Exhibit (h)(i)
▇▇▇▇▇▇▇ Global Commodities Stock Fund, Inc.
(a Maryland corporation )
Shares of Common Stock
($0.01 Par Value Per Share)
FORM OF PURCHASE AGREEMENT
September [23], 2004
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
UBS Securities LLC
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
Deutsche Bank Securities Inc.
Advest, Inc.
BB&T Capital Markets, a division of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated
H&R Block Financial Advisors, Inc.
KeyBanc Capital Markets, a division of McDonald Investments Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
▇▇▇▇▇▇▇▇▇▇▇ & Co. Inc.
RBC Capital Markets Corporation
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇▇ Global Commodities Stock Fund, Inc., a Maryland corporation (the
"Fund"), and the Fund's investment adviser, Deutsche Investment Management
Americas Inc., a Delaware corporation (the "Investment Adviser"), confirm their
agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), and UBS Securities LLC, ▇.▇. ▇▇▇▇▇▇▇ & Sons,
Inc., Deutsche Bank Securities Inc., Advest, Inc., BB&T Capital Markets, a
division of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated, H&R Block Financial Advisors, Inc., KeyBanc
Capital Markets, a division of McDonald Investments Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, Incorporated, ▇▇▇▇▇▇▇▇▇▇▇ & Co. Inc., RBC Capital Markets Corporation,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated and each of the other Underwriters
named in Schedule A hereto (collectively, the "Underwriters," which term shall
also include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇, and UBS Securities LLC, ▇.▇. ▇▇▇▇▇▇▇ & Sons,
Inc., Deutsche Bank Securities Inc., Advest, Inc., BB&T Capital Markets, a
division of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated, H&R Block Financial Advisors, Inc., KeyBanc
Capital Markets, a division of McDonald Investments Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, Incorporated, ▇▇▇▇▇▇▇▇▇▇▇ & Co. Inc., RBC Capital Markets Corporation,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
Company, Incorporated are acting as representatives (in such capacity, the
"Representatives"), with respect to the issue and sale by the Fund and the
purchase by the Underwriters, acting severally and not jointly, of the
respective number of shares of common stock, par value $.001 per share, of the
Fund ("Common Shares") set forth in said Schedule A, and with respect to the
grant by the Fund to the Underwriters, acting severally and not jointly, of the
option described in Section 2(b) hereof to purchase all or any part of [ ]
additional Common Shares to cover overallotments, if any. The aforesaid [ ]
Common Shares (the "Initial Securities") to be purchased by the Underwriters and
all or any part of the [ ] Common Shares subject to the option described in
Section 2(b) hereof (the "Option Securities") are hereinafter called,
collectively, the "Securities."
The Fund understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-117143 and No.
811-21600) covering the registration of the Securities under the Securities Act
of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses, and a notification on Form N-8A of registration of
the Fund as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Rules and Regulations") and the 1940 Act the "1940
Act Rules and Regulations and, together with 1940 Act Rules and Regulations,
(the "Rules and Regulations"). Promptly after execution and delivery of this
Agreement, the Fund will either (i) prepare and file a prospectus in accordance
with the provisions of Rule 430A ("Rule 430A") of the Rules and Regulations and
paragraph (c) or (h) of Rule 497 ("Rule 497") of the 1933 Act Rules and
Regulations or (ii) if the Fund has elected to rely upon Rule 434 ("Rule 434")
of the 1933 Act Rules and Regulations, prepare and file a term sheet (a "Term
Sheet") in accordance with the provisions of Rule 434 and Rule 497. The
information included in any such prospectus that was omitted from such
registration statement at the time it became effective but that is deemed to be
part of such registration statement at the time it became effective, if
applicable, (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information." Each prospectus used before such registration statement
became effective, and any prospectus that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, including in each
case any statement of additional information incorporated therein by reference,
is herein called a "preliminary prospectus." Such registration statement,
including the exhibits thereto and schedules thereto at the time it became
effective and including the Rule 430A Information and the Rule 434 Information,
as applicable, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Rules and Regulations is
herein referred to as the "Rule 462(b) Registration Statement," and after such
filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final prospectus in the form first furnished to the
Underwriters for use in connection with the offering of the Securities,
including the statement of additional information incorporated therein by
reference, is herein called the "Prospectus." If Rule 434 is relied on, the term
"Prospectus" shall refer to the preliminary prospectus dated August 23, 2004
together with the Term Sheet and all references in this Agreement to the date of
the Prospectus shall mean the date of the Term Sheet. For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any Term Sheet or any amendment or supplement to
any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial
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statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Fund and the Investment Adviser.
The Fund and the Investment Adviser jointly and severally represent and warrant
to each Underwriter as of the date hereof, as of the Closing Time referred to in
Section 2(c) hereof, and as of each Date of Delivery (if any) referred to in
Section 2(b) hereof, and agree with each Underwriter, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act, or order of
suspension or revocation of registration pursuant to Section 8(e) of the
1940 Act, and no proceedings for any such purpose have been instituted or
are pending or, to the knowledge of the Fund or the Investment Adviser,
are contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement, the notification on Form N-8A and any
amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act, the 1940 Act and
the Rules and Regulations and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or supplement
was issued and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), included or will include an untrue
statement of a material fact or omitted or will omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. If Rule 434
is used, the Fund will comply with the requirements of Rule 434 and the
Prospectus shall not be "materially different", as such term is used in
Rule 434, from the prospectus included in the Registration Statement at
the time it became effective. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Fund in writing by an
Underwriter expressly for use in the Registration Statement or the
Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
effective Registration Statement or as part of any amendment thereto, or
filed pursuant to Rule 497 under the 1933 Act, complied when so filed in
all material respects with the Rules and Regulations and each preliminary
prospectus and the Prospectus delivered to the Underwriters for use in
connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇,
except to the extent permitted by Regulation S-T.
If a Rule 462(b) Registration Statement is required in connection
with the offering and sale of the Securities, the Fund has complied or
will comply with the requirements of Rule 111 under the 1933 Act
Regulations relating to the payment of filing fees thereof.
(ii) Independent Accountants. The accountants who certified the
statement of assets and liabilities included in the Registration Statement
are independent public accountants as required by the 1933 Act and the
Rules and Regulations.
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(iii) Financial Statements. The statement of assets and liabilities
included in the Registration Statement and the Prospectus, together with
the related notes, presents fairly in accordance with generally accepted
accounting principle ("GAAP") in all material respects the financial
position of the Fund at the date indicated; said statement has been
prepared in conformity with GAAP.
(iv) Expense Summary. The information set forth in the Prospectus in
the Fee Table has been prepared in accordance in all material respects
with the requirements of Form N-2 and to the extent estimated or
projected, such estimates or projections are reasonably believed to be
attainable and reasonably based.
(v) No Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Fund other
than as a result of a change in the financial markets generally, whether
or not arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the Fund,
other than those in the ordinary course of business, which are material
with respect to the Fund, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Fund on any class
of its capital stock.
(vi) Good Standing of the Fund. The Fund has been duly organized and
is validly existing as a corporation under the laws of the State of
Maryland and has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectus
and to enter into and perform its obligations under this Agreement; and
the Fund is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Material Adverse
Effect.
(vii) No Subsidiaries. The Fund has no subsidiaries.
(viii) Investment Company Status. The Fund is duly registered with
the Commission under the 1940 Act as a closed-end non-diversified
management investment company, and no order of suspension or revocation of
such registration has been issued or proceedings therefor initiated or, to
the knowledge of the Fund, threatened by the Commission.
(ix) Officers and Directors. 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 Rules and Regulations and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and the
rules and regulations of the Commission promulgated under the Advisers Act
(the "Advisers Act Rules and Regulations"). Except as disclosed in the
Registration Statement or the Prospectus (or any amendment or supplement
to either of them), to the knowledge of the Fund after due inquiry, no
director of the Fund is (A) an "interested person" (as defined in the ▇▇▇▇
▇▇▇) of the Fund or (B) an "affiliated person" (as defined in the ▇▇▇▇
▇▇▇) of any Underwriter.
(x) Capitalization. The authorized shares of common stock of the
Fund is as set forth in the Prospectus under the caption "Description of
Shares". All issued and outstanding shares of common stock of the Fund
have been duly authorized and validly issued and are fully paid and
non-assessable (except as described in the Registration Statement) and
have been offered and sold or exchanged by the Fund in compliance with all
applicable laws (including, without limitation, federal and state
securities laws); none of the outstanding shares of common
4
stock of the Fund were issued in violation of the preemptive or other
similar rights of any securityholder of the Fund.
(xi) Authorization and Description of Securities. The Securities to
be purchased by the Underwriters from the Fund have been duly authorized
for issuance and sale to the Underwriters pursuant to this Agreement and,
when issued and delivered by the Fund pursuant to this Agreement against
payment of the consideration set forth herein, will be validly issued and
fully paid and non-assessable (except as described in the Registration
Statement). The Common Shares conform in all material respects to all
statements relating thereto contained in the Prospectus and such
description conforms in all material respects to the rights set forth in
the instruments defining the same, to the extent such rights are set
forth; no holder of the Securities will be subject to personal liability
by reason of being such a holder; and the issuance of the Securities is
not subject to the preemptive or other similar rights of any
securityholder of the Fund.
(xii) Absence of Defaults and Conflicts. The Fund is not in
violation of its articles of incorporation or by-laws, each as amended
from time to time, or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease
or other agreement or instrument to which it is a party or by which it is
bound, or to which any of the property or assets of the Fund is subject
(collectively, "Agreements and Instruments") except for such violations or
defaults that would not result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement, the Management
Agreement, the Administration Agreement, the Custodian Agreement and the
Transfer Agency and Service Agreement referred to in the Registration
Statement (as used herein, the "Management Agreement," the "Administration
Agreement," the "Custodian Agreement" and the "Transfer Agency Agreement,"
respectively) and the consummation of the transactions contemplated herein
and in the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use of Proceeds") and
compliance by the Fund with its obligations hereunder have been duly
authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Fund pursuant to,
the Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation of
the provisions of the articles of incorporation or by-laws of the Fund,
each as amended from time to time, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Fund or any of its assets, properties or operations. As used herein, a
"Repayment Event" means any event or condition which gives the holder of
any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the
Fund.
(xiii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Fund, threatened, against or affecting the Fund, which is required to
be disclosed in the Registration Statement (other than as disclosed
therein), or which would reasonably be expected to result in a Material
Adverse Effect, or which would reasonably be expected to materially and
adversely affect the properties or assets of the Fund or the consummation
of the transactions contemplated in this Agreement or the performance by
the Fund of its obligations hereunder. The aggregate of all pending legal
or governmental
5
proceedings to which the Fund is a party or of which any of its property
or assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material Adverse
Effect.
(xiv) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto by the 1933 Act, the 1940
Act or by the Rules and Regulations which have not been so described and
filed as required.
(xv) Possession of Intellectual Property. The Fund owns, has the
right to use or possesses, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by the Fund, and the Fund has not received any notice or is
not otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any facts
or circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Fund therein, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect.
(xvi) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Fund of its
obligations hereunder, in connection with the offering, issuance or sale
of the Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except such as have been already obtained
or as may be required under the 1933 Act, the 1940 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), the rules of the New
York Stock Exchange (the "NYSE"), the rules of the National Association of
Securities Dealers, Inc. ("NASD") or state securities laws.
(xvii) Possession of Licenses and Permits. The Fund possesses such
permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to operate
its properties and to conduct the business as contemplated in the
Prospectus, except where the absence of such possession would not result
in a Material Adverse Effect; the Fund is in compliance with the terms and
conditions of all such Governmental Licenses except where the failure to
comply would not result in a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when
the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and the Fund has not received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xviii) Advertisements. Any 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 Investment Adviser used in connection with the
public offering of the Securities (collectively, "sales material") does
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Moreover, all sales material complied and will
comply in all material
6
respects with the applicable requirements of the 1933 Act, the 1940 Act
and the Rules and Regulations and the rules and interpretations of the
National Association of Securities Dealers, Inc. ("NASD").
(xix) Subchapter M. The Fund intends to direct the investment of the
proceeds of the offering described in the Registration Statement in such a
manner as to comply with the requirements of Subchapter M of the Internal
Revenue Code of 1986, as amended ("Subchapter M of the Code" and the
"Code," respectively), and intends to qualify as a regulated investment
company under Subchapter M of the Code.
(xx) Distribution of Offering Materials. The Fund has not
distributed and, prior to the later to occur of (A) the Closing Time and
(B) completion of the distribution of the Common Shares, will not
distribute any offering material in connection with the offering and sale
of the Common Shares other than the Registration Statement, a preliminary
prospectus, the Prospectus or the sales materials.
(xxi) Accounting Controls. The Fund maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
portfolio securities transactions and dividends are executed in accordance
with management's general or specific authorization and with the
applicable requirements of the 1940 Act, the Rules and Regulations and the
Code; (B) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets and to maintain
compliance with the books and records requirements under the 1940 Act and
the Rules and Regulations; (C) access to assets is permitted only in
accordance with the management's general or specific authorization; and
(D) a reconciliation between the Fund's Custodian's records and the Fund's
accounting records occurs at reasonable intervals and appropriate action
is taken with respect to any differences.
(xxii) Absence of Undisclosed Payments. To the Fund's knowledge,
neither the Fund nor any employee or agent of the Fund has made any
payment of funds of the Fund or received or retained any funds, which
payment, receipt or retention of funds is of a character required to be
disclosed in the Prospectus (other than as disclosed therein).
(xxiii) Material Agreements. This Agreement, the Management
Agreement the Administration Agreement, the Custodian Agreement and the
Transfer Agency Agreement have each been duly authorized by all requisite
action on the part of the Fund, executed and delivered by the Fund, as of
the dates noted therein and each complies with all applicable provisions
of the 1940 Act. Assuming due authorization, execution and delivery by the
other parties thereto, each such Agreement constitutes a valid and binding
agreement of the Fund, enforceable against the Fund in accordance with its
terms, except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) or an implied
covenant of good faith and fair dealing and except as rights to indemnify
or contribute thereunder may be limited by federal or state laws.
(xxiv) Registration Rights. There are no persons with registration
rights or other similar rights to have any securities of the Fund
registered pursuant to the Registration Statement or otherwise registered
by the Fund under the 1933 Act.
(xxv) NYSE Listing. The Securities have been duly authorized for
listing, upon notice of issuance, on the NYSE and the Fund's registration
statement on Form 8-A under the 1934 Act has become effective.
7
(b) Representations and Warranties by the Investment Adviser. The
Investment Adviser represents and warrants to each Underwriter as of the date
hereof, as of the Closing Time referred to in Section 2(c) hereof, and as of
each Date of Delivery (if any) referred to in Section 2(b) hereof as follows:
(i) Good Standing of the Investment Adviser. The Investment Adviser
has been duly organized and is validly existing and in good standing as a
corporation 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 Prospectus and is duly qualified
as a foreign corporation to transact business and is in good standing in
each other jurisdiction in which such qualification is required except as
would not, individually or in the aggregate, result in a material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Investment Adviser (an
"Adviser Material Adverse Effect").
(ii) Investment Adviser Status. The Investment Adviser is duly
registered and in good standing with the Commission as an investment
adviser under the Advisers Act, and is not prohibited by the Advisers Act
or the 1940 Act, 1940 Act Rules and Regulations or the Advisers Act Rules
and Regulations from acting under the Management Agreement for the Fund as
contemplated by the Prospectus.
(iii) Description of the Investment Adviser. The description of the
Investment Adviser in the Registration Statement and the Prospectus (and
any amendment or supplement to either of them) under the caption
"Management of the Fund" complied and comply in all material respects with
the provisions of the 1933 Act, the 1940 Act and the Rules and Regulations
and is true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(iv) Capitalization. The Investment Adviser has the financial
resources available to it necessary for the performance of its services
and obligations as contemplated in the Prospectus and under the Management
Agreement.
(v) Authorization of Agreements; Absence of Defaults and Conflicts.
This Agreement, the Management Agreement and the Additional Compensation
Agreement have each been duly authorized, executed and delivered by the
Investment Adviser, and, assuming due authorization, execution and
delivery by the other parties thereto, the Management Agreement and the
Additional Compensation Agreement each constitutes a valid and binding
obligation of the Investment Adviser, each enforceable against the
Investment Adviser in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally and general equitable principles (whether considered in a
proceeding in equity or at law) or an implied covenant of good faith and
fair dealing; and neither the execution and delivery of this Agreement,
the Management Agreement or the Additional Compensation Agreement nor the
performance by the Investment Adviser of its obligations hereunder or
thereunder will conflict with, or result in a breach of any of the terms
and provisions of, or constitute, with or without the giving of notice or
lapse of time or both, a default under, (i) any agreement or instrument to
which the Investment Adviser is a party or by which it is bound, (ii) the
organizational documents of the Investment Adviser, or, (iii) to the
Investment Adviser's knowledge, by any law, order, decree, rule or
regulation applicable to it of any jurisdiction, court, federal or state
regulatory body, administrative agency or other governmental body, stock
exchange or securities association having jurisdiction over the Investment
Adviser or its properties or operations other than, in clauses (i) and
(iii), any conflict, breach or default that would not, individually or in
the aggregate, reasonably be expected to result in an Adviser Material
Adverse Effect; and no consent, approval, authorization or order of any
court or governmental authority or agency is
8
required for the consummation by the Investment Adviser of the
transactions contemplated by this Agreement, the Management Agreement or
the Additional Compensation Agreement, except as have been obtained or may
be required under the 1933 Act, the 1940 Act, the 1934 Act, the NYSE or
state securities laws.
(vi) No Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred any
event which would reasonably be expected to have a material adverse effect
with respect to the Investment Adviser to perform its obligations under
this Agreement and the Management Agreement.
(vii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Investment Adviser, threatened against or affecting either the
Investment Adviser or any parent or subsidiary of the Investment Adviser
or any partners, directors, officers or employees of the foregoing,
whether or not arising in the ordinary course of business, which might
reasonably be expected to result in any Adviser Material Adverse Effect,
materially and adversely affect the properties or assets of the Investment
Adviser or materially impair or adversely affect the ability of the
Investment Adviser to function as an investment adviser with respect to
the Fund or perform its obligations under the Management Agreement, or
which is required to be disclosed in the Registration Statement and the
Prospectus (and has not been so disclosed).
(viii) Absence of Violation or Default. The Investment Adviser is
not in violation of its organizational documents or in default under any
agreement, indenture or instrument, where such violation or default would
reasonably be expected to have a Material Adverse Effect on the ability of
the Investment Adviser to function as an investment adviser or perform its
obligations under the Management Agreement.
(c) Officer's Certificates. Any certificate signed by any officer of the
Fund or the Investment Adviser delivered to the Representatives or to counsel
for the Underwriters shall be deemed a representation and warranty by the Fund
or the Investment Adviser, as the case may be, to each Underwriter as to the
matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Fund agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Fund, at the
price per share set forth in Schedule B, the number of Initial Securities set
forth in Schedule A opposite the name of such Underwriter, plus any additional
number of Initial Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Fund hereby grants an option to the Underwriters, severally and
not jointly, to purchase up to an additional [ ] Common Shares in the aggregate
at the price per share set forth in Schedule B, less an amount per share equal
to any dividends or distributions declared by the Fund and payable on the
Initial Securities but not payable on the Option Securities. The option hereby
granted will expire 45 days after the date hereof and may be exercised in whole
or in part from time to time only for the purpose of covering overallotments
which may be made in connection with the offering and distribution of the
Initial Securities upon written notice by the Representatives to the Fund
setting forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such
9
Option Securities. Any such time and date of delivery (a "Date of Delivery")
shall be determined by the Representatives, but shall not be earlier than the
third day after the date on which the option is being exercised nor later than
seven full business days after the exercise of said option, nor in any event
prior to the Closing Time, as hereinafter defined. If the option is exercised as
to all or any portion of the Option Securities, each of the Underwriters, acting
severally and not jointly, will purchase that proportion of the total number of
Option Securities then being purchased which the number of Initial Securities
set forth in Schedule A opposite the name of such Underwriter bears to the total
number of Initial Securities, subject in each case to such adjustments as
▇▇▇▇▇▇▇ ▇▇▇▇▇ in its discretion shall make to eliminate any sales or purchases
of a fractional number of Option Securities plus any additional number of Option
Securities which such Underwriter may become obligated to purchase pursuant to
the provisions of Section 10 hereof.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
▇▇▇▇▇▇▇▇ Chance US LLP, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at
such other place as shall be agreed upon by the Representatives and the Fund, at
10:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30
P.M. (Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
Representatives and the Fund (such time and date of payment and delivery being
herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates, if any, for such Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Representatives and the Fund, on each Date of Delivery as specified in the
notice from the Representatives to the Fund.
Payment shall be made to the Fund by wire transfer of immediately
available funds to a bank account designated by the Fund, against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in the City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants.
(a) The Fund and the Investment Adviser, jointly and severally, covenant
with each Underwriter as follows:
(i) Compliance with Securities Regulations and Commission Requests.
The Fund, subject to Section 3(a)(ii), will comply with the requirements
of Rule 430A or Rule 434, as applicable, and will notify the
Representatives immediately, and confirm the notice in writing,
10
(i) when any post-effective amendment to the Registration Statement shall
become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from
the Commission, (iii) of any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the
Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, or of the
initiation or, to the knowledge of the Fund, threatening of any
proceedings for any of such purposes. The Fund will promptly effect the
filings necessary pursuant to Rule 497 and will take such steps as it
deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 497 was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. The Fund will make every reasonable effort to prevent the
issuance of any stop order, or order of suspension or revocation of
registration pursuant to Section 8(e) of the 1940 Act, and, if any such
stop order or order of suspension or revocation of registration is issued,
to obtain the lifting thereof at the earliest possible moment.
(ii) Filing of Amendments. For a period of one year from the date
hereof, the Fund will give the Representatives notice of its intention to
file or prepare any amendment to the Registration Statement (including any
filing under Rule 462(b)), any Term Sheet or any amendment, supplement or
revision to either the prospectus included in the Registration Statement
at the time it became effective or to the Prospectus, will furnish the
Representatives with copies of any such documents a reasonable amount of
time prior to such proposed filing or use, as the case may be, and will
not file or use any such document to which the Representatives or counsel
for the Underwriters shall reasonably object.
(iii) Delivery of Registration Statements. The Fund has furnished or
will deliver to the Representatives, without charge, a signed copy of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein)
and a signed copy of all consents and certificates of experts, and will
also deliver to the Representatives, without charge, a conformed copy of
the Registration Statement as originally filed and of each amendment
thereto (without exhibits) for each of the Underwriters. The copies of the
Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted by Regulation S-T.
(iv) Delivery of Prospectuses. The Fund has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Fund hereby consents to
the use of such copies for purposes permitted by the 1933 Act. The Fund
will furnish to each Underwriter, without charge, during the period when
the Prospectus is required to be delivered under the 1933 Act, such number
of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(v) Continued Compliance with Securities Laws. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with
sales of the Securities, any event shall occur or condition shall exist as
a result of which it is necessary, in the reasonable opinion of counsel
for the Underwriters or for the Fund, to amend the Registration Statement
or amend or supplement the Prospectus in order that the Prospectus will
not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
11
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of
such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the
requirements of the 1933 Act or the Rules and Regulations, the Fund will
promptly prepare and file with the Commission, subject to Section
3(a)(ii), such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Fund will furnish to the
Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request; provided that, if the supplement or
amendment is required exclusively as a result of a misstatement in or
omission from the information provided to the Fund in writing by the
Underwriters expressly for use in the Prospectus, the Fund may deliver
such supplement or amendment to the Underwriters and dealers at a
reasonable charge not to exceed the actual cost thereof to the Fund.
(vi) Blue Sky Qualifications. The Fund will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering
and sale under the applicable securities laws of such states and other
jurisdictions of the United States as the Representatives may designate
and to maintain such qualifications in effect for a period of not less
than one year from the later of the effective date of the Registration
Statement and any Rule 462(b) Registration Statement; provided, however,
that the Fund shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer
in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. In each jurisdiction
in which the Securities have been so qualified, the Fund will file such
statements and reports as may be required by the laws of such jurisdiction
to continue such qualification in effect for a period of not less than one
year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(vii) Rule 158. The Fund will make generally available to its
securityholders as soon as practicable an earnings statement, if
applicable, for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(viii) Use of Proceeds. The Fund will use the net proceeds received
by it from the sale of the Securities substantially in the manner
specified in the Prospectus under "Use of Proceeds".
(ix) Listing. The Fund will use its reasonable best efforts to cause
the Securities to be duly authorized for listing by the NYSE, prior to the
date the Securities are issued.
(x) Restriction on Sale of Securities. During a period of 180 days
from the date of the Prospectus, the Fund will not, without the prior
written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (A) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option, rights or warrant to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of Common Shares
or any securities convertible into or exercisable or exchangeable for
Common Shares or file any registration statement under the 1933 Act with
respect to any of the foregoing or (B) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly
or indirectly, the economic consequence of ownership of the Common Shares,
whether any such swap or transaction described in clause (A) or (B) above
is to be settled by delivery of Common Shares or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (1) the
Securities to be sold hereunder or (2) Common Shares issued or, for
avoidance of doubt, purchased in the open market pursuant to any dividend
reinvestment plan.
(xi) Reporting Requirements. The Fund, during the period when the
Prospectus is required to be delivered under the 1933 Act, will file all
documents required to be filed with the
12
Commission pursuant to the 1940 Act and the 1934 Act within the time
periods required by the 1940 Act and the Rules and Regulations and the
1934 Act and the rules and regulations of the Commission thereunder,
respectively.
(xii) Subchapter M. The Fund will use its best efforts to comply
with the requirements of Subchapter M of the Code to qualify as a
regulated investment company under Subchapter M of the Code.
(xiii) No Manipulation of Market for Securities. Except for the
authorization of actions permitted to be taken by the Underwriters as
contemplated herein or in the Prospectus, the Fund will not (a) take,
directly or indirectly, any action designed to cause or to result in, or
that would reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Fund to facilitate the
sale or resale of the Securities in violation of federal or state
securities laws, until the Closing Date, or the Date of Delivery, if any,
(i) sell, bid for or purchase the Securities or pay any person any
compensation for soliciting purchases of the Securities or (ii) pay or
agree to pay to any person any compensation for soliciting another to
purchase any other securities of the Fund.
(xiv) Rule 462(b) Registration Statement. If the Fund elects to rely
upon Rule 462(b), the Fund shall file a Rule 462(b) Registration Statement
with the Commission in compliance with Rule 462(b) by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement, and the Fund shall
at the time of filing either pay to the Commission the filing fee for the
Rule 462(b) Registration Statement or give irrevocable instructions for
the payment of such fee pursuant to Rule 111(b) under the ▇▇▇▇ ▇▇▇.
(b) The Adviser covenants with each Underwriter that for a period of 180
days from the date of the Prospectus, the Adviser will not, without your prior
written consent which consent shall not be unreasonably withheld, act as
investment adviser to any other closed end registered investment company having
an investment objective, policies and restrictions substantially similar to
those of the Fund.
SECTION 4. Payment of Expenses.
(a) Expenses. The Fund will pay all expenses incident to the performance
of its obligations under this Agreement, including (i) the preparation, printing
and filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery to the Underwriters of this Agreement, any
Agreement among Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Underwriters, if any, including any stock or other
transfer taxes and any stamp or other duties payable upon the sale, issuance or
delivery of the Securities to the Underwriters, (iv) the fees and disbursements
of the Fund's counsel, accountants and other advisors, (v) the qualification of
the Securities under securities laws in accordance with the provisions of
Section 3(a)(vi) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, Prospectus and any amendments or supplements thereto,
(vii) the preparation, printing and delivery to the Underwriters of copies of
the Blue Sky Survey and any supplement thereto, (viii) the fees and expenses of
any transfer agent or registrar for the Securities, (ix) the filing fees
incident to, and the reasonable fees and disbursements of counsel to the
Underwriters in connection with, the review by the NASD of the terms of the sale
of the Securities in an amount up to $7,500 (which will not exceed .[0.75007]%
of the total price to the public of the Common Shares sold in this offering),
(x) the fees and expenses incurred in connection with the listing of the
Securities on the NYSE and (xi) the printing of any sales material. Also,
13
the Fund shall pay to ▇▇▇▇▇▇▇ ▇▇▇▇▇ on behalf of the Underwriters $0.005 per
common share purchased pursuant to this Agreement as partial reimbursement of
expenses incurred in connection with the offering. The amount paid by the Fund
as this partial reimbursement to the Underwriters will not exceed .03335% of the
total price to the public of the common stock sold in this offering. The Fund's
Investment Adviser has agreed to pay the Fund's offering and organizational
costs (other than sales load) that exceed $.03 per share of common stock. The
sum total of all compensation received by the Underwriters and the Investment
Adviser in connection with this offering, including sales load and all forms of
compensation to and reimbursement of Underwriters and Investment Adviser, will
not exceed 9.0% of the total price to the public of the Common Shares sold in
this offering.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section 9(a)
hereof, the Fund and the Investment Adviser, jointly and severally, agree that
they shall reimburse the Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations.
The obligations of the several Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Fund and the Investment
Adviser contained in Section 1 hereof or in certificates of any officer of the
Fund or the Investment Adviser delivered pursuant to the provisions hereof, to
the performance by the Fund and the Investment Adviser of their respective
covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective or will
have become effective by 5:30 p.m., New York City time on the date hereof, and
at Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act, no notice or order pursuant
to Section 8(e) of the 1940 Act shall have been issued, and no proceedings with
respect to either shall have been initiated or, to the knowledge of counsel to
the Underwriters and counsel to the Fund, threatened by the Commission, and any
request on the part of the Commission for additional information shall have been
complied with or waived to the reasonable satisfaction of counsel to the
Underwriters. A prospectus containing the Rule 430A Information shall have been
filed with the Commission in accordance with Rule 497 (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A or a certificate must
have been filed in accordance with Rule 497(j)) or, if the Fund has elected to
rely upon Rule 434, a Term Sheet shall have been filed with the Commission in
accordance with Rule 497.
(b) Opinion of Counsel for Fund and the Investment Adviser. At Closing
Time, the Representatives shall have received the favorable opinions, dated as
of Closing Time, of counsel for the Fund and the Investment Adviser, together
with signed or reproduced copies of such letter for each of the other
Underwriters substantially to the effect set forth in Exhibit A hereto or in
such other forms and substance reasonably satisfactory to counsel to the
Underwriters may reasonably request.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇▇▇ Chance US LLP, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in clauses (A) (i), (ii), (vi), (vii)
(solely as to preemptive or other similar rights arising by operation of law or
under the charter or by-laws of the Fund), (viii) through (x), inclusive, (xii),
(xiv) (solely as to the information in the Prospectus under "Description of
Shares") and the last paragraph of Exhibit A hereto. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the law of the State of New York and the federal law of the United States,
upon the opinions of counsel satisfactory to the Representatives. Such counsel
may
14
also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Fund and certificates of public officials.
(d) Officers' Certificates. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Fund, whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of a duly authorized officer
of the Fund and of the chief financial or chief accounting officer of the Fund
and of the President or a Vice President or Managing Director of the Investment
Adviser, dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in Sections
1(a) and (b) hereof, as applicable, are true and correct with the same force and
effect as though expressly made at and as of Closing Time, (iii) each of the
Fund and the Investment Adviser, respectively, has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied pursuant
to this Agreement at or prior to Closing Time, (iv) with respect to the
certificate by an officer of the Investment Adviser only, there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Investment Adviser,
whether or not arising in the ordinary course of business, and (v) with respect
to the Fund only, no stop order suspending the effectiveness of the Registration
Statement, or order of suspension or revocation of registration pursuant to
Section 8(e) of the 1940 Act, has been issued and no proceedings for any such
purpose have been instituted or are pending or are contemplated by the
Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from PricewaterhouseCoopers
LLP a letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the Representatives shall
have received from PricewaterhouseCoopers LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(g) Approval of Listing. At Closing Time, the Securities shall have been
approved for listing on the NYSE, subject only to official notice of issuance.
(h) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements
(i) Execution of Additional Compensation Agreement. At Closing Time,
▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have received the Additional Compensation Agreement, dated
as of the Closing Date, as executed by the Investment Adviser.
(j) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Fund contained herein and the statements in any certificates furnished by
the Fund hereunder shall be true and correct as of each Date of Delivery and, at
the relevant Date of Delivery, the Representatives shall have received:
(i) Officers' Certificates. Certificates, dated such Date of
Delivery, of a duly authorized officer of the Fund and of the chief
financial or chief accounting officer of the Fund and of the President or
a Vice President or Managing Director of the Investment Adviser confirming
that the information contained in the certificate delivered by each of
them at the Closing Time pursuant to Section 5(d) hereof remains true and
correct as of such Date of Delivery.
15
(ii) Opinion of Counsel for the Fund and the Investment Adviser. The
favorable opinions of counsel for the Fund and the Investment Adviser,
dated such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and to the same effect as the opinions
required by Section 5(b) hereof.
(iii) Opinion of Counsel for the Underwriters. The favorable opinion
of ▇▇▇▇▇▇▇▇ Chance US LLP, counsel for the Underwriters, dated such Date
of Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion required
by Section 5(c) hereof.
(iv) Bring-down Comfort Letter. A letter from PricewaterhouseCoopers
LLP, in form and substance satisfactory to the Representatives and dated
such Date of Delivery, substantially in the same form and substance as the
letter furnished to the Representatives pursuant to Section 5(f) hereof,
except that the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than five days prior to such Date of
Delivery.
(k) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Fund and the Investment Adviser in connection with the organization
and registration of the Fund under the 1940 Act and the issuance and sale of the
Securities as herein contemplated shall be satisfactory in form and substance to
the Representatives and counsel for the Underwriters.
(l) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Fund at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7, 8 and 14
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Fund and the Investment Adviser,
jointly and severally, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information
and the Rule 434 Information, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
16
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(e) below) any such settlement is effected with the prior written consent
of the Fund and the Investment Advisor; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund or the
Investment Adviser by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in
the Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); and
provided further that this indemnity provision shall not apply, with respect to
any particular Underwriter, to any loss, liability, claim, damage or expense to
the extent arising out of any untrue statement or omission or alleged untrue
statement or omission contained in any preliminary prospectus to the extent that
the Fund complied with its prospectus delivery requirements contained herein and
the particular Underwriter was legally required to and failed to send or give a
copy of the Prospectus, as then amended or supplemented, to the person alleging
such defect and the untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact in such
preliminary prospectus was corrected in such Prospectus, as amended or
supplemented.
(b) Indemnification of the Fund, Investment Adviser, Trustees, Directors
and Officers. Each Underwriter severally agrees to indemnify and hold harmless
the Fund and the Investment Adviser, their respective trustees, directors,
officers and shareholders, each of the Fund's officers who signed the
Registration Statement, and each person, if any, who controls the Fund or the
Investment Adviser within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Fund or the Investment Adviser by such
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, or such preliminary prospectus or the Prospectus (or
any amendment or supplement thereto).
(c) Indemnification for Marketing Materials. In addition to the foregoing
indemnification, the Fund and the Investment Adviser also, jointly and
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 6(a),
as limited by the proviso set forth therein, with respect to any sales material.
(d) Actions against Parties; Notification. Each indemnified party shall give
notice as promptly as reasonably practicable to each indemnifying party of any
action commenced against it in respect of
17
which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 6(a) above, counsel to the indemnified parties shall be
selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in the case of parties indemnified pursuant to
Section 6(b) above, counsel to the indemnified parties shall be selected by the
Fund and the Investment Adviser. An indemnifying party may participate at its
own expense in the defense of any such action; provided, however, that counsel
to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(e) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) through, if applicable, the provisions of Section 6(b) effected
without its written consent if (i) such settlement is entered into more than 60
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
(f) Indemnification or Contribution by the Fund. Any indemnification or
contribution by the Fund shall be subject to the requirements and limitations of
Section 17(i) of the 1940 Act applicable to the Fund.
SECTION 7. Contribution.
If the indemnification provided for in Section 6 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then, in lieu of indemnifying such indemnified party, each indemnifying party
shall contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Fund and the Investment Adviser on the one hand and the Underwriters on the
other hand from the offering of the Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the Fund
and the Investment Adviser on the one hand and of the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Fund and the Investment Adviser on
the one hand and the Underwriters on the other hand in connection with the
offering of the Securities pursuant to this
18
Agreement shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Securities pursuant to this Agreement
(before deducting expenses) received by the Fund and the total underwriting
discount received by the Underwriters (whether from the Fund or otherwise), in
each case as set forth on the cover of the Prospectus, or, if Rule 434 is used,
the corresponding location on the Term Sheet, bear to the aggregate initial
public offering price of the Securities as set forth on such cover.
The relative fault of the Fund and the Investment Adviser on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Fund or the Investment Adviser or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Fund, the Investment Adviser and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director and shareholder of the Fund and each director of the Investment
Adviser, respectively, each officer of the Fund who signed the Registration
Statement, and each person, if any, who controls the Fund or the Investment
Adviser, within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Fund and the
Investment Adviser, respectively. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the number of
Initial Securities set forth opposite their respective names in Schedule A
hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and covenants contained in this Agreement
or in certificates of officers of the Fund or the Investment Adviser submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or controlling
person, or by or on behalf of the Fund or the Investment Adviser, and shall
survive delivery of the Securities to the Underwriters.
19
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Fund, at any time at or prior to Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund or the Investment
Adviser, whether or not arising in the ordinary course of business, or (ii) if
there has occurred any material adverse change in the financial markets in the
United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable or
inadvisable to market the Securities or to enforce contracts for the sale of the
Securities, or (iii) if trading in the Common Shares of the Fund has been
suspended or materially limited by the Commission or the NYSE, or if trading
generally on the American Stock Exchange or the NYSE or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the NASD
or any other governmental authority, or a material disruption has occurred in
commercial banking or securities settlement or clearance services in the United
States, or (iv) if a banking moratorium has been declared by either Federal or
New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7, 8 and 14 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at Closing Time or a Date of
Delivery to purchase the Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), the Representatives shall
have the right, within 24 hours thereafter, to make arrangements for one or more
of the non-defaulting Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to any
Date of Delivery which occurs after the Closing Time, the obligation of the
Underwriters to purchase and of the Fund to sell the Option Securities to be
purchased and sold on such Date of Delivery shall terminate without liability on
the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Fund to sell the relevant Option Securities, as
the case may be, either the Representatives or the Fund shall have the right to
postpone Closing Time or the relevant Date of Delivery, as the case may be, for
a period not exceeding seven days in order to effect any
20
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10.
SECTION 11. Tax Disclosure.
Notwithstanding any other provision of this Agreement, from the
commencement of discussions with respect to the transactions contemplated
hereby, the Fund and the Investment Adviser (and each employee, representative
or other agent of the Fund or the Investment Adviser) may disclose to any and
all persons, without limitation of any kind, the tax treatment and tax structure
(as such terms are used in Sections 6011, 6111 and 6112 of the U.S. Code and the
Treasury Regulations promulgated thereunder) of the transactions contemplated by
this Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided relating to such tax treatment and tax structure.
SECTION 12. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representatives, ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, attention of Equity Capital Markets; and notices to the Fund or the
Investment Adviser shall be directed, as appropriate, to the office of Deutsche
Investment Management Americas Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: [ ].
SECTION 13. Parties.
This Agreement shall each inure to the benefit of and be binding upon the
Underwriters, the Fund, the Investment Adviser and their respective partners and
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Fund, the Investment Adviser and their respective successors
and the controlling persons and officers, trustees, shareholders and directors
referred to in Sections 6 and 7 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
Underwriters, the Fund, the Investment Adviser and their respective partners and
successors, and said controlling persons and officers, trustees, shareholders
and directors and their heirs and legal representatives, and for the benefit of
no other person, firm or corporation. No purchaser of Securities from any
Underwriter shall be deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SAID STATE. UNLESS OTHERWISE EXPLICITLY PROVIDED, SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings.
The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.
21
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriters, the Fund and Investment Adviser in accordance with its terms.
Very truly yours,
▇▇▇▇▇▇▇ GLOBAL COMMODITIES STOCK FUND, INC.
By:
------------------------------------------
Name:
Title:
DEUTSCHE INVESTMENT MANAGEMENT AMERICAS INC.
By:
------------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
[other co-managers]
By:
------------------------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
22
SCHEDULE A
Number of
Name of Underwriter Initial Securities
------------------- ------------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated..............................................
Total.....................................................
Sch A-1
SCHEDULE B
▇▇▇▇▇▇▇ Global Commodities Stock Fund, Inc.
Shares of Common Stock
(Par Value $0.01 per share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $15.00.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $[ ], being an amount equal to the initial public
offering price set forth above less $[ ] per share; provided that the purchase
price per share for any Option Securities purchased upon the exercise of the
overallotment option described in Section 2(b) shall be reduced by an amount per
share equal to any dividends or distributions declared by the Fund and payable
on the Initial Securities but not payable on the Option Securities.
Sch B-1
Exhibit A
FORM OF OPINION OF FUND'S AND INVESTMENT ADVISER'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(A) With respect to the Fund:
(i) The Fund has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Maryland.
(ii) The Fund has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the
Purchase Agreement.
(iii) The Fund is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect.
(iv) To the best of our knowledge, the Fund does not have any
subsidiaries.
(v) The authorized, issued and outstanding shares of beneficial
interest of the Fund is as set forth in the Prospectus under the caption
"Description of Shares" (except for subsequent issuances, if any, pursuant
to the Purchase Agreement); all issued and outstanding shares of
beneficial interest of the Fund have been duly authorized and validly
issued and are fully paid and non-assessable and have been offered and
sold or exchanged by the Fund in compliance with all applicable laws
(including, without limitation, federal and state securities laws); the
Common Shares conform as to legal matters to all statements relating
thereto contained in the Prospectus and such description conforms to the
rights set forth in the instruments defining the same; and none of the
outstanding shares of beneficial interest of the Fund was issued in
violation of the preemptive or other similar rights of any securityholder
of the Fund.
(vi) The Securities to be purchased by the Underwriters from the
Fund have been duly authorized for issuance and sale to the Underwriters
pursuant to the Purchase Agreement and, when issued and delivered by the
Fund pursuant to the Purchase Agreement against payment of the
consideration set forth in the Purchase Agreement, will be validly issued
and fully paid and non-assessable and no holder of the Securities is or
will be subject to personal liability by reason of being such a holder.
(vii) The issuance of the Securities is not subject to preemptive or
other similar rights of any securityholder of the Fund.
(viii) The Purchase Agreement has been duly authorized, executed and
delivered by the Fund.
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act;
any required filing of the Prospectus pursuant to Rule 497(c) or Rule
497(h) has been made in the manner and within the time period required by
Rule 497; and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act, and, to the
best of our knowledge, no order of suspension or revocation of
registration
A-1
pursuant to Section 8(e) of the 1940 Act has been issued, and no proceedings for
any such purpose have been instituted or are pending or threatened by the
Commission.
(x) The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information and the Rule 434 Information, as
applicable, the Prospectus and each amendment or supplement to the Registration
Statement and Prospectus as of their respective effective or issue dates (other
than the financial statements and supporting schedules included therein or
omitted therefrom, as to which we need express no opinion), and the notification
on Form N-8A complied as to form in all material respects with the requirements
of the 1933 Act, the 1940 Act and the Rules and Regulations.
(xi) If Rule 434 has been relied upon, the Prospectus was not "materially
different," as such term is used in Rule 434, from the prospectus included in
the Registration Statement at the time it became effective.
(xii) The form of certificate used to evidence the Common Shares complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the articles of incorporation and by-laws of the Fund
and the requirements of the New York Stock Exchange.
(xiii) To the best of our knowledge, there is not pending or threatened
any action, suit, proceeding, inquiry or investigation, to which the Fund is a
party, or to which the property of the Fund is subject, before or brought by any
court or governmental agency or body, domestic or foreign, which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the properties or
assets of the Fund or the consummation of the transactions contemplated in the
Purchase Agreement or the performance by the Fund of its obligations thereunder.
(xiv) The information in the Prospectus under "Description of the Shares"
and "Taxation " and in the Registration Statement under Item 29
(Indemnification), to the extent that it constitutes matters of law, summaries
of legal matters, the Fund's articles of incorporation and by-laws or legal
proceedings, or legal conclusions, has been reviewed by us and is correct in all
material respects.
(xv) Each of the Management Agreement, the Administration Agreement, the
Custodian Agreement, the Transfer Agency Agreement and the Purchase Agreement
comply in all material respects with all applicable provisions of the 1940 Act,
Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations.
(xvi) The Fund is duly registered with the Commission under the 1940 Act
as a closed-end non-diversified management investment company; and, to the best
of our knowledge, no order of suspension or revocation of such registration has
been issued or proceedings therefor initiated or threatened by the Commission.
(xvii) To the best of our knowledge, no person is serving as an officer,
trustee or investment adviser of the Fund except in accordance with the 1940 Act
and the Rules and Regulations and the Investment Advisers Act and the Advisers
Act Rules and Regulations. Except as disclosed in the Registration Statement and
Prospectus (or any amendment or supplement to either of them), to the best of
our knowledge, no trustee of the Fund is an "interested person" (as defined in
the ▇▇▇▇ ▇▇▇) of the Fund or an "affiliated person" (as defined in the ▇▇▇▇ ▇▇▇)
of an Underwriter.
(xviii) There are no statutes or regulations that are required to be
described in the Prospectus that are not described as required.
A-2
(xix) All descriptions in the Registration Statement of contracts and
other documents to which the Fund is a party are accurate in all material
respects. To the best of our knowledge, there are no franchises, contracts,
indentures, mortgages, loan agreements, notes, leases or other instruments
required to be described or referred to in the Registration Statement or to be
filed as exhibits thereto other than those described or referred to therein or
filed or incorporated by reference as exhibits thereto, and the descriptions
thereof or references thereto are correct in all material respects.
(xx) To the best of our knowledge, the Fund is not in violation of its
articles of incorporation or by-laws and no default by the Fund exists in the
due performance or observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus or filed or incorporated by reference
as an exhibit to the Registration Statement.
(xxi) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority or
agency (other than under the 1933 Act, the 1934 Act, the 1940 Act and the Rules
and Regulations, which have been obtained, or as may be required under the
securities or blue sky laws of the various states, as to which we need express
no opinion) is necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement or for the offering, issuance
or sale of the Securities or the consummation of the transactions contemplated
by this Agreement.
(xxii) The execution, delivery and performance of the Purchase Agreement
and the consummation of the transactions contemplated in the Purchase Agreement
and in the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use of Proceeds") and compliance
by the Fund with its obligations under the Purchase Agreement do not and will
not, whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(xii) of the Purchase Agreement) under or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Fund pursuant to any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or any other agreement or instrument,
known to us, to which the Fund is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Fund is subject, nor
will such action result in any violation of the provisions of the charter or
by-laws of the Fund, or any applicable law, statute, rule, regulation, judgment,
order, writ or decree, known to us, of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the Fund
or any of its properties, assets or operations.
(xxiii) The Purchase Agreement, the Management Agreement, the
Administration Agreement, the Custodian Agreement and the Transfer Agency
Agreement have each been duly authorized by all requisite action on the part of
the Fund, executed and delivered by the Fund, as of the dates noted therein.
Assuming due authorization, execution and delivery by the other parties thereto
with respect to the Administration Agreement, the Custodian Agreement and the
Transfer Agency Agreement, each of the Management Agreement, the Administration
Agreement, the Custodian Agreement and the Transfer Agency Agreement constitutes
a valid and binding agreement of the Fund, enforceable in accordance with its
terms, except as affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
A-3
(B) With respect to the Investment Adviser:
(i) The Investment Adviser has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.
(ii) The Investment Adviser has full corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under the Purchase Agreement.
(iii) The Investment Adviser is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure to so qualify would not result in a Material Adverse
Effect.
(iv) The Investment 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 Rules and Regulations from acting under the Management Agreement for
the Fund as contemplated by the Prospectus.
(v) The Purchase Agreement, the Management Agreement and the
Additional Compensation Agreement have been duly authorized, executed and
delivered by the Investment Adviser, and the Management Agreement
constitutes a valid and binding obligation of the Investment Adviser,
enforceable in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally and general equitable principles (whether considered in a
proceeding in equity or at law).
(vi) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to
which the Investment Adviser is a party, or to which the property of the
Investment Adviser is subject, before or brought by any court or
governmental agency or body, domestic or foreign, which might reasonably
be expected to result in any material adverse change in the condition,
financial or otherwise, in the earnings, business affairs or business
prospects of the Investment Adviser, materially and adversely affect the
properties or assets of the Investment Adviser or materially impair or
adversely affect the ability of the Investment Adviser to function as an
investment adviser or perform its obligations under the Management
Agreement, or which is required to be disclosed in the Registration
Statement or the Prospectus.
(vii) To the best of our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits
thereto, and the descriptions thereof or references thereto are correct in
all material respects.
(viii) To the best of our knowledge, the Investment Adviser is not
in violation of its certificate of incorporation, by-laws or other
organizational documents and no default by the Investment Adviser exists
in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument
that is described or referred to in the Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.
(ix) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign
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(other than under the 1933 Act, the 1940 Act and the Rules and
Regulations, which have been obtained, or as may be required under the
securities or blue sky laws of the various states, as to which we need
express no opinion) is necessary or required in connection with the due
authorization, execution and delivery of the Purchase Agreement.
(x) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the
Purchase Agreement and in the Registration Statement and compliance by the
Investment Adviser with its obligations under the Purchase Agreement do
not and will not, whether with or without the giving of notice or lapse of
time or both, conflict with or constitute a breach of, or default or
Repayment Event (as defined in Section 1(a)(xii) of the Purchase
Agreement) under or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Investment
Adviser pursuant to any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease or any other agreement or instrument,
known to us, to which the Investment Adviser is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Investment Adviser is subject (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not have a Material
Adverse Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of the Investment Adviser, or any
applicable law, statute, rule, regulation, judgment, order, writ or
decree, known to us, of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Investment
Adviser or any of its properties, assets or operations.
In addition, we have participated in the preparation of the Registration
Statement and the Prospectus and participated in discussions with certain
officers, trustees and employees of the Fund, representatives of [ ], the
independent accountants who examined the statement of assets and liabilities of
the Fund included or incorporated by reference in the Registration Statement and
the Prospectus, and you and your representatives and we have reviewed certain
Fund records and documents. While we have not independently verified and are not
passing upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the information contained in the Registration
Statement and the Prospectus, except to the extent necessary to enable us to
give the opinions with respect to the Fund in paragraphs (A)(v), (xiv) and
(xix), on the basis of such participation and review, nothing has come to our
attention that would lead us to believe that the Registration Statement (except
for financial statements, supporting schedules and other financial data included
therein or omitted therefrom and for statistical information derived from such
financial statements, supporting schedules or other financial data, as to which
we do not express any belief), at the time such Registration Statement became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus (except for financial
statements, supporting schedules and other financial data included therein or
omitted therefrom and for statistical information derived from such financial
statements, supporting schedules or other financial data, as to which we do not
express any belief), at the time the Prospectus was issued, or at the Closing
Time, included or includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
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