Exhibit (h)(1)
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PREFERRED INCOME STRATEGIES FUND, INC.
(a Maryland corporation)
__________ Shares of Common Stock
PURCHASE AGREEMENT
Dated: __________ ___, 2003
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TABLE OF CONTENTS
Page
SECTION 1. Representations and Warranties...................................2
(a) Representations and Warranties by the Fund and the Adviser.......2
(b) Additional Representations of the Adviser........................6
(c) Officer's Certificates...........................................6
SECTION 2. Sale and Delivery to the Underwriters; Closing...................6
(a) Initial Shares...................................................7
(b) Option Shares....................................................7
(c) Payment..........................................................7
(d) Denominations; Registration......................................7
SECTION 3. Covenants of the Fund............................................7
(a) Compliance with Securities Regulations and Commission Requests...7
(b) Filing of Amendments.............................................8
(c) Delivery of Registration Statements..............................8
(d) Delivery of Prospectus...........................................8
(e) Continued Compliance with Securities Laws........................8
(f) Blue Sky Qualifications..........................................9
(g) Rule 158.........................................................9
(h) Use of Proceeds..................................................9
(i) Subchapter M.....................................................9
(j) Listing..........................................................9
(k) Restrictions on Sale of Shares...................................9
(l) Reporting Requirements...........................................9
SECTION 4. Payment of Expenses.............................................10
(a) Expenses........................................................10
(b) Termination of Agreement........................................10
SECTION 5. Conditions of Underwriters' Obligations.........................10
(a) Effectiveness of Registration Statement.........................10
(b) Opinion of Counsel for the Fund and the Underwriters............11
(c) Opinion of General Counsel of the Adviser.......................11
(d) Officers' Certificates..........................................11
(e) Accountant's Comfort Letter.....................................11
(f) Bring-down Comfort Letter.......................................11
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(g) Approval of Listing.............................................11
(h) No Objection....................................................11
(i) Conditions to Purchase Option Shares............................11
(j) Additional Documents............................................12
(k) Termination of Agreement........................................12
(l) Execution of Additional Compensation Agreement..................12
SECTION 6. Indemnification.................................................12
(a) Indemnification of the Underwriters.............................12
(b) Indemnification of Fund, Adviser, Directors, General Partner
and Officers....................................................13
(c) Actions against Parties, Notification...........................13
(d) Settlement without Consent if Failure to Reimburse..............14
SECTION 7. Contribution....................................................14
SECTION 8. Representations, Warranties and Agreements to Survive Delivery..15
SECTION 9. Termination of Agreement........................................15
(a) Termination; General............................................15
(b) Liabilities.....................................................16
SECTION 10. Notices.........................................................16
SECTION 11. Parties.........................................................16
SECTION 12. GOVERNING LAW AND TIME..........................................16
SECTION 13. Effect of Headings..............................................16
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EXHIBITS
Exhibit A - Form of Opinion of Fund's Counsel
Exhibit B - Form of Opinion of General Counsel of the Investment Adviser
Exhibit C - Form of Accountant's Comfort Letter
PREFERRED INCOME STRATEGIES FUND, INC.
(a Maryland corporation)
___________ Shares of Common Stock
(Par Value $.10 Per Share)
PURCHASE AGREEMENT
____________, 2003
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
[Other Underwriters]
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Preferred Income Strategies Fund, Inc., a Maryland corporation (the
"Fund"), and Fund Asset Management, L.P., a Delaware limited partnership (the
"Adviser"), each confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and [co-managers]
and each of the other Underwriters named in Schedule A hereto (collectively,
the "Underwriters", which term shall also include any Underwriters substituted
as hereinafter provided in Section 10 hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
[co-managers] 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 $.10 per share, of the
Fund (the "Common Stock") 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 shares of Common Stock to cover over-allotments, if any.
The aforesaid ____________ shares of Common Stock (the "Initial Shares") to be
purchased by the Underwriters and all or any part of the __________ shares of
Common Stock subject to the option described in Section 2(b) hereof (the
"Option Shares"), are hereinafter called, collectively, the "Shares."
The Fund understands that the Underwriters propose to make a public
offering of the Shares as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") 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
"Investment Company Act"), and a registration statement on Form N-2 (Nos.
333-102712, 811-21286), including the related preliminary prospectus, for the
registration of the Shares under the Securities Act of 1933, as amended (the
"1933 Act"), the Investment Company Act, and the rules and regulations of the
Commission under the 1933 Act and the Investment Company Act (together, the
"Rules and Regulations"), and has filed such amendments to such registration
statement on Form N-2, if any, and such amended preliminary prospectuses as may
have been required to the date hereof. Promptly after execution and delivery of
this Agreement, the Fund will either (i) prepare and file a prospectus in
accordance with the provisions of paragraph (c) of Rule 497 ("Rule 497(c)") of
the rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") or a
certificate in accordance with the provisions of paragraph (j) of Rule 497
("Rule 497(j)") of the 1933 Act Regulations, (ii) prepare and file a prospectus
in accordance with the provisions of Rule 430A ("Rule 430A") of the 1933 Act
Regulations and paragraph (h) of Rule 497 ("Rule 497(h)") of the 1933 Act
Regulations, or (iii) if the Fund has elected to rely upon Rule 434 ("Rule
434") of the 1933 Act Regulations, prepare and file a term sheet (a "Term
Sheet") in accordance with the provisions of Rule 434 and Rule 497(h). The
information included in any such prospectus or in any such Term Sheet, as the
case may be, that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement
at the time it became effective (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, if any, 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 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 Shares, 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 February __, 2003, together with the
applicable Term Sheet and all references in this Agreement to the date of such
Prospectus shall mean the date of the applicable 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 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; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934, as amended (the "1934
Act"), which is incorporated by reference in the Registration Statement, such
preliminary prospectus or the Prospectus, as the case may be.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE FUND AND THE ADVISER. The Fund
and the Adviser each severally 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 the Date of Delivery (if any) referred to in Section 2(b) hereof, and
agree with each Underwriter, as follows:
(i) Compliance with Registration Requirements. The Fund meets the
requirements for use of Form N-2 under the 1933 Act. 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 and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Fund or the Adviser, are contemplated by the
Commission,
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and any request on the part of the Commission for additional information
has been complied with. If required, the Fund has received any orders
exempting the Fund from any provisions of the Investment Company Act.
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 Shares are
purchased, at the Date of Delivery) the Registration Statement, the Rule
462(b) Registration Statement and any amendments or supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act, the Investment Company 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
amendments or supplements thereto were issued and at the Closing Time
(and, if any Option Shares 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. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Fund in writing by the
Underwriters expressly for use in the Registration Statement or in the
Prospectus. If Rule 434 is used, the Fund will comply with the
requirements of Rule 434 and the Prospectus shall not be "materially
different", as such term is used in Rule 434, from the prospectus included
in the Registration Statement at the time it became effective.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 497(c) or Rule 497(h) 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 Shares, 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
financial statements and supporting schedules, if any, included in the
Registration Statement are independent public accountants as required by
the 1933 Act and the Rules and Regulations.
(iii) Financial Statements. The financial statements, included in the
Registration Statement and Prospectus, together with the related schedules
and notes, present fairly the financial position of the Fund at the date
indicated and said statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the period involved. The supporting schedules, if any,
included in the Registration Statement present fairly in accordance with
GAAP the information required to be stated therein.
(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
in 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, whether
or not
3
arising in the ordinary course of business (a "Material Adverse Effect"),
(B)there have been no transactions entered into by the Fund, other than
those in the ordinary course of business, which are material with respect
to the Fund and (C) there has been no dividend or distribution of any kind
declared, paid or made by the Fund on any class of its capital stock.
(v) Good Standing of the Fund. The Fund has been duly organized and
is validly existing as a corporation in good standing under the laws of
the State of Maryland and has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement; and the Fund is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure
so to qualify or to be in good standing would not result in a Material
Adverse Effect.
(vi) Subsidiaries. The Fund has no subsidiaries.
(vii) Officers and Trustees. No person is serving or acting as an
officer, trustee 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 and the Prospectus (or any amendment or supplement
to either of them), 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 any Underwriter.
(viii) Capitalization. The authorized, issued and outstanding capital
stock of the Fund is as set forth in the Prospectus under the caption
"Description of Capital Stock." 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 provided for in the Fund's
charter, 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 stock of the Fund was issued in violation of the preemptive or
other similar rights of any securityholder of the Fund.
(ix) Investment Company Act. The Fund is registered with the
Commission under the Investment Company Act as a closed-end, diversified,
management investment company, and no order of suspension or revocation of
such registration has been issued or proceedings therefor initiated, to
the knowledge of the Fund and the Adviser, or threatened by the
Commission.
(x) Authorization of Agreement. This Agreement been duly authorized,
executed and delivered by the Fund.
(xi) Authorization and Description of Shares. The Shares 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 in this Agreement will be validly
issued, fully paid and non-assessable; the Shares conform to all
statements relating thereto contained in the Prospectus and such
description conforms to the rights set forth in the instruments defining
the same; no holder of the Shares will be subject to personal liability by
reason of being such a holder; and the issuance of the Shares is not
subject to the preemptive or other similar rights of any securityholder of
the Fund.
4
(xii) Absence of Defaults and Conflicts. The Fund is not in violation
of its charter or by-laws or in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any
material contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the Fund
is a party or by which it or its properties may be bound, or to which any
of the property or assets of the Fund is subject (collectively,
"Agreements and Instruments"), except for such defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement, the Investment Advisory Agreement, the
Custody Agreement referred to in the Registration Statement (as used
herein, the "Advisory Agreement" and the "Custody Agreement,"
respectively) and the consummation of the transactions contemplated in
this Agreement and in the Registration Statement (including the issuance
and sale of the Shares and the use of the proceeds from the sale of the
Shares as described in the Prospectus under the caption "Use of Proceeds")
and compliance by the Fund with its obligations under this Agreement 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 a 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 charter or the by-laws of the Fund, or
any applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Fund or any of its assets,
properties or operations. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Fund.
(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 or the Adviser, threatened against or affecting, the Fund, which
is required to be disclosed in the Registration Statement (other than as
disclosed therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets of the Fund or
the consummation of the transactions contemplated in this Agreement or the
performance by the Fund of its obligations hereunder; the aggregate of all
pending legal or governmental proceedings to which the Fund is a party or
of which any of its respective 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) Subchapter M Compliance. The Fund intends to, and will, direct
the investment of 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 intends to qualify as a regulated investment company
under Subchapter M of the Code.
(xv) Distribution of Offering Materials. The Fund has not distributed
and, prior to the later to occur of (A) the Closing Time and (B)
completion of the distribution of the Shares, will not distribute any
offering material in connection with the offering and sale of the Shares
other than the Registration Statement, a preliminary prospectus, the
Prospectus or other materials, if any, permitted by the 1933 Act or the
1940 Act or the Rules and Regulations.
5
(xvi) Accounting Controls. The Fund maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or
specific authorization and with the applicable requirements of the 1940
Act, the Rules and Regulations and the Code; (B) transactions are recorded
as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain
accountability for assets and to maintain compliance with the books and
records requirements under the 1940 Act and the Rules and Regulations; (C)
access to assets is permitted only in accordance with the management's
general or specific authorization; and (D) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xvii) 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.
(xviii) Material Agreements. This Agreement, the Advisory Agreement,
the Custody Agreement and the Transfer and Dividend Disbursing Agency and
Registrar Agreement have each been duly authorized by all requisite action
on the part of the Fund and executed and delivered by the Fund, as of the
dates noted therein, and each complies with all applicable provisions of
the 1940 Act in all material respects. Assuming due authorization,
execution and delivery by the other parties thereto with respect to the
Advisory Agreement, the Custody Agreement and the Transfer and Dividend
Disbursing Agency and Registrar Agreement, each of the Advisory Agreement,
the Custody Agreement and the Transfer and Dividend Disbursing Agency and
Registrar 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 and except as rights to indemnification or contribution
thereunder may be limited by federal or state laws.
(xix) Registration Rights. There are no persons with registration
rights or other similar rights to have any securities registered pursuant
to the Registration Statement or otherwise registered by the Fund under
the 1933 Act.
(xx) 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
Investment Company Act or the Rules and Regulations which have not been so
described and filed as required.
(xxi) Possession of Intellectual Property. The Fund owns or
possesses, has the right to use 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.
6
(xxii) 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 Shares under this Agreement 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 1934 Act or the 1940 Act or
the Rules and Regulations or foreign or state securities laws or under the
rules of the NASD (formerly, the National Association of Securities
Dealers, Inc.).
(xxiii) 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 conduct
the business now operated by it; the Fund is in compliance with the terms
and conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental Licenses
or the failure of such Governmental Licenses to be in full force and
effect would not have a Material Adverse Effect; and the Fund has not
received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect.
(xxiv) Advertisements. Any advertising, sales literature or other
promotional material (including "prospectus wrappers", "broker kits,"
"road show slides" and "road show scripts" and "electronic road show
presentations") authorized in writing by or prepared by the Fund or the
Adviser used in connection with the public offering of the Shares
(collectively, "sales material") does not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Moreover, all sales material complied and will comply in all material
respects with the applicable requirements of the 1933 Act, the 1940 Act,
the Rules and Regulations and the rules and interpretations of the
National Association of Securities Dealers, Inc. ("NASD").
(xxv) NYSE Listing. The Shares have been duly authorized for listing,
upon notice of issuance, on the New York Stock Exchange ("NYSE").
(b) ADDITIONAL REPRESENTATIONS OF THE ADVISER. The Adviser represents and
warrants to the Underwriters as of the date hereof and as of the Representation
Date as follows:
(i) Organization and Authority of Adviser. The Adviser has been duly
organized as a limited partnership under the laws of the State of
Delaware, with power and authority to conduct its business as described in
the Registration Statement and the Prospectus.
(ii) Investment Advisers Act. The Adviser is duly registered as an
investment adviser under the Investment Advisers Act of 1940, as amended
(the "Investment Advisers Act"), and is not prohibited by the Investment
Advisers Act or the Investment Company Act, or the rules and regulations
under such acts, from acting under the Advisory Agreement for the Fund as
contemplated by the Registration Statement and the Prospectus.
(iii) Description of Advisers. The description of the Adviser in the
Registration Statement and the Prospectus (and any amendment or supplement
to either of them) complied and complies in all material respects with the
provisions of the 1933 Act, the 1940 Act, the Advisers Act, the Rules and
Regulations and the Advisers Act Rules and Regulations and is true and
7
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 Adviser has the financial resources
available to it necessary for the performance of its services and
obligations as contemplated in the Registration Statement, the Prospectus,
this Agreement and under the Advisory Agreement.
(v) Authorization of Agreements. This Agreement has been duly
authorized, executed and delivered by the Adviser; the Advisory Agreement
has been duly authorized, executed and delivered by the Adviser and the
Additional Compensation Agreement between the Adviser and ▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "Additional Compensation Agreement") has been duly authorized,
executed and delivered by the Adviser, and each constitutes a valid and
binding obligation of the Adviser, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization or other laws relating to or affecting creditors' rights
and to general equitable principles; and neither the execution and
delivery of this Agreement, the Advisory Agreement or the Additional
Compensation Agreement nor the performance by the 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,
any agreement or instrument to which the Adviser is a party or by which it
is bound, the certificate of formation, the operating agreement, or other
organizational documents of the Adviser, or to the 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 Adviser or its respective
properties or operations; and no consent, approval, authorization or order
of any court or governmental authority or agency is required for the
consummation by the Adviser of the transactions contemplated by this
Agreement, the Advisory Agreement and the Additional Compensation
Agreement, except as have been obtained or may be required under the 1933
Act, the 1940 Act, the 1934 Act or state securities laws.
(vi) No Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred any
event which should reasonably be expected to have a material adverse
effect on the ability of the Adviser to perform its respective obligations
under this Agreement and the Advisory Agreement.
(vii) Absence of Proceedings. Other than the proceeding [SEC ▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇] [cite SEC Release number], as to which the Adviser has
filed an application for relief from Section 9(a) of the 1940 Act pursuant
to Section 9(c) thereof, 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
Adviser, threatened against or affecting the Adviser or any "affiliated
person" of the Adviser (as such term is defined in the ▇▇▇▇ ▇▇▇) or any
partners, trustees, officers or employees of the foregoing, whether or not
arising in the ordinary course of business, which might reasonably be
expected to result in any material adverse change in the condition,
financial or otherwise, or earnings, business affairs or business
prospects of the Adviser, materially and adversely affect the properties
or assets of the Adviser or materially impair or adversely affect the
ability of the Adviser to function as an investment adviser or perform its
obligations under the Advisory Agreement, or which is required to be
disclosed in the Registration Statement and the Prospectus.
8
(viii) Absence of Violation or Default. The Adviser is not in
violation of its certificate of formation, its operating agreement or
other 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 Adviser's ability to
function as an investment adviser or perform its obligations under the
Advisory Agreement.
(ix) Rule 482 Compliance. Any advertisement approved by the Adviser
for use in the public offering of the Shares pursuant to Rule 482 under
the 1933 Act Regulations (an "Omitting Prospectus") complies with the
requirements of such Rule 482.
(c) OFFICER'S CERTIFICATES. Any certificate signed by any officer of the
Fund or any officer of the Adviser delivered to the Representatives or to
counsel for the Fund and the Underwriters shall be deemed a representation and
warranty by the Fund or the Adviser, as the case may be, to each Underwriter as
to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO THE UNDERWRITERS; CLOSING.
(a) INITIAL SHARES. 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 Shares set
forth in Schedule A opposite the name of such Underwriter, plus any additional
number of Initial Shares which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof.
(b) OPTION SHARES. 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 to purchase up to
an additional __________ shares of Common Stock 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 Shares but not
payable on the Option Shares. The option hereby granted will expire 45 days
after the date hereof and may be exercised in whole or in part from time to
time only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Initial Shares upon notice
by the Representatives to the Fund setting forth the number of Option Shares as
to which the several Underwriters are then exercising the option and the time,
date and place of payment and delivery for such Option Shares. Any such time
and date of delivery for the Option Shares (a "Date of Delivery") shall be
determined by the Representatives, but shall not be later than seven full
business days after the exercise of said option, nor in any event prior to
Closing Time, as hereinafter defined. If the option is exercised as to all or
any portion of the Option Shares, each of the Underwriters, acting severally
and not jointly, will purchase that proportion of the total number of Option
Shares then being purchased which the number of Initial Shares set forth in
Schedule A opposite the name of such Underwriter bears to the total number of
Initial Shares, 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 Shares plus any additional number of Option Shares 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 Shares shall be made at the offices of Sidley
▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at
such other place as shall be agreed upon by the Representatives and the Fund,
at 9:00 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 following the date
hereof, or such other time not later than ten business days after such date as
shall be agreed upon by the Underwriters and the Fund (such time and date of
payment and delivery herein being referred to as "Closing Time").
9
In addition, in the event that any or all of the Option Shares are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Shares shall be made at the above-mentioned
offices of Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, 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 of
certificates for the Shares 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 Shares and the Option Shares, 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 Shares or the Option Shares, 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 Shares and
the Option Shares, 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 Shares and the Option Shares will
be made available by the Fund for examination by the Representatives not later
than 10:00 A.M. on the last business day prior to Closing Time or the Date of
Delivery, as the case may be.
SECTION 3. COVENANTS OF THE FUND. The Fund covenants with each Underwriter
as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. The
Fund, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and will notify the Representatives immediately,
and confirm the notice in writing, (i) if any post-effective amendment to the
Registration Statement shall have 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, (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 Shares for
offering or sale in any jurisdiction, or of the initiation or threatening of
any proceedings for any of such purposes, and (v) of the issuance by the
Commission of an order of suspension or revocation of the notification on Form
N-8A of registration of the Fund as an investment company under the Investment
Company Act or the initiation of any proceeding for that purpose. The Fund will
make every reasonable effort to prevent the issuance of any stop order
described in subsection (iv) hereunder or any order of suspension or revocation
described in subsection (v) hereunder and, if any such stop order or order of
suspension or revocation is issued, to obtain the lifting thereof at the
earliest possible moment. The Fund will promptly effect the filings necessary
pursuant to Rule 497(c), Rule 497(j) or Rule 497(h) and will take such steps as
it deems necessary to ascertain promptly whether the certificate transmitted
for filing under Rule 497(j) or the form of prospectus transmitted for filing
under Rule 497(c) or Rule 497(h) was received for filing by the Commission and,
in the event that it was not, it will promptly file such certificate or
prospectus.
(b) FILING OF AMENDMENTS. The Fund will give the Representatives notice of
its intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment or 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, whether pursuant to the Investment Company Act, the 1933 Act,
or otherwise, and will furnish the Representatives with copies of any such
documents a reasonable amount of time prior to such proposed
10
filing or use, as the case may be, and will not file or use any such
document to which the Representatives or counsel to the Underwriters and the
Fund shall object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Fund has furnished or will
deliver to the Representatives and counsel to the Underwriters and the Fund,
without charge, signed copies of the notification of registration on Form N-8A
and Registration Statement as originally filed and of each amendment thereto,
(including exhibits filed therewith, or incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will also
deliver to the Representatives a conformed copy, without charge, 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.
(d) DELIVERY OF PROSPECTUS. 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 field with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Fund will comply with
the 1933 Act, the Investment Company Act and the Rules and Regulations so as to
permit the completion of the distribution of the Shares as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required
by the 1933 Act to be delivered in connection with sales of the Shares, any
event shall occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel to the Underwriters and the Fund, to amend
the Registration Statement or amend or supplement any Prospectus in order that
the Prospectus will not include any untrue statements of material fact or omit
to state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of such
counsel, at any such time to amend the Registration Statement or amend or
supplement any Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Fund will promptly prepare and file with
the Commission, subject to Section 3(b), 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.
(f) BLUE SKY QUALIFICATIONS. The Fund will use its best efforts, in
cooperation with the Underwriters, to qualify the Shares for offering and sale
under the applicable securities laws of such states and other jurisdictions 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 Shares
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.
11
(g) RULE 158. The Fund will timely file such reports pursuant to the 1934
Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) USE OF PROCEEDS. The Fund will use the net proceeds received by it
from the sale of the Shares in the manner specified in the Prospectus under
"Use of Proceeds."
(i) SUBCHAPTER M. The Fund will use its best efforts to maintain its
qualification as a regulated investment company under Subchapter M of the Code.
(j) LISTING. The Fund will use its best efforts to effect the listing of
the Shares on the New York Stock Exchange or another national securities
exchange so that trading on such Exchange will begin no later than two weeks
from the date of the Prospectus.
(k) RESTRICTIONS ON SALE OF SHARES. During a period of 180 days from the
date of the Prospectus, the Fund will not, without the prior written consent of
▇▇▇▇▇▇▇ ▇▇▇▇▇, (i) directly or indirectly offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or otherwise transfer
or dispose of any share of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or file any registration statement
under the 1933 Act with respect to any of the foregoing or (ii) 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 Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock of such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Shares to be sold hereunder or (B) any shares or Common Stock issued
pursuant to any dividend reinvestment plan.
(l) REPORTING REQUIREMENTS. The Fund, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the
1940 Act and the 1934 Act within the time periods required by the 1940 Act and
the Rules and Regulations and the 1934 Act and the rules and regulations of the
Commission thereunder, respectively.
(m) No Manipulation of Market for Securities. The Fund will not (a) take,
directly or indirectly, any action designed to cause or to result in, or that
might reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Fund to facilitate the sale or resale of
the Shares in violation of federal or state securities laws, and (b) until the
Closing Time, or the Date of Delivery, if any, (i) except for share repurchases
permitted in accordance with applicable laws and purchases of Shares in the
open market pursuant to the Fund's dividend reinvestment plan, sell, bid for or
purchase the Shares or pay any person any compensation for soliciting purchases
of the Shares or (ii) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the Fund.
(n) Rule 462(b) Registration Statement. If the Fund elects to rely upon
Rule 462(b), the Fund shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time,
on the date of this Agreement, and the Fund shall at the time of filing either
pay to the Commission the filing fee for the Rule 462(b) Registration Statement
or give irrevocable instructions for the payment of such fee pursuant to Rule
111(b) under the 1933 Act.
SECTION 4. PAYMENT OF EXPENSES.
12
(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 Shares, (iii) the preparation, issuance and delivery of the certificates
for the Shares to the Underwriters, including any stock or other transfer taxes
and any stamp or other duties payable upon the sale, issuance or delivery of
the Shares to the Underwriters, (iv) the fees and disbursements of the Fund's
counsel, accountants and other advisors, (v) the qualification of the Shares
under the securities laws in accordance with the provisions of Section 3(f)
hereof, including filing fees and the reasonable fees and disbursements of
counsel to the Underwriters and the Fund 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, any Term Sheet and of the 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 Shares,
(ix) the filing fees incident to, and the reasonable fees and disbursements of
counsel to the Underwriters and the Fund in connection with the review by the
NASD of the terms of the sale of the Shares, (x) the printing of any sales
material and (xi) the fees and expenses incurred in connection with the listing
of the Shares on the New York Stock Exchange or another national securities
exchange.
(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 Adviser shall reimburse, or arrange for an affiliate to reimburse,
the Underwriters for all of its out-of-pocket expenses, including the
reasonable fees and disbursements of counsel to the Underwriters. In the event
the transactions contemplated hereunder are not consummated, the Adviser agrees
to pay. or arrange for an affiliate to pay, all of the costs and expenses set
forth in paragraph (a) of this Section 4.
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 Adviser
contained in Section 1 hereof, or in the certificates of any officer of the
Fund and the Adviser delivered pursuant to the provisions hereof, to the
performance by the Fund and the Adviser of their respective covenants and
obligations hereunder, and to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement
including any Rule 462(b) Registration Statement has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters and the Fund. Either (i)
a certificate has been filed with the Commission in accordance with Rule 497(j)
or a prospectus has been filed with the Commission in accordance with Rule
497(c), or (ii) a prospectus containing the Rule 430A Information shall have
been filed with the Commission in accordance with Rule 497(h) (or a
post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A) or, if the
Fund has elected to rely upon Rule 434, a Term Sheet shall have been filed with
the Commission in accordance with Rule 497(h).
13
(b) OPINION OF COUNSEL FOR THE FUND. At Closing Time, the Representatives
shall have received the favorable opinion, dated as of Closing Time, of Sidley
▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, counsel to the Fund to the effect set forth in Exhibit
A hereto.
(c) OPINION OF GENERAL COUNSEL OF THE ADVISER. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., General Counsel to the Adviser, or a senior
attorney of the Adviser, in form and substance satisfactory to counsel to the
Underwriters, to the effect set forth in Exhibit B hereto and to such further
effect as counsel to the Underwriters may reasonably request.
(d) 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, (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
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.
(e) 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) a certificate of the
President or a Vice President of the Fund, dated as of Closing Time, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct with
the same force and effect as though expressly made at and as of Closing Time,
(iii) the Fund has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are pending
or are contemplated by the Commission and (B) a certificate of the President or
a Vice President of the Adviser, dated as of Closing Time, to the effect that
(i) the representations and warranties in Sections 1(a) and 1(b) hereof are
true and correct with the same force and effect as though expressly made at and
as of Closing Time, and (ii) the Adviser has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior
to Closing Time.
(f) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the Representatives shall have received from _____________________,
a letter, dated such date, in form and substance satisfactory to the
Representatives 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, to the effect set forth in Exhibit C
hereto and to such further effect as counsel to the Underwriters may reasonably
request.
(g) BRING-DOWN COMFORT LETTER. At Closing Time, the Representatives shall
have received from _________________, 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.
14
(h) APPROVAL OF LISTING. At Closing Time, the Shares shall have been
approved for listing on the New York Stock Exchange or another national
securities exchange, subject only to official notice of issuance.
(i) 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.
(j) CONDITIONS TO PURCHASE OPTION SHARES. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Shares, the representations and warranties of
the Fund and the Adviser contained herein and the statements in any
certificates furnished by the Fund and the Adviser 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 the President or a Vice President of the Fund and of the
President or a Vice President of the Adviser confirming that the
respective certificates delivered at the Closing Time pursuant to Section
5(d) hereof remains true and correct as of such Date of Delivery.
(ii) Opinions of Counsel. The favorable opinions of Sidley ▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇ LLP, counsel to the Fund, and of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.,
General Counsel of the Adviser, or a senior attorney of the Adviser, each
in form and substance satisfactory to the counsel for the Underwriters,
dated such Date of Delivery, relating to the Option Shares to be purchased
on such Date of Delivery and otherwise to the same effect as the opinions
required by Sections 5(b) and 5(c) hereof, respectively.
(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 Shares 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 ________________ in
form and substance satisfactory to the Representatives and dated such Date
of Delivery, substantially the same in form and substance as the letter
furnished to the Representatives pursuant to Section 5(e), 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 to the Underwriters shall have been furnished with such documents and
opinions as it may require for the purpose of enabling it to pass upon the
issuance and sale of the Shares 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
in connection with the issuance and sale of the Shares as herein contemplated
shall be satisfactory in form and substance to the Representatives and counsel
to 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 Shares on
a Date of Delivery which is after the Closing Time, the obligations of the
Underwriters to purchase the relevant Option Shares, may be terminated by the
Underwriters 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
15
except that Sections 1, 6, 7, 8 and 13 shall survive any such termination
and remain in full force and effect.
(m) EXECUTION OF ADDITIONAL COMPENSATION AGREEMENT. At Closing Time, the
Underwriters shall have received the Additional Compensation Agreement, dated
the date of the Closing Time, as executed by the Adviser.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF THE UNDERWRITERS. The Fund and the 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, and any director, officer,
employee or affiliate thereof 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, any Omitting 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;
(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, provided that
(subject to Section 6(d) below) any such settlement is effected with the
written consent of the indemnifying party; 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 by any
Underwriter 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, any Omitting Prospectus or the
Prospectus (or any amendment or supplement thereto).
(b) INDEMNIFICATION OF FUND, ADVISER, DIRECTORS, GENERAL PARTNER AND
OFFICERS. Each Underwriter severally agrees to indemnify and hold harmless the
Fund, the Adviser, the directors of the Fund, the general partner of the
Adviser, each of the Fund's officers who signed the Registration Statement, and
each person, if any, who controls the Fund or the 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
16
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 in 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 by such Underwriter through
▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration Statement (or any amendment
thereto), or any 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 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 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 the
Underwriters, 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
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 the fees and expenses of more than one counsel (in addition to any
local counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified
parties are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.
(e) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6 (a)(ii) effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received notice
of the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. CONTRIBUTION.
17
If the indemnification provided for in Section 6 hereof is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Fund and the Adviser on the one
hand and the Underwriters on the other hand from the offering of the Shares
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 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 Adviser on the one hand
and the Underwriters on the other hand in connection with the offering of the
Shares pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Shares pursuant
to this Agreement (before deducting expenses) received by the Fund, and the
total underwriting commission received by the Underwriters, 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 Shares as set forth on such cover.
The relative fault of the Fund and the 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 and the 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 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 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, the Underwriters shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which the
Underwriters have 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 of such Underwriter,
and each director of the Fund and the Adviser, respectively, each officer of
the Fund who signed the Registration Statement and each person, if any, who
controls the Fund and the Adviser within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act, shall
18
have the same rights to contribution as the Fund and the Adviser. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial Shares set forth opposite
their respective names in Schedule A hereto and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement
or in certificates of officers of the Fund or of the Adviser submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Underwriters or controlling person,
or by or on behalf of the Fund or the Adviser and shall survive delivery of the
Shares to the Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Representatives may terminate this Agreement
by notice to the Fund, at any time at or prior to Closing Time (i) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Fund or the 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
Shares or to enforce contracts for the sale of the Shares, or (iii) if trading
in any securities of the Fund has been suspended or materially limited by the
Commission or the New York Stock Exchange or such other national securities
exchange upon which the Fund's securities trade, or if trading generally on the
New York Stock Exchange or the American Stock Exchange or in the Nasdaq
National Market System has been suspended or materially limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities 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 and 8 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 Shares which it or they are obligated to purchase
under this Agreement (the "Defaulted Shares"), the Representatives shall have
the right, within 24 hours thereafter, to make arrangements for one or more the
non-defaulting Underwriters, or any other underwriters, to purchase all, but
not less than all, of the Defaulted Shares 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 Shares does not exceed 10% of the number of
Shares 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
19
(b) if the number of Defaulted Shares exceeds 10% of the number of Shares
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 Shares 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 Shares, as
the case may be, either the Representatives or the Fund shall have the right to
postpone Closing Time or the relevant Date of Delivery, as the case may be, for
a period not exceeding seven days in order to effect any required changes in
the Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
SECTION 11. 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 Representatives c/o Merrill ▇▇▇▇▇ & Co. Inc., 4 World Financial
Center, New York, N.Y. 10080, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Vice President; notices
to the Fund shall be directed to ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, President; notices to the Adviser shall be
directed to ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., President.
SECTION 12. PARTIES.
This Agreement shall inure to the benefit of and be binding upon the
Underwriters, the Fund, the Adviser and their respective 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 Adviser and their respective successors and the controlling persons and
officers, directors and general partner 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 and the Adviser
and their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Shares from the Underwriters
shall be deemed to be a successor merely by reason of such purchase.
SECTION 13. GOVERNING LAW AND TIME.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY
TIME.
SECTION 14. EFFECT OF HEADINGS.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
20
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Fund a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Fund and the Adviser in accordance with its
terms.
Very truly yours,
PREFERRED INCOME STRATEGIES FUND, INC.
By: _______________________________
Name:
Title:
FUND ASSET MANAGEMENT, L.P.
By: PRINCETON SERVICES, INC.,
General Partner
By: ______________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
[other underwriters]
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: ________________________________
Authorized Signatory
For themselves and as Representatives of the
other Underwriters named
in Schedule A hereto.
21
SCHEDULE A
Number of
Name of Underwriter Initial Shares
--------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated.....
===============
SCHEDULE B
PREFERRED INCOME STRATEGIES FUND, INC.
(a Maryland corporation)
_____________ Shares of Common Stock
(Par Value $.10 Per Share)
1. The initial public offering price per share for the Shares, determined
as provided in Section 2, shall be $25.00.
2. The purchase prices per share for the Shares to be paid by the
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 Shares purchased upon the exercise of
the over-allotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Fund
and payable on the Initial Shares but not payable on the Option Shares.
Exhibit A
FORM OF OPINION OF FUND'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
1. The Fund has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland.
2. 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.
3. The Fund is duly qualified as a foreign corporation to transact
business and is in good standing in each 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 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 (a "Material Adverse Effect").
4. The authorized, issued and outstanding capital stock of the Fund is
as set forth in the Prospectus under the caption "Description of Capital
Stock."
5. The Shares 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 Shares is or will be subject to personal liability by
reason of being such a holder.
6. The issuance of the Shares is not subject to the preemptive or
other similar rights of any securityholder of the Fund.
7. To the best of our knowledge, the Fund does not have any
subsidiaries.
8. The Purchase Agreement has been duly authorized, executed and
delivered by the Fund and complies with all applicable provisions of the
Investment Company Act.
9. The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; any required filing
of the certificate pursuant to Rule 497(j) or the Prospectus pursuant to Rule
497(c) or Rule 497(h), as the case may be, has been made in the manner and
within the time period required by Rule 497(j), Rule 497(c) or Rule 497(h), as
the case may be; 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 no proceedings for that
purpose have been instituted or are pending or threatened by the Commission.
10. 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 the 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) complied
as to form in all material respects with the requirements of the 1933 Act, the
Investment Company Act and the Rules and Regulations.
11. The form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the charter and by-laws of the Fund and the
requirements of the New York Stock Exchange.
12. 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 thereof or the consummation of the transactions contemplated in the
Purchase Agreement or the performance by the Fund of its obligations
thereunder, other than those disclosed in the Prospectus.
13. The information in the Prospectus under "Description of Capital
Stock" and "Taxes" and in the Registration Statement under Item 29, to the
extent that it constitutes matters of law, summaries of legal matters, the
Fund's charter and bylaws or legal proceedings, or legal conclusions, has been
reviewed by us and is correct in all material respects.
14. To the best of our knowledge, there are no statutes or regulations
that are required to be described in the Prospectus that are not described as
required.
15. All descriptions in the Prospectus 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 of the Fund
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.
16. To the best of our knowledge, the Fund is not in violation of its
charter 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.
17. No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act, the
1934 Act, the Investment Company Act, the Rules and Regulations, or under the
rules of the NASD (formerly, the National Association of Securities Dealers,
Inc.) 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, the Advisory Agreement and the Custody
Agreement or for the offering, issuance, sale or delivery of the Shares.
18. The Advisory Agreement and the Custody Agreement have each been
duly authorized and approved by the Fund and comply as to form in all material
respects with all applicable provisions of the Investment Company Act, and each
has been duly executed by the Fund.
19. The Fund is registered with the Commission under the Investment
Company Act as a closed-end, diversified management investment company, and all
required action has been taken by the Fund under the 1933 Act, the Investment
Company Act and the Rules and Regulations to make the public offering and
consummate the sale of the Shares pursuant to the Purchase Agreement; the
provisions of the charter and the by-laws of the Fund comply as to form in all
material respects with the requirements of the Investment Company Act; and, to
the best of their knowledge and information, no order of suspension or
revocation of such registration under the Investment Company Act, pursuant to
Section 8(e) of the Investment Company Act, has been issued or proceedings
therefor initiated or threatened by the Commission.
20. 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
Shares, and the use of the proceeds from the sale of the Shares 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)(xi) 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 may be bound, or to which any
of the property or assets of the Fund 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 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.
Nothing has come to our attention that has caused us to believe that
the Registration Statement or any amendment thereto, including the Rule 430A
Information and Rule 434 Information (if applicable), (except for financial
statements and schedules and other financial data included or incorporated by
reference therein or omitted therefrom, as to which we need make no statement),
at the time such Registration Statement or any such amendment 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 or any amendment or supplement thereto
(except for financial statements and schedules and other financial data
included or incorporated by reference therein or omitted therefrom, as to which
we need make no statement), at the time the Prospectus was issued, at the time
any such amended or supplemented 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.
In rendering such opinion, we may rely as to matters of fact (but not
as to legal conclusions), to the extent we deem proper, on certificates and
written statements of responsible officers of and accountants for the Fund and
the Adviser and public officials. Such letter shall not state that it is to be
governed or qualified by, or that it is otherwise subject to, any treatise,
written policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).
Exhibit B
FORM OF OPINION OF GENERAL COUNSEL TO THE
INVESTMENT ADVISER TO BE DELIVERED
PURSUANT TO SECTION 5(e)
(1) The Adviser has been duly organized as a limited partnership under
the laws of the State of Delaware, with power and authority to conduct its
business as described in the Registration Statement and in the Prospectus.
(2) The Adviser is duly registered as an investment adviser under the
Investment Advisers Act and is not prohibited by the Investment Advisers Act or
the Investment Company Act, or the rules and regulations under such Acts, from
acting under the Advisory Agreement for the Fund as contemplated by the
Prospectus.
(3) This Agreement, the Advisory Agreement and the Additional
Compensation Agreement have been duly authorized, executed and delivered by the
Adviser, and the Advisory Agreement constitutes a valid and binding obligation
of the Adviser, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization or other laws relating
to or affecting creditors' rights and to general equity principles; and, to the
best of my knowledge and information, neither the execution and delivery of
this Agreement or the Advisory Agreement nor the performance by the 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 the lapse of time or both, a default under, any
agreement or instrument to which the Adviser is a party or by which the Adviser
is bound, or any law, order, rule or regulation applicable to the Adviser of
any jurisdiction, court, Federal or state regulatory body, administrative
agency or other governmental body, stock exchange or securities association
having jurisdiction over the Adviser or its properties or operations.
(4) To the best of my knowledge and information, the description of
the Adviser in the Registration Statement and in the Prospectus does not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading.
Exhibit C
FORM OF ACCOUNTANTS'
COMFORT LETTER PURSUANT TO SECTION 5(e)
(1) We are independent public accountants with respect to the Fund
within the meaning of the 1933 Act and the 1933 Act Regulations.
(2) In our opinion the financial statements audited by us and included
in the Registration Statement and the Prospectus comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act,
the Investment Company Act and the Rules and Regulations.
Such accountants shall also state that they have performed specified
procedures, not constituting an audit, including a reading of the latest
available interim financial statements of the Fund, a reading of the minute
books of the Fund, made inquiries of officials of the Fund responsible for
financial accounting matters and such other inquiries and procedures as may be
specified in such letter, and on the basis of such inquiries and procedures
nothing came to their attention that caused them to believe that at the date of
the latest available financial statements read by such accountants, or at a
subsequent specified date not more than three days prior to the date of the
Purchase Agreement, there was any change in the capital stock or net assets of
the Fund as compared with amounts shown on the financial statements included in
the Registration Statement and the Prospectus.
