untrue statement of a material fact or omit
to state a material fact required to be stated in it or necessary to
make the statements in it, in light of the circumstances under which
they were made, not misleading. The foregoing representations in
this Section 3(a) do not apply to statements or omissions relating
to the Underwriters made in reliance on and in conformity with
information furnished in writing to the Fund by you expressly for
use in the Registration Statement, the Prospectus, or any amendments
or supplements thereto, as described in Section 9(f) hereof.
(b) The Fund has been duly formed, is validly existing as a
Massachusetts business trust, with full power and authority to
conduct its business as described in the Registration Statement and
Prospectus, and the Fund is duly licensed and qualified to do
business and in good standing in each jurisdiction in which its
ownership or leasing of property or its conducting of business
requires such qualification, except where the failure to be so
licensed and qualified, either alone or in the aggregate, would not
result in a Material Adviser Effect (as defined below in Section
3(n)) and the Fund owns, possesses or has obtained and currently
maintains all governmental licenses, permits, consents, orders,
approvals and other authorizations, whether foreign or domestic,
necessary to carry on its business as contemplated in the
Prospectus, except such licenses, permits, consents, orders,
approvals and other authorizations of the Fund to obtain, either
alone or in the aggregate, would not result in a Material Adviser
Effect. The Fund has no subsidiaries.
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(c) The capitalization of the Fund is as set forth in the Registration
Statement and the Prospectus. The Common Shares conform to the
description of them in the Prospectus. All the outstanding Common
Shares have been duly authorized and are validly issued, fully paid
and, except to the extent set forth in the Prospectus,
nonassessable. The Shares to be issued and delivered to and paid for
by the Underwriters in accordance with this Underwriting Agreement
against payment therefor as provided by this Underwriting Agreement
have been duly authorized and when issued and delivered to the
Underwriters will have been validly issued and will be fully paid
and, except to the extent set forth in the Prospectus,
nonassessable. No person is entitled to any preemptive or other
similar rights with respect to the Shares.
(d) The Fund is duly registered with the Commission under the Investment
Company Act as a diversified, closed-end management investment
company, and, subject to the filing of a final amendment to the
Registration Statement, or any required filing under Rule 430A or
Rule 497 under the Securities Act (the "Final Amendment"), if not
already filed, all action under the Act and the Investment Company
Act, as the case may be, necessary under the federal securities laws
on the part of the Fund to make the public offering and consummate
the sale of the Shares as provided in this Underwriting Agreement
has or will have been taken by the Fund.
(e) The Fund has full power and authority to enter into each of this
Underwriting Agreement, the Investment Advisory Agreement, the
Custody Agreement, the Transfer Agency Agreement and the Dividend
Reinvestment Plan (collectively, the "Fund Agreements") and to
perform all of the terms and provisions hereof and thereof to be
carried out by it and (i) each Fund Agreement has been duly and
validly authorized, executed and delivered by or on behalf of the
Fund, (ii) each Fund Agreement does not violate in any material
respect any of the applicable provisions of the Investment Company
Act or the Investment Advisers Act of 1940, as amended, and the
rules and regulations thereunder (collectively called the "Advisers
Act"), as the case may be, and (iii) assuming due authorization,
execution and delivery by 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
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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 or the
By-laws of the Fund or any agreement or instrument to which the Fund
is a party or by which the Fund is bound, or any law, rule or
regulation, or order of any court, governmental instrumentality,
securities exchange or association or arbitrator, whether foreign or
domestic, applicable to the Fund, other than state securities or
"blue sky" laws applicable in connection with the purchase and
distribution of the Shares by the Underwriters pursuant to this
Underwriting Agreement.
(g) The Fund is not currently in breach of, or in default under, any
written agreement or instrument to which it is a party or by which
it or its property is bound or affected, except for such breaches or
defaults that do not, either alone or in the aggregate, have a
Material Adverse Effect.
(h) No person has any right to the registration of any securities of the
Fund because of the filing of the Registration Statement.
(i) No consent, approval, authorization or order of any court or
governmental agency or body or securities exchange or association,
whether foreign or domestic, is required to be obtained by the Fund
prior to the Closing Date for the consummation by the Fund of the
transactions to be performed by the Fund or the performance by the
Fund of all the terms and provisions to be performed by or on behalf
of it in each case as contemplated in the Fund Agreements, except
such as (i) have been obtained under the Act, the Investment Company
Act or the Advisers Act, and (ii) may be required 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.
(j) The Shares are duly authorized for listing, subject to official
notice of issuance, on the New York Stock Exchange and the Fund's
Registration Statement on Form 8-A, under the Securities Exchange
Act of 1934, as amended and the rules and regulations thereunder
(the "Exchange Act"), has become effective.
(k) 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.
(l) 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.
7
(m) 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.
(n) 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.
(o) There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending, or,
to the knowledge of the Fund, threatened against or affecting the
Fund, which (i) might result in any material adverse change in the
condition, financial or otherwise, business affairs or business
prospects of the Fund or might materially adversely affect the
properties or assets of the Fund or (ii) is of a character required
to be described in the Registration Statement or the Prospectus; and
there are no contracts, franchises or other documents that are of a
character required to be described in, or that are required to be
filed as exhibits to, the Registration Statement that have not been
described or filed as required.
(p) Except for stabilization transactions conducted by the Managing
Representative, and except for tender offers, Share repurchases and
the issuance or purchase of Common Shares pursuant to the Dividend
Reinvestment Plan effected following the date on which the
distribution of the Shares is completed in accordance with the
policies of the Fund as set forth in the Prospectus, the Fund has
not taken and will not take, directly or indirectly, any action
designed or which might be reasonably expected to cause or result
in, or which will constitute, stabilization or manipulation of the
price of the Common Shares in violation of applicable federal
securities laws.
(q) 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
8
Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code").
(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 other than the definitive client
brochure and the broker selling memo which were filed with the
National Association of Securities Dealers, Inc. (the "NASD") on
July 17, 2002 (collectively referred to as the "sales materials");
the sales materials and any road show slides or road show tapes
complied and comply in all material respects with the applicable
requirements of the Act and the rules and interpretations of the
NASD; and no broker kits, road show slides, road show tapes or sales
materials authorized or prepared by the Fund or authorized or
prepared on behalf of the Fund by the Investment Adviser or any
representative thereof for use in connection with the public
offering or sale of the Shares contained or contains any untrue
statement of a material fact or omitted or omits to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTMENT ADVISER. The Investment
Adviser represents to each Underwriter as follows:
(a) The Investment Adviser has been duly formed, is validly existing as
a limited liability company under the laws of Delaware with full
power and authority to perform its obligations under this Agreement,
the Shareholder Servicing Agreement, the Investment Advisory
Agreement and the Additional Compensation Agreement, and the
Investment Adviser is duly licensed and qualified to do business and
in good standing in each jurisdiction in which it is required to be
so qualified in order to perform its obligations under this
Agreement, the Shareholder Servicing Agreement the Investment
Advisory Agreement and the Additional Compensation Agreement; and
the Investment Adviser owns, possesses or has obtained and currently
maintains all governmental licenses, permits, consents, orders,
approvals and other authorizations, whether foreign or domestic,
necessary to perform its obligations under this Agreement, the
Shareholder Servicing Agreement, the Investment Advisory Agreement
and the Additional Compensation Agreement.
(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.
9
(c) The Investment Adviser has full power and authority to enter into
each of this Underwriting Agreement, the Shareholder Servicing
Agreement, the Investment Advisory Agreement and the Additional
Compensation Agreement (collectively, this Underwriting Agreement,
the Shareholder Servicing Agreement, the Investment Advisory
Agreement and the Additional Compensation Agreement being referred
to as the "Investment Adviser Agreements") and to carry out all the
terms and provisions hereof and thereof to be carried out by it; and
each Investment Adviser Agreement has been duly and validly
authorized, executed and delivered by the Investment Adviser; none
of the Investment Adviser Agreements violate any of the applicable
provisions of the Investment Company Act or the Advisers Act; and
assuming due authorization, execution and delivery by the other
parties thereto, each Investment Adviser Agreement constitutes a
legal, valid and binding obligation of the Investment Adviser,
enforceable in accordance with its terms, (i) subject, as to
enforcement, to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general equitable
principles (regardless of whether enforcement is sought in a
proceeding in equity or at law) and (ii) except as rights to
indemnity thereunder may be limited by federal or state securities
laws.
(d) Neither (i) the execution and delivery by the Investment Adviser of
any Investment Adviser Agreement nor (ii) the consummation by the
Investment Adviser of the transactions contemplated by, or the
performance of its obligations under any Investment Adviser
Agreement conflicts or will conflict with, or results or will result
in a breach of, the limited liability company agreement or other
organizational documents of the Investment Adviser or any agreement
or instrument to which the Investment Adviser is a party or by which
the Investment Adviser is bound, or any law, rule or regulation, or
order of any court, governmental instrumentality, securities
exchange or association or arbitrator, whether foreign or domestic,
applicable to the Investment Adviser, except in each case for such
conflicts or breaches which do not, either alone or in the
aggregate, have a material adverse effect upon the Investment
Adviser's ability to perform its obligations under the Investment
Adviser Agreements.
(e) No consent, approval, authorization or order of any court,
governmental agency or body or securities exchange or association,
whether foreign or domestic, is required to be obtained by the
Investment Adviser on or prior to the Closing Date for the
consummation of the transactions contemplated in, or the performance
by the Investment Adviser of its 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
10
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 attributed 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) Except for stabilization activities conducted by the Managing
Representative and except for tender offers, Share repurchases and
the issuance or purchase of Common Shares pursuant to the Dividend
Reinvestment Plan effected following the date on which the
distribution of the Shares is completed in accordance with the
policies of the Fund as set forth in the Prospectus, the Investment
Adviser has not taken and will not take, directly or indirectly, any
action designed, or which might reasonably be expected to cause or
result in, or which will constitute, stabilization or manipulation
of the price of the Common Shares in violation of applicable federal
securities laws.
(i) 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
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pursuant to Rule 497(h) under the Act as promptly as practicable,
but no later than the second business day following the earlier of
the date of the determination of the offering price of the Shares or
the date the Prospectus is first used after the Effective Date. If
the Registration Statement has become effective and the Prospectus
contained therein does not so omit such information, the Fund will
file a Prospectus pursuant to Rule 497(b) or (j) under the Act as
promptly as practicable, but no later than the fifth business day
following the date of the later of the Effective Date or the
commencement of the public offering of the Shares after the
Effective Date. In either case, the Fund will provide you
satisfactory evidence of the filing. The Fund will not file with the
Commission any Prospectus or any other amendment (except any
post-effective amendment which is filed with the Commission after
the later of (x) one year from the date of this Underwriting
Agreement or (y) the date on which distribution of the Shares is
completed) or supplement to the Registration Statement or the
Prospectus unless a copy has first been submitted to the Managing
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
12
Shares is completed) to either the Registration Statement or the
Notification (including all exhibits filed with any such document)
and as many conformed copies of the Registration Statement and any
amendments thereto (except any post-effective amendment which is
filed with the Commission after the later of (x) one year from the
date of this Underwriting Agreement or (y) the date on which the
distribution of the Shares is completed) (excluding exhibits) as the
Managing Representative may reasonably request.
(d) During such period as a prospectus is required by law to be
delivered by an underwriter or a dealer, the Fund will deliver,
without charge, to you, the Underwriters and any dealers, at such
office or offices as you may designate, as many copies of the
Prospectus as you may reasonably request, and, if any event occurs
during such period as a result of which it is necessary to amend or
supplement the Prospectus, in order to make the statements therein,
in light of the circumstances existing when such 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.
13
(g) If the transactions contemplated by this Underwriting Agreement are
consummated, the Fund shall pay all costs and expenses incident to
the performance of the obligations of the Fund under this
Underwriting Agreement (to the extent such expenses do not, in the
aggregate, exceed $0.05 per Share), including but not limited to
costs and expenses of or relating to (1) the preparation, printing
and filing of the Registration Statement and exhibits to it, each
Preliminary Prospectus, the Prospectus and all amendments and
supplements thereto, (2) the issuance of the Shares and the
preparation and delivery of certificates for the Shares, (3) the
registration or qualification of the Shares for offer and sale under
the securities or "blue sky" laws of the jurisdictions referred to
in the foregoing paragraph, including the fees and disbursements of
counsel for the Underwriters in that connection, and the preparation
and printing of any preliminary and supplemental "blue sky"
memoranda, (4) the furnishing (including costs of design,
production, shipping and mailing) to the Underwriters and dealers of
copies of each Preliminary Prospectus relating to the Shares, the
sales materials, the Prospectus, and all amendments or supplements
to the Prospectus, and of the other documents required by this
Section to be so furnished, (5) the filing requirements of the NASD,
in connection with its review of the financing, including filing
fees and the fees, disbursements and other charges of counsel for
the Underwriters in that connection, (6) all transfer taxes, if any,
with respect to the sale and delivery of the Shares to the
Underwriters, (7) the listing of the Shares on the New York Stock
Exchange, and (8) the transfer agent for the Shares. To the extent
the foregoing costs and expenses incident to the performance of the
obligations of the Fund under this Underwriting Agreement exceed, in
the aggregate, $0.05 per Share, Xxxx Xxxxxxx Advisers or an
affiliate will pay all such excess costs and expenses.
(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.
14
(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 and except in connection
with any offering of preferred shares of beneficial interest as
contemplated by the Prospectus.
(j) The Fund will use its best efforts to list the Shares on the New
York Stock Exchange and comply with the rules and regulations of
such exchange.
(k) 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 each of the Closing Dates, 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
15
been any material adverse change in the general affairs, prospects,
management, business, financial condition or results of operations
of the Fund or the Investment Adviser whether or not arising from
transactions in the ordinary course of business as set forth in or
contemplated by the Prospectus (provided that a change in the Fund's
net asset value, liabilities or portfolio securities arising in the
course of its normal investment operations shall not be deemed to be
a material adverse change); (iii) the Fund must not have sustained
any material interference with its business from any court or from
legislative or other governmental action, order or decree, whether
foreign or domestic, not described in the Registration Statement and
Prospectus; and (iv) there must not have occurred any event that
makes untrue or incorrect in any material respect any statement or
information contained in the Registration Statement or Prospectus or
that is not reflected in the Registration Statement or Prospectus
but should be reflected therein in order to make the statements or
information therein (in the case of the Prospectus, in light of the
circumstances in which they were made) not misleading in any
material respect; if, in the judgment of the Managing
Representative, any such development referred to in clause (i),
(ii), (iii) or (iv) of this paragraph (c) makes it impracticable or
inadvisable to consummate the sale and delivery of the Shares
pursuant to this Underwriting Agreement by the Underwriters, at the
initial public offering price of the Shares.
(d) The Managing Representative must have received on each Closing Date
a certificate, dated such date, of the President or a Vice-President
and the chief financial or accounting officer of each of the Fund
and the Investment Adviser certifying in their capacity as such
officers that (i) the signers have examined the Registration
Statement, the Prospectus, and this Underwriting Agreement, (ii) the
representations of the Fund (with respect to the certificates from
such Fund officers) and the representations of the Investment
Adviser (with respect to the certificates from such officers of the
Investment Adviser) in this Underwriting Agreement are accurate on
and as of the date of the certificate, (iii) there has not been any
material adverse change in the general affairs, prospects,
management, business, financial condition or results of operations
of the Fund (with respect to the certificates from such Fund
officers) or the Investment Adviser (with respect to the
certificates from such officers of the Investment Adviser), which
change would materially and adversely affect the ability of the Fund
or the Investment Adviser, as the case may be, to fulfill its
obligations under this Underwriting Agreement or the Investment
Advisory Agreement, whether or not arising from transactions in the
ordinary course of business, (iv) with respect to the Fund only, no
order suspending the effectiveness of the Registration Statement, or
prohibiting the sale of any of the Shares has been issued and no
proceedings for any such purpose are pending before or threatened by
the Commission or any other regulatory body, whether foreign or
domestic, (v) no order having a material adverse effect on the
ability of the Investment Adviser to fulfill
16
its obligations under this Underwriting Agreement, the Shareholder
Servicing Agreement, the Investment Advisory Agreement or the
Additional Compensation Agreement, as the case may be, has been
issued and no proceedings for any such purpose are pending before or
threatened by the Commission or any other regulatory body, whether
foreign or domestic, and (vi) each of the Fund (with respect to the
certificates from such Fund officers) and the Investment Adviser
(with respect to the certificates from such officers of the
Investment Adviser) has performed all of its respective agreements
that this Underwriting Agreement requires it to perform by such
Closing Date (to the extent not waived in writing by the Managing
Representative).
(e) You must receive on each 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 each Closing Date from Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP or its affiliated entities an opinion dated such
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
each Closing Date a signed letter from such accountants, dated as of
such 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 such Closing Date, that would require any
change in their letter referred to in the foregoing sentence.
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.
17
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 any 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 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 any 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 any Closing Date the Shares agreed
to be purchased on such 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 such Closing Date, and
(a) the number of Shares to be purchased by the defaulting Underwriters
on such Closing Date does not exceed 10% of the Shares that the
18
Underwriters are obligated to purchase on such Closing Date, each of
the nondefaulting Underwriters will be obligated to purchase such
Shares on the terms set forth in this Underwriting Agreement in
proportion to their respective obligations under this Underwriting
Agreement, or
(b) the number of Shares to be purchased by the defaulting Underwriters
on such Closing Date exceeds 10% of the Shares to be purchased by
all the Underwriters on such 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 applicable 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
such Closing Date by such defaulting Underwriter or Underwriters exceeds
10% of the Shares that the Underwriters are obligated to purchase on such
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
19
Prospectus, the sales materials prepared or authorized by the Fund,
the Prospectus and the Prospectus as amended or supplemented by the
Fund), or arises out of or is based upon any omission or alleged
omission to state a material fact required to be stated in either
such Registration Statement or Prospectus or necessary to make the
statements made therein not misleading, except insofar as any such
loss, damage, expense, liability or claim arises out of or is based
upon any untrue statement or alleged untrue statement of a material
fact contained in and in conformity with information furnished in
writing by or on behalf of any Underwriter through you to the Fund
or the Investment Adviser expressly for use with reference to such
Underwriter in such Registration Statement or such Prospectus or
arises out of or is based upon any omission or alleged omission to
state a material fact in connection with such information required
to be stated in such Registration Statement or such Prospectus or
necessary to make such information not misleading, provided,
however, that the indemnity agreement contained in this subsection
(a) with respect to any Preliminary Prospectus or amended
Preliminary Prospectus shall not inure to the benefit of any
Underwriter (or to the benefit of any person controlling such
Underwriter) from whom the person asserting any such loss, damage,
expense, liability or claim purchased the Shares which is the
subject thereof if the Prospectus corrected any such alleged untrue
statement or omission and if such Underwriter failed to send or give
a copy of the Prospectus to such person at or prior to the written
confirmation of the sale of such Shares to such person, unless the
failure is the result of noncompliance by the Fund with Section 5(d)
hereof.
If any action, suit or proceeding (together, a "Proceeding")
is brought against an Underwriter or any such person in respect of
which indemnity may be sought against the Fund or the Investment
Adviser pursuant to the foregoing paragraph, such Underwriter or
such person shall promptly notify the Fund or the Investment
Adviser, as the case may be, in writing of the institution of such
Proceeding and the Fund or the Investment Adviser shall assume the
defense of such Proceeding, including the employment of counsel
reasonably satisfactory to such indemnified party and payment of all
fees and expenses; provided, however, that the omission to so notify
the Fund or the Investment Adviser shall not relieve the Fund or the
Investment Adviser from any liability which the Fund or the
Investment Adviser may have to any Underwriter or any such person or
otherwise and, unless only to the extent that, such omission results
in the forfeiture of substantive rights or defenses by the
indemnifying party. Such Underwriter or such person shall have the
right to employ its or their own counsel in any such case, but the
fees and expenses of such 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
20
reasonable period of time in light of the circumstances, employed
counsel to have charge of the defense of such Proceeding or such
indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different
from, additional to or in conflict with those available to the Fund
or the Investment Adviser (in which case the Fund or the Investment
Adviser shall not have the right to direct the defense of such
Proceeding on behalf of the indemnified party or parties), in any of
which events such fees and expenses shall be borne by the Fund or
the Investment Adviser and paid as incurred (it being understood,
however, that the Fund or the Investment Adviser shall not be liable
for the expenses of more than one separate counsel (in addition to
any local counsel) in any one Proceeding or series of related
Proceedings in the same jurisdiction representing the indemnified
parties who are parties to such Proceeding). None of the Fund or the
Investment Adviser shall be liable for any settlement of any
Proceeding effected without its written consent but if settled with
the written consent of the Fund or the Investment Adviser, the Fund
or the Investment Adviser, as the case may be, agrees to indemnify
and hold harmless any Underwriter and any such person from and
against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement
of any Proceeding effected without its written consent if (i) such
settlement is entered into more than 60 business days after receipt
by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall not have reimbursed the indemnified party
in accordance with such request prior to the date of such settlement
and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or
threatened Proceeding in respect of which any indemnified party is
or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes
an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such Proceeding
and does not include an admission of fault, culpability or a failure
to act, by or on behalf of such indemnified party.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Fund and the Investment Adviser, its directors and
officers, and any person who controls the Fund or the Investment
Adviser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, and the successors and assigns of all of the
foregoing persons from and against any loss, damage, expense,
liability or claim (including the reasonable cost of investigation)
which, jointly or severally, the Fund or the Investment
21
Adviser or any such person may incur under the Act, the Exchange
Act, the Investment Company Act, the Advisers Act, the common law or
otherwise, insofar as such loss, damage, expense, liability or claim
arises out of or is based upon any untrue statement or alleged
untrue statement of a material fact contained in and in conformity
with information furnished in writing by or on behalf of such
Underwriter through you to the Fund or the Investment Adviser
expressly for use with reference to such Underwriter in the
Registration Statement (or in the Registration Statement as amended
by any post-effective amendment thereof by the Fund) or in a
Prospectus, or arises out of or is based upon any omission or
alleged omission to state a material fact in connection with such
information required to be stated in such Registration Statement or
such Prospectus or necessary to make such information not
misleading.
If any Proceeding is brought against the Fund, the Investment
Adviser, or any such person in respect of which indemnity may be
sought against any Underwriter pursuant to the foregoing paragraph,
the Fund or the Investment Adviser or such person shall promptly
notify such Underwriter in writing of the institution of such
Proceeding and such Underwriter shall assume the defense of such
Proceeding, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and
expenses; provided, however, that the omission to so notify such
Underwriter shall not relieve such Underwriter from any liability
which such Underwriter may have to the Fund, the Investment Adviser,
or any such person or otherwise. The Fund, the Investment Adviser,
or such person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the
expense of the Fund, the Investment Adviser, or such person, as the
case may be, unless the employment of such counsel shall have been
authorized in writing by such Underwriter in connection with the
defense of such Proceeding or such Underwriter shall not have,
within a reasonable period of time in light of the circumstances,
employed counsel to have charge of the defense of such Proceeding or
such indemnified party or parties shall have reasonably concluded
that there may be defenses available to it or them which are
different from or additional to or in conflict with those available
to such Underwriter (in which case such Underwriter shall not have
the right to direct the defense of such Proceeding on behalf of the
indemnified party or parties, but such Underwriter may employ
counsel and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such
Underwriter), in any of which events such fees and expenses shall be
borne by such Underwriter and paid as incurred (it being understood,
however, that such Underwriter shall not be liable for the expenses
of more than one separate counsel (in addition to any local counsel)
in any one Proceeding or series of related Proceedings in the same
jurisdiction representing the indemnified parties who are parties to
such Proceeding). No Underwriter shall be liable for any settlement
of any such Proceeding
22
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 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
23
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
24
on the cover page of and (2) the statements relating to
stabilization, to selling concessions and reallowances of selling
concessions and with respect to discretionary accounts under the
caption "Underwriting" in the Prospectus constitute the only
information furnished in writing to the Fund by the Managing
Representative on behalf of the Underwriters expressly for use in
such document. The Underwriters severally confirm that these
statements are correct in all material respects and were so
furnished by or on behalf of the Underwriters severally for use in
the Prospectus.
(g) Notwithstanding any other provisions in this Section 9, no party
shall be entitled to indemnification or contribution under this
Underwriting Agreement against any loss, claim, liability, expense
or damage arising by reason of such person's willful misfeasance,
bad faith, gross negligence or reckless disregard in the performance
of its duties hereunder.
10. NOTICES. Except as otherwise herein provided, all statements, requests,
notices and agreements shall be in writing or by telegram and, if to the
Underwriters, shall be sufficient in all respects if delivered or sent to
UBS Warburg LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000-0000, Attention:
Syndicate Department and, if to the Fund or the Investment Adviser, shall
be sufficient in all respects if delivered or sent to the Fund or the
Investment Adviser, as the case may be, at the offices of the Fund or the
Investment Adviser at 000 Xxxxxxxxxx Xxxxxx, Xxxxxx, XX 00000-0000,
Attention: Xxxxx X. Xxxxxx, Senior Vice President and General Counsel.
11. GOVERNING LAW; CONSTRUCTION. This Agreement and any claim, counterclaim or
dispute of any kind or nature whatsoever arising out of or in any way
relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of
New York. The Section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
12. SUBMISSION TO JURISDICTION. Except as set forth below, no Claim may be
commenced, prosecuted or continued in any court other than the courts of
the State of New York located in the City and County of New York or in the
United States District Court for the Southern District of New York, which
courts shall have jurisdiction over the adjudication of such matters, and
the Fund consents to the jurisdiction of such courts and personal service
with respect thereto. The Fund hereby consents to personal jurisdiction,
service and venue in any court in which any Claim arising out of or in any
way relating to this Agreement is brought by any third party against UBS
Warburg LLC or any indemnified party. Each of UBS Warburg LLC, the Fund
(on its behalf and, to the extent permitted by applicable law, on behalf
of its stockholders and affiliates) and the Investment Adviser (on its
behalf and, to the extent permitted by applicable law, on behalf of its
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
25
Investment Adviser agrees that a final judgment in any such action,
proceeding or counterclaim brought in any such court may be enforced in
any other courts in the jurisdiction of which the Fund or the Investment
Adviser, as the case may be, is or may be subject, by suit upon such
judgment.
13. PARTIES AT INTEREST. The Agreement herein set forth has been and is made
solely for the benefit of the Underwriters and the Fund and to the extent
provided in Section 9 hereof the controlling persons, directors and
officers referred to in such section, and their respective successors,
assigns, heirs, personal representatives and executors and administrators.
No other person, partnership, association or corporation (including a
purchaser, as such purchaser, from any of the Underwriters) shall acquire
or have any right under or by virtue of this Agreement.
14. COUNTERPARTS. This Agreement may be signed by the parties in one or more
counterparts which together shall constitute one and the same agreement
among the parties.
15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Underwriters, the Fund or the Investment Adviser, and any successor or
assign of any substantial portion of the Fund's, the Investment Adviser's,
or any of the Underwriters' respective businesses and/or assets.
16. DISCLAIMER OF LIABILITY OF TRUSTEES AND BENEFICIARIES. A copy of the
Agreement and Declaration of Trust of the Fund 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.
26
If the foregoing correctly sets forth the understanding among the Fund and
the Underwriters, please so indicate in the space provided below for the
purpose, whereupon this letter and your acceptance shall constitute a binding
agreement among the Fund, the Investment Adviser and the Underwriters,
severally.
Very truly yours,
XXXX XXXXXXX PREFERRED INCOME FUND
------------------------------------
By:
Title:
XXXX XXXXXXX ADVISERS, LLC
------------------------------------
By:
Title:
Accepted and agreed to as of the date first above written, on behalf of
themselves and the other several Underwriters named in Schedule A
UBS WARBURG LLC
By: UBS WARBURG LLC
------------------------------------
By: Xxxx X. Reit
Title: Executive Director
27
SCHEDULE A
Number of Shares
Name to be Purchased
UBS Warburg
Total
SCHEDULE B
FORM OF OPINION OF
XXXX & XXXX REGARDING THE FUND
1. The Trust is validly existing as a business trust in good standing
under the laws of the Commonwealth of Massachusetts and has business
trust power and authority to carry on its business and own, lease
and operate its properties as described in the Prospectus, and to
enter into and perform its obligations under the Underwriting
Agreement.
2. The authorized, issued and outstanding shares of beneficial interest
of the Trust as of the date of the Prospectus are as set forth in
the Prospectus under the caption "Description of Shares". All issued
and outstanding shares of beneficial interest of the Trust as of the
date hereof have been duly authorized, validly issued, and fully
paid and are not subject to any preemptive or similar statutory
rights under the Massachusetts Business Trust statute or, to our
knowledge, similar contractual rights granted by the Trust.
3. The Shares have been duly authorized and, when issued and delivered
to the Underwriters against payment therefor pursuant to the
Underwriting Agreement, will be validly issued and fully paid.
4. The Registration Statement has been declared effective under the
Securities Act. Any required filing of the Prospectus pursuant to
Rule 497(c) or Rule 497(h) has been made in the manner and within
the time period required by Rule 497. To the best of our knowledge,
no stop order suspending the effectiveness of the Registration
Statement has been issued under the Securities Act. To the best of
our knowledge, no order of suspension or revocation of registration
pursuant to Section 8(e) of the Investment Company Act of 1940, as
amended (the "1940 Act"), has been issued, and no proceedings for
any such purpose have been instituted or are pending or threatened
by the Commission.
5. The Trust is registered with the Commission under the 1940 Act as a
closed-end, diversified management investment company; and, to the
best of our knowledge, no order of suspension or revocation of such
registration has been issued nor have any proceedings therefor been
initiated or threatened by the Commission.
6. The Underwriting Agreement has been duly authorized, executed and
delivered by the Trust.
7. Each of the Investment Advisory Agreement between the Trust and the
Adviser, dated August __, 2002 (the "Investment Advisory
Agreement"),
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the Custodian Agreement between the Trust and The Bank of New York,
dated August __, 2002 (the "Custodian Agreement"), the Transfer
Agency Agreement between the Trust and Mellon Investor Services,
LLC, dated August __, 2002 (the "Transfer Agency Agreement"), the
Underwriting Agreement, the Shareholder Servicing Agreement between
the Adviser and UBS Warburg, LLC, dated August __, 2002 and the
Additional Compensation Agreement between the Adviser and UBS
Warburg, LLC, dated August __, 2002 comply in all material respects
with all applicable provisions of the 1940 Act, the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), and the rules
and regulations of the Commission under the 1940 Act and the
Advisers Act.
8. Each of the Investment Advisory Agreement, the Custodian Agreement,
and the Transfer Agency Agreement, has been duly authorized by all
requisite action on the part of the Trust, executed and delivered by
the Trust, as of the date noted therein. Assuming due authorization,
execution and delivery by the other parties thereto, each of the
Investment Advisory Agreement, the Custodian Agreement, and the
Transfer Agency Agreement constitutes a valid and binding agreement
of the Trust, enforceable against the Trust in accordance with their
respective terms.
9. The execution, delivery and performance of the Investment Advisory
Agreement, Transfer Agency Agreement, Custodian Agreement and the
Underwriting Agreement by the Trust, the compliance by the Trust
with all the provisions thereof and the consummation by the Trust of
the transactions contemplated thereby (including the issuance and
sale of the Shares and the use of the proceeds from the sale of the
Shares as described in the Prospectus under the caption "Use of
Proceeds") do not and will not (A) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under
the securities or Blue Sky laws of the various states or the
National Association of Securities Dealers, Inc. or as have been
obtained under the federal securities laws), (B) conflict with or
constitute a breach of any of the terms or provisions of, or a
default under, or result in the imposition of a lien, charge or
encumbrance upon the assets of the Trust pursuant to any indenture,
loan agreement, mortgage, lease or other agreement or instrument
filed as an exhibit to the Registration Statement, (C) violate or
conflict with the Declaration of Trust or By-laws, (D) violate or
conflict with any applicable U.S. federal or Massachusetts state
law, rule or regulation which in our experience is normally
applicable in transactions of the type contemplated by the
Underwriting Agreement, or (E) violate or conflict with any
judgment, order or decree specifically naming the Trust or its
property of which we are aware.
10. The Shares have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance, and the Trust's
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Registration Statement on Form 8-A under the Exchange Act as amended
is effective.
11. We do not know of any legal or governmental proceedings pending or
threatened against the Trust.
12. The statements in the Prospectus under the caption "Description of
the Shares" and in Item 29 of Part C of the Registration Statement,
insofar as such statements constitute matters of law or legal
conclusions, are correct in all material respects.
13. The Trust does not require any tax or other rulings to enable it to
qualify as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended.
14. Each of the section in the Prospectus entitled "U.S. Federal Income
Tax Matters" and the section in the Statement of Additional
Information entitled "U.S. Federal Income Tax Matters" is a fair
summary of the principal United States federal income tax rules
currently in effect applicable to the Trust and to the purchase,
ownership and disposition of the Shares.
15. The Registration Statement, including any Rule 430A Information, the
Prospectus and each amendment or supplement to the Registration
Statement and Prospectus as of their respective effective or issue
dates (other than the financial statements and supporting schedules
including the notes and schedules thereto, or any other financial or
accounting data included therein or omitted therefrom, as to which
we express no opinion), and the notification on Form N-8A complied
as to form in all material respects with the requirements of the
Securities Act, the 1940 Act and the rules and regulations of the
Commission thereunder.
In connection with the preparation of the Registration Statement,
the Prospectus and the Statement of Additional Information, we have participated
in conferences with officers and representatives of the Trust and the Adviser,
representatives of the Underwriters, counsel for the Underwriters and the
independent accountants of the Trust, at which conferences we made inquiries of
such persons and others and discussed the contents of the Registration Statement
and the Prospectus and the Statement of Additional Information. While the
limitations inherent in the independent verification of factual matters and the
character of determinations involved in the registration process are such that
we are not passing upon and do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus, subject to the foregoing and based on such
participation, inquiries and discussions, no facts have come to our attention
which have caused us to believe that the Registration Statement, as of the
Effective Date (but after giving effect to changes incorporated pursuant to Rule
430A under the Securities Act), contained any untrue statement of a material
fact or omitted to state any material fact
C-4
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).
C-5
SCHEDULE C
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING XXXX XXXXXXX ADVISERS, LLC
i. Xxxx Xxxxxxx Advisers, LLC ("Xxxx Xxxxxxx Advisers") has been duly formed and
is validly existing as a limited liability company under the laws of the State
of Delaware. Xxxx Xxxxxxx Advisers has limited liability company power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus and to enter into and perform its obligations
under the Underwriting Agreement, the Shareholder Servicing Agreement, the
Additional Compensation Agreement and the Investment Advisory Agreement.
ii. Xxxx Xxxxxxx Advisers is registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act or the Investment Company
Act from acting as investment adviser and administrator for the Fund as
contemplated by the Investment Advisory Agreement, the Registration Statement
and the Prospectus.
iii. The Underwriting Agreement, the Shareholder Servicing Agreement, the
Investment Advisory Agreement and the Additional Compensation Agreement have
been duly authorized, executed and delivered by Xxxx Xxxxxxx Advisers, and the
Investment Advisory Agreement, the Shareholder Servicing Agreement and the
Additional Compensation Agreement each constitutes a valid and binding
obligation of Xxxx Xxxxxxx Advisers, enforceable in accordance with their
respective terms
iv. The execution, delivery and performance of the Underwriting Agreement by
Xxxx Xxxxxxx Advisers, the compliance by Xxxx Xxxxxxx Advisers with all the
provisions thereof and the consummation by Xxxx Xxxxxxx Advisers of the
transactions contemplated thereby do not and will not (A) require any consent,
approval, authorization or order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states or the National Association of Securities
Dealers, Inc. or as have been obtained under the federal securities laws), (B)
conflict with or constitute a breach of any of the terms or provisions of, or a
default under or result in the imposition of a lien, charge or encumbrance upon
the assets of Xxxx Xxxxxxx Advisers pursuant to, any indenture, loan agreement,
mortgage, lease or other agreement or instrument to which Xxxx Xxxxxxx Adviser
is a party filed as an exhibit to the Registration Statement, (C) violate or
conflict with the Certificate of Limited Liability Company or the Limited
Liability Company Agreement of Xxxx Xxxxxxx Advisers, or (D) violate or conflict
with any applicable federal and Massachusetts law, rule or regulation or the
Delaware Limited Liability Company statute, or (E) violate or conflict with any
judgment, order or decree specifically naming Xxxx Xxxxxxx Advisers or its
property.
vi. To my 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.
SCHEDULE D
FORM OF ACCOUNTANT'S LETTER
August , 2002
The Board of Trustees of
Xxxx Xxxxxxx Preferred Income Fund
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
UBS Warburg LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
as Managing Representative of the Underwriters
Ladies and Gentlemen:
We have audited the statement of assets and liabilities of Xxxx Xxxxxxx
Preferred Income Fund (the "Fund") as of __ _, 2001 included in the Registration
Statement on Form N-2 filed by the Fund under the Securities Act of 1933 (the
"Act") (File No. 333-91324) and under the Investment Company Act of 1940 (the
"1940 Act") (File No. 811-21131); such statement and our report with respect to
such statement are included in the Registration Statement.
In connection with the Registration Statement:
1. We are independent public accountants with respect to the Fund
within the meaning of the Act and the applicable rules and regulations
thereunder.
2. In our opinion, the statement of assets and liabilities included
in the Registration Statement and audited by us complies as to form in all
respects with the applicable accounting requirements of the Act, the 1940
Act and the respective rules and regulations thereunder.
3. For purposes of this letter we have read the minutes of all
meetings of the Shareholders, the Board of Trustees and all Committees of
the Board of Trustees of the Fund as set forth in the minute books at the
offices of the Fund, officials of the Fund having advised us that the
minutes of all such meetings through , 2002, were set forth
therein.
4. Fund officials have advised us that no financial statements as of
any date subsequent to , 2002, are available. We have made
inquiries of certain officials of the Fund who have responsibility for
financial and accounting matters regarding whether there was any change at
, 2002, in the capital
shares or net assets of the Fund as compared with amounts shown in the
, 2002, statement of assets and liabilities included in the
Registration Statement, except for changes that the Registration Statement
discloses have occurred or may occur. On the basis of our inquiries and
our reading of the minutes as described in Paragraph 3, nothing came to
our attention that caused us to believe that there were any such changes.
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,
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