CC DRAFT 3/2/04
Exhibit h
Xxxxx & Steers Select Utility Fund, Inc.
(a Maryland corporation)
[ ] Common Shares
(Par Value $.001 Per Share)
FORM OF PURCHASE AGREEMENT
March [ ], 2004
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
UBS Securities LLC
X.X. Xxxxxxx & Sons, Inc.
Wachovia Capital Markets, LLC
Deutsche Bank Securities Inc.
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
Xxxxxxx Xxxxx & Associates, Inc.
RBC Capital Markets Corporation
Xxxxx Fargo Securities, LLC
Advest, Inc.
BB&T Capital Markets, a division of Xxxxx & Xxxxxxxxxxxx, Inc.
Xxxxxx X. Xxxxx & Co. Incorporated
H&R Block Financial Advisors, Inc.
J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc.
Xxxxxx Xxxxxxxxxx Xxxxx LLC
XxXxxxxx Investments Inc., a KeyCorp Company
Quick & Xxxxxx, Inc.
Xxxxxx, Xxxxxxxx & Company, Incorporated
TD Waterhouse Investor Services, Inc.
c/o Merrill Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxx & Steers Select Utility Fund, Inc., a Maryland corporation (the
"Fund"), and the Fund's investment manager, Xxxxx & Steers Capital Management,
Inc., a New York corporation (the "Investment Manager"), each confirms its
agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("Xxxxxxx Xxxxx"), UBS Securities LLC, X.X. Xxxxxxx & Sons, Inc.,
Wachovia Capital Markets, LLC, Deutsche Bank Securities Inc., Xxxx Xxxxx Xxxx
Xxxxxx, Incorporated, Xxxxxxx Xxxxx & Associates, Inc., RBC Capital Markets
Corporation, Xxxxx Fargo Securities, LLC, Advest, Inc., BB&T Capital Markets, a
division of Xxxxx & Xxxxxxxxxxxx, Inc., Xxxxxx X. Xxxxx & Co. Incorporated, H&R
Block Financial Advisors, Inc., J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc., Xxxxxx
Xxxxxxxxxx Xxxxx LLC, XxXxxxxx Investments Inc., a KeyCorp Company, Quick &
Xxxxxx, Inc., Xxxxxx, Xxxxxxxx & Company, Incorporated and TD Waterhouse
Investor Services, Inc. and each of the other Underwriters named in Schedule A
hereto (collectively, the "Underwriters," which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for whom
Xxxxxxx Xxxxx, UBS Securities LLC, X.X. Xxxxxxx & Sons, Inc., Wachovia Capital
Markets, LLC, Deutsche
Bank Securities Inc., Xxxx Xxxxx Xxxx Xxxxxx, Incorporated, Xxxxxxx Xxxxx &
Associates, Inc., RBC Capital Markets Corporation, Xxxxx Fargo Securities, LLC,
Advest, Inc., BB&T Capital Markets, a division of Xxxxx & Xxxxxxxxxxxx, Inc.,
Xxxxxx X. Xxxxx & Co. Incorporated, H&R Block Financial Advisors, Inc.,
J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc., Xxxxxx Xxxxxxxxxx Xxxxx LLC, XxXxxxxx
Investments Inc., a KeyCorp Company, Quick & Xxxxxx, Inc., Xxxxxx, Xxxxxxxx &
Company, Incorporated and TD Waterhouse Investor Services, Inc. are acting as
representatives (in such capacity, the "Representatives"), with respect to the
issue and sale by the Fund and the purchase by the Underwriters, acting
severally and not jointly, of the respective number of common shares, par value
$.001 per share, of the Fund ("Common Shares") set forth in said Schedule A,
and with respect to the grant by the Fund to the Underwriters, acting severally
and not jointly, of the option described in Section 2(b) hereof to purchase all
or any part of [_________] additional Common Shares to cover over-allotments,
if any. The aforesaid [_________] Common Shares (the "Initial Securities") to be
purchased by the Underwriters and all or any part of the [_________] Common
Shares subject to the option described in Section 2(b) hereof (the "Option
Securities") are hereinafter called, collectively, the "Securities."
The Fund understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-111820 and No.
811-21485) covering the registration of the Securities under the Securities Act
of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses, and a notification on Form N-8A of registration of
the Fund as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations of the Commission under
the 1933 Act and the 1940 Act (the "Rules and Regulations"). Promptly after
execution and delivery of this Agreement, the Fund will either (i) prepare and
file a prospectus in accordance with the provisions of Rule 430A ("Rule 430A")
of the Rules and Regulations and paragraph (c) or (h) of Rule 497 ("Rule 497")
of the Rules and Regulations or (ii) if the Fund has elected to rely upon Rule
434 ("Rule 434") of the Rules and Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 497. The
information included in any such prospectus or in any such Term Sheet, as the
case may be, that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective, if applicable, (a) pursuant to paragraph (b) of
Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to paragraph
(d) of Rule 434 is referred to as "Rule 434 Information." Each prospectus used
before such registration statement became effective, and any prospectus that
omitted, as applicable, the Rule 430A Information or the Rule 434 Information,
that was used after such effectiveness and prior to the execution and delivery
of this Agreement, including in each case any statement of additional
information incorporated therein by reference, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the Rules and Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final prospectus in
the form first furnished to the Underwriters for use in connection with the
offering of the Securities, including the statement of additional information
incorporated therein by reference, is herein called the "Prospectus." If Rule
434 is relied on, the term "Prospectus" shall refer to the preliminary
prospectus dated [_________], 2004 together with the Term Sheet and all
references in this Agreement to the date of the Prospectus shall mean the date
of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("XXXXX").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial
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statements and schedules and other information which is incorporated by
reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Fund and the Investment Manager.
The Fund and the Investment Manager jointly and severally represent and warrant
to each Underwriter as of the date hereof, as of the Closing Time referred to in
Section 2(c) hereof, and as of each Date of Delivery (if any) referred to in
Section 2(b) hereof, and agree with each Underwriter, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act, or order of suspension or
revocation of registration pursuant to Section 8(e) of the 1940 Act, and no
proceedings for any such purpose have been instituted or are pending or, to
the knowledge of the Fund or the Investment Manager, are contemplated by
the Commission, and any request on the part of the Commission for
additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement, the notification of Form N-8A and any
amendments and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act, the 1940 Act and the Rules
and Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. Neither
the Prospectus nor any amendments or supplements thereto, at the time the
Prospectus or any such amendment or supplement was issued and at the
Closing Time (and, if any Option Securities are purchased, at the Date of
Delivery), included or will include an untrue statement of a material fact
or omitted or will omit 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 (except that this representation and warranty
does not apply to statements in or omissions from the Registration
Statement or the Prospectus made in reliance upon and in conformity with
information relating to the Underwriters furnished to the Fund by or on
behalf of the Underwriters expressly for use therein). If Rule 434 is used,
the Fund will comply with the requirements of Rule 434 and the Prospectus
shall not be "materially different," as such term is used in Rule 434, from
the prospectus included in the Registration Statement at the time it became
effective.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 497 under the 1933 Act, complied when so
filed in all material respects with the Rules and Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters for
use in connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T.
If a Rule 462(b) Registration Statement is required in connection with
the offering and sale of the Securities, the Fund has complied or will
comply with the requirements of Rule 111 under the 1933 Act Regulations
relating to the payment of filing fees thereof.
(ii) Independent Accountants. The accountants who certified the
statement of assets and liabilities included in the Registration Statement
have represented to the Fund that they are independent public accountants
as required by the 1933 Act and the Rules and Regulations.
(iii) Financial Statements. The statement of assets and liabilities
included in the Registration Statement and the Prospectus, together with
the related notes, presents fairly the
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financial position of the Fund at the date indicated; said statement has
been prepared in conformity with generally accepted accounting principles
("GAAP").
(iv) No Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects (other than as a result of
a change in the financial markets generally) of the Fund, whether or not
arising in the ordinary course of business (a "Material Adverse Effect"),
(B) there have been no transactions entered into by the Fund, other than
those in the ordinary course of business, which are material with respect
to the Fund, and (C) there has been no dividend or distribution of any kind
declared, paid or made by the Fund on any class of its capital stock.
(v) Good Standing of the Fund. The Fund has been duly organized and is
validly existing as a corporation in good standing under the laws of the
State of Maryland and has corporate 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 this
Agreement; and the Fund is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse
Effect.
(vi) No Subsidiaries. The Fund has no subsidiaries.
(vii) Investment Company Status. The Fund is duly registered with the
Commission under the 1940 Act as a closed-end, non-diversified management
investment company, and to the Fund's knowledge no order of suspension or
revocation of such registration has been issued or proceedings therefor
initiated or threatened by the Commission.
(viii) Officers and Directors. No person is serving or acting as an
officer, director or investment manager of the Fund except in accordance
with the provisions of the 1940 Act and the Rules and Regulations and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and the
rules and regulations of the Commission promulgated under the Advisers Act
(the "Advisers Act Rules and Regulations"). Except as disclosed in the
Registration Statement and the Prospectus (or any amendment or supplement
to either of them), no director of the Fund is an "interested person" (as
defined in the 0000 Xxx) of the Fund or an "affiliated person" (as defined
in the 0000 Xxx) of any Underwriter listed in Schedule A hereto.
(ix) Capitalization. The authorized, issued and outstanding common
shares of the Fund is as set forth in the Prospectus as of the date thereof
under the caption "Description of Shares." All issued and outstanding
common shares of the Fund have been duly authorized and validly issued and
are fully paid and non-assessable and have been offered and sold or
exchanged by the Fund in compliance with all applicable laws (including,
without limitation, federal and state securities laws); none of the
outstanding common shares of the Fund was issued in violation of the
preemptive or other similar rights of any securityholder of the Fund.
(x) Authorization and Description of Securities. The Securities to be
purchased by the Underwriters from the Fund have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Fund pursuant to this Agreement against payment
of the consideration set forth herein, will be validly issued and fully
paid and non-assessable. The Common Shares conform to all statements
relating thereto contained in the Prospectus and such description conforms
to the rights set forth in the instruments defining the same; no holder of
the Securities will be subject to personal liability by reason of being
such a holder; and the issuance of the Securities is not subject to the
preemptive or other similar rights of any securityholder of the Fund.
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(xi) Absence of Defaults and Conflicts. The Fund is not in violation
of its articles of incorporation or by-laws, or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which it is a party or by which it may be bound, or to which any of the
property or assets of the Fund is subject (collectively, "Agreements and
Instruments") except for such violations or defaults that would not result
in a Material Adverse Effect; and the execution, delivery and performance
of this Agreement, the Investment Management Agreement, the Administration
Agreement, the Sub-Administration Agreement, the Custodian Agreement and
the Transfer Agent and Service Agreement referred to in the Registration
Statement (as used herein, the "Management Agreement," the "Administration
Agreement," the "Sub-Administration Agreement," the "Custodian Agreement"
and the "Transfer Agency Agreement," respectively) and the consummation of
the transactions contemplated herein and in the Registration Statement
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Prospectus
under the caption "Use of Proceeds") and compliance by the Fund with its
obligations hereunder have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of,
or default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Fund pursuant to, the Agreements and Instruments (except
for such conflicts, breaches or defaults or liens, charges or encumbrances
that would not result in a Material Adverse Effect), nor will such action
result in any violation of the provisions of the articles of incorporation
or by-laws of the Fund or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Fund or any of its assets, properties or operations. As used herein, a
"Repayment Event" means any event or condition which gives the holder of
any note, debenture or other evidence of indebtedness (or any person acting
on such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Fund.
(xii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Fund or the Investment Manager, threatened, against or affecting the
Fund, which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which might reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be expected
to materially and adversely affect the properties or assets of the Fund or
the consummation of the transactions contemplated in this Agreement or the
performance by the Fund of its obligations hereunder. The aggregate of all
pending legal or governmental proceedings to which the Fund is a party or
of which any of its property or assets is the subject which are not
described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Effect.
(xiii) Accuracy of Exhibits. There are no contracts or documents which
are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto by the 1933 Act, the 1940 Act
or by the Rules and Regulations which have not been so described and filed
as required.
(xiv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Fund of its obligations
hereunder, in connection with the offering, issuance or sale of the
Securities hereunder or the consummation of the transactions contemplated
by this Agreement, except such as have been already obtained or as may be
required under the 1933 Act, the 1940 Act, the Securities Exchange
5
Act of 1934, as amended (the "1934 Act"), or under the rules of the
National Association of Securities Dealers, Inc ("NASD") or state
securities laws.
(xv) Possession of Licenses and Permits. The Fund possesses such
permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to operate
its properties and to conduct the business as contemplated in the
Prospectus; the Fund is in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply would
not, singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when
the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and the Fund has not received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xvi) Advertisements. Any advertising, sales literature or other
promotional material (including "prospectus wrappers," "broker kits," "road
show slides" and "road show scripts" and "electronic road show
presentations") authorized in writing by or prepared by the Fund or the
Investment Manager used in connection with the public offering of the
Securities (collectively, "sales material") does not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. Moreover, all sales material complied and will comply in all
material respects with the applicable requirements of the 1933 Act, the
1940 Act, the Rules and Regulations and the rules and interpretations of
the NASD.
(xvii) Subchapter M. The Fund intends to direct the investment of the
proceeds of the offering described in the Registration Statement in such a
manner as to comply with the requirements of Subchapter M of the Internal
Revenue Code of 1986, as amended ("Subchapter M of the Code" and the
"Code," respectively), and intends to qualify as a regulated investment
company under Subchapter M of the Code.
(xviii) Distribution of Offering Materials. The Fund has not
distributed and, prior to the later to occur of (A) the Closing Time and
(B) completion of the distribution of the Shares, will not distribute any
offering material in connection with the offering and sale of the Shares
other than the Registration Statement, a preliminary prospectus, the
Prospectus or the sales materials.
(xix) Accounting Controls. The Fund maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or
specific authorization and with the applicable requirements of the 1940
Act, the Rules and Regulations and the Code; (B) transactions are recorded
as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain
accountability for assets and to maintain compliance with the books and
records requirements under the 1940 Act and the Rules and Regulations; (C)
access to assets is permitted only in accordance with the management's
general or specific authorization; and (D) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xx) Absence of Undisclosed Payments. To the Fund's knowledge, neither
the Fund nor any employee or agent of the Fund has made any payment of
funds of the Fund or received or retained any funds, which payment, receipt
or retention of funds is of a character required to be disclosed in the
Prospectus.
(xxi) Material Agreements. This Agreement, the Management Agreement,
the Administration Agreement, the Sub-Administration Agreement, the
Custodian Agreement and the Transfer Agency Agreement have each been duly
authorized by all requisite action on the part of the Fund, executed and
delivered by the Fund, as of the dates noted therein and each complies
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with all applicable provisions of the 1940 Act. Assuming due authorization,
execution and delivery by the other parties thereto with respect to the
Management Agreement, the Sub-Administration Agreement, the Custodian
Agreement and the Transfer Agency Agreement, each of the Management
Agreement, the Administration Agreement, the Sub-Administration Agreement,
the Custodian Agreement and the Transfer Agency Agreement constitutes a
valid and binding agreement of the Fund, enforceable in accordance with its
terms, except as affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law).
(xxii) Registration Rights. There are no persons with registration
rights or other similar rights to have any securities registered pursuant
to the Registration Statement or otherwise registered by the Fund under the
1933 Act.
(xxiii) NYSE Listing. The Securities have been duly authorized for
listing, upon notice of issuance, on the New York Stock Exchange ("NYSE")
and the Fund's registration statement on Form 8-A under the 1934 Act has
become effective.
(b) Representations and Warranties by the Investment Manager. The
Investment Manager represents and warrants to each Underwriter as of the date
hereof, as of the Closing Time referred to in Section 2(c) hereof, and as of
each Date of Delivery (if any) referred to in Section 2(b) hereof as follows:
(i) Good Standing of the Investment Manager. The Investment Manager
has been duly organized and is validly existing and in good standing as a
corporation under the laws of the State of New York with full corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus and is duly qualified as a
foreign corporation to transact business and is in good standing in each
other jurisdiction in which such qualification is required except where the
failure so to register or to qualify does not have a material adverse
effect on the condition (financial or other), business, business prospects,
properties, net assets or results of operations of the Investment Manager
or on the ability of the Investment Manager to perform its obligations
under this Agreement and the Management Agreement.
(ii) Investment Manager Status. The Investment Manager is duly
registered and in good standing with the Commission as an investment
manager under the Advisers Act, and is not prohibited by the Advisers Act
or the 1940 Act, or the rules and regulations under such acts, from acting
under the Management Agreement or Administration Agreement for the Fund as
contemplated by the Prospectus.
(iii) Description of Investment Manager. The description of the
Investment Manager in the Registration Statement and the Prospectus (and
any amendment or supplement to either of them) complied and comply in all
material respects with the provisions of the 1933 Act, the 1940 Act, the
Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations and is true and correct and does 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, in
light of the circumstances under which they were made, not misleading.
(iv) Capitalization. The Investment Manager has the financial
resources available to it necessary for the performance of its services and
obligations as contemplated in the Prospectus, this Agreement and under the
Management Agreement and Administration Agreement to which it is a party.
(v) Authorization of Agreements; Absence of Defaults and Conflicts.
This Agreement, the Management Agreement, the Administration Agreement and
the Additional Compensation Agreement have each been duly authorized,
executed and delivered by the Investment Manager, and the Management
Agreement and the Administration Agreement each constitute a valid and
binding obligation of the Investment Manager, enforceable in accordance
7
with its terms, except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally and general equitable principles
(whether considered in a proceeding in equity or at law); and neither the
execution and delivery of this Agreement, the Management Agreement or the
Administration Agreement nor the performance by the Investment Manager of
its obligations hereunder or thereunder will conflict with, or result in a
breach of any of the terms and provisions of, or constitute, with or
without the giving of notice or lapse of time or both, a default under, any
agreement or instrument to which the Investment Manager is a party or by
which it is bound, the certificate of incorporation, the by-laws or other
organizational documents of the Investment Manager, or to the Investment
Manager's knowledge, by any law, order, decree, rule or regulation
applicable to it of any jurisdiction, court, federal or state regulatory
body, administrative agency or other governmental body, stock exchange or
securities association having jurisdiction over the Investment Manager or
its properties or operations; and no consent, approval, authorization or
order of any court or governmental authority or agency is required for the
consummation by the Investment Manager of the transactions contemplated by
this Agreement, the Management Agreement or the Administration Agreement,
except as have been obtained or may be required under the 1933 Act, the
1940 Act, the 1934 Act or state securities laws.
(vi) No Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred any
event which should reasonably be expected to have a material adverse effect
on the ability of the Investment Manager to perform its obligations under
this Agreement and the Management Agreement and Administration Agreement to
which it is a party.
(vii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Investment Manager, threatened against or affecting the Investment
Manager or any "affiliated person" of the Investment Manager (as such term
is defined in the 0000 Xxx) or any partners, directors, officers or
employees of the foregoing, whether or not arising in the ordinary course
of business, which might reasonably be expected to result in any material
adverse change in the condition, financial or otherwise, or earnings,
business affairs or business prospects of the Investment Manager,
materially and adversely affect the properties or assets of the Investment
Manager or materially impair or adversely affect the ability of the
Investment Manager to function as an investment manager or perform its
obligations under the Management Agreement or the Administration Agreement,
or which is required to be disclosed in the Registration Statement and the
Prospectus.
(viii) Absence of Violation or Default. The Investment Manager is not
in violation of its certificate of incorporation, by-laws or other
organizational documents or in default under any agreement, indenture or
instrument except for such violations or defaults that would not result in
a material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Investment
Manager or the Fund.
(c) Officer's Certificates. Any certificate signed by any officer of the
Fund or the Investment Manager delivered to the Representatives or to counsel
for the Underwriters shall be deemed a representation and warranty by the Fund
or the Investment Manager, as the case may be, to each Underwriter as to the
matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Fund agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Fund, at the
price per share set forth in Schedule B, the number of Initial Securities set
forth in Schedule A opposite
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the name of such Underwriter, plus any additional number of Initial Securities
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Fund hereby grants an option to the Underwriters, severally and not
jointly, to purchase up to an additional [_________] Common Shares in the
aggregate at the price per share set forth in Schedule B, less an amount per
share equal to any dividends or distributions declared by the Fund and payable
on the Initial Securities but not payable on the Option Securities. The option
hereby granted will expire 45 days after the date hereof and may be exercised in
whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representatives to the
Fund setting forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Securities. Any such time and date of delivery (a "Date
of Delivery") shall be determined by the Representatives, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as Xxxxxxx Xxxxx in its discretion shall make to eliminate any sales
or purchases of a fractional number of Option Securities.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Xxxxxxx
Xxxxxxx & Xxxxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at
such other place as shall be agreed upon by the Representatives and the Fund, at
10:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30
P.M. (Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
Representatives and the Fund (such time and date of payment and delivery being
herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Fund, on each Date of Delivery as specified in the notice from the
Representatives to the Fund.
Payment shall be made to the Fund by wire transfer of immediately available
funds to a bank account designated by the Fund, against delivery to the
Representatives for the respective accounts of the Underwriters of certificates
for the Securities to be purchased by them. It is understood that each
Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. Xxxxxxx Xxxxx, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in the City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
9
SECTION 3. Covenants.
(a) The Fund and the Investment Manager, jointly and severally, covenant
with each Underwriter as follows:
(i) Compliance with Securities Regulations and Commission Requests.
The Fund, subject to Section 3(a)(ii), will comply with the requirements of
Rule 430A or Rule 434, as applicable, and will notify the Representatives
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of
any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of
any order preventing or suspending the use of any preliminary prospectus,
or of the suspension of the qualification of the Securities for offering or
sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Fund will promptly effect the
filings necessary pursuant to Rule 497 and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted
for filing under Rule 497 was received for filing by the Commission and, in
the event that it was not, it will promptly file such prospectus. The Fund
will make every reasonable effort to prevent the issuance of any stop
order, or order of suspension or revocation of registration pursuant to
Section 8(e) of the 1940 Act, and, if any such stop order or order of
suspension or revocation of registration is issued, to obtain the lifting
thereof at the earliest possible moment.
(ii) Filing of Amendments. The Fund will give the Representatives
notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or
to the Prospectus, will furnish the Representatives with copies of any such
documents a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall reasonably object.
(iii) Delivery of Registration Statements. The Fund has furnished or
will deliver to the Representatives and counsel for the Underwriters,
without charge, signed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the Representatives,
without charge, a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) for each
of the Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(iv) Delivery of Prospectuses. The Fund has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Fund hereby consents to
the use of such copies for purposes permitted by the 1933 Act prior to the
date of the Prospectus. The Fund will furnish to each Underwriter, without
charge, during the period when the Prospectus is required to be delivered
under the 1933 Act or the 1934 Act, such number of copies of the Prospectus
(as amended or supplemented) as such Underwriter may reasonably request.
The Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
10
(v) Continued Compliance with Securities Laws. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with
sales of the Securities, any event shall occur or condition shall exist as
a result of which it is necessary, in the opinion of counsel for the
Underwriters or for the Fund, to amend the Registration Statement or amend
or supplement the Prospectus in order that the Prospectus will not include
any untrue statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at
any such time to amend the Registration Statement or amend or supplement
the Prospectus in order to comply with the requirements of the 1933 Act or
the Rules and Regulations, the Fund will promptly prepare and file with the
Commission, subject to Section 3(a)(ii), such amendment or supplement as
may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements, and
the Fund will furnish to the Underwriters such number of copies of such
amendment or supplement as the Underwriters may reasonably request.
(vi) Blue Sky Qualifications. The Fund will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering
and sale under the applicable securities laws of such states and other
jurisdictions of the United States as the Representatives may designate and
to maintain such qualifications in effect for a period of not less than one
year from the later of the effective date of the Registration Statement and
any Rule 462(b) Registration Statement; provided, however, that the Fund
shall not be obligated to file any general consent to service of process or
to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject. In each jurisdiction in which the Securities have
been so qualified, the Fund will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the effective date of
the Registration Statement and any Rule 462(b) Registration Statement.
(vii) Rule 158. The Fund will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(viii) Use of Proceeds. The Fund will use the net proceeds received by
it from the sale of the Securities in the manner specified in the
Prospectus under "Use of Proceeds."
(ix) Listing. The Fund will use commercially reasonable efforts to
effect the listing of the Securities on the NYSE, subject to notice of
issuance, concurrently with the effectiveness of the Registration
Statement.
(x) Restriction on Sale of Securities. During a period of 180 days
from the date of the Prospectus, the Fund will not, without the prior
written consent of Xxxxxxx Xxxxx, (A) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant
to purchase or otherwise transfer or dispose of Common Shares or any
securities convertible into or exercisable or exchangeable for Common
Shares or file any registration statement under the 1933 Act with respect
to any of the foregoing or (B) enter into any swap or any other agreement
or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Shares,
whether any such swap or transaction described in clause (A) or (B) above
is to be settled by delivery of Common Shares or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (1) the
Securities to be sold hereunder or (2) Common Shares issued pursuant to any
dividend reinvestment plan.
(xi) Reporting Requirements. The Fund, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be
11
filed with the Commission pursuant to the 1940 Act and the 1934 Act within
the time periods required by the 1940 Act and the Rules and Regulations and
the 1934 Act and the rules and regulations of the Commission thereunder,
respectively.
(xii) Subchapter M. The Fund will use its best efforts to comply with
the requirements of Subchapter M of the Code to qualify as a regulated
investment company under the Code.
(xiii) No Manipulation of Market for Securities. The Fund will not (a)
take, directly or indirectly, any action designed to cause or to result in,
or that might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Fund to facilitate the
sale or resale of the Securities, and (b) until the Closing Date, or the
Date of Delivery, if any, (i) sell, bid for or purchase the Securities or
pay any person any compensation for soliciting purchases of the Securities
or (ii) pay or agree to pay to any person any compensation for soliciting
another to purchase any other securities of the Fund .
(xiv) Rule 462(b) Registration Statement. If the Fund elects to rely
upon Rule 462(b), the Fund shall file a Rule 462(b) Registration Statement
with the Commission in compliance with Rule 462(b) by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement, and the Fund shall at
the time of filing either pay to the Commission the filing fee for the Rule
462(b) Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the 1933 Act.
SECTION 4. Payment of Expenses.
(a) Expenses. The Fund will pay all expenses incident to the performance of
its obligations under this Agreement, including (i) the preparation, printing
and filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery to the Underwriters of this Agreement, any
Agreement among Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Underwriters, including any stock or other transfer taxes
and any stamp or other duties payable upon the sale, issuance or delivery of the
Securities to the Underwriters, (iv) the fees and disbursements of the Fund's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(a)(vi)
hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation of the Blue Sky Survey and any supplement thereto, (vi) the printing
and delivery to the Underwriters of copies of each preliminary prospectus,
Prospectus and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey and
any supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters (up to $10,000)
in connection with, the review by the NASD of the terms of the sale of the
Securities, (x) the fees and expenses incurred in connection with the listing of
the Securities on the NYSE and (xi) the printing of any sales material. Also,
the Fund shall pay to Xxxxxxx Xxxxx, on behalf of the Underwriters, $.00667 per
share of the securities purchased pursuant to this agreement as partial
reimbursement of expenses incurred in connection with the offering. The
Investment Manager has agreed to pay organizational expenses and offering costs
(other than sales load, but including the partial reimbursement of expenses
described in the preceding sentence) of the Fund that exceed $.04 per Common
Share.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section 9(a)
hereof, the Fund and the Investment Manager, jointly and severally, agree that
they shall reimburse the Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the Underwriters.
12
SECTION 5. Conditions of Underwriters' Obligations.
The obligations of the several Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Fund and the Investment
Manager contained in Section 1 hereof or in certificates of any officer of the
Fund or the Investment Manager delivered pursuant to the provisions hereof, to
the performance by the Fund and the Investment Manager of their respective
covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act, no notice or order pursuant
to Section 8(e) of the 1940 Act shall have been issued, and no proceedings with
respect to either shall have been initiated or threatened by the Commission, and
any request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
Underwriters. A prospectus containing the Rule 430A Information shall have been
filed with the Commission in accordance with Rule 497 (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the Fund has
elected to rely upon Rule 434, a Term Sheet shall have been filed with the
Commission in accordance with Rule 497.
(b) Opinion of Counsel for Fund and the Investment Manager. At Closing
Time, the Representatives shall have received the favorable opinions, dated as
of Closing Time, of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, counsel for the Fund and of
Xxxxxxxx X. Xxxxxxx, Esq., internal counsel for the Investment Manager, in form
and substance satisfactory to counsel for the Underwriters, together with signed
or reproduced copies of such letters for each of the other Underwriters
substantially to the effect set forth in Exhibit A hereto and to such further
effect as counsel to the Underwriters may reasonably request. Insofar as the
opinions expressed above relate to or are dependent upon matters governed by
Maryland law, Xxxxxxx Xxxxxxx & Xxxxxxxx LLP will be permitted to rely on the
opinion of Xxxxxxx LLP.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Xxxxxxxx Chance US LLP, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in clauses (A) (1), (4), (5) (solely as to
the information in the second clause thereof), (6), (7), (11) and the second
paragraph after (A)(15) of the form of opinion of counsel for the Fund in
Exhibit A hereto. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State of
New York and the federal law of the United States, upon the opinions of counsel
satisfactory to the Representatives. Such counsel may also state that, insofar
as such opinion involves factual matters, they have relied, to the extent they
deem proper, upon certificates of officers of the Fund and certificates of
public officials.
(d) Officers' Certificates. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Fund, whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of a duly authorized officer
of the Fund and of the chief financial or chief accounting officer of the Fund
and of the President or a Vice President or Managing Director of the Investment
Manager, dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in Sections
1(a) and (b) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) each of the Fund and the
Investment Manager, respectively, has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to Closing
Time, (iv) with respect to the Investment Manager only, there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Investment Manager,
whether or not arising in the ordinary course of business and (v) to the
knowledge of such officers, no stop order suspending the effectiveness of the
Registration Statement, or order of suspension or revocation of registration
pursuant
13
to Section 8(e) of the 1940 Act, has been issued and no proceedings for any such
purpose have been instituted or are pending or are contemplated by the
Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from PricewaterhouseCoopers
LLP a letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information to the
effect that:
(i) They are independent certified public accountants with respect to
the Fund within the meaning of the 1933 Act and 1940 Act, and the
applicable rules and regulations thereunder adopted by the Commission;
(ii) In their opinion, the financial statements of the Fund audited by
them and included in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the 1933
Act and 1940 Act and the related rules and regulations adopted by the
Commission;
(iii) on the basis of procedures (but not an audit in accordance with
generally accepted auditing standards) consisting of:
a. Reading the minutes of meetings of the Board of
Directors of the Fund as set forth in the minute books
through a specified date not more than three business days
prior to the date of delivery of such letter; and
b. Making inquiries of certain officials of the Fund
who have responsibility for financial and accounting matters
regarding changes in the capital stock, net assets or
long-term liabilities of the Fund as compared with the
amounts shown in the latest balance sheet included in the
Registration Statement or for the period from the date of
the latest income statement included in the Registration
Statement to a specified date not more than three business
days prior to the delivery of such letter,
there has been no change in the capital stock, net assets or long-term
liabilities of the Fund except as disclosed in the comfort letter.
(f) Bring-down Comfort Letter. At Closing Time, the Representatives shall
have received from PricewaterhouseCoopers LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(g) Approval of Listing. At Closing Time, the Securities shall have been
approved for listing on the NYSE, subject only to official notice of issuance.
(h) No Objection. The NASD has not raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(i) Execution of Additional Compensation Agreement. At Closing Time,
Xxxxxxx Xxxxx shall have received the Additional Compensation Agreement, dated
as of the Closing Date, as executed by the Investment Manager.
(j) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Fund contained herein and the statements in any certificates furnished by
the Fund hereunder shall be true and correct as of each Date of Delivery and, at
the relevant Date of Delivery, the Representatives shall have received:
(i) Officers' Certificates. Certificates, dated such Date of Delivery,
of a duly authorized officer of the Fund and of the chief financial or
chief accounting officer of the Fund and of the President or a Vice
President or Managing Director of the Investment Manager
14
confirming that the information contained in the certificate delivered by
each of them at the Closing Time pursuant to Section 5(d) hereof remains
true and correct as of such Date of Delivery.
(ii) Opinions of Counsel for the Fund and the Investment Manager. The
favorable opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, counsel for the Fund
and of Xxxxxxxx X. Xxxxxxx, Esq., internal counsel for the Investment
Manager, in form and substance satisfactory to counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Section 5(b) hereof.
(iii) Opinion of Counsel for the Underwriters. The favorable opinion
of Xxxxxxxx Chance US LLP, counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Section 5(c) hereof.
(iv) Bring-down Comfort Letter. A letter from PricewaterhouseCoopers
LLP, in form and substance satisfactory to the Representatives and dated
such Date of Delivery, substantially in the same form and substance as the
letter furnished to the Representatives pursuant to Section 5(f) hereof,
except that the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than five days prior to such Date of
Delivery.
(k) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Fund and the Investment Manager in connection with the organization
and registration of the Fund under the 1940 Act and the issuance and sale of the
Securities as herein contemplated shall be satisfactory in form and substance to
the Representatives and counsel for the Underwriters.
(l) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Fund at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7, 8 and 13
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Fund and the Investment Manager,
jointly and severally, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
15
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(e) below) any such settlement is effected with the written consent of the
Fund; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Xxxxxxx Xxxxx), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund or the
Investment Manager by any Underwriter through Xxxxxxx Xxxxx expressly for use in
the Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); provided,
however, that the indemnification contained in this paragraph (a) with respect
to any preliminary prospectus shall not inure to the benefit of any Underwriter
(or to the benefit of any person controlling such Underwriter) on account of any
such loss, claim, damage, liability or expense arising from the sale of the
Securities by such Underwriter to any person if the Fund sustains the burden of
proof that a copy of the Prospectus has not been delivered or sent by the
Underwriters as required to such person within the time required by the 1933 Act
and the 1933 Act Rules and Regulations, and the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact contained in
such preliminary prospectus was corrected in such Prospectus.
(b) Indemnification of Fund, Investment Manager, Directors and Officers.
Each Underwriter severally agrees to indemnify and hold harmless the Fund and
the Investment Manager, their respective directors, each of the Fund's officers
who signed the Registration Statement, and each person, if any, who controls the
Fund or the Investment Manager within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Fund or the Investment Manager by such
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) Indemnification for Marketing Materials. In addition to the foregoing
indemnification, the Fund and the Investment Manager also, jointly and
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 6(a),
as limited by the proviso set forth therein, with respect to any sales material.
(d) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
16
counsel to the indemnified parties shall be selected by Xxxxxxx Xxxxx, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Fund and the Investment Manager. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(e) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. Contribution.
If the indemnification provided for in Section 6 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Fund and the Investment Manager on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) 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 Manager on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Fund and the Investment Manager on
the one hand and the Underwriters on the other hand in connection with the
offering of the Securities pursuant to this Agreement shall be deemed to be in
the same respective proportions as the total net proceeds from the offering of
the Securities pursuant to this Agreement (before deducting expenses) received
by the Fund and the total underwriting discount received by the Underwriters
(whether from the Fund or otherwise), in each case as set forth on the cover of
the Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the Securities as
set forth on such cover.
The relative fault of the Fund and the Investment Manager on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Fund or the Investment Manager or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
17
The Fund, the Investment Manager and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Fund and each director of the Investment Manager,
respectively, each officer of the Fund who signed the Registration Statement,
and each person, if any, who controls the Fund or the Investment Manager, within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Fund and the Investment Manager,
respectively. The Underwriters' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the number of Initial Securities set
forth opposite their respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement
or in certificates of officers of the Fund or the Investment Manager submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or controlling
person, or by or on behalf of the Fund or the Investment Manager, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this Agreement,
by notice to the Fund, at any time at or prior to Closing Time (i) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus (exclusive of any
supplement thereto), any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Fund or the Investment Manager, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States or the international financial markets,
any outbreak of hostilities or escalation thereof or other calamity or crisis or
any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Representatives,
impracticable or inadvisable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in the Common Shares of the
Fund has been suspended or materially limited by the Commission or the NYSE, or
if trading generally on the American Stock Exchange or the NYSE or in the Nasdaq
National Market has been suspended or materially limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the
Commission, the NASD or any other governmental authority, or a material
disruption has occurred in commercial banking or securities settlement or
clearance services in the United States, or (iv) if a banking moratorium has
been declared by either Federal or New York authorities.
18
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7, 8 and 13 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at Closing Time or a Date of
Delivery to purchase the Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), the Representatives shall
have the right, within 24 hours thereafter, to make arrangements for one or more
of the non-defaulting Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the number
of Securities to be purchased on such date, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to any
Date of Delivery which occurs after the Closing Time, the obligation of the
Underwriters to purchase and of the Fund to sell the Option Securities to be
purchased and sold on such Date of Delivery shall terminate without liability on
the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Fund to sell the relevant Option Securities, as
the case may be, either the Representatives or the Fund shall have the right to
postpone Closing Time or the relevant Date of Delivery, as the case may be, for
a period not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
As used herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10.
SECTION 11. Tax Disclosure.
Notwithstanding any other provision of this Agreement, from the
commencement of discussions with respect to the transactions contemplated
hereby, the Fund (and each employee, representative or other agent of the Fund)
may disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure (as such terms are used in Sections 6011, 6111 and
6112 of the U.S. Code and the Treasury Regulations promulgated thereunder) of
the transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided relating to such
tax treatment and tax structure.
SECTION 12. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representatives, c/o Merrill Xxxxx & Co., 0 Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, attention of Equity Capital Markets; and notices to the Fund or
the Investment Manager shall be directed, as appropriate, to the office of Xxxxx
& Steers Capital Management, Inc. at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx X. Xxxxxx.
19
SECTION 13. Parties.
This Agreement shall each inure to the benefit of and be binding upon the
Underwriters, the Fund, the Investment Manager and their respective partners and
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Fund, the Investment Manager and their respective successors
and the controlling persons and officers and directors referred to in Sections 6
and 7 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters, the Fund, the
Investment Manager and their respective partners and successors, and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SAID STATE. UNLESS OTHERWISE EXPLICITLY PROVIDED, SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
20
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a binding agreement among the
Underwriters, the Fund and the Investment Manager in accordance with its terms.
Very truly yours,
Xxxxx & Steers Select Utility Fund, Inc.
By:
------------------------------------
Name:
Title:
Xxxxx & Steers Capital Management, Inc.
By:
------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
[OTHER CO-MANAGERS]
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:
------------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
21
SCHEDULE A
Number of
Initial
Name of Underwriter Securities
------------------- ----------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated..................................................
UBS Securities LLC
X.X. Xxxxxxx & Sons, Inc.
Wachovia Capital Markets, LLC
Deutsche Bank Securities Inc.
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
Xxxxxxx Xxxxx & Associates, Inc.
RBC Capital Markets Corporation
Xxxxx Fargo Securities, LLC
Advest, Inc.
BB&T Capital Markets, a division of Xxxxx & Xxxxxxxxxxxx, Inc.
Xxxxxx X. Xxxxx & Co. Incorporated
H&R Block Financial Advisors, Inc.
J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc.
Xxxxxx Xxxxxxxxxx Xxxxx LLC
XxXxxxxx Investments Inc., a KeyCorp Company
Quick & Xxxxxx, Inc.
Xxxxxx, Xxxxxxxx & Company, Incorporated
TD Waterhouse Investor Services, Inc.
Sch A-1
Number of
Initial
Name of Underwriter Securities
------------------- ----------
Total..............................................................
----------
==========
Sch A-2
SCHEDULE B
XXXXX & STEERS SELECT UTILITY FUND, INC.
[_________] Common Shares
(Par Value $.001 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $20.00.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $[___], being an amount equal to the initial
public offering price set forth above less $[___] per share; provided that the
purchase price per share for any Option Securities purchased upon the exercise
of the over-allotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Fund
and payable on the Initial Securities but not payable on the Option Securities.
Sch B-1
Exhibit A
FORM OF OPINION OF FUND'S AND INVESTMENT MANAGER'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
With respect to the Fund:
1. The Fund (A) has been duly incorporated and is validly existing and
in good standing as a corporation under the laws of the State of Maryland and
has full corporate power and authority to conduct its business as described in
the Registration Statement and the Prospectus and to enter into and perform its
obligations under the Purchase Agreement, and (B) is duly registered and
qualified to conduct its business and is in good standing in the State of New
York (which is the only jurisdiction identified by management of the Fund to us
in which the Fund owns or leases property or operates or conducts its business);
2. The statements made in the Prospectus under the caption
"Description of Shares", insofar as they purport to constitute summaries of the
terms of the Fund's common stock, constitute accurate summaries of the terms of
such common stock in all material respects;
3. All outstanding shares of capital stock of the Fund have been duly
authorized and validly issued by the Fund, and are fully paid and nonassessable;
4. The Shares have been duly authorized and, when issued and delivered
to the Underwriters against payment therefor in accordance with the terms of the
Purchase Agreement, will be validly issued by the Fund, fully paid and
nonassessable. There are no preemptive rights under federal or New York law or
under the Maryland General Corporation Law to subscribe for or purchase shares
of the Fund's capital stock. There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the issuance, voting or
transfer of, any shares of the Fund's capital stock pursuant to the Fund's
charter or by-laws or any agreement or other instrument filed or incorporated by
reference as an exhibit to the Registration Statement;
5. The Shares have been authorized for listing, subject to notice of
issuance, on the New York Stock Exchange (the "NYSE"); the form of the
certificate for the Shares conforms to the requirements of the Maryland General
Corporation Law and the NYSE;
6. The Registration Statement and all post-effective amendments, have
become effective under the 1933 Act and, to our knowledge, no stop order
suspending the effectiveness of the Registration Statement or order pursuant to
Section 8(e) of the 1940 Act has been issued and no proceedings for that purpose
are pending before or threatened by the Commission; and any required filing of
the Prospectus pursuant to Rule 497 of the 1933 Act Rules and Regulations has
been made in accordance with Rule 497;
7. (A) The Purchase Agreement and each of the Advisory Agreement dated
as of [_________], 2004 between the Fund and the Investment Manager (the
"Advisory Agreement"), the Administration Agreement dated as of [_________]
between the Fund and the Investment Manager (the "Administration Agreement"),
the Master Custodian Agreement dated as of March 9, 2001 and effective with
respect to the Fund as of [_________] between the Fund and State Street Bank and
Trust Company (the "Custodian Agreement"), the agreement dated as of March 12,
2001 and effective with respect to Fund as of [_________] between the Fund and
State Street Bank and Trust Company (the "Sub-Administration Agreement"), and
the Stock Transfer Agent Services Agreement dated as of [_________] between the
Fund and
A-1
Equiserve Trust Company, NA (the "Transfer Agent Agreement"; collectively with
the Advisory Agreement, Administration Agreement, Custodian Agreement and
Sub-Administration Agreement, the "Fund Agreements") have been duly authorized,
executed and delivered by the Fund and (B) the Advisory Agreement, assuming that
the Advisory Agreement is the valid and legally binding obligations of the other
parties thereto, is a valid and legally binding agreement of the Fund,
enforceable against the Fund in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and to general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and fair
dealing and as the enforceability thereof may be limited by considerations of
public policy;
8. The issue and sale of the Shares by the Fund and the compliance by
the Fund with the provisions of the Purchase Agreement and the Fund Agreements
will not breach or result in a default under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Fund pursuant to any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument filed or incorporated by reference as an exhibit to the
Registration Statement, nor will such action violate the charter or by-laws of
the Fund or any federal or New York statute or any rule or regulation thereunder
or the Maryland General Corporation Law or order known to us issued pursuant to
any federal or New York statute or the Maryland General Corporation Law by any
New York or Maryland court or governmental agency or body having jurisdiction
over the Fund or any of its properties;
9. No consent, approval, authorization, order, registration, filing or
qualification of or with any federal or New York governmental agency or body or
any Maryland governmental agency or body acting pursuant to the Maryland General
Corporation Law or, to our knowledge, any federal or New York court or any
Maryland court acting pursuant to the Maryland General Corporation Law is
required for the issue and sale of the Shares by the Fund and the compliance by
the Fund with all of the provisions of the Purchase Agreement and the Fund
Agreements, except for the registration with the Commission under the 1940 Act
of the Fund as an investment company which has occurred and the registration of
the Shares under the 1933 Act and the 1940 Act pursuant to the Registration
Statement and under the Securities Exchange Act of 1934, as amended, pursuant to
the Fund's Registration Statement on Form 8-A, both of which have been filed and
have become effective, and such consents, approvals, authorizations,
registrations, filings or qualifications as have been made or as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
10. To our knowledge, (A) other than as described or contemplated in
the Registration Statement or Prospectus, there are no legal or governmental
proceedings pending or threatened against the Fund, or to which the Fund or any
of its properties is subject and (B) there are no agreements, contracts,
indentures, leases or other instruments that are required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that are not described or filed as required, as the case
may be;
11. The statements made in the Prospectus under the caption
"Management of the Fund," "Description of Shares - Common Shares" and in the
Registration Statement under Item 29 (Indemnification), insofar as they purport
to constitute summaries of the terms of the Maryland General Corporation Law or
any federal statutes, rules and regulations thereunder or contracts and other
documents, constitute accurate summaries of the terms of such statutes, rules
and regulations or contracts and other documents in all material respects;
A-2
12. The statements made in the Prospectus under the caption "Taxation"
insofar as they purport to constitute summaries of matters of United States
federal tax law and regulations or legal conclusions with respect thereto,
constitute accurate summaries of the matters described therein in all material
respects;
13. Each of the Fund Agreements complies as to form with all
applicable provisions of the 1940 Act, the Investment Advisers Act of 1940, as
amended (the "Advisers Act") and the rules and regulations under the 1940 Act
and the Advisers Act;
14. The Fund is duly registered with the Commission under the 1940 Act
and the rules and regulations under the 1940 Act (the "1940 Act Rules and
Regulations") as a closed-end, non-diversified management investment company
and, to our knowledge, no order of suspension or revocation of such registration
under the 1940 Act and the 1940 Act Rules and Regulations has been issued or
proceedings therefor initiated or threatened by the Commission; the provisions
of the charter and by-laws do not violate the provisions of the 1940 Act or the
1940 Act Rules and Regulations; and the provisions of the charter and the
by-laws and the investment policies and restrictions described in the
Registration Statement and the Prospectus under the captions "Investment
Objectives and Policies", "Principal Risks of the Fund", "Additional Risk
Considerations" and "Investment Restrictions" (in the Prospectus and the
statement of additional information incorporated by reference therein) comply in
all material respects with the requirements of the 1940 Act and the applicable
1940 Act Rules and Regulations;
15. Except as described in the Prospectus, there are no outstanding
options, warrants or other rights calling for the issuance of, and we do not
know of any commitment, plan or arrangement to issue (other than in connection
with the reinvestment of dividends) any shares of capital stock of the Fund or
any security convertible into or exchangeable or exercisable for shares of
capital stock of the Fund or to otherwise register such securities for sale.
Insofar as the opinions expressed herein relate to or are dependent
upon matters governed by the laws of the State of Maryland, we have relied upon
the opinion of Xxxxxxx LLP.
We have not independently verified the accuracy, completeness or
fairness of the statements made or included in the Registration Statement or the
Prospectus and take no responsibility therefor, except as and to the extent set
forth in paragraphs 2, 11 and 12 above. In the course of the preparation by the
Fund of the Registration Statement and the Prospectus, we participated in
conferences with certain officers and employees of the Fund and the Investment
Manager, with representatives of PricewaterhouseCoopers LLP and with counsel to
the Investment Manager. Based upon our examination of the Registration Statement
and the Prospectus, our investigations made in connection with the preparation
of the Registration Statement and the Prospectus and our participation in the
conferences referred to above, (i) we are of the opinion that the Registration
Statement, as of its effective date, the Prospectus, as of its date, and the
notification on Form N-8A, complied as to form in all material respects with the
requirements of the 1933 Act and the 1940 Act and the applicable rules and
regulations of the Commission thereunder, except that in each case we express no
opinion with respect to the financial statements or other financial data
contained or incorporated by reference in the Registration Statement or the
Prospectus, and (ii) we have no reason to believe that the Registration
Statement, at the time the Registration Statement became effective, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein not
misleading or that the Prospectus contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that in each case we express no belief with respect
to the financial statements or other financial data contained or incorporated by
reference in the Registration Statement or the Prospectus.
A-3
With respect to the Investment Manager:
1. The Investment Manager (A) has been duly incorporated and is
validly existing as a corporation under the laws of the State of New York with
full corporate power and authority to conduct its business as described in the
Registration Statement and the Prospectus and (B) is duly registered and
qualified to conduct its business and is in good standing in the State of New
York (which is the only jurisdiction in which the Investment Manager owns or
leases property or operates or conducts its business).
2. The Investment Manager is duly registered with the Commission as an
investment adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act") and is not prohibited by the Advisers Act, the rules and
regulations under the Advisers Act (the "Advisers Act Rules and Regulations"),
the 1940 Act, the rules and regulations under the 1940 Act from acting under the
Advisory Agreement dated as of [_________] between the Fund and the Investment
Manager (the "Advisory Agreement"), the Administration Agreement between the
Investment Manager and the Fund dated as of [_________] (the "Administration
Agreement"), the Additional Compensation Agreement between the Investment
Manager and Xxxxxxx Lynch, Pierce, Xxxxxx and Xxxxx Incorporated dated as of
[_________] (the "Merrill Additional Compensation Agreement"), the Additional
Compensation Agreement between the Investment Manager and [_________] dated as
of [_________] (the "[_________]"), or the Additional Compensation Agreement
between the Investment Manager and [_________] dated as of [_________] (the
"[_________]," collectively with the Merrill Additional Compensation Agreement
and the [_________], the "Additional Compensation Agreements"), for the Fund as
contemplated by the Prospectus; and to my knowledge, no order of suspension or
revocation of such registration under the Advisers Act and the Advisers Act
Rules and Regulations has been issued and no proceedings for that purpose are
pending before or threatened by the Commission;
3. Each of this Agreement, the Advisory Agreement, the Administration
Agreement and the Additional Compensation Agreements has been duly authorized,
executed and delivered by the Investment Manager and assuming that each is the
valid and legally binding agreement of the other parties thereto, each is a
valid and legally binding agreement of the Investment Manager, enforceable
against the Investment Manager in accordance with its terms subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and fair
dealing;
4. Neither the execution, delivery or performance of this Agreement,
the Advisory Agreement, the Administration Agreement or the Additional
Compensation Agreements by the Investment Manager or compliance by the
Investment Manager with the provisions of the Purchase Agreement, the Advisory
Agreement, the Administration Agreement or the Additional Compensation
Agreements nor consummation by the Investment Manager of the transactions
contemplated hereby and thereby will breach or result in a default under or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Investment Manager pursuant to any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Investment Manager is a party or by which its properties are bound
except where breach or default would not reasonably be expected to have a
material adverse effect on the ability of the Investment Manager to perform its
obligations under the Purchase Agreement, the Advisory Agreement, the
Administration Agreement or the Additional Compensation Agreements, nor will
such action violate the charter or by-laws of the Investment Manager or any
federal or New York statute or any rules or regulations thereunder
A-4
or order known to me issued pursuant to any federal or New York statute by any
court or governmental agency or body having jurisdiction over the Investment
Manager or any of its properties;
5. No consent, approval, authorization, order, registration, filing or
qualification of or with any federal or New York governmental agency or body or,
to my knowledge, any federal or New York court is required on the part of the
Investment Manager for the execution, delivery and performance by the Investment
Manager of the Purchase Agreement, the Advisory Agreement, the Administration
Agreement or the Additional Compensation Agreements, except such consents,
approvals, authorizations, orders, registrations, filings or qualifications as
have been obtained or made prior to the date hereof;
6. To the best of my knowledge, no person is serving as an officer,
director or investment manager of the Fund except in accordance with the 1940
Act and the Rules and Regulations and the Advisers Act and the Advisers Act
Rules and Regulations. Except as disclosed in the Registration Statement and
Prospectus (of any amendment or supplement to either of them), to the best of my
knowledge, no director of the Fund is an "interested person" (as defined in the
0000 Xxx) of the Fund or an "affiliated person" (as defined in the 0000 Xxx) of
an Underwriter listed on Schedule A to the Purchase Agreement.
7. To my knowledge, there are no legal or governmental proceedings
pending or threatened against the Investment Manager, or to which the Investment
Manager or any of its properties is subject, which are required to be described
in the Registration Statement or Prospectus that are not described as required
or which may reasonably be expected to involve a prospective material adverse
change in the ability of the Investment Manager to perform its obligations under
the Purchase Agreement, the Advisory Agreement, the Administration Agreement and
the Additional Compensation Agreements.
I have not independently verified the accuracy, completeness or
fairness of the statements made or included in the Registration Statement or the
Prospectus and take no responsibility therefor. In the course of the preparation
by the Fund of the Registration Statement and the Prospectus, I participated in
conferences with certain officers and employees of the Fund and the Investment
Manager, with representatives of PricewaterhouseCoopers LLP and with counsel to
the Fund. Based upon my examination of the Registration Statement and the
Prospectus, my investigations made in connection with the preparation of the
Registration Statement and the Prospectus and my participation in the
conferences referred to above, I have no reason to believe that the Registration
Statement, at the time the Registration Statement became effective, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein not
misleading or that the Prospectus contains any untrue statement of material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except I express no belief with respect to the financial statements
or other financial data contained or incorporated by reference in the
Registration Statement or the Prospectus.
A-5
