Auction Rate Cumulative Preferred Stock
ZENIX INCOME FUND INC.
2,400 Shares
Liquidation Preference $25,000 Per Share
UNDERWRITING AGREEMENT
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April 12, 2000
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XXXXXXX XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Zenix Income Fund Inc., a Maryland corporation (the "Fund"), proposes,
of 2,400 shares of its Auction Rate Cumulative Preferred Stock (the "Preferred
Shares"), each with a liquidation preference of $25,000 per share (the Preferred
Shares to be sold hereby are referred to herein, collectively, as the "Shares").
The Shares will be authorized by, and subject to the terms and conditions of,
the Amended and Restated Articles and the Articles Supplementary of the Fund in
the forms filed as exhibits to the Registration Statement referred to in Section
1 of this agreement. The Fund and its investment adviser, SSB Citi Fund
Management LLC (the "Adviser"), wish to confirm as follows their agreement with
Xxxxxxx Xxxxx Xxxxxx Inc. (the "Underwriter") in connection with the purchase of
the Shares by the Underwriter.
Collectively, (i) the Investment Advisory Agreement, dated July 30,
1993, between the Fund and the Adviser (the "Advisory Agreement"), (ii) the
Custodian Services Agreement, dated as of July 30, 1995, between the Fund and
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PNC Bank, National Association, (iii) the Auction Agency Agreement,
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to be dated as of April 14, 2000, as supplemented by the Acceptance
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Letter dated April 14, 2000, between the Fund and Bankers Trust Company
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and (iv) the Broker-Dealer Agreement, to be dated as of April 14, 2000,
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as supplemented by the Acceptance Letter dated April 14, 2000, between the Fund
and Xxxxxxx Xxxxx Xxxxxx Inc. are hereinafter referred to as the "Fund
Agreements". This Underwriting Agreement is hereinafter referred to as the
"Agreement".
1. Registration Statement and Prospectus. The Fund has prepared in
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conformity
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with the provisions of the Securities Act of 1933, as amended (the "1933 Act"),
the Investment Company Act of 1940, as amended (the "1940 Act"), and the rules
and regulations of the Securities and Exchange Commission (the "Commission")
promulgated under the 1933 Act (the "1933 Act Rules and Regulations") and the
1940 Act (the "1940 Act Rules and Regulations" and, together with the 1933 Act
Rules and Regulations, the "Rules and Regulations") a registration statement on
Form N-2, as amended (File Nos. 333-30248 and 811-05484), under the 1933 Act and
the 1940 Act (the "Registration Statement"), including a Prospectus relating to
the Shares, and has filed the Registration Statement and Prospectus in
accordance with the 1933 Act and 1940 Act. The Fund also has filed a
notification of registration of the Fund as an investment company under the 1940
Act on Form N-8A (the "1940 Act Notification"). The term "Registration
Statement" as used in this Agreement means the Registration Statement (including
all financial schedules and exhibits), as amended at the time it becomes
effective under the 1933 Act or, if the Registration Statement became effective
under the 1933 Act prior to the execution of this Agreement, as amended or
supplemented at the time it became effective, prior to the execution of this
Agreement. If it is contemplated, at the time this Agreement is executed, that a
post-effective amendment to the registration statement will be filed under the
1933 Act and must be declared effective before the offering of the Shares may
commence, the term "Registration Statement" as used in this Agreement means the
registration statement as amended by said post-effective amendment. If the Fund
has filed an abbreviated registration statement to register an additional amount
of Shares pursuant to Rule 462(b) under the 1933 Act (the "Rule 462 Registration
Statement"), then any reference herein to the term "Registration Statement"
shall include such Rule 462 Registration Statement. The term "Prospectus" as
used in this Agreement means the prospectus and statement of additional
information in the forms included in the Registration Statement or, if the
prospectus and statement of additional information included in the Registration
Statement omit information in reliance on Rule 430A under the 1933 Act Rules and
Regulations and such information is included in a prospectus and statement of
additional information filed with the Commission pursuant to Rule 497 under the
1933 Act, the term "Prospectus" as used in this Agreement means the prospectus
and statement of additional information in the forms included in the
Registration Statement as supplemented by the addition of the information
contained in the prospectus filed with the Commission pursuant to Rule 497. The
term "Prepricing Prospectus" as used in this Agreement means the prospectus and
statement of additional information subject to completion in the forms included
in the registration statement at the time of filing of amendment no. 1 to the
registration statement with the Commission on April 7, 2000, and as such
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prospectus and statement of additional information shall have been amended from
time to time prior to the date of the Prospectus, together with any other
prospectus and statement of additional information relating to the Fund other
than the Prospectus approved in writing by or directly or indirectly prepared by
the Fund or the Adviser; it being understood that the definition of Prepricing
Prospectus above shall not include any Prepricing Prospectus prepared by the
Underwriter unless approved in writing by the Fund or the Adviser. The terms
"Registration Statement", "Prospectus" and "Prepricing Prospectus" shall also
include any financial statements incorporated by reference therein.
The Fund has furnished the Underwriter with copies of such
registration statement, each amendment to such registration statement filed with
the Commission and each Prepricing Prospectus.
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2. Agreements to Sell and Purchase. The Fund hereby agrees, subject
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to all the terms and conditions set forth herein, to issue and sell to the
Underwriter and, upon the basis of the representations, warranties and
agreements of the Fund and the Adviser herein contained and subject to all the
terms and conditions set forth herein, the Underwriter agrees to purchase from
the Fund, at a purchase price of $ $25,000 per Share, the number of shares of
Preferred Shares set forth opposite the name of the Underwriter in Schedule I
hereto.
3. Terms of Public Offering. The Fund and the Adviser have been
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advised by the Underwriter that the Underwriter proposes to make a public
offering of the Shares as soon after the Registration Statement and this
Agreement have become effective as in the Underwriter's judgment is advisable
and initially to offer the Shares upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
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Underwriter of and payment for the Shares shall be made at the office of Xxxxxxx
Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, at 9:30 A.M., New
York City time, on April 14, 2000 (the "Closing Date"). The place of closing
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for the Shares and the Closing Date may be varied by agreement between the
Underwriter and the Fund.
5. Agreements of the Fund and the Adviser. The Fund and the Adviser,
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jointly and severally, agree with the Underwriter as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective under the 1933 Act before the offering of the Shares
may commence, the Fund will endeavor to cause the Registration Statement or such
post-effective amendment to become effective under the 1933 Act as soon as
possible and will advise the Underwriter promptly and, if requested by the
Underwriter, will confirm such advice in writing when the Registration Statement
or such post-effective amendment has become effective.
(b) The Fund will advise the Underwriter promptly and, if requested
by the Underwriter, will confirm such advice in writing: (i) of any request made
by the Commission for amendment of or a supplement to the Registration
Statement, any Prepricing Prospectus or the Prospectus (or any amendment or
supplement to any of the foregoing) or for additional information, (ii) of the
issuance by the Commission, the National Association of Securities Dealers, Inc.
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(the "NASD"), any state securities commission, any national securities exchange,
any arbitrator, any court or any other governmental, regulatory, self-regulatory
or administrative agency or any official of any order suspending the
effectiveness of the Registration Statement, prohibiting or suspending the use
of the Prospectus or any Prepricing Prospectus, or any sales material (as
hereinafter defined), of any notice pursuant to Section 8(e) of the 1940 Act, of
the suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such purposes, (iii)
of receipt by the Fund, the Adviser, any affiliate of the Fund or the Adviser or
any representative or attorney of the Fund or the Adviser of any other material
communication from the Commission, the NASD, any state securities commission,
any national securities exchange, any arbitrator, any court or any other
governmental, regulatory, self-regulatory or administrative agency or any
official relating to the Fund (if such communication relating to the Fund is
received by such person within three years after the date of this Agreement),
the Registration Statement, the 1940 Act Notification, the Prospectus, any
Prepricing Prospectus, any sales material (as hereinafter defined) (or any
amendment or supplement to any of the foregoing) or this Agreement or any of the
Fund Agreements and (iv) within the period of time referred to in paragraph (f)
below, of any material adverse change in the condition (financial or other),
business, prospects, properties, net assets or results of operations of the Fund
or the Adviser or of the happening of any other event which makes any statement
of a material fact made in the Registration Statement or the Prospectus, or any
Prepricing Prospectus or any sales material (as hereinafter defined) (or any
amendment or supplement to any of the foregoing) untrue or which requires the
making of any additions to or changes in the Registration Statement or the
Prospectus, or any Prepricing Prospectus or any sales materials (as herein
defined) (or any amendment or supplement to any of the foregoing) in order to
state a material fact required by the 1933 Act, the 1940 Act or the Rules and
Regulations 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 or of the necessity to amend or supplement the Registration
Statement, the Prospectus, or any Prepricing Prospectus or any sales material
(as herein defined) (or any amendment or supplement to any of the foregoing) to
comply with the 1933 Act, the 1940 Act, the Rules and Regulations or any other
law or order of any court or regulatory body. If at any time the Commission,
the NASD, any state securities commission, any national securities exchange, any
arbitrator, any court or any other governmental, regulatory, self-regulatory or
administrative agency or any official shall issue any order suspending the
effectiveness of the Registration Statement, prohibiting or suspending the use
of the Prospectus or any sales material (as herein defined) (or any amendment or
supplement to any of the foregoing) or suspending the qualification of the
Shares for offering or sale in any jurisdiction, the Fund will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible time.
(c) The Fund will furnish to the Underwriter, without charge, three
signed copies of the Registration Statement as originally filed with the
Commission and of each amendment thereto, including financial statements and all
exhibits thereto, and will also furnish to the Underwriter, without charge, such
number of conformed copies of the Registration Statement as
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originally filed and of each amendment thereto, but without exhibits, as the
Underwriter may reasonably request.
(d) The Fund will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus, or any sales
material (as herein defined), of which the Underwriter shall not previously have
been advised or to which the Underwriter shall reasonably object after being so
advised or (ii) so long as, in the opinion of counsel for the Underwriter, a
Prospectus is required by the 1933 Act to be delivered in connection with sales
by the Underwriter or any dealer, file any information, documents or reports
pursuant to the Securities Exchange Act of 1934, as amended (the A1934 Act"),
without delivering a copy of such information, documents or reports to the
Underwriter prior to or concurrently with such filing.
(e) Prior to the execution and delivery of this Agreement, the Fund
has delivered to the Underwriter, without charge, in such quantities as the
Underwriter has requested, copies of each form of the Prepricing Prospectus.
The Fund consents to the use, in accordance with the provisions of the 1933 Act
and with the state securities or blue sky laws of the jurisdictions in which the
Shares are offered by the Underwriter and by dealers, prior to the date of the
Prospectus, of each Prepricing Prospectus so furnished by the Fund.
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriter a prospectus is required by the 1933 Act to be
delivered in connection with sales by the Underwriter or any dealer, the Fund
will expeditiously deliver to the Underwriter and each dealer, without charge,
as many copies of the Prospectus (and of any amendment or supplement thereto) as
the Underwriter may reasonably request. The Fund consents to the use of the
Prospectus (and of any amendment or supplement thereto) in accordance with the
provisions of the 1933 Act and with the state securities or blue sky laws of the
jurisdictions in which the Shares are offered by the Underwriter and by all
dealers to whom Shares may be sold, both in connection with the offering and
sale of the Shares and for such period of time thereafter as the Prospectus is
required by the 1933 Act to be delivered in connection with sales by the
Underwriter or any dealer. If during such period of time any event shall occur
that in the judgment of the Fund or in the opinion of counsel for the
Underwriter is required to be set forth in the Registration Statement or the
Prospectus (as then amended or supplemented) or should be set forth therein in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Registration Statement or the Prospectus to comply with the 1933 Act,
the 1940 Act, the Rules and Regulations or any other federal law, rule or
regulation, or any state securities or blue sky disclosure laws, rules or
regulations, the Fund will forthwith prepare and, subject to the provisions of
paragraph (d) above, promptly file with the Commission an appropriate supplement
or amendment thereto, and will expeditiously furnish to the Underwriter and
dealers, without charge, a reasonable number of copies thereof. In the event
that the Fund and the Underwriter agree that the Registration Statement or the
Prospectus should be amended or supplemented, the Fund, if requested by the
Underwriter, will promptly issue a press release announcing or disclosing the
matters to be covered by the proposed amendment or supplement.
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(g) The Fund will make generally available to its security holders an
earnings statement, which need not be audited, covering a twelve-month period
ending not later than 15 months after the effective date of the Registration
Statement as soon as practicable after the end of such period, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule
158 of the 1933 Act Rules and Regulations.
(h) During the period of five years hereafter, the Fund will furnish
to the Underwriter (i) as soon as available, a copy of each report of the Fund
mailed to shareholders or filed with the Commission or furnished to the New York
Stock Exchange (the "NYSE") other than reports on Form N-SAR, and (ii) from time
to time such other information concerning the Fund as the Underwriter may
reasonably request.
(i) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than by notice given by
the Underwriter terminating this Agreement pursuant to Section 12 hereof or
pursuant to the second paragraph of Section 11 hereof) or if this Agreement
shall be terminated by the Underwriter because of any failure or refusal on the
part of the Fund or the Adviser to comply with the terms or fulfill any of the
conditions of this Agreement, the Fund agrees to reimburse the Underwriter for
all out-of-pocket expenses (including reasonable fees and expenses of counsel
for the Underwriter) incurred by the Underwriter in connection herewith.
(j) The Fund will apply the net proceeds from the sale of the Shares
substantially in accordance with the description set forth in the Prospectus and
in such a manner as to comply with the investment objectives, policies and
restrictions of the Fund as described in the Prospectus.
(k) The Fund will timely file the requisite copies of the Prospectus
with the Commission pursuant to Rule 497(c) or Rule 497(h) of the 1933 Act Rules
and Regulations, whichever is applicable or, if applicable, will timely file the
certification permitted by Rule 497(j) of the 1933 Act Rules and Regulations and
will advise the Underwriter of the time and manner of such filing.
(l) Except as provided in this Agreement, so long as the Preferred
Shares remain outstanding, the Fund will not sell, contract to sell, or
otherwise dispose of any senior securities (as defined in the 1940 Act) of the
Fund, or grant any options or warrants to purchase senior securities of the
Fund, for a period of 120 days after the date of the Prospectus, without the
prior written consent of the Underwriter.
(m) The Fund will use its best efforts to cause the Preferred Shares,
prior to the Closing Date, to be assigned a rating of 'aaa' by Xxxxx'x Investors
Service, Inc. ("Moody's") and
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AAA by Standard & Poor's Ratings Services ("S&P" and, together with Moody's, the
"Rating Agencies").
(n) The Fund and the Adviser will each use its best efforts to
perform all of the agreements required of them and discharge all conditions to
closing as set forth in this Agreement.
6. Representations and Warranties of the Fund and the Adviser. The
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Fund and the Adviser, jointly and severally, represent and warrant to the
Underwriter that:
(a) Each Prepricing Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement thereto,
or filed pursuant to Rule 497 of the 1933 Act Rules and Regulations, complied
when so filed in all material respects with the provisions of the 1933 Act, the
1940 Act and the Rules and Regulations. The Commission has not issued any order
preventing or suspending the use of any Prepricing Prospectus.
(b) The registration statement in the form in which it became or
becomes effective and also in such form as it may be when any post-effective
amendment thereto shall become effective and the Prospectus and any supplement
or amendment thereto when filed with the Commission under Rule 497 of the 1933
Act Rules and Regulations and the 1940 Act Notification when originally filed
with the Commission and any amendment or supplement thereto when filed with the
Commission, complied or will comply in all material respects with the applicable
requirements of the 1933 Act, the 1940 Act and the Rules and Regulations and did
not or will not at any such times 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, in light of the circumstances under which they were
made, not misleading, except that this representation and warranty does not
apply to (i) statements in or omissions from the registration statement or the
Prospectus made in reliance upon and in conformity with information relating to
the Underwriter furnished to the Fund in writing by or on behalf of the
Underwriter expressly for use therein or (ii) with respect to the
representations of the Fund, the description of the Adviser contained in the
Prospectus heading AManagement of the Fund" and in the statement of additional
information heading AInvestment Adviser."
(c) All the outstanding Common Stock and Preferred Stock (each as
defined in the Prospectus) of the Fund have been duly authorized and validly
issued, are fully paid and nonassessable and are free of any preemptive or
similar rights; the Shares have been duly authorized and, when issued and
delivered to the Underwriter against payment therefor in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable and free of
any preemptive or similar rights and will conform to the description thereof in
the Registration Statement and the Prospectus (and any amendment or supplement
to either of them); and the capitalization of the Fund conforms to the
description thereof in the Registration Statement and the Prospectus (and any
amendment or supplement to either of them).
(d) The Fund is a corporation duly organized and validly existing in
good standing under the laws of the State of Maryland with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and
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the Prospectus (and any amendment or supplement to either of them), and is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify does not have a Material Adverse Effect (as
hereinafter defined); and the Fund has no subsidiaries.
(e) There are no legal or governmental proceedings pending or, to the
knowledge of the Fund, threatened, against the Fund, or to which the Fund or any
of its properties is subject, that are required to be described in the
Registration Statement or the Prospectus (and any amendment or supplement to
either of them) but are not described as required, and there are no agreements,
contracts, indentures, leases or other instruments that are required to be
described in the Registration Statement or the Prospectus (and any amendment or
supplement to either of them) or to be filed as an exhibit to the Registration
Statement that are not described or filed as required by the 1933 Act, the 1940
Act or the Rules and Regulations.
(f) The Fund is not in violation of its Amended and Restated Article
(the ACharter") or its amended and restated Articles Supplementary (the
"Articles Supplementary") or other organizational documents of the Fund
(together with the Charter and Articles Supplementary, the "Organizational
Documents"), or of any law, ordinance, administrative or governmental rule or
regulation applicable to the Fund or of any decree of the Commission, the NASD,
any state securities commission, any national securities exchange, any
arbitrator, any court or governmental agency, body or official having
jurisdiction over the Fund, or in default in any respect in the performance of
any material obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any material
agreement, indenture, lease or other instrument to which the Fund is a party or
by which it or any of its properties may be bound, except where such violation
does not have a Material Adverse Effect.
(g) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or any of the Fund Agreements by the
Fund, nor the consummation by the Fund of the transactions contemplated hereby
or thereby (i) requires any consent, approval, authorization or other order of
or registration or filing with, the Commission, the NASD, any state securities
commission, any national securities exchange, any arbitrator, any court,
regulatory body, administrative agency or other governmental body, agency or
official (except such as may have been obtained prior to the date hereof and
such as may be required for compliance with the state securities or blue sky
laws of various jurisdictions which have been or will be effected in accordance
with this Agreement) or conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the Organizational Documents or (ii)
conflicts or will conflict with or constitutes or will constitute a material
breach of, or a default under, any material agreement, indenture, lease or other
instrument to which the Fund is a party or by which it or any of its properties
may be bound, or violates or will violate any statute, law, regulation or
judgment, injunction, order or decree applicable to the Fund or any of its
properties, or will result in the creation or imposition of any material lien,
charge or encumbrance upon any property or assets of the Fund pursuant to the
terms of any agreement or instrument to which it is a party or by which it may
be bound or to which any of its property or assets is subject. The Fund is not
9
subject to any order of any court or of any arbitrator, governmental authority
or administrative agency.
(h) The accountants, KPMG Peat Marwick LLP, who have certified or
shall certify the audited financial statements included or incorporated by
reference in the Registration Statement and the Prospectus (or any amendment or
supplement to either of them) are independent public accountants as required by
the 1933 Act, the 1940 Act and the Rules and Regulations.
(i) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement and
the Prospectus (and any amendment or supplement to either of them), present
fairly the financial position, results of operations and changes in financial
position of the Fund on the basis stated or incorporated by reference in the
Registration Statement and the Prospectus at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and data
included in the Registration Statement and the Prospectus (and any amendment or
supplement to either of them) are accurately presented and prepared on a basis
consistent with such financial statements and the books and records of the Fund.
(j) The execution and delivery of, and the performance by the Fund of
its obligations under, this Agreement and the Fund Agreements have been duly and
validly authorized by the Fund, and this Agreement and the Fund Agreements have
been duly executed and delivered by the Fund and assuming due authorization,
execution and delivery by the other parties thereto, constitute the valid and
legally binding agreements of the Fund, enforceable against the Fund in
accordance with their terms (subject to the qualification that the
enforceability of the Fund's obligations thereunder may be limited by
bankruptcy, insolvency, reorganization, moratorium, and similar laws of general
applicability relating to or affecting creditors' rights, and to general
principles of equity regardless of whether enforceability is considered in a
proceeding in equity or at law), except as rights to indemnity and contribution
hereunder and thereunder may be limited by federal or state securities laws.
(k) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement to either of them),
the Fund has not incurred any liability or obligation, direct or contingent, or
entered into any transaction, not in the ordinary course of business, that is
material to the Fund, and there has not been any change in the capitalization,
or material increase in the short-term debt or long-term debt, of the Fund, or
any material adverse change, or any development involving or which may
reasonably be expected to involve, a prospective material adverse change, in the
condition (financial or other), business, prospects, properties, net assets or
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results of operations of the Fund, whether or not arising in the ordinary course
of business (a "Material Adverse Effect").
(l) The Fund has not distributed and, prior to the later to occur of
(i) the Closing Date and (ii) 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, the Prepricing Prospectus, the
Prospectus or other materials, if any, permitted by the 1933 Act, the 1940 Act
or the Rules and Regulations.
(m) (i) The Fund has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus (and any amendment or supplement thereto), except
for any such permits the absence of which would not have a Material Adverse
Effect, subject to such qualifications as may be set forth in the Prospectus;
(ii) the Fund has fulfilled and performed all its material obligations with
respect to such permits and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the Fund under any such permit,
subject in each case to such qualification as may be set forth in the Prospectus
(and any amendment or supplement thereto); and (iii) except as described in the
Prospectus (and any amendment or supplement thereto), none of such permits
contains any restriction that is materially burdensome to the Fund, except where
the failure of (i), (ii) or (iii) to be accurate would not, individually or in
the aggregate, have a Material Adverse Effect on the Fund.
(n) The Fund maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization and with the
applicable requirements of the 1940 Act, the 1940 Act Rules and Regulations and
the Internal Revenue Code of 1986, as amended (the "Code"); (ii) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets and to maintain compliance with the books and records
requirements under the 1940 Act and the 1940 Act Rules and Regulations; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(o) The Fund has filed all tax returns required to be filed, which
returns are complete and correct in all material respects, and the Fund is not
in material default in the payment of any taxes which were payable pursuant to
said returns or any assessments with respect thereto.
(p) No holder of any security of the Fund has any right to require
registration of any Common Shares, shares of Preferred Shares or any other
security of the Fund because of the filing of the registration statement or
consummation of the transactions contemplated by this Agreement.
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(q) The Fund, subject to the registration statement having been
declared effective and the filing of the Prospectus under Rule 497 under the
1933 Act Rules and Regulations, has taken all required action under the 1933
Act, the 1940 Act and the Rules and Regulations to make the public offering and
consummate the sale of the Shares as contemplated by this Agreement.
(r) The conduct by the Fund of its business (as described in the
Prospectus) does not require it to be the owner, possessor or licensee of any
patents, patent licenses, trademarks, service marks or trade names which it does
not own, possess or license.
(s) The Fund is registered under the 1940 Act as a closed-end
diversified management investment company and the 1940 Act Notification has been
duly filed with the Commission and, at the time of filing thereof and any
amendment or supplement thereto, conformed in all material respects with all
applicable provisions of the 1940 Act and the 1940 Act Rules and Regulations.
The Fund has not received any notice from the Commission pursuant to Section
8(e) of the 1940 Act with respect to the 1940 Act Notification. The Fund is,
and at all times through the completion of the transactions contemplated hereby,
will be, in compliance in all material respects with the terms and conditions of
the 1933 Act and the 1940 Act. No person is serving or acting as an officer,
director or investment Adviser of the Fund except in accordance with the
provisions of the 1940 Act and the 1940 Act 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").
(t) Except as stated in this Agreement and in the Prospectus (and any
amendment or supplement thereto), the Fund has not taken, nor will it take,
directly or indirectly, any action designed to or which might reasonably be
expected to cause or result in stabilization or manipulation of the price of any
securities issued by the Fund to facilitate the sale or resale of the Shares,
and the Fund is not aware of any such action taken or to be taken by any
affiliates of the Fund.
(u) The Fund has filed in a timely manner each document or report
required to be filed by it pursuant to the 1934 Act and the rules and
regulations of the Commission promulgated thereunder (the "1934 Act Rules and
Regulations"); each such document or report at the time it was filed conformed
to the requirements of the 1934 Act and the 1934 Act Rules and Regulations; and
none of such documents or reports contained an untrue statement of any material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(v) All advertising, sales literature or other promotional material
(including "prospectus wrappers," "broker kits," "road show slides" and "road
show scripts") authorized in writing by or prepared by the Fund or the Adviser
for use in connection with the offering and sale of the Shares (collectively
"sales material") complied and 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 and no such sales material
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact required to be stated
12
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(w) Each of the Fund Agreements and the Fund's obligations under this
Agreement and each of the Fund Agreements comply in all material respects with
all applicable provisions of the 1940 Act, the 1940 Act Rules and Regulations,
the Advisers Act and the Advisers Act Rules and Regulations.
(x) The Fund currently complies with all requirements under the Code
to qualify as a regulated investment company under Subchapter M of the Code.
(x) 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 1940 Act) of the Fund or
an "affiliated person" (as defined in the 1940 Act) of the Underwriter.
(y) The Fund's Common Shares are duly listed on the NYSE.
(z) The Adviser has considered, and has taken actions to address, the
possible adverse effects of the Year 2000 on the critical computer systems used
by the Adviser and its affiliates on behalf of the Fund. Because the date has
passed, the Adviser has determined that recognition and execution of date-
sensitive functions involving certain dates after December 31, 1999 (the "Year
2000 Problem") will not pose significant problems for the computer systems used
by the Adviser on behalf of the Fund. The Adviser believes, after reasonable
inquiry, that suppliers, vendors, or financial service organizations used in the
operation of the Fund have remedied their Year 2000 Problem, except to the
extent that a failure to remedy by any such supplier, vendor, or financial
service organization would not have a Material Adverse Effect on the operations
of the Fund. The Fund is in compliance with the Commission's Release No. 33-
7558 related to Year 2000 compliance, as amended to date.
7. Representations and Warranties of the Adviser. The Adviser
---------------------------------------------
represents and warrants to the Underwriter as follows:
(a) The Adviser is a corporation duly organized and validly existing
in good standing under the laws of the State of [Delaware], with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus (and any
amendment or supplement to either of them), and is duly registered and qualified
to conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or to
qualify does not have a material adverse effect on the condition (financial or
other), business, prospects, properties, net assets or results of operations of
the Adviser or on the ability of the Adviser to perform its obligations under
this Agreement and the Advisory Agreement.
13
(b) The Adviser is duly registered with the Commission as an
Investment Adviser under the Advisers Act and is not prohibited by the Advisers
Act, the Advisers Act Rules and Regulations, the 1940 Act or the 1940 Act Rules
and Regulations from acting under the Advisory Agreement for the Fund as
contemplated by the Prospectus (or any amendment or supplement thereto). There
does not exist any proceeding or any facts or circumstances the existence of
which could lead to any proceeding which might adversely affect the registration
of the Adviser with the Commission.
(c) There are no legal or governmental proceedings pending or, to the
knowledge of the Adviser, threatened against the Adviser, or to which the
Adviser or any of its properties is subject, that are required to be described
in the Registration Statement or the Prospectus (or any amendment or supplement
to either of them) but are not described as required or that may reasonably be
expected to involve a prospective material adverse change, in the condition
(financial or other), business, prospects, properties, net assets or results of
operations of the Adviser or on the ability of the Adviser to perform its
obligations under this Agreement and the Advisory Agreement.
(d) Neither the execution, delivery or performance of this Agreement
or the performance of the Advisory Agreement by the Adviser, nor the
consummation by the Adviser of the transactions contemplated hereby or thereby
(A) requires the Adviser to obtain any consent, approval, authorization or other
order of or registration or filing with, the Commission, the NASD, any state
securities commission, any national securities exchange, any arbitrator, any
court, regulatory body, administrative agency or other governmental body, agency
or official or conflicts or will conflict with or constitutes or will constitute
a breach of or a default under, the certificate of incorporation or by-laws, or
other organizational documents, of the Adviser or (B) conflicts or will conflict
with or constitutes or will constitute a material breach of or a default under,
any material agreement, indenture, lease or other instrument to which the
Adviser is a party or by which it or any of its properties may be bound, or
violates or will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Adviser or any of its properties
or will result in the creation or imposition of any material lien, charge or
encumbrance upon any property or assets of the Adviser pursuant to the terms of
any 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 Adviser is subject. The
Adviser is not subject to any order of any court or of any arbitrator,
governmental authority or administrative agency.
(e) The execution and delivery of, and the performance by the Adviser
of its obligations under, this Agreement and the Advisory Agreement have been
duly and validly authorized by the Adviser, and this Agreement and the Advisory
Agreement have been duly executed and delivered by the Adviser and, assuming due
authorization, execution and delivery by the other parties thereto, each
constitutes the valid and legally binding agreement of the Adviser, enforceable
against the Adviser in accordance with its terms (subject to the
14
qualification that the enforceability of the Adviser's obligations thereunder
may be limited by bankruptcy, insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights, and to
general principles of equity regardless of whether enforceability is considered
in a proceeding in equity or at law), except as rights to indemnity and
contribution hereunder may be limited by federal or state securities laws.
(f) The description of the Adviser in the Registration Statement and
the Prospectus (and any amendment or supplement thereto) complies 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 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, in light of the circumstances under which they were made,
not misleading.
(g) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement to either of them),
the Adviser has not incurred any liability or obligation, direct or contingent,
or entered into any transaction, not in the ordinary course of business, that is
material to the Adviser or the Fund and that is required to be disclosed in the
Registration Statement or the Prospectus and there has not been any material
adverse change, or any development involving or which may reasonably be expected
to involve, a prospective material adverse change, in the condition (financial
or other), business, prospects, properties, net assets or results of operations
of the Adviser, whether or not arising in the ordinary course of business, or
which, in each case, could have a material adverse effect on the ability of the
Adviser to perform its obligations under this Agreement and the Advisory
Agreement.
(h) (i) The Adviser has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities (Apermits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus (and any amendment thereto); (ii) the Adviser has
fulfilled and performed all its material obligations with respect to such
permits and no event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the Adviser under any such permit; and (iii) except
as described in the Prospectus (and any amendment or supplement thereto), none
of such permits contains any restriction that is materially burdensome to the
Adviser, except where the failure of (i), (ii), or (iii) to be accurate would
not, individually or in the aggregate, have a Material Adverse Effect on the
Adviser.
8. Indemnification and Contribution.
--------------------------------
(a)(i) The Fund agrees to indemnify and hold harmless each of the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act from and
against any and all losses, claims, damages, liabilities and reasonable expenses
(including reasonable costs of investigation), joint or several, arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact
15
contained in any Prepricing Prospectus or in the Registration Statement or
the Prospectus or in any amendment or supplement thereto, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information relating to
the Underwriter furnished in writing to the Fund by or on behalf of the
Underwriter expressly for use in connection therewith; provided, however, that
the indemnification contained in this paragraph (a)(i) with respect to any
Prepricing Prospectus, Prospectus or Registration Statement shall not inure to
the benefit of the Underwriter (or to the benefit of any person controlling the
Underwriter) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Shares by the Underwriter to any person if a copy
of the Prospectus shall not have been delivered or sent to such person within
the time required by the 1933 Act and the 1933 "ct Rules and Regulations, and
the untrue statement or alleged untrue statement or omission or alleged omission
of a material fact contained in such Prepricing Prospectus was corrected in the
Prospectus, provided that the Fund has delivered the Prospectus to the
Underwriter in requisite quantity on a timely basis to permit such delivery or
sending. The foregoing indemnity agreement shall be in
addition to any liability which the Fund
(ii) The Adviser agrees to indemnify and hold harmless each of the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act from and
against any and all losses, claims, damages, liabilities and reasonable expenses
(including reasonable costs of investigation), joint or several, arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact contained in any Prepricing Prospectus or in the Registration Statement or
the Prospectus or in any amendment or supplement thereto, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information relating to
the Underwriter furnished in writing to the Fund by or on behalf of the
Underwriter expressly for use in connection therewith; provided, however, that
the indemnification contained in this paragraph (a)(ii) with respect to any
Prepricing Prospectus, Prospectus or Registration Statement shall not inure to
the benefit of the Underwriter (or to the benefit of any person controlling the
Underwriter) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Shares by the Underwriter to any person if a copy
of the Prospectus shall not have been delivered or sent 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 Prepricing Prospectus was corrected in the
Prospectus, provided that the Fund has delivered the Prospectus to the
Underwriter in requisite quantity on a timely basis to permit such delivery or
16
sending; and provided further, that (i) the Adviser will not be liable to any
such indemnified party in any such case except to the extent that the Fund has
failed to indemnify and hold harmless such indemnified party pursuant to
paragraph (a)(i) in respect of any such loss, claim, damage, liability or
expense after such indemnified party has made a claim of the Fund as required
below; and (ii) the amount of the Adviser's liability hereunder shall be limited
to the amount of the net proceeds from the sale of the Shares. This indemnity
agreement shall be in addition to any liability which the Adviser may otherwise
have.
(b) Any party that proposes to assert the right to be indemnified
under this Section 8 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 8, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission to so notify such indemnifying party (i) will
not relieve it from any liability that it may have to any indemnified party
under the foregoing provision of this Section 8 unless, and only to the extent
that, such omission results in the forfeiture of substantive rights or defenses
by the indemnifying party and (ii) will not, in any event, relieve such
indemnifying party from any other obligation (other than pursuant to the
foregoing provision of this Section 8) it may have under this Agreement. If any
action, suit or proceeding shall be brought against the Underwriter or any
person controlling the Underwriter in respect of which indemnity may be sought
against the Fund or the Adviser, the Underwriter or such controlling person
shall promptly notify the Fund or the Adviser, and the Fund or the Adviser shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. The Underwriter or any such controlling person shall
have the right to employ separate counsel in any such action, suit or proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Underwriter or such controlling person
unless (i) the Fund or the Adviser has agreed in writing to pay such fees and
expenses, (ii) the Fund and the Adviser have failed to assume the defense and
employ counsel, or (iii) the named parties to any such action, suit or
proceeding (including any impleaded parties) include both the Underwriter or
such controlling person and the Fund or the Adviser and the Underwriter or such
controlling person shall have been advised by its counsel that representation of
such indemnified party and the Fund or the Adviser by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or not
such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the Fund and the
Adviser shall not have the right to assume the defense of such action, suit or
proceeding on behalf of the Underwriter or such controlling person). It is
understood, however, that the Fund and the Adviser shall, in connection with any
one such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for the Underwriter and controlling persons not having
actual or potential differing interests with the Underwriter or among
themselves, which firm shall be designated in writing by the Underwriter,
17
and that all such fees and expenses shall be reimbursed as they are incurred.
The Fund and the Adviser shall not be liable for any settlement of any such
action, suit or proceeding effected without its written consent (which consent
shall not be unreasonably withheld), but if settled with such written consent,
or if there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Fund and the Adviser agree to indemnify and hold harmless the
Underwriter, to the extent provided in the preceding paragraph, and any such
controlling person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(c) The Underwriter agrees to indemnify and hold harmless the Fund
and the Adviser, their directors, trustees and officers who sign the
Registration Statement, and any person who controls the Fund or the Adviser
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
to the same extent as the foregoing indemnity from the Fund and the Adviser to
the Underwriter, but only with respect to information relating to the
Underwriter furnished in writing by or on behalf of the Underwriter expressly
for use in the Registration Statement, the Prospectus or any Prepricing
Prospectus, or any amendment or supplement thereto. If any action, suit or
proceeding shall be brought against the Fund or the Adviser, any of their
directors or trustees, any such officer, or any such controlling person based on
the Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto, and in respect of which indemnity may be sought
against the Underwriter pursuant to this paragraph (c), the Underwriter shall
have the rights and duties given to the Fund and the Adviser by paragraph (b)
above (except that if the Fund or the Adviser shall have assumed the defense
thereof the Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the Underwriter's expense), and the Fund
and the Adviser, their directors, trustees and any such officer, and any such
controlling person shall have the rights and duties given to the Underwriter by
paragraph (b) above. The foregoing indemnity agreement shall be in addition to
any liability which the Underwriter may otherwise have.
(d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or reasonable expenses
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Fund and the Adviser on the one hand (treated jointly for this
purpose as one person) and the Underwriter on the other hand from the offering
of the Shares, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Fund and the Adviser on the one hand (treated jointly for this
purpose as one person) and the Underwriter on the other in connection with the
statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations
with respect to the offering of the Shares. The relative benefits received by
the Fund and the Adviser on the one hand (treated jointly for this purpose as
one person) and the Underwriter on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses)
18
received by the Fund bear to the total underwriting discounts and commissions
received by the Underwriter, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault of the Fund and the Adviser on the
one hand (treated jointly for this purpose as one person) and the Underwriter on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Fund and the Adviser on the one hand (treated jointly for this purpose as one
person) or by the Underwriter on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action against such party in
respect of which a claim for contribution may be made under this Section 8(d),
notify such party or parties from whom contribution may be sought, but the
omission so to notify (i) will not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have under
this Section 8(d), unless such omission results in the forfeiture of substantive
rights or defenses by the party or parties from whom contribution is being
sought and (ii) will not, in any event, relieve the party or parties from whom
contribution may be sought from any other obligation (other than pursuant to
this Section 8(d)) it or they may have under this Agreement. Except for a
settlement entered into pursuant to the last sentence of Section 8(b) hereof, no
party will be liable for contribution with respect to any action or claim
settled without its written consent (which consent shall not be unreasonably
withheld).
(e) The Fund, the Adviser and the Underwriter agree that it would not
be just and equitable if contribution pursuant to this Section 8 were determined
by a pro rata allocation (even if the Underwriter were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities and expenses referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating any claim or defending any such action, suit or proceeding.
Notwithstanding the provisions of this Section 8, the Underwriter shall not be
required to contribute any amount in excess of the amount by which the total
price of the Shares underwritten by it and distributed to the public exceeds the
amount of any damages which the Underwriter has otherwise been required to pay
by reason of 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 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriter's obligations to contribute pursuant to this Section 8 are several
in proportion to the respective numbers of Shares set forth opposite their names
in Schedule I hereto and not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject
19
matter of such action, suit or proceeding.
(g) Notwithstanding any other provisions in this Section 8, no party
shall be entitled to the benefit of any provision under this Agreement which
protects or purports to protect such person against any liability to the Fund or
its security holders to which such person would otherwise be subject by reason
of such person's willful misfeasance, bad faith, or gross negligence, in the
performance of such person's duties hereunder, or by reason of such person's
reckless disregard of such person's obligations and duties hereunder.
(h) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Fund and the Adviser set forth in this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of the Underwriter or any person
controlling the Underwriter, the Fund, the Adviser, their directors, trustees or
officers, or any person controlling the Fund or the Adviser, (ii) acceptance of
any Shares and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to the Underwriter or any person controlling the
Underwriter, or to the Fund, the Adviser, their directors, trustees or officers,
or any person controlling the Fund or the Adviser, shall be entitled to the
benefits of the indemnity, contribution, and reimbursement agreements contained
in this Section 8.
9. Conditions of Underwriter's Obligations. The obligation of the
---------------------------------------
Underwriter to purchase the Shares hereunder are subject to the following
conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
registration statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by the
Underwriter, and all filings, if any, required by Rules 497 and 430A under the
1933 Act and the 1933 Act Rules and Regulations shall have been timely made; no
stop order suspending the effectiveness of the Registration Statement or order
pursuant to Section 8(e) of the 1940 Act shall have been issued and no
proceeding for those purposes shall have been instituted or, to the knowledge of
the Fund, the Adviser or the Underwriter, threatened by the Commission, and any
request of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been complied
with to the Underwriter's reasonable satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change or any development involving a prospective
change in or affecting the condition (financial or other), business, prospects,
properties, net assets, or results of operations of the Fund or the Adviser not
contemplated by the Prospectus, which in the Underwriter's
20
reasonable opinion would materially adversely affect the market for the Shares,
or (ii) any event or development relating to or involving the Fund or the
Adviser or any officer or director of the Fund or the Adviser which makes any
statement made in the Prospectus untrue or which, in the reasonable opinion of
the Fund and its counsel or the Underwriter and its counsel, requires the making
of any addition to or change in the Prospectus in order to state a material fact
required by the 1933 Act, the 1940 Act or the Rules and Regulations or any other
law to be stated therein or necessary in order to make the statements therein
not misleading, if amending or supplementing the Prospectus to reflect such
event or development would, in the Underwriter's opinion, materially adversely
affect the market for the Shares.
(c) The Fund shall have furnished to the Underwriter a report showing
compliance with the asset coverage requirements of the 1940 Act and a [Basic
Maintenance Report (as defined in the Articles Supplementary)], each dated the
Closing Date and in form and substance satisfactory to the Underwriter. Each
such report may use portfolio holdings and valuations as of the close of
business of any day not more than six business days preceding the Closing Date,
provided, however, that the Fund represents in such report that its total net
assets as of the Closing Date have not declined by 5% or more from such
valuation date.
(d) The Underwriter shall have received on the Closing Date, an
opinion of Xxxxxxx Xxxx & Xxxxxxxxx, counsel for the Fund, dated the Closing
Date and addressed to the Underwriter, in form and substance satisfactory to the
Underwriter and to the effect that:
(i) The Fund has been duly organized and is validly existing and in
good standing under the laws of the State of Maryland and has full
corporate power and authority to own, lease and operate its properties, to
conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them);
(ii) The Shares have been duly authorized and, when issued and
delivered to the Underwriter against payment therefor in accordance with
the terms of this Agreement, will be validly issued, fully paid and
nonassessable and free of any preemptive or similar rights and will conform
in all material respects to the description thereof in the Registration
Statement and the Prospectus (and any amendment or supplement to either of
them); the Certificate evidencing the Shares complies in all material
respects with all requirements of Maryland law; and the relative rights,
interests, powers and preferences of the Shares, and the obligation of the
Fund to redeem such Shares upon the terms and conditions set forth in the
Charter, are legal, valid, binding and enforceable under Maryland law,
subject to enforcement of bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium and other laws of general equitable principles
[and to the provisions of Section 2-311 of the Maryland General Corporation
Law];
21
(iii) The Shares conform in all material respects with the statements
concerning them contained in the Prospectus under the heading
"Description of Preferred Shares", and the authorized and outstanding
---------------------------------
shares of beneficial interest of the Fund are as set forth in
the Prospectus under the heading "Capitalization";
(iv) The Registration Statement is effective under the 1933 Act and
the 1940 Act; any required filing of the Prospectus pursuant to Rule 497 of
the 1933 Act Rules and Regulations has been made within the time periods
required by Rule 497(b) or (h), as the case may be; to the knowledge of
such counsel, no stop order suspending its effectiveness or order pursuant
to Section 8(e) of the 1940 Act relating to the Fund has been issued and no
proceeding for any such purpose is pending or threatened by the Commission;
(v) The Registration Statement, the Prospectus (and each amendment
thereof or supplement thereto) comply as to form in all material respects
with the applicable requirements of the 1933 Act, the 1940 Act and the
Rules and Regulations (except that no opinion need be expressed as to the
financial statements or other financial data contained therein);
(vi) The statements made in the Prospectus (including the Statement
of Additional Information) under the captions "The Auction" and
"Description of Preferred Shares", insofar as they purport to summarize the
provisions of the Articles Supplementary or other documents or agreements
specifically referred to therein, constitute accurate summaries of the
terms of any such documents in all material respects;
(vii) The statements made in the Prospectus (including the Statement
of Additional Information) under the caption "Tax Matters," insofar as they
constitute matters of law or legal conclusions, have been reviewed by such
counsel and constitute accurate statements of any such matters of law or
legal conclusions in all material respects, and fairly present the
information called for with respect thereto by Form N-2 under the 1940 Act;
(viii) To such counsel's knowledge, 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, that are required to be
described in the Registration Statement or the Prospectus but are not
described as required;
(ix) To such counsel's knowledge after reasonable inquiry, 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 by the 1933 Act
that have not been so described or filed as an exhibit, or incorporated by
reference as permitted by the 1933 Act, the 1940 Act or the Rules and
Regulations;
(x) Neither the issuance, sale or delivery of the Shares, the
execution, delivery or
22
performance of this Agreement or any of the Fund Agreements by the Fund,
nor the consummation by the Fund of the transactions contemplated thereby
(A) requires any consent, approval, authorization or other order of or
registration or filing by the Fund with the Commission, the NASD, any
national securities exchange, any arbitrator, any court, regulatory body,
administrative agency or other governmental body, agency or official
(except such as may have been obtained prior to the date hereof and such as
may be required for compliance with state securities and blue sky laws) or
conflicts or will conflict with or constitutes or will constitute a breach
of, or a default under, the Charter, the Articles Supplementary or other
organizational documents of the Fund or (B) (i) conflicts or will conflict
with or constitutes or will constitute a breach of, or a default under, any
agreement, indenture, lease or other instrument known to such counsel to
which the Fund is a party or by which it or any of its properties may be
bound and that is identified, in an officer's certificate of the Fund, as
material to the business, financial condition, operations, properties or
prospects of the Fund (the "Agreements and Instruments"), (ii) violates or
will violate any statute, law or regulation (assuming compliance with state
securities and blue sky laws), except that such counsel may state that it
expresses no opinion as to the reasonableness or fairness of compensation
payable under the Advisory Agreement or as to rights to indemnity and
contribution in this Agreement or the Fund Agreements, (iii) violates or
will violate any judgment, injunction, order or decree that is applicable
to the Fund or any of its properties and that is known to such counsel, or
(iv) will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Fund pursuant to the terms
of the Agreements and Instruments;
(xi) The Fund has corporate power and authority to issue, sell and
deliver the Shares to the Underwriter as provided herein, and this
Agreement and the Fund Agreements have been duly authorized, executed and
delivered by the Fund and each complies with all applicable provisions of
the 1940 Act and the Advisers Act (except that such counsel may state that
it expresses no opinion as to the reasonableness or fairness of
compensation payable under the Advisory Agreement); assuming due
authorization, execution and delivery by the other parties thereto, this
Agreement and each Trust Fund Agreement constitutes the valid and binding
----
obligation of the Fund enforceable in accordance with its terms, except as
rights to indemnity and contribution hereunder and thereunder may be
limited by Federal or state securities laws or principles of public policy
and except that such counsel may state that it expresses no opinion as to
the reasonableness or fairness of compensation payable under the Advisory
Agreement, subject to enforcement to bankruptcy, fraudulent conveyance
insolvency, reorganization, moratorium and other laws of general
applicability relating to or affecting creditors' rights and to general
equitable principles;
(xii) The Fund is duly registered under the 1940 Act as a closed-end
diversified management investment company; and
(xiii) The provisions of the Charter and Articles Supplementary and
the investment policies and restrictions described in the Prospectus
(including the Statement
23
of Additional Information) under the caption "Investment Objectives and
Policies" comply with the requirements of the 1940 Act and the 1940 Act
Rules and Regulations.
Such counsel shall also have furnished to the Underwriter a statement,
addressed to the Underwriter, dated the Closing Date, to the effect that:
They have not independently verified the accuracy, completeness
or fairness of the statements made or the information contained in the
Registration Statement or the Prospectus, and, except for the statements
referred to in paragraphs (vi) and (vii) above and the information referred
to in paragraph (xiii) above, they are not passing upon and do not assume
any responsibility therefor. In the course of the preparation by the Fund
of the Registration Statement and the Prospectus, they have participated in
discussions with the representatives and employees and officers of the Fund
and the Adviser and in discussions with the Fund's independent accountants,
in which the business and the affairs of the Fund and the Adviser and the
contents of the Registration Statement and the Prospectus were discussed.
On the basis of information that they have gained in the course of their
representation of the Fund in connection with its preparation of the
Registration Statement and the Prospectus and their participation in the
discussions referred to above, no facts have come to their attention that
would lead them to believe that as of its effective date, the Registration
Statement contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading, or that as of the Closing
Date the Prospectus contained an untrue statement of material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading (in each case other than the financial
statements and schedules, the notes thereto and any schedules and other
financial data contained or incorporated by reference therein or omitted
therefrom, as to which they need express no opinion).
Insofar as the opinions expressed above are dependent upon matters
governed by Maryland law, Xxxxxxx Xxxx & Xxxxxxxxx will be permitted to rely on
the opinion of Xxxxxxx, Xxxxxxx and Xxxxxx, LLP, Baltimore, Maryland.
(e) The Underwriter shall have received on the Closing Date an
opinion of the General Counsel for the Adviser, dated the Closing Date and
addressed to the Underwriter, in form and substance satisfactory to the
Underwriter and to the effect that:
(i) The Adviser is a corporation duly organized and validly existing
and in good standing under the laws of the State of [Delaware], with full
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them),
(ii) The Adviser is duly registered with the Commission as an
investment adviser
24
under the Advisers Act and is not prohibited by the Advisers Act, the
Advisers Act Rules and Regulations, the 1940 Act or the 1940 Act Rules and
Regulations from acting as the investment Adviser to the Fund pursuant to
the Advisory Agreement as described in the Prospectus;
(iii) To the best of such counsel's knowledge after reasonable
inquiry, there are no legal or governmental proceedings pending or
threatened against the Adviser, or to which the Adviser or any of its
properties is subject, that are required to be described in the
Registration Statement or the Prospectus but are not described as required;
(iv) To the best of such counsel's knowledge after reasonable
inquiry, the Adviser is not in violation of its corporate charter or by-
laws, nor is the Adviser in default under any material agreement, indenture
or instrument or in breach or violation of any judgment, decree, order,
rule or regulation of any court or governmental or self-regulatory agency
or body;
(v) Neither the execution, delivery or performance of this Agreement
nor the consummation by the Adviser of the transactions contemplated hereby
(A) requires the Adviser to obtain any consent, approval, authorization or
other order of or registration or filing with, the Commission, the NASD,
any national securities exchange, any arbitrator, any court, regulatory
body, administrative agency or other governmental body, agency or official
(except such as may have been obtained prior to the date hereof and such as
may be required for compliance with state securities or blue sky laws) or
conflicts or will conflict with or constitutes or will constitute a breach
of, or a default under, the certificate of incorporation or by-laws, or
other organizational documents, of the Adviser or (B) (i) conflicts or will
conflict with or constitutes or will constitute a breach of, or a default
under, any material agreement, indenture, lease or other instrument to
which the Adviser is a party or by which it or any of its properties may be
bound (the "Agreements and Instruments"), (ii) violates or will violate any
statute, law or regulation (assuming compliance with state securities and
blue sky laws), (iii) violates or will violate any judgment, injunction,
order or decree that is applicable to the Adviser or any of its properties
and that is known to such counsel, or (iv) will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Adviser pursuant to the terms of the Agreements and Instruments;
(vi) The Adviser has the corporate power and authority to enter into
this Agreement and the Advisory Agreement, and this Agreement and the
Advisory Agreement have been duly authorized, executed and delivered by the
Adviser; assuming due authorization, execution and delivery by the other
parties thereto, this Agreement and the Advisory Agreement each constitutes
the valid and binding obligation of the Adviser enforceable in accordance
with its terms (except as rights to indemnity and contribution in
25
this Agreement and the Advisory Agreement may be limited by Federal or
state securities laws), subject as to enforcement to bankruptcy,
insolvency, moratorium, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles (regardless of whether enforceability is considered in a
proceeding in equity or at law); and
(vii) The description of the Adviser (other than statements as to the
Adviser's investment decisions, beliefs and strategies regarding the Fund's
portfolio as to which such counsel need express no opinion) in the
Registration Statement and the Prospectus 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, in light of
the circumstances under which they were made, not misleading.
(f) The Underwriter shall have received on the Closing Date an
opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the Underwriter, dated the
Closing Date and addressed to the Underwriter, with respect to such matters as
the Underwriter may reasonably request.
(g) The Underwriter shall have received letters addressed to the
Underwriter and dated the date hereof and the Closing Date from KPMG Peat
Marwick LLP, independent certified public accountants, substantially in the
forms heretofore approved by the Underwriter.
(h) (i) No order suspending the effectiveness of the Registration
Statement or prohibiting or suspending the use of the Prospectus (or any
amendment or supplement thereto) or any Prepricing Prospectus or any sales
material shall have been issued and no proceedings for such purpose or for the
purpose of commencing an enforcement action against the Fund, the Adviser or,
with respect to the transactions contemplated by the Prospectus (or any
amendment or supplement thereto) and this Agreement, the Underwriter, may be
pending before or, to the knowledge of the Fund, the Adviser or the Underwriter
or in the reasonable view of counsel to the Underwriter, shall be threatened or
contemplated by the Commission at or prior to the Closing Date and that any
request for additional information on the part of the Commission (to be included
in the Registration Statement, the Prospectus or otherwise) be complied with to
the satisfaction of the Underwriter; (ii) there shall not have been any change
in the shares of beneficial interest of the Fund nor any material increase in
the short-term or long-term debt of the Fund (other than in the ordinary course
of business) from that set forth or contemplated in the Registration Statement
or the Prospectus (or any amendment or supplement thereto); (iii) there shall
not have been, subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (or any amendment or
supplement thereto), except as may otherwise be stated in the Registration
Statement and Prospectus (or any amendment or supplement thereto), any material
adverse change in the condition (financial or other), business, prospects,
properties, net assets or results of operations of the Fund or the Adviser; (iv)
the Fund shall not have any liabilities or obligations, direct or contingent
(whether or not in the ordinary course of business), that are material to the
Fund, other than those reflected in the Registration Statement or the Prospectus
(or any amendment or supplement to either of them); and (v) all the
representations and warranties of the Fund and the Adviser contained in this
Agreement shall be
26
true and correct on and as of the date hereof and on and as of the Closing Date
as if made on and as of the Closing Date, and the Underwriter shall have
received a certificate of the Fund and the Adviser, dated the Closing Date and
signed by the chief executive officer and the chief financial officer of each of
the Fund and the Adviser (or such other officers as are acceptable to the
Underwriter), to the effect set forth in this Section 9(h) and in Section 9(i)
hereof.
(i) Neither the Fund nor the Adviser shall have failed at or prior to
the Closing Date to have performed or complied in all material respects with any
of its agreements herein contained and required to be performed or complied with
by it hereunder at or prior to the Closing Date.
(j) The Fund shall have delivered and the Underwriter shall have
received evidence satisfactory to the Underwriter that the Shares are rated
'aaa' by Xxxxx'x and AAA by S&P as of the Closing Date, and there shall not have
been given any notice of any intended or potential downgrading, or of any review
for a potential downgrading, in the rating accorded to the Shares by any Rating
Agency.
(k) The Fund and the Adviser shall have furnished or caused to be
furnished to the Underwriter such further certificates and documents as the
Underwriter shall have reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Underwriter and the Underwriter's
counsel.
Any certificate or document signed by any officer of the Fund or the
Adviser and delivered to the Underwriter, or to counsel for the Underwriter,
shall be deemed a representation and warranty by the Fund or the Adviser to the
Underwriter as to the statements made therein.
10. Expenses. The Fund agrees to pay the following costs and
--------
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the 1940 Act
Notification, the Prospectus and each amendment or supplement to any of them
(including, without limitation, the filing fees prescribed by the 1933 Act, the
1940 Act and the Rules and Regulations); (ii) the printing (or reproduction) and
delivery (including postage, air freight charges and charges for counting and
packaging) of such copies of the Registration Statement, each Prepricing
Prospectus, the Prospectus, any sales material and all amendments or supplements
to any of them as may be reasonably requested for use in connection with the
offering and sale of the Shares; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, including
any stamp taxes in connection with the original issuance and sale of the
27
Shares; (iv) the reproduction and delivery of this Agreement, any dealer
agreements, the preliminary blue sky memorandum, if any, and all other
agreements or documents reproduced and delivered in connection with the offering
of the Shares; (v) the registration of the Shares under the 1934 Act; (vi) the
reasonable fees, expenses and disbursements of counsel for the Underwriter
relating to the preparation, reproduction, and delivery of any preliminary blue
sky memorandum; (vii) fees paid to the Rating Agencies; (viii) the
transportation and other expenses incurred by or on behalf of Fund
representatives in connection with presentations to prospective purchasers of
the Shares; and (ix) the fees and expenses of the Fund's accountants and the
fees and expenses of counsel (including local and special counsel) for the Fund.
11. Effective Date of Agreement. This Agreement shall become
---------------------------
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Shares may commence, when
notification of the effectiveness of the registration statement or such post-
effective amendment has been released by the Commission. Until such time as
this Agreement shall have become effective, it may be terminated by the Fund, by
notifying the Underwriter, or by the Underwriter, by notifying the Fund.
Any notice under this Section 11 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
12. Termination of Agreement. This Agreement shall be subject to
------------------------
termination in the Underwriter's absolute discretion, without liability on the
part of the Underwriter to the Fund or the Adviser, by notice to the Fund, if
prior to the Closing Date (i) trading in securities generally on the NYSE shall
have been suspended or materially limited, (ii) a general moratorium on
commercial banking activities in New York shall have been declared by either
federal or state authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis or
change in political, financial or economic conditions, the effect of which on
the financial markets of the United States is to make it, in the Underwriter's
judgment, impracticable or inadvisable to commence or continue the offering of
the Shares at the offering price to the public set forth on the cover page of
the Prospectus or to enforce contracts for the resale of the Shares by the
Underwriter. Notice of such termination may be given to the Fund by telegram,
telecopy or telephone and shall be subsequently confirmed by letter.
13. Information Furnished by the Underwriter. The statements set
----------------------------------------
forth in the last paragraph on the cover page and the statements in the first
and third sentences of the third paragraph and in the fifth paragraph under the
caption AUnderwriting" in any Prepricing Prospectus and in the Prospectus,
constitute the only information furnished by or on behalf of the Underwriter as
such information is referred to in Sections 6(b) and 8 hereof.
14. Miscellaneous. Except as otherwise provided in Sections 5, 11
-------------
and 12 hereof, notice given pursuant to any provision of this Agreement shall be
in writing and shall be delivered (i) if to the Fund or the Adviser, at the
office of the Fund at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx,
28
New York 10013, Attention: [Secretary]; or (ii) if to the Underwriter, to
Xxxxxxx Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Manager, Investment Banking Division.
15. Disclaimer. A copy of the document establishing the Fund is
----------
filed with the Secretary of the State of Maryland. This Agreement is executed
by officers not as individuals and is not binding upon any of the directors,
officers, or shareholders of the Fund individually but only upon the assets of
the Fund.
This Agreement has been and is made solely for the benefit of the
Underwriter, the Fund, the Adviser, their directors and officers, and the other
controlling persons referred to in Section 8 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the
term Asuccessor" nor the term Asuccessors and assigns" as used in this Agreement
shall include a purchaser from the Underwriter of any of the Shares in his
status as such purchaser.
16. Applicable Law; Counterparts. This Agreement shall be governed
----------------------------
by and construed in accordance with the laws of the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
29
Please confirm that the foregoing correctly sets forth the agreement
among the Fund, the Adviser and the Underwriter.
Very truly yours,
ZENIX INCOME FUND INC.
By:
Confirmed as of the date first
above mentioned.
XXXXXXX XXXXX XXXXXX INC.
By:____________________________
Managing Director
SCHEDULE I
ZENIX INCOME FUND INC.
Number of
Underwriter Preferred Shares
-----------------
Xxxxxxx Xxxxx Xxxxxx Inc............................. _________2,400
Total................................................ _________2,400
