7,800 SHARES
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ REALTY
INCOME FUND INC.
SERIES A AUCTION PREFERRED SHARES
SERIES B AUCTION PREFERRED SHARES
SERIES C AUCTION PREFERRED SHARES
SERIES D AUCTION PREFERRED SHARES
UNDERWRITING AGREEMENT
----------------------
June 19, 2003
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated
Citigroup Global Markets Inc.
c/o ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Realty Income Fund Inc., a Maryland
corporation (the "Fund"), ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Management Inc., a New York
corporation (the "Adviser"), and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC, a Delaware limited
liability company (the "Sub-Adviser"), address you as Underwriters and as the
Representative (the "Representative") of each of the other persons, firms and
corporations, if any, listed in Schedule I hereto (herein collectively called
"Underwriters"). The Fund proposes to issue and sell an aggregate of 1,950
shares of Series A Auction Preferred Shares, $.0001 par value per share,
liquidation preference $25,000 per share, 1,950 shares of Series B Auction
Preferred Shares, $.0001 par value per share, liquidation preference $25,000 per
share, 1,950 shares of Series C Auction Preferred Shares, $.0001 par value per
share, liquidation preference $25,000 per share, and 1,950 shares of Series D
Auction Preferred Shares, $.0001 par value per share, liquidation preference
$25,000 per share (collectively the "Shares"), of the Fund to the Underwriters.
The Fund, the Adviser and the Sub-Adviser wish to confirm as follows their
agreements with you and with any other Underwriters on whose behalf you are
acting in connection with the purchase of the Shares by the Underwriters.
The Fund has entered into an investment management agreement with the
Adviser dated April 24, 2003 (the "Management Agreement"), an administration
agreement with the Adviser dated April 24, 2003 (the "Administration
Agreement"), a Custodian Contract with State Street Bank and Trust Company
("State Street") dated April 24, 2003 (the "Custodian Contract"), a Transfer
Agency Agreement with The Bank of New York dated April 24, 2003 (the "Transfer
Agency Agreement"), an Auction Agency Agreement with the Bank of New York dated
June , 2003 (the "Auction Agency Agreement") and a Letter Agreement with the
Depository Trust Company dated June , 2003 (the "DTC Agreement"). In addition,
the Fund has adopted a dividend reinvestment plan (the "Dividend Reinvestment
Plan"), pursuant to which holders of shares of common stock, par value $.0001
per share, of the Fund (the "Common Shares") shall have their dividends
automatically reinvested in additional Common Shares unless they elect to
receive such dividends in cash. Collectively, the Management Agreement,
Administration Agreement, Custodian Contract, Transfer Agency Agreement, Auction
Agency Agreement and DTC Agreement are herein referred to as the "Fund
Agreements." The Adviser has entered into a Sub-Advisory Agreement with the
Sub-Adviser dated April 24, 2003 (the "Sub-Advisory Agreement"). Collectively
the Management Agreement, Administration Agreement and Sub-Advisory Agreement
are herein referred to as the "Adviser Agreements." This Underwriting Agreement
is herein referred to as the "Agreement."
1. REGISTRATION STATEMENT AND PROSPECTUS. The Fund has prepared and filed
with the Securities and Exchange Commission (the "Commission") in accordance
with the provisions of the Securities Act of 1933, as amended (the "1933 Act"),
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the Investment Company Act of 1940, as amended (the "1940 Act"), and the rules
and regulations of the Commission under the 1933 Act (the "1933 Act Rules and
Regulations") and the 1940 Act (the "1940 Act Rules and Regulations" and
together with the 1933 Act Rules and Regulations, the "Rules and Regulations") a
registration statement on Form N-2 (File No. 333-105293 under the 1933 Act) (the
"registration statement"), including a prospectus and statement of additional
information relating to the Shares, and a notification of registration of the
Fund as an investment company under the 1940 Act on Form N-8A (File No.
811-21315) under the 1940 Act (the "1940 Act Notification") and may pursuant to
the Rules and Regulations prepare and file an additional registration statement
relating to a portion of the Shares pursuant to Rule 462(b) of the 1933 Act
Rules and Regulations (a "Rule 462 registration statement"). The term
"Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended at the
time it becomes effective under the 1933 Act or, if the registration statement
became effective under the 1933 Act prior to the execution of this Agreement, as
amended or supplemented thereto, prior to the execution of this Agreement and
includes any information deemed to be included by Rule 430A under the 1933 Act
Rules and Regulations. If it is contemplated, at the time this Agreement is
executed, that a post-effective amendment to the registration statement will be
filed under the 1933 Act and must be declared effective before the offering of
Shares may commence, the term "Registration Statement" as used in this Agreement
means the Registration Statement as amended by said post-effective amendment. If
the Fund has filed a Rule 462 registration statement, then the reference herein
to the term "Registration Statement" shall include such Rule 462 registration
statement. The term "Prospectus" as used in this Agreement means the prospectus
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and statement of additional information in the forms included in the
Registration Statement or, if the prospectus and statement of additional
information included in the Registration Statement omit information in reliance
on Rule 430A under the 1933 Act Rules and Regulations and such information is
included in a prospectus and statement of additional information filed with the
Commission pursuant to Rule 497(h) under the 1933 Act Rules and Regulations, the
term "Prospectus" as used in this Agreement means the prospectus and statement
of additional information in the forms included in the Registration Statement as
supplemented by the addition of the information contained in the prospectus
(including the statement of additional information) filed with the Commission
pursuant to Rule 497(h). The term "Prepricing Prospectus" as used in this
Agreement means the prospectus and statement of additional information subject
to completion in the form included in the registration statement at the time of
the initial filing of the registration statement with the Commission and as such
prospectus and statement of additional information shall have been amended from
time to time prior to the date of the Prospectus, together with any other
prospectus (including any other statement of additional information) relating to
the Fund other than the Prospectus. The terms "Registration Statement,"
"Prospectus" and "Prepricing Prospectus" shall also include any financial
statements and other information included or incorporated by reference therein.
The Fund has furnished the Representative with copies of such Registration
Statement, each amendment to such Registration Statement filed with the
Commission and each Prepricing Prospectus.
2. AGREEMENTS TO SELL AND PURCHASE. The Fund hereby agrees, subject to all
the terms and conditions set forth herein, to issue and to sell to each
Underwriter and, upon the basis of the representations, warranties and
agreements of the Fund, the Adviser and the Sub-Adviser herein contained and
subject to all of the other terms and conditions set forth herein, each
Underwriter agrees, severally and not jointly, to purchase from the Fund at a
purchase price of $24,750 per Share (the "Price per Share"), the number of
Shares set forth opposite the name of such Underwriter in Schedule I hereto.
3. TERMS OF PUBLIC OFFERING. The Fund and the Adviser have been advised by
you that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable and initially
to offer the Shares upon the terms set forth in the Prospectus.
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4. DELIVERY OF SHARES AND PAYMENTS THEREFOR.
(a) Payment of the purchase price for the Shares shall be made to
the Fund by Federal Funds wire transfer, against delivery of the
certificate or certificates, if any, (or, if no certificates, against
notification of electronic delivery) for the Shares to the Representative
through the facilities of the Depository Trust Company ("DTC") for the
respective accounts of the Underwriters. Delivery to the Underwriters of
and payment to the Fund for the Shares and compensation of the
Underwriters with respect thereto shall be made at the offices of
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at
9:00 a.m. New York City time on June 23, 2003 (the "Closing Date"). The
place of closing for the Shares and the Closing Date may be varied by
agreement between the Fund and ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc., as the managing
representative (the "Managing Representative") of the Underwriters.
(b) The Shares shall be registered in such names and in such
denominations as the Underwriters shall request prior to 1:00 P.M., New
York City time (or such other time as the parties agree) on the first
business day preceding the Closing Date.
5. AGREEMENTS OF THE FUND, THE ADVISER AND THE SUB-ADVISER. The Fund, the
Adviser and the Sub-Adviser, jointly and severally, agree with the Underwriters
as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment
thereto to be declared effective under the 1933 Act before the offering of
the Shares may commence, the Fund will use its best efforts to cause the
Registration Statement or such post-effective amendment to become
effective under the 1933 Act as soon as possible. If the Registration
Statement has become effective and the Prospectus contained therein omits
certain information at the time of effectiveness pursuant to Rule 430A of
the 1933 Act Rules and Regulations, the Fund will file a prospectus
including such information pursuant to Rule 497(h) of the 1933 Act Rules
and Regulations, as promptly as practicable, but no later than the second
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business day following the earlier of the date of the determination of the
offering price of the Shares or the date the Prospectus is first used
after the effective date of the Registration Statement. If the
Registration Statement has become effective and the Prospectus contained
therein does not so omit such information, the Fund will file a Prospectus
or certification pursuant to Rule 497(c) or (j), as the case may be, of
the 1933 Act Rules and Regulations as promptly as practicable, but no
later than the fifth business day following the date of the later of the
effective date of the Registration Statement or the commencement of the
public offering of the Shares after the effective date of the Registration
Statement. The Fund will advise you promptly and, if requested by you,
will confirm such advice in writing (i) when the Registration Statement or
such post-effective amendment has become effective, (ii) when the
Prospectus has been timely filed pursuant to Rule 497(c) or Rule 497(h) of
the 1933 Act Rules and Regulations or (iii) when the certification
permitted pursuant to Rule 497(j) of the 1933 Act Rules and Regulations
has been timely filed, whichever is applicable.
(b) The Fund, and (in the case of (iii)(B) below with respect to
communications received by the Adviser or the Sub-Adviser) the Adviser or
the Sub-Adviser, will advise you promptly and, if requested by you, will
confirm such advice in writing: (i) of any request made by the Commission
for amendment of or a supplement to the Registration Statement, the
Prospectus or any Prepricing Prospectus (or any amendment or supplement to
any of the foregoing) or for additional information, (ii) of the issuance
by the Commission, any state securities commission, any national
securities exchange, any arbitrator, any court or any other governmental,
regulatory, self-regulatory or administrative agency or any official of
any order suspending the effectiveness of the Registration Statement,
prohibiting or suspending the use of the Prospectus or any Prepricing
Prospectus, of any notice pursuant to Section 8(e) of the 1940 Act, of the
suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation or contemplated initiation of any
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proceeding for any such purposes, (iii) of receipt by (A) the Fund, any
affiliate of the Fund or attorney of the Fund of any other material
communication from the Commission, or (B) the Fund, the Adviser, the
Sub-Adviser, any affiliate of the Fund, the Adviser or the Sub-Adviser or
attorney of the Fund, the Adviser or the Sub-Adviser of any other material
communication from the Commission, any state securities commission, any
national securities exchange, any arbitrator, any court or any other
governmental, regulatory, self-regulatory or administrative agency or any
official relating, in the case of either clause (A) or (B), to the Fund
(if such communication relating to the Fund is received by such person
within three years after the date of this Agreement), the Registration
Statement, the Prospectus, any Prepricing Prospectus, (or any amendment or
supplement to any of the foregoing) or this Agreement, any of the Fund
Agreements or the Adviser Agreements and (iv) within the period of time
referred to in paragraph (f) below, of any material, adverse change in the
condition (financial or other), business, business prospects, properties,
net assets or results of operations of the Fund (other than as a result of
changes in market conditions generally or the market for real estate
securities generally) or any event which has or would reasonably be
expected to have a material adverse effect on the ability of the Adviser
or the Sub-Adviser to perform their respective obligations under this
Agreement, the Advisory Agreement or the Sub-Advisory Agreement, as the
case may be, or of the happening of any event (but as to each of the Fund,
the Adviser and the Sub-Adviser, an event known to that respective entity)
which makes any statement of a material fact made in the Registration
Statement, the Prospectus or any Prepricing Prospectus (or any amendment
or supplement to any of the foregoing) untrue or which requires the making
of any additions to or changes in the Registration Statement, the
Prospectus, or any Prepricing Prospectus (or any amendment or supplement
to any of the foregoing) in order to state a material fact required by the
1933 Act, the 1940 Act or the Rules and Regulations to be stated therein
or necessary in order to make the statements therein (in the case of a
prospectus, in light of the circumstances under which they were made) not
7
misleading or of the necessity to amend or supplement the Registration
Statement, the Prospectus, or any Prepricing Prospectus (or any amendment
or supplement to any of the foregoing) to comply with the 1933 Act, the
1940 Act, the Rules and Regulations or any other law or order of any court
or regulatory body. If at any time the Commission shall issue any order
suspending the effectiveness of the Registration Statement, prohibiting or
suspending the use of the Prospectus (or any amendment or supplement to
any of the foregoing) or suspending the qualification of the Shares for
offering or sale in any jurisdiction, the Fund, the Adviser and the
Sub-Adviser will use their best efforts to obtain the withdrawal of such
order at the earliest possible time. If at any time any national
securities exchange, any state securities commission, any arbitrator, any
court or any other governmental, regulatory, self-regulatory or
administrative agency or any official shall issue any order suspending the
effectiveness of the Registration Statement, prohibiting or suspending the
use of the Prospectus (or any amendment or supplement to any of the
foregoing) or suspending the qualification of the Shares for offering or
sale in any jurisdiction, the Fund, the Adviser and the Sub-Adviser will
use their respective best efforts to obtain the withdrawal of such order
at the earliest possible time.
(c) The Fund will furnish to you, without charge, one signed copy of
the registration statement as originally filed with the Commission and of
each amendment thereto, including financial statements and all exhibits
thereto and will also furnish to you, without charge, such number of
conformed copies of the registration statement as originally filed and of
each amendment thereto, but without exhibits, as you may reasonably
request.
(d) Within five years from the date hereof, the Fund will not (i)
file any amendment (except any post-effective amendment required by Rule
8b-16 of the 1940 Act which is filed with the Commission after the later
of (x) one year from the date of this Agreement or (y) the date on which
the distribution of the Shares is completed) to the registration statement
or the Registration Statement or make any amendment or supplement to the
8
Prospectus or any Prepricing Prospectus (or any amendment or supplement to
any of the foregoing) of which you shall not previously have been advised
or (with respect to amendments filed within two years from the date
hereof) to which you shall reasonably object within two business days
after being so advised or (ii) so long as, in the opinion of counsel for
the Underwriters, a Prospectus is required to be delivered in connection
with sales of Shares by any Underwriter or dealer, file any information,
documents or reports pursuant to the 1933 Act, the 1940 Act or the
Securities Exchange Act of 1934, as amended (the "1934 Act"), without
delivering a copy of such information, documents or reports to you, as
Representative of the Underwriters, prior to or concurrently with such
filing.
(e) Prior to the execution and delivery of this Agreement, the Fund
has delivered to you, without charge, in such quantities as you have
reasonably requested, copies of each form of any Prepricing Prospectus.
The Fund consents to the use, in accordance with the provisions of the
1933 Act and with the securities or Blue Sky laws of the jurisdictions in
which the Shares are offered by the several Underwriters and by dealers,
prior to the date of the Prospectus, of each Prepricing Prospectus so
furnished by the Fund.
(f) As soon after the execution and delivery of this Agreement as
reasonably possible and thereafter from time to time, for such period as
in the opinion of counsel for the Underwriters a prospectus is required by
the 1933 Act to be delivered in connection with sales of Shares by any
Underwriter or dealer, the Fund will expeditiously deliver to each
Underwriter and each dealer, without charge, as many copies of the
Prospectus (and of any amendment or supplement thereto) as you may
reasonably request. The Fund consents to the use of the Prospectus (and of
any amendments or supplements thereto) in accordance with the provisions
of the 1933 Act and with the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the several Underwriters
and by all dealers to whom Shares may be sold, both in connection with the
9
offering or sale of the Shares and for such period of time thereafter as
the Prospectus is required by law to be delivered in connection with sales
of Shares by any Underwriter or dealer. If during such period of time any
event shall occur that in the judgment of the Fund or in the opinion of
counsel for the Underwriters is required to be set forth in the
Registration Statement or the Prospectus (as then amended or supplemented)
or should be set forth therein in order to make the statements therein (in
the case of the Prospectus, in light of the circumstances under which they
were made) not misleading or if it is necessary to supplement or amend the
Registration Statement or the Prospectus to comply with the 1933 Act, the
1940 Act, the Rules and Regulations or any other applicable law, rule or
regulation, the Fund will forthwith notify you of such event, prepare and,
subject to the provisions of paragraph (d) above, promptly file with the
Commission an appropriate amendment or supplement thereto and will furnish
as promptly as reasonably possible to the Underwriters and dealers,
without charge, such number of copies thereof as they may reasonably
request; PROVIDED, however, that if such amendment or supplement is
required solely as a result of a material misstatement in or material
omission from the information furnished in writing by or on behalf of an
Underwriter to the Fund, the Adviser or the Sub-Adviser expressly for use
in the Registration Statement or the Prospectus (such information, as
described in Section 9(h) of this Agreement, being referred to herein as
the "Underwriter Information"), then the Fund shall deliver such amendment
or supplement at cost.
(g) The Fund will cooperate with you and with counsel for the
Underwriters in connection with any registration or qualification of the
Shares for offering and sale by the several Underwriters and by dealers as
may be required under the applicable securities or Blue Sky laws of such
jurisdictions as you may designate and will file such consents to service
of process or other documents necessary or appropriate in order to effect
such registration or qualification; PROVIDED, HOWEVER, that the foregoing
shall not apply to the extent that the Shares are "covered securities"
that are exempt from state regulation of securities offerings pursuant to
Section 18 of the 1933 Act.
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(h) As soon as practicable, but in no event later than the last day
of the 18th full calendar month following the calendar quarter in which
the effective date of the Registration Statement falls, the Fund will make
generally available to its security holders an earnings statement, which
need not be audited, which earnings statement shall satisfy the provisions
of Section 11(a) of the 1933 Act and Rule 158 of the 1933 Act Rules and
Regulations.
(i) The Fund will comply with the undertaking set forth in sub-item
6 of Item 33 of Part C of the Registration Statement.
(j) During the period of three years hereafter, the Fund will
furnish or will have furnished to you as soon as available, a copy of each
report of the Fund mailed to shareholders or filed with the Commission
(other than reports on Form N-SAR or Form N-CSR) or furnished to the New
York Stock Exchange (the "NYSE").
(k) If this Agreement shall terminate or be terminated after
execution pursuant to any provisions hereof (other than pursuant to the
second paragraph of Section 11 hereof or by notice given by you
terminating this Agreement pursuant to Section 12 hereof) or if this
Agreement shall be terminated by the Underwriters because of any
inability, failure or refusal on the part of the Fund, the Adviser or the
Sub-Adviser to comply with any material terms in this Agreement or because
any of the conditions in Section 10 of this Agreement required to be
complied with or fulfilled by them are not satisfied, then the Fund, the
Adviser and the Sub-Adviser, jointly and severally, agree to reimburse the
Representative for all out-of-pocket expenses not to exceed the amounts
set forth in Section 13 of this Agreement (including reasonable fees and
expenses of counsel for the Underwriters) incurred by you in connection
herewith.
(l) The Fund will direct the investment of the net proceeds of the
offering of the Shares (i) in accordance with the description set forth in
11
the Prospectus and (ii) in such a manner as to comply with the investment
objectives, policies and restrictions of the Fund as described in the
Prospectus.
(m) The Fund will file the requisite copies of the Prospectus with
the Commission in a timely fashion pursuant to Rule 497(c) or Rule 497(h)
of the 1933 Act Rules and Regulations, whichever is applicable or, if
applicable, will file in a timely fashion the certification permitted by
Rule 497(j) of the 1933 Act Rules and Regulations and will advise you of
the time and manner of such filing.
(n) Except as provided in this Agreement or pursuant to any dividend
reinvestment plan of the Fund, the Fund will not sell, contract to sell or
otherwise dispose of, any preferred stock of the Fund or any securities
convertible into or exercisable or exchangeable for preferred stock of the
Fund or grant any options or warrants to purchase preferred stock of the
Fund, for a period of 180 days after the date of the Prospectus, without
the prior written consent of the Representative.
(o) The Fund will direct the investment of the proceeds of the
offering of the Shares so as to comply with the requirements of Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"), to
qualify as a regulated investment company under the Code.
6. REPRESENTATIONS AND WARRANTIES OF THE FUND, THE ADVISER AND THE
SUB-ADVISER. The Fund, the Adviser and the Sub-Adviser, jointly and severally,
represent and warrant to each Underwriter that:
(a) Each Prepricing Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement
thereto or filed pursuant to Rule 497 of the 1933 Act Rules and
Regulations, complied when so filed in all material respects with the
provisions of the 1933 Act, the 1940 Act and the Rules and Regulations
(except that this representation and warranty does not apply to statements
in or omissions from the Prepricing Prospectus (and any amendment or
12
supplement thereto) made in reliance upon and in conformity with the
Underwriter Information) and the Commission has not issued any order
preventing or suspending the use of the Prepricing Prospectus.
(b) The registration statement, in the form in which it was
originally filed, in the form in which it became or becomes effective and
also in such form as it may be when any post-effective amendment thereto
shall become effective, the Prospectus and any amendment or supplement
thereto when filed with the Commission under Rule 497 of the 1933 Act
Rules and Regulations and any amendment or supplement thereto when filed
with the Commission complied or will comply in all material respects with
the provisions of the 1933 Act, the 1940 Act and the Rules and Regulations
and each of the Registration Statement and the Prospectus (or any
supplement or amendment to either of them) did not or will not at any such
times contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading; except that this
representation and warranty does not apply to statements in or omissions
from the Registration Statement and the Prospectus (and any amendment or
supplement to either of them) made in reliance upon and in conformity with
the Underwriter Information.
(c) All the outstanding Common Shares have been duly authorized and
validly issued, are fully paid and nonassessable and are free of any
preemptive or similar rights; the Shares have been duly authorized and,
when issued and delivered to the Underwriters against payment therefor in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable and free of any preemptive or similar rights; and the
capital stock of the Fund conforms in all material respects to the
description thereof in the Registration Statement or the Prospectus (or
any amendment or supplement to either of them). Except for the Shares and
the Common Shares, no other shares of capital stock are issued or
outstanding and the capitalization of the Fund conforms in all material
13
respects to the description thereof in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them).
(d) The Fund has been duly formed and is validly existing in good
standing as a corporation under the laws of the State of Maryland, with
full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement to either of
them) and is duly registered and qualified to conduct business and is in
good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or to qualify does
not or would not have a material, adverse effect on the condition
(financial or other), business, business prospects, properties, net assets
or results of operations of (a "Material Adverse Effect") the Fund. The
Fund has no subsidiaries.
(e) There are no legal or governmental proceedings pending or, to
the knowledge of the Fund, threatened, against the Fund, or to which the
Fund or any of its properties is subject, that are required to be
described in the Registration Statement or the Prospectus (and any
amendment or supplement to either of them) but are not described therein
and there are no agreements, contracts, indentures, leases or other
instruments that are required to be described in the Registration
Statement or the Prospectus (or any amendment or supplement to either of
them) or to be filed as an exhibit to the Registration Statement that are
not described therein or filed as an exhibit thereto as required by the
1933 Act, the 1940 Act or the Rules and Regulations.
(f) The Fund is not (i) in violation of its Articles of
Incorporation, including the Articles Supplementary adopted in connection
with the issuance of the Shares ("Articles"), by-laws or other
organizational documents, (ii) in violation of any law, ordinance,
administrative or governmental rule or regulation applicable to the Fund
14
or of any decree of the Commission, any state securities commission, any
national securities exchange, any arbitrator, any court or any other
governmental, regulatory, self-regulatory or administrative agency or any
other agency or any body or official having jurisdiction over the Fund or
(iii) in breach or default in the performance of any obligation, agreement
or condition contained in any bond, debenture, note or any other evidence
of indebtedness or in any agreement, indenture, lease or other instrument
to which the Fund is a party or by which it or any of its properties may
be bound, except, in the case of (ii) and (iii) above, for violations,
breaches or defaults that do not or would not have, either individually or
in the aggregate, a Material Adverse Effect on the Fund.
(g) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or any of the Fund Agreements by
the Fund, nor the consummation by the Fund of the transactions
contemplated hereby or thereby (i) requires any consent, approval,
authorization or order of or registration or filing with the Commission,
any state securities commission, any national securities exchange, any
arbitrator, any court, regulatory body, administrative agency or other
governmental body, agency or official having jurisdiction over the Fund
(except (A) such as have been obtained or made prior to the date of this
Agreement, (B) for compliance with the securities or Blue Sky laws of
various jurisdictions which have been or will be effected in accordance
with this Agreement and (C) for compliance with the filing requirements,
if any, of the NASD Division of Corporate Finance) or conflicts or will
conflict with or constitutes or will constitute a breach of the Articles,
bylaws, or other organizational documents of the Fund or (ii) (A)
conflicts or will conflict with or constitutes or will constitute a breach
of or a default under any agreement, indenture, lease or other instrument
to which the Fund is a party or by which it or any of its properties may
be bound or (B) violates or will violate any statute, law, regulation or
filing or judgment, injunction, order or decree applicable to the Fund or
any of its properties or will result in the creation or imposition of any
15
lien, charge or encumbrance upon any property or assets of the Fund
pursuant to the terms of any agreement or instrument to which it is a
party or by which it may be bound or to which any of the property or
assets of the Fund is subject except, in the case of (ii) above, for
conflicts, breaches, defaults, violations or encumbrances that do not or
would not have, either individually or in the aggregate, a Material
Adverse Effect on the Fund. As of the date hereof, the Fund is not subject
to any order of any court or of any arbitrator, governmental authority or
administrative agency that has or would have, either individually or in
the aggregate, a Material Adverse Effect on the Fund.
(h) Since the date as of which information is given in the
Registration Statement and the Prospectus (and any amendment or supplement
to either of them), except as otherwise stated therein, (i) there has been
no change, whether or not arising in the ordinary course of business, that
has or would have a Material Adverse Effect on the Fund (other than as a
result of a change in the financial markets generally); and (ii) there
have been no transactions entered into by the Fund other than those in the
ordinary course of its business or as described in the Prospectus (and any
amendment or supplement thereto).
(i) Ernst & Young LLP, who have audited the Statement of Assets and
Liabilities included in, and whose report appears in, the Registration
Statement and the Prospectus (and any amendment or supplement to either of
them), are independent public accountants with respect to the Fund as
required by the 1933 Act, the 1940 Act and the Rules and Regulations.
(j) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement
or the Prospectus (or any amendment or supplement to either of them)
present fairly the financial position of the Fund on the basis stated in
the Registration Statement at the respective dates or for the respective
periods to which they apply; such statements and related schedules and
16
notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved except as
disclosed therein; and the other financial and statistical information and
data included in the Registration Statement or the Prospectus (or any
amendment or supplement thereto) are accurately derived from such
financial statements and the books and records of the Fund.
(k) The Fund, subject to the Registration Statement having been
declared effective and the filing of the Prospectus under Rule 497 under
the 1933 Act Rules and Regulations, has taken all action required to be
taken by it under the 1933 Act, the 1940 Act and the Rules and Regulations
to make the public offering and consummate the sale of the Shares as
contemplated by this Agreement.
(l) The execution and delivery of and the performance by the Fund of
its obligations under this Agreement and the Fund Agreements have been
duly and validly authorized by the Fund and this Agreement and each of the
Fund Agreements have been duly executed and delivered by the Fund and
(assuming due and valid authorization, execution and delivery by the other
parties hereto and thereto) this Agreement and each Fund Agreement
constitutes the valid and legally binding agreement of the Fund,
enforceable against the Fund in accordance with its terms, except as
rights to indemnity and contribution hereunder may be limited by federal
or state securities laws and subject to the qualification that the
enforceability of the Fund's obligations hereunder and thereunder may be
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights
generally and by general equitable principles (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(m) Except as disclosed in or contemplated by the Registration
Statement or the Prospectus (or any amendment or supplement to either of
them), subsequent to the respective dates as of which such information is
given in the Registration Statement and the Prospectus (and any amendment
17
or supplement to either of them), the Fund has not incurred any debt,
liability or obligation, direct or contingent, and there has not been any
change in the capital stock or capitalization of the Fund.
(n) The Fund has not distributed and, prior to the later to occur of
(i) the Closing Date and (ii) completion of the distribution of the
Shares, will not distribute to the public any offering material in
connection with the offering and sale of the Shares other than the
Registration Statement, the Prepricing Prospectus included in
Pre-Effective Amendment No. 1 to the registration statement (the "Red
▇▇▇▇▇▇▇ Preliminary Prospectus"), and the Prospectus.
(o) (i) The Fund has such licenses, permits, and authorizations of
governmental or regulatory authorities ("permits") as are necessary to own
its property and to conduct its business in the manner described in the
Prospectus (and any amendment or supplement thereto); (ii) the Fund has
fulfilled and performed all its obligations with respect to such permits
and no event has occurred which allows or, after notice or lapse of time,
would allow, revocation or termination thereof or results in any other
impairment of the rights of the Fund under any such permit, subject in
each case to such qualification as may be set forth in the Prospectus (and
any amendment or supplement thereto); and, (iii) except as described in
the Prospectus (and any amendment or supplement thereto), none of such
permits contains any restriction that is materially burdensome to the
Fund; except where the failure to obtain or perform its obligations with
respect to such permits, or the restrictions set forth in such permits, as
set forth in clauses (i), (ii) and (iii), either individually or in the
aggregate, does or would not have a Material Adverse Effect on the Fund.
(p) The Fund will maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with the Board of Directors' general or specific
authorization and with the investment policies and restrictions of the
18
Fund and the applicable requirements of the 1940 Act, the 1940 Act Rules
and Regulations and the Internal Revenue Code of 1986, as amended (the
"Code"); (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles, to calculate net asset value and fee accruals, to maintain
accountability for assets and to maintain compliance with the books and
records requirements under the 1940 Act and the 1940 Act Rules and
Regulations; (iii) access to assets is permitted only in accordance with
the Board of Directors' general or specific authorization; and (iv) the
recorded account for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(q) The conduct by the Fund of its business (as described in the
Prospectus) does not require it to be the owner, possessor, licensee of,
or otherwise require it to have the right to use, any patents, patent
licenses, trademarks, service marks or trade names (collectively,
"Intellectual Property") which it does not own, possess, license or
otherwise have the right to use, except where the failure to own, possess,
license or otherwise have the right to use such Intellectual Property,
individually or in the aggregate, does or would not have a Material
Adverse Effect on the Fund.
(r) The Fund is duly registered under the 1940 Act and the Rules and
Regulations as a closed-end, non-diversified management investment company
and the 1940 Act Notification has been duly filed with the Commission and,
at the time of filing thereof and at all times through the date hereof,
the 1940 Act Notification conformed in all material respects with all
applicable provisions of the 1940 Act and the Rules and Regulations; no
order of suspension or revocation of such registration under the 1940 Act
and the Rules and Regulations has been issued or proceedings therefor
initiated or, to the knowledge of the Fund, threatened by the Commission.
The provisions of the Articles, and the investment policies and
restrictions described in each of the Registration Statement and the
19
Prospectus, comply in all material respects with the requirements of the
1940 Act and the Rules and Regulations.
(s) Each of the Fund Agreements complies in all material respects
with all applicable provisions of the 1933 Act, the 1940 Act, the Rules
and Regulations, the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and the rules and regulations of the Commission
promulgated under the Advisers Act (the "Advisers Act Rules and
Regulations").
(t) No holder of any security of the Fund has any right to require
registration of any Shares, capital stock or any other security of the
Fund because of the filing of the registration statement or consummation
of the transactions contemplated by this Agreement.
(u) The Fund, the Adviser and the Sub-Adviser intend to direct the
investment of the proceeds of the offering of the Shares in such a manner
as to comply with the requirements of Subchapter M of the Code.
(v) The Commission has not issued any order preventing or suspending
the use of any Prepricing Prospectus or the Prospectus.
(w) Except as disclosed in the Registration Statement or the
Prospectus (or any amendment or supplement to either of them), to the
Fund's knowledge, after due inquiry, no director 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 listed
in Schedule I hereto.
(x) The Common Shares are listed on the NYSE.
7. REPRESENTATIONS AND WARRANTIES OF THE ADVISER. The Adviser represents
and warrants to each Underwriter as follows:
(a) The Adviser is a corporation duly organized and validly existing
in good standing under the laws of the State of New York, with full
corporate power and authority to own, lease and operate its properties and
20
to conduct its business as described in each of the Registration Statement
and the Prospectus (or any amendment or supplement to either of them) and
is duly registered and qualified to conduct business and is in good
standing in each jurisdiction or place where the nature of its properties
or conduct of its business requires such registration or qualification,
except where the failure so to register or to qualify does or would not
have a Material Adverse Effect on the Adviser.
(b) The Adviser is duly registered with the Commission as an
investment adviser under the Advisers Act and is not prohibited by the
Advisers Act, the 1940 Act, the Advisers Act Rules and Regulations or the
1940 Act Rules and Regulations from acting under the Management Agreement
for the Fund as contemplated by the Registration Statement or the
Prospectus (or any amendment or supplement to either of them). There does
not exist any proceeding which, if determined adversely with respect to
the Adviser, does or would have a material and adverse effect on the
registration of the Adviser with the Commission.
(c) There are no legal or governmental proceedings pending or, to
the knowledge of the Adviser, threatened against the Adviser that are
required to be described in the Registration Statement or the Prospectus
(or any amendment or supplement to either of them) but are not described
as required or that, if determined adversely with respect to the Adviser,
does or would have a Material Adverse Effect on the Adviser or does or
would have a material and adverse effect on the ability of the Adviser to
perform its obligations under this Agreement or any of the Adviser
Agreements.
(d) Neither the execution, delivery or performance of this Agreement
or any of the Adviser Agreements, nor the consummation by the Adviser of
the transactions contemplated hereby or thereby (i) requires the Adviser
to obtain any consent, approval, authorization or other order of, or
registration or filing with, the Commission, any state securities
commission, any national securities exchange, any arbitrator, any court,
21
regulatory body, administrative agency or other governmental body, agency
or official having jurisdiction over the Adviser or conflicts or will
conflict with or constitutes or will constitute a breach of or a default
under, the certificate of incorporation or bylaws, or other organizational
documents of the Adviser or (ii) conflicts or will conflict with or
constitutes or will constitute a breach of or a default under, any
agreement, indenture, lease or other instrument to which the Adviser is a
party or by which the Adviser or any of its properties may be bound, or
violates or will violate any statute, law, regulation or judgment,
injunction, order or decree applicable to the Adviser or any of its
properties or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Adviser pursuant
to the terms of any agreement or instrument to which it is a party or by
which it may be bound or to which any of the property or assets of the
Adviser is subject, except in any case under clause (i) or (ii) as does or
would not have a Material Adverse Effect on the Adviser or does or would
have a material and adverse effect on the ability of the Adviser to
perform its obligations under this Agreement or any of the Adviser
Agreements. The Adviser is not subject to any order of any court or of any
arbitrator, regulatory body, administrative agency or other governmental
body, agency or official that would have a Material Adverse Effect on the
Adviser or does or would have a material and adverse effect on the ability
of the Adviser to perform its obligations under this Agreement or any of
the Adviser Agreements.
(e) The Adviser has full power and authority to enter into this
Agreement and each of the Adviser Agreements; the execution and delivery
of and the performance by the Adviser of its obligations under this
Agreement and the Adviser Agreements have been duly and validly authorized
by the Adviser; and this Agreement and each of the Adviser Agreements have
been duly executed and delivered by the Adviser and (assuming due and
valid authorization, execution and delivery by the other parties hereto
and thereto) this Agreement and each Adviser Agreement constitutes the
valid and legally binding agreement of the Adviser, enforceable against
22
the Adviser in accordance with its terms, except as rights to indemnity
and contribution hereunder may be limited by federal or state securities
laws and subject to the qualification that the enforceability of the
Adviser's obligations hereunder and thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium
and other laws relating to or affecting creditors' rights generally and by
general equitable principles (regardless of whether enforcement is sought
in a proceeding in equity or at law).
(f) The Adviser has the financial resources necessary for the
performance of its services and obligations as contemplated in the
Registration Statement and the Prospectus (or any amendment or supplement
to either of them) or under this Agreement or any of the Adviser
Agreements.
(g) The description of the Adviser in the Registration Statement and
the Prospectus (or any amendment or supplement to either of them) complied
and comply in all material respects with the provisions of the 1933 Act,
the 1940 Act, the Advisers Act, the Rules and Regulations and the Advisers
Act Rules and Regulations; and such description and the statements
attributable to the Adviser in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them) 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 (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
(h) Since the date as of which information is given in the
Registration Statement or the Prospectus (or any amendment or supplement
to either of them), except as otherwise stated therein, there has been no
material adverse change in the condition (financial or other), business,
properties, net assets or results of operations or business prospects of
the Adviser, whether or not arising from the ordinary course of business
that does or would have a Material Adverse Effect on the Adviser or does
23
or would have a material and adverse effect on the ability of the Adviser
to perform its obligations under this Agreement or any of the Adviser
Agreements.
(i) (i) The Adviser has such licenses, permits, and authorizations
of governmental or regulatory authorities ("permits") as are necessary to
own its property and to conduct its business in the manner described in
the Prospectus (and any amendment or supplement thereto); (ii) the Adviser
has fulfilled and performed all its obligations with respect to such
permits and no event has occurred which allows or, after notice or lapse
of time, would allow, revocation or termination thereof or results in any
other impairment of the rights of the Adviser under any such permit,
subject in each case to such qualification as may be set forth in the
Prospectus (and any amendment or supplement thereto); and, (iii) except as
described in the Prospectus (and any amendment or supplement thereto),
none of such permits contains any restriction that is materially
burdensome to the Adviser; except where the failure to obtain or perform
its obligations with respect to such permits, or the restrictions set
forth in such permits, as set forth in clauses (i), (ii) and (iii), either
individually or in the aggregate, does or would have a Material Adverse
Effect on the Adviser or does or would have a material and adverse effect
on the ability of the Adviser to perform its obligations under this
Agreement or any of the Adviser Agreements.
(j) Each of the Adviser Agreements comply in all material respects
with the applicable provisions of the 1940 Act, the 1940 Act Rules and
Regulations, the Advisers Act and the Advisers Act Rules and Regulations.
8. REPRESENTATIONS AND WARRANTIES OF THE SUB-ADVISER. The Sub-Adviser
represents and warrants to each Underwriter as follows:
(a) The Sub-Adviser is a limited liability company duly formed and
validly existing in good standing under the laws of the State of Delaware,
with full limited liability company power and authority to own, lease and
24
operate its properties and to conduct its business as described in each of
the Registration Statement and the Prospectus (or any amendment or
supplement to either of them) and is duly registered and qualified to
conduct business and is in good standing in each jurisdiction or place
where the nature of its properties or conduct of its business requires
such registration or qualification, except where the failure so to
register or to qualify does or would not have a Material Adverse Effect on
the Sub-Adviser.
(b) The Sub-Adviser is duly registered with the Commission as an
investment adviser under the Advisers Act and is not prohibited by the
Advisers Act, the 1940 Act, the Advisers Act Rules and Regulations or the
1940 Act Rules and Regulations from acting under this Agreement or the
Sub-Advisory Agreement for the Fund as contemplated by the Registration
Statement or the Prospectus (or any amendment or supplement to either of
them). There does not exist any proceeding which, if determined adversely
with respect to the Sub-Adviser, does or would have a material and adverse
effect on the registration of the Sub-Adviser with the Commission.
(c) There are no legal or governmental proceedings pending or, to
the knowledge of the Sub-Adviser, threatened against the Sub-Adviser that
are required to be described in the Registration Statement or the
Prospectus (or any amendment or supplement to either of them) but are not
described as required or that, if determined adversely with respect to the
Sub-Adviser, does or would have a Material Adverse Effect on the
Sub-Adviser or does or would have a material and adverse effect on the
ability of the Sub-Adviser to perform its obligations under this Agreement
or the Sub-Advisory Agreement.
(d) Neither the execution, delivery or performance of this Agreement
or the Sub-Advisory Agreement, nor the consummation by the Sub-Adviser of
the transactions contemplated hereby or thereby (i) requires the
Sub-Adviser to obtain any consent, approval, authorization or other order
of, or registration or filing with, the Commission, any state securities
25
commission, any national securities exchange, any arbitrator, any court,
regulatory body, administrative agency or other governmental body, agency
or official having jurisdiction over the Sub-Adviser or conflicts or will
conflict with or constitutes or will constitute a breach of or a default
under, the certificate of incorporation or bylaws, or other organizational
documents of the Sub-Adviser or (ii) conflicts or will conflict with or
constitutes or will constitute a breach of or a default under, any
agreement, indenture, lease or other instrument to which the Sub-Adviser
is a party or by which the Sub-Adviser or any of its properties may be
bound, or violates or will violate any statute, law, regulation or
judgment, injunction, order or decree applicable to the Sub-Adviser or any
of its properties or will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Sub-Adviser
pursuant to the terms of any agreement or instrument to which it is a
party or by which it may be bound or to which any of the property or
assets of the Sub-Adviser is subject, except in any case under clause (i)
or (ii) as would not have a Material Adverse Effect on the Sub-Adviser or
on the ability of the Sub-Adviser to perform its obligations under this
Agreement or the Sub-Advisory Agreement. The Sub-Adviser is not subject to
any order of any court or of any arbitrator, regulatory body,
administrative agency or other governmental body, agency or official that
does or would have a Material Adverse Effect on the Sub-Adviser or does or
would have a material and adverse effect on the ability of the Sub-Adviser
to perform its obligations under this Agreement or the Sub-Advisory
Agreement.
(e) The Sub-Adviser has full power and authority to enter into this
Agreement and the Sub-Advisory Agreement; the execution and delivery of
and the performance by the Sub-Adviser of its obligations under this
Agreement and the Sub-Advisory Agreement have been duly and validly
authorized by the Sub-Adviser; and this Agreement and the Sub-Advisory
Agreement have been duly executed and delivered by the Sub-Adviser and
(assuming due and valid authorization, execution and delivery by the other
parties hereto and thereto) this Agreement and the Sub-Advisory Agreement
26
constitutes the valid and legally binding agreement of the Sub-Adviser,
enforceable against the Sub-Adviser in accordance with its terms, except
as rights to indemnity and contribution hereunder may be limited by
federal or state securities laws and subject to the qualification that the
enforceability of the Sub-Adviser's obligations hereunder and thereunder
may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and by general equitable principles
(regardless of whether enforcement is sought in a proceeding in equity or
at law).
(f) The Sub-Adviser has the financial resources necessary for the
performance of its services and obligations as contemplated in the
Registration Statement and the Prospectus (or any amendment or supplement
to either of them) or under this Agreement and the Sub-Advisory Agreement.
(g) The description of the Sub-Adviser in the Registration Statement
and the Prospectus (or any amendment or supplement to either of them)
complied and comply in all material respects with the provisions of the
1933 Act, the 1940 Act, the Advisers Act, the Rules and Regulations and
the Advisers Act Rules and Regulations; and such description and the
statements attributable to the Sub-Adviser in the Registration Statement
and the Prospectus (or any amendment or supplement to either of them) 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 (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
(h) Since the date as of which information is given in the
Registration Statement or the Prospectus (or any amendment or supplement
to either of them), except as otherwise stated therein, there has been no
material adverse change in the condition (financial or other), business,
properties, net assets or results of operations or business prospects of
27
the Sub-Adviser, whether or not arising from the ordinary course of
business that does or would have a Material Adverse Effect on the
Sub-Adviser or does or would have a material and adverse effect on the
ability of the Sub-Adviser to perform its obligations under this Agreement
or the Sub-Advisory Agreement.
(i) (i) The Sub-Adviser has such licenses, permits, and
authorizations of governmental or regulatory authorities ("permits") as
are necessary to own its property and to conduct its business in the
manner described in the Prospectus (and any amendment or supplement
thereto); (ii) the Sub-Adviser has fulfilled and performed all its
obligations with respect to such permits and no event has occurred which
allows or, after notice or lapse of time, would allow, revocation or
termination thereof or results in any other impairment of the rights of
the Sub-Adviser under any such permit, subject in each case to such
qualification as may be set forth in the Prospectus (and any amendment or
supplement thereto); and, (iii) except as described in the Prospectus (and
any amendment or supplement thereto), none of such permits contains any
restriction that is materially burdensome to the Sub-Adviser; except where
the failure to obtain or perform its obligations with respect to such
permits, or the restrictions set forth in such permits, as set forth in
clauses (i), (ii) and (iii), either individually or in the aggregate, does
or would have a Material Adverse Effect on the Sub-Adviser or does or
would have a material and adverse effect on the ability of the Sub-Adviser
to perform its obligations under this Agreement or the Sub-Advisory
Agreement.
(j) The Sub-Advisory Agreement complies in all material respects
with the applicable provisions of the 1940 Act, the 1940 Act Rules and
Regulations, the Advisers Act and the Advisers Act Rules and Regulations.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) The Fund, the Adviser and the Sub-Adviser, jointly and
28
severally, agree to indemnify and hold harmless each of you and each other
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,
from and against any and all losses, claims, damages, liabilities and
expenses, joint or several (including reasonable costs of investigation),
arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Prospectus, any Prepricing Prospectus (or any amendment or supplement to
any of the foregoing) or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of a
prospectus, in light of the circumstances under which they were made) not
misleading, (except insofar as such losses, claims, damages, liabilities
or expenses arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which has been made
therein or omitted therefrom in reliance upon and in conformity with the
Underwriter Information); PROVIDED, however, that the foregoing
indemnification contained in this paragraph (a) with respect to the Red
▇▇▇▇▇▇▇ Preliminary Prospectus (or any amendment or supplement thereto)
shall not inure to the benefit of any Underwriter (or to the benefit of
any person controlling such Underwriter) on account of any such loss,
claim, damage, liability or expense arising from the sale of the Shares by
such Underwriter to any person if it is shown that a copy of any such
amendment or supplement to the Red ▇▇▇▇▇▇▇ Preliminary Prospectus or of
the Prospectus (which term as used in this proviso shall not include any
statement of additional information unless specifically requested by such
person) was not delivered or sent to such person within the time required
by the 1933 Act and the 1933 Act Rules and Regulations and the untrue
statement or alleged untrue statement or omission or alleged omission of a
material fact contained in the Red ▇▇▇▇▇▇▇ Preliminary Prospectus was
corrected in the supplement or amendment to the Red ▇▇▇▇▇▇▇ Preliminary
Prospectus or in the Prospectus, provided that the Fund has delivered such
supplements or amendments or the Prospectus to the several Underwriters in
requisite quantity on a timely basis to permit proper delivery or sending.
29
The foregoing indemnity agreement shall be in addition to any liability
which the Fund, the Adviser or the Sub-Adviser may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Fund, the Adviser or the Sub-Adviser,
such Underwriter or such controlling person shall promptly notify the
Fund, the Adviser or the Sub-Adviser and the Fund, the Adviser or the
Sub-Adviser shall assume the defense thereof, including the employment of
counsel and the payment of all fees and expenses. Such Underwriter or any
such controlling person shall have the right to employ separate counsel in
any such action, suit or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense
of such Underwriter or controlling person unless (i) the Fund, the Adviser
or the Sub-Adviser have agreed in writing to pay such fees and expenses,
(ii) the Fund, the Adviser or the Sub-Adviser have failed within a
reasonable time to assume the defense and employ counsel or (iii) the
named parties to any such action, suit or proceeding (including any
impleaded parties) include both such Underwriter or such controlling
person and the Fund, the Adviser or the Sub-Adviser and such Underwriter
or such controlling person shall have been advised by its counsel that
representation of such indemnified party and the Fund, the Adviser or the
Sub-Adviser by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation by
the same counsel has been proposed) due to actual or potential differing
interests between them (in which case the Fund, the Adviser and the
Sub-Adviser shall not have the right to assume the defense of such action,
suit or proceeding on behalf of such Underwriter or such controlling
person). It is understood, however, that the Fund, the Adviser and the
Sub-Adviser shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits
or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and
30
expenses of only one separate firm of attorneys (in addition to any local
counsel if there is any action, suit or proceeding in more than one
jurisdiction) at any time for all such Underwriters and controlling
persons not having actual or potential differing interests with you or
among themselves, which firm shall be designated in writing by the
Representative and that, subject to the requirements of 1940 Act Release
No. 11330 and Section 17(i) of the 1940 Act, all such fees and expenses
shall be reimbursed promptly as they are incurred. The Fund, the Adviser
and the Sub-Adviser shall not be liable for any settlement of any such
action, suit or proceeding effected without the written consent of the
Fund, the Adviser or the Sub-Adviser (whether or not the fund, the Adviser
or the Sub-Adviser are actual or potential parties to such action, suit or
proceeding), but if settled with such written consent or if there be a
final judgment for the plaintiff in any such action, suit or proceeding,
the Fund, the Adviser and the Sub-Adviser agree to indemnify and hold
harmless any Underwriter, to the extent provided in the preceding
paragraph and any such controlling person from and against any loss,
liability, damage or expense by reason by such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Fund, the Adviser and the Sub-Adviser, their
directors, members or managers, any officers of the Fund who sign the
Registration Statement and any person who controls the Fund, the Adviser
or the Sub-Adviser within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, to the same extent as the foregoing indemnity
from the Fund, the Adviser and the Sub-Adviser to each Underwriter, but
only with respect to the Underwriter Information relating to such
Underwriter. If any action, suit or proceeding shall be brought against
the Fund, the Adviser or the Sub-Adviser, any of their directors, members
or managers, any such officer or any such controlling person, based on the
Registration Statement, the Prospectus or any Prepricing Prospectus (or
any amendment or supplement thereto) and in respect of which indemnity may
be sought against any Underwriter pursuant to this paragraph (c), such
31
Underwriter shall have the rights and duties given to each of the Fund,
the Adviser and the Sub-Adviser by paragraph (b) above (except that if the
Fund, the Adviser or the Sub-Adviser shall have assumed the defense
thereof such Underwriter shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof, but the
fees and expenses of such counsel shall be at such Underwriter's expense)
and the Fund, the Adviser and the Sub-Adviser, their directors, managers
or members, any such officer and any such controlling person shall have
the rights and duties given to the Underwriters by paragraph (b) above.
The foregoing indemnity agreement shall be in addition to any liability
which the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred
to therein, then an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Fund, the Adviser and the Sub-Adviser on
the one hand (treated jointly for this purpose as one person) and the
Underwriters on the other from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
the Fund, the Adviser and the Sub-Adviser on the one hand (treated jointly
for this purpose as one person) and of the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Fund, the
Adviser and the Sub-Adviser on the one hand (treated jointly for this
purpose as one person) and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering
32
(before deducting expenses) received by the Fund bear to the total
underwriting discounts and commissions received by the Underwriters, in
each case, as set forth in the table on the cover page of the Prospectus.
The relative fault of the Fund, the Adviser and the Sub-Adviser on the one
hand (treated jointly for this purpose as one person) and of the
Underwriters on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Fund, the Adviser and the Sub-Adviser on the
one hand (treated jointly for this purpose as one person) or by the
Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission.
(e) The Fund, the Adviser, the Sub-Adviser and the Underwriters
agree that it would not be just and equitable if contribution pursuant to
this Section 9 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable
considerations referred to in paragraph (d) above. The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages, liabilities and expenses referred to in paragraph (d) above shall
be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit
or proceeding. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price of the Shares underwritten by it and
distributed to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of
the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters'
33
obligations to contribute pursuant to this Section 9 are several in
proportion to the respective number of Shares set forth opposite their
names in Schedule I (or such number of Shares increased as set forth in
Section 11 hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability from
claimants on claims that are the subject matter of such action, suit or
proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under
this Section 9 shall, subject to the requirements of Release No. 11330 and
Section 17(i) of the 1940 Act, be paid by the indemnifying party to the
indemnified party as such losses, claims, damages, liabilities or expenses
are incurred. The indemnity and contribution agreements contained in this
Section 9 and the representations and warranties of each of the Fund, the
Adviser and the Sub-Adviser set forth in this Agreement shall remain
operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Fund, the Adviser, the Sub-Adviser or
their directors, managers, members, officers or any person controlling the
Fund, the Adviser or the Sub-Adviser, (ii) acceptance of any Shares and
payment therefor hereunder and (iii) any termination of this Agreement. A
successor to any Underwriter or to the Fund, the Adviser or the
Sub-Adviser or their directors, managers, members, officers or any person
controlling the Fund, the Adviser or the Sub-Adviser shall be entitled to
the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 9.
34
(h) The Fund, the Adviser and the Sub-Adviser each acknowledge, and
the Underwriters severally confirm, that the statements in the Prospectus
with respect to (1) the "Price to Public" of the Shares as set forth on
the cover page of the Prospectus, (2) the names and corresponding share
amounts set forth in the table of Underwriters in the first paragraph
under the caption "Underwriting" in the Prospectus, (3) the dollar amount
of the selling concessions and reallowances of selling concessions in the
third paragraph under the caption "Underwriting" in the Prospectus and (4)
statements regarding the possible electronic distribution of Prospectuses
in the seventh paragraph under the caption "Underwriting" in the
Prospectus constitute the only Underwriter Information. The Underwriters
severally confirm that these statements are correct in all material
respects and were so furnished by or on behalf of the Underwriters
severally for use in the Prospectus.
(i) The indemnification provisions of this Section 9 that are
applicable to the Fund are subject to any applicable limitations and
provisions of Section 17(i) of the 1940 Act.
10. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase the Shares hereunder are subject to the accuracy of
and compliance with the representations, warranties and agreements of and by
each of the Fund, the Adviser and the Sub-Adviser contained herein on and as of
the date on which the Registration Statement becomes or became effective, the
date of the Prospectus (and of any amendment or supplement thereto) and the
Closing Date (each, a "Condition Compliance Date" and collectively, the
"Condition Compliance Dates"); to the accuracy and completeness of all
statements made by the Fund, the Adviser, the Sub-Adviser or any of their
respective officers in any certificate delivered to the Representative or its
counsel pursuant to this Agreement on any Condition Compliance Date, and to the
following conditions (each of which shall be satisfied as of each of the
Condition Compliance Dates):
(a) If, at the time this Agreement is executed and delivered, it is
35
necessary for the Registration Statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may
commence, the Registration Statement or such post-effective amendment
shall have become effective not later than 5:30 p.m., New York City time,
on the date hereof or at such later date and time as shall be consented to
in writing by you and all filings, if any, required by Rules 497 and 430A
under the 1933 Act and the 1933 Act Rules and Regulations shall have been
timely made; no order pursuant to Section 8(e) of the 1940 Act shall have
been issued and no proceeding for that purpose shall have been instituted
or, to the knowledge of the Fund, the Adviser or any Underwriter,
threatened by the Commission and any request of the Commission for
additional information (to be included in the Registration Statement or
the Prospectus or otherwise) shall have been complied with to your
satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change or any development involving a
prospective change that does or would have a Material Adverse Effect on
the Fund, the Adviser or the Sub-Adviser (in each case not contemplated by
the Prospectus and other than as a result of changes in market conditions
generally), which in your opinion, would materially adversely affect the
market for the Shares, or (ii) any event or development relating to or
involving the Fund, the Adviser or the Sub-Adviser which makes any
statement made in the Prospectus untrue or which, in the opinion of the
Fund and its counsel or the Underwriters and their counsel, requires the
making of any addition to or change in the Prospectus in order to state a
material fact required by the 1933 Act, the 1940 Act or the Rules and
Regulations or any other law to be stated therein or necessary in order to
make the statements therein not misleading, if amending or supplementing
the Prospectus to reflect such event or development would, in your
opinion, materially adversely affect the market for the Shares.
(c) That you shall have received on the Closing Date an opinion of
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Fund, dated the Closing Date
and addressed to you, as the Representative of the several Underwriters,
36
in substantially the form attached hereto as Exhibit A.
(d) That you shall have received on the Closing Date an opinion of
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel for the Adviser, dated the Closing Date
and addressed to you, as Representative of the several Underwriters, in
substantially the form attached hereto as Exhibit B.
(e) That you shall have received on the Closing Date an Opinion of
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel for the Sub-Adviser, dated the Closing
Date and addressed to you, as the Representative of the several
Underwriters, in substantially the form attached hereto as Exhibit C.
(f) That you shall have received on the Closing Date (i) an opinion
of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), and (ii) a letter from
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, each dated the Closing Date and
addressed to you, as the Representative of the several Underwriters, with
respect to such matters as you may require, and the Fund, the Adviser, the
Sub-Adviser and their respective counsel shall have furnished to such
counsel such documents as they may request for the purpose of enabling
them to pass upon such matters.
(g) That you shall have received letters addressed to you, as the
Representative of the several Underwriters and dated each of the date
hereof and the Closing Date, from Ernst & Young LLP, independent auditors,
substantially in the forms attached hereto as Exhibit D. You also must
receive on the Closing Date a signed letter from such accountants, dated
as of the Closing Date, confirming on the basis of a review in accordance
with the procedures set forth in their letter that nothing has come to
their attention during the period from a date not more than five business
days before the date of this Underwriting Agreement, specified in the
letter, to a date not more than five business days before the Closing
Date, that would require any change in their letter referred to in the
foregoing sentence.
37
(h) (i) No stop order suspending the effectiveness of the
Registration Statement or prohibiting or suspending the use of the
Prospectus (or any amendment or supplement to any of the foregoing) or any
Prepricing Prospectus shall have been issued and no proceedings for such
purpose or for the purpose of commencing an enforcement action against the
Fund, the Adviser or the Sub-Adviser or, with respect to the transactions
contemplated by the Prospectus (or any amendment or supplement thereto)
and this Agreement, may be pending before or, to the knowledge of the
Fund, the Adviser, the Sub-Adviser or any Underwriter or in the reasonable
view of counsel to the Underwriters, shall be threatened or contemplated
by the Commission at or prior to the Closing Date and that any request for
additional information on the part of the Commission (to be included in
the Registration Statement, the Prospectus or otherwise) be complied with
to the satisfaction of the Representative, (ii) there shall not have been
any change in the capital stock of the Fund nor any increase in debt of
the Fund from that set forth in the Registration Statement or the
Prospectus (or any amendment or supplement to either of them) and the Fund
shall not have sustained any material liabilities or obligations, direct
or contingent, other than those reflected in or contemplated by the
Registration Statement or the Prospectus (or any amendment or supplement
to either of them), (iii) since the date of the Prospectus there shall not
have been any material, adverse change in the condition (financial or
other) business, business prospects, properties, net assets or results of
operations of the Fund, the Adviser or the Sub-Adviser, (iv) none of the
Fund, the Adviser or the Sub-Adviser shall have sustained any material
loss or interference with their businesses from any court or from
legislative or other governmental action, order or decree or from any
other occurrence not described in the Registration Statement or the
Prospectus (or any amendment or supplement to either of them), and (v) all
of the representations and warranties of each of the Fund, the Adviser or
the Sub-Adviser contained in this Agreement shall be true and correct on
and as of the date hereof and as of the respective Condition Compliance
Date as if made on and as of such Condition Compliance Date.
38
(i) That none of the Fund, the Adviser, or the Sub-Adviser shall
have failed at or prior to the respective Condition Compliance Date to
have performed or complied with any of the agreements herein contained and
required to be performed or complied with by them at or prior to the such
Condition Compliance Date.
(j) The Shares shall have been accorded a rating of "Aaa" by ▇▇▇▇▇'▇
Investors Service, Inc. and "AAA" by Fitch Ratings, and letters and/or
press releases to such effect, dated on or before the Closing Date, shall
have been delivered to the Representative.
(k) As of the Closing Date, and assuming receipt of the net proceeds
from the sale of the Shares, the 1940 Act Preferred Shares Asset Coverage
and the Preferred Shares Basic Maintenance Amount (each as defined in the
Prospectus) each will be met and a certificate to such effect, signed by
an officer of the Fund, shall have been delivered to the Representative.
(l) That you shall have received on the Closing Date a certificate,
dated such date, of each of the chief executive officer and chief
financial officer of the Fund, and of the President (or a Vice President)
and Treasurer (or an Assistant Treasurer) of each of the Adviser and the
Sub-Adviser certifying that (i) the signers have carefully examined the
Registration Statement, the Prospectus (and any amendments or supplements
to either of them) and this Agreement, (ii) the representations and
warranties of the Fund (with respect to the certificates from such Fund
officers), the representations and warranties of the Adviser (with respect
to the certificates from such officers of the Adviser), and the
representations and warranties of the Sub-Adviser (with respect to the
certificates from such officers of the Sub-Adviser) in this Agreement are
true and correct on and as of the date of the certificate as if made on
such date, (iii) since the date of the Prospectus (and any amendment or
supplement thereto) there has not been any change that does or would have
a Material Adverse Effect on the Fund (with respect to the certificates
from such Fund officers) or the Adviser (with respect to the certificates
39
from such officers of the Adviser) or the Sub-Adviser (with respect to the
certificates from such officers of the Sub-Adviser), (iv) to the knowledge
of such officers after reasonable investigation, no order suspending the
effectiveness of the Registration Statement or prohibiting the sale of any
of the Shares or having a Material Adverse Effect on the Fund (with
respect to the certificates from such Fund officers) or the Adviser (with
respect to the certificates from such officers of the Adviser) or the
Sub-Adviser (with respect to the certificates from such officers of the
Sub-Adviser) has been issued and no proceedings for any such purpose are
pending before or, to the knowledge of such officers, threatened by the
Commission or any court or other regulatory body, any state securities
commission, any national securities exchange, any arbitrator, any court or
any other governmental, regulatory, self-regulatory or administrative
agency or any official, (v) each of the Fund (with respect to certificates
from such Fund officers), the Adviser (with respect to certificates from
such officers of the Adviser) and the Sub-Adviser(with respect to the
certificates from such officers of the Sub-Adviser) has performed and
complied with all agreements that this Agreement require it to perform by
such Closing Date and (vi) with respect to the certificate from such
officers of the Fund, there has not been any change in the capital stock
of the Fund nor any increase in the debt of the Fund from that set forth
in the Prospectus (or any amendment or supplement thereto) and the Fund
has not sustained any material liabilities or obligations, direct or
contingent, other than those reflected in the Prospectus (or any amendment
or supplement thereto).
(m) That the Fund, the Adviser and the Sub-Adviser shall have
furnished to you such further certificates and documents as you shall
reasonably request.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and your counsel acting in good faith.
40
Any certificate or document signed by any officer of the Fund, the Adviser
or the Sub-Adviser and delivered to you, as the Representative of the
Underwriters or to Underwriters' counsel, shall be deemed a representation and
warranty by the Fund, the Adviser or the Sub-Adviser to each Underwriter as to
the statements made therein.
11. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective:
(i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at
the time this Agreement is executed and delivered, it is necessary for the
Registration Statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, when the Registration
Statement or such post-effective amendment has become effective. Until such time
as this Agreement shall have become effective, it may be terminated by the Fund
by notifying you, or by you by notifying the Fund.
If any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they have agreed to purchase hereunder and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares, each non-defaulting Underwriter shall be obligated, severally, in
the proportion which the aggregate number of Shares set forth opposite its name
in Schedule I hereby bears to the aggregate number of Shares set forth opposite
the names of all non-defaulting Underwriters or in such other proportion as you
may specify in accordance with Section 7 of the ▇.▇. ▇▇▇▇▇▇▇ Master Agreement
Among Underwriters, to purchase Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase. If any Underwriter or
Underwriters shall fail or refuse to purchase Shares and the aggregate number of
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares and arrangements satisfactory to you and the Fund for
the purchase of such Shares by one or more non-defaulting Underwriters or other
party or parties approved by you and the Fund are not made within 36 hours after
such default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Fund. In any such case which does not result
in termination of this Agreement, either you or the Fund shall have the right to
41
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and the
Prospectus or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect to any such default of any such Underwriter under this
Agreement. The term "Underwriter" as used in this Agreement includes, for all
purposes of this Agreement, any party not listed in Schedule I hereto who, with
your approval and the approval of the Fund, purchases Shares which a defaulting
Underwriter agreed, but failed or refused, to purchase.
Any notice under this Section 11 may be made by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
12. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Fund or the Adviser by notice to the Fund or the Adviser if
at any time at or prior to the Closing Date (i) 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 trading in securities generally on the New York Stock
Exchange, American Stock Exchange, Nasdaq National Market or the Nasdaq Stock
Market shall have been suspended or limited or minimum or maximum prices shall
have been established or required by such exchanges, the Commission, NASD or
other governmental authority, (ii) additional governmental restrictions not in
force on the date of this Agreement have been imposed upon trading in securities
generally or a general moratorium on commercial banking activities shall have
been declared by Federal or any state's authorities or (iii) there has occurred
any outbreak or material escalation of hostilities or other international or
domestic calamity, crisis or change or development in political, financial,
economic, legal or regulatory conditions or markets, the effect of which is such
as to make it, in your judgment, impracticable or inadvisable to commence or
continue the offering of the Shares at the offering price to the public set
42
forth on the cover page of the Prospectus or to enforce contracts for the resale
of the Shares by the Underwriters. Notice of such termination may be given to
the Fund, the Adviser or the Sub-Adviser by telegram, telecopy or telephone but
shall be subsequently confirmed by letter.
13. EXPENSES. The Fund agrees to pay the following costs and expenses and
all other costs and expenses incident to the performance by the Fund of its
obligations hereunder: (a) the preparation, printing or reproduction, filing
(including, without limitation, the filing or registration fees prescribed by
the 1933 Act, the 1934 Act, the 1940 Act and the Rules and Regulations) and
distribution of the Registration Statement (including exhibits thereto), the
Prospectus, each Prepricing Prospectus and all amendments or supplements to any
of them, (b) the printing (or reproduction) and delivery to the Underwriters
(including postage, air freight charges and charges for counting and packaging)
of such copies of the Registration Statement, the Prospectus, each Prepricing
Prospectus (and all amendments or supplements to any of them, except as provided
in Section 5(f) of this Agreement) as may be reasonably requested for use in
connection with the offering and sale of the Shares, (c) the preparation,
printing, authentication, issuance and delivery of certificates (if any) for the
Shares, including any stamp taxes and transfer agent and registrar fees payable
in connection with the original issuance and sale of such Shares, (d) the
registrations or qualifications of the Shares for offer and sale thereof, if
any, as are required under the securities or Blue Sky laws of the several states
as provided in Section 5(g) hereof (including the reasonable fees, expenses and
disbursements of counsel for the Underwriters relating to the preparation,
printing or reproduction and delivery of the preliminary and supplemental Blue
Sky Memoranda and such registration and qualification), (e) the fees and
expenses of the Fund's independent accountants, counsel for the Fund and of the
transfer agent, (f) the printing (or reproduction) and delivery of this
Agreement, the preliminary and supplemental Blue Sky Memoranda (if any) and all
other company-authorized agreements or other documents printed (or reproduced)
and delivered in connection with the offering of the Shares, (g) the fees
charged by the securities rating agencies rating the Shares, (h) the fees and
expenses charged by the Depository Trust Company and its nominee and (i) the
43
fees and expenses charged by the Bank of New York, as Auction Agent with respect
to the Shares.
Notwithstanding the foregoing, in the event that the sale of the Shares is
not consummated pursuant to Section 2 hereof, the Adviser or the Sub-Adviser
will pay the costs and expenses of the Fund set forth above in this Section
13(a) through (i), and reimbursements of Underwriter expenses in connection with
the offering shall be made in accordance with Section 5(k) hereof.
14. MISCELLANEOUS. Except as otherwise provided in Sections 5, 11 and 12
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (a) if to the Fund, the Adviser or the
Sub-Adviser, c/o Neuberger ▇▇▇▇▇▇ LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇; Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq., with a copy to ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention Art
Delibert (b) if to you, as Representative of the Underwriters, at the office of
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, with a copy to Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Fund, the Adviser, the Sub-Adviser, their directors, officers,
managers, members and the other controlling persons referred to in Section 9
hereof and their respective successors and assigns, to the extent provided
herein and no other person shall acquire or have any right under or by virtue of
this Agreement. Neither the term "successor" nor the term "successors and
assigns" as used in this Agreement shall include a purchaser from any
Underwriter of any of the Shares in his status as such purchaser.
15. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
44
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
45
Please confirm that the foregoing correctly sets forth the agreement among
the Fund, the Adviser, the Sub-Adviser and the several Underwriters.
Very truly yours,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ REALTY INCOME FUND
INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Title: Director
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ MANAGEMENT INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Title: President
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Title: Executive Vice President
Confirmed as of the date first above
written on behalf of themselves and the
other several Under- writers named in
Schedule I hereto.
AS REPRESENTATIVE OF THE SEVERAL UNDERWRITERS
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
46
SCHEDULE I
Underwriters Number of Shares
------------ ----------------
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. 5,692
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated 1,328
Citigroup Global Markets Inc. 780
Total 7,800
===== =====
47
EXHIBIT A
FORM OF ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ OPINION
1. The Fund is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Maryland and is
qualified to do business as a foreign corporation in the State of
New York, which such counsel has been advised by an officer of the
Fund is the only state in which the Fund maintains an office for the
conduct of its business.
2. The Fund has the corporate power and authority to: (i) own its
properties and conduct its business as described in the Registration
Statement and the Prospectus; and (ii) execute, deliver, and perform
its obligations under the Underwriting Agreement and the Fund
Agreements.
3. To such counsel's knowledge, the Fund does not have any
subsidiaries.
4. The Preferred Shares, conform in all material respects as to all
statements as to legal matters relating thereto contained in the
Prospectus. No person is entitled to any preemptive or other similar
rights with respect to the Common Shares or the issuance of
Preferred Shares.
5. The number of authorized Common Shares and Shares is as set forth in
the Prospectus under the caption "The Fund." All Common Shares that
to such counsel's knowledge have been issued and are outstanding
prior to the issuance of the Preferred Shares: (i) have been duly
authorized and validly issued and are fully paid and non-assessable;
and (ii) have been offered and sold by the Fund in compliance with
applicable law.
6. The Preferred Shares have been duly authorized for issuance and sale
to the Underwriters pursuant to the Underwriting Agreement and, when
issued and delivered by the Fund pursuant to the Underwriting
Agreement against payment of the consideration set forth in the
Underwriting Agreement, will be validly issued and fully paid and
non-assessable.
48
7. The Registration Statement, including any Rule 462(b) Registration
Statement, has become effective under the 1933 Act, any required
filing of the Prospectus pursuant to Rule 497(c) or Rule 497(h) has
been made in the manner and within the time period required by Rule
497, and to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or of any Rule 462(b)
Registration Statement has been issued, or proceedings therefor
threatened, under the 1933 Act.
8. The Fund is duly registered with the Commission under the 1940 Act
as a closed-end non-diversified management investment company.
9. Other than with respect to financial statements and related notes
and schedules and any other financial, accounting and statistical
information that is included or incorporated by reference in, or
omitted from, the following documents, as to which such counsel need
express no opinion; (i) the Registration Statement, including any
Rule 462(b) Registration Statement and any Rule 430A Information,
the Prospectus and any amendment or supplement thereto through the
date hereof complied as to form in all material respects with the
requirements of the 1933 Act, the 1940 Act and the Rules and
Regulations thereunder; and (ii) the Fund's notification of
registration on Form N-8A complied as to form in all material
respects with the requirements of the 1940 Act and the Rules and
Regulations thereunder.
10. Insofar as the statements in the Prospectus under the captions
"Description of Preferred Shares" "Tax Matters" and in the
Registration Statement under Item 29 (Indemnification) constitute
summaries of legal matters, provisions of the Fund's charter or
bylaws or legal proceedings or legal conclusions referred to
therein, those statements fairly present the information called for
with respect to those legal matters, documents, proceedings or
conclusions.
11. To such counsel's knowledge, there is no action, suit, proceeding,
inquiry or investigation by or before any court or governmental
agency that is pending against the Fund or to which any of its
properties are subject or that is threatened against the Fund, which
49
may reasonably be expected to result in a Material Adverse Effect or
to materially and adversely affect the properties or assets of the
Fund, the consummation by the Fund of the transactions contemplated
in the Underwriting Agreement or the performance by the Fund of its
obligations thereunder.
12. The terms of the Underwriting Agreement and each of the Fund
Agreements do not violate in any material respect any applicable
provision of 1940 Act, the Rules and Regulations thereunder, the
Advisers Act or the Advisers Act Rules and Regulations.
13. Neither the execution and delivery by the Fund of, and the
performance by the Fund of its obligations under, the Underwriting
Agreement or the Fund Agreements, nor the issuance and sale of the
Preferred Shares to the Underwriters and the use by the Fund of the
proceeds thereof as provided by the Underwriting Agreement and as
described in the Prospectus under the caption "Use of Proceeds": (i)
violate the Fund's charter or bylaws; (ii) violate, breach or
constitute a default or event of default under the terms of any
agreement or instrument that is filed as an exhibit to the
Registration Statement and to which the Fund is a party or by which
its property may be bound, except for violations, breaches or
defaults that would not have a Material Adverse Effect; (iii)
violate the laws of the United States, the States of Maryland and
New York and The Commonwealth of Massachusetts that are, in such
counsel's experience, applicable to the transactions of the types
covered by the Underwriting Agreement and the Fund Agreements (the
"Covered Laws"); (iv) violate the terms of any order of any court,
governmental instrumentality, securities exchange or association or
arbitrator specifically naming the Fund and known to such counsel or
(v) to such counsel's knowledge, require the Fund to obtain any
consent or approval by, or make any filing with, any court,
regulatory body, administrative or other governmental body, agency
or official under any statute, rule, or regulation of the State of
Maryland or of the United States, other than consents, approvals and
filings previously obtained or made and in full force and effect.
50
14. The execution and delivery of, and performance of the Fund's
obligations under, the Underwriting Agreement and each of the Fund
Agreements have been duly authorized by all necessary action of the
Fund, and the Fund has duly executed and delivered the Underwriting
Agreement and each of the Fund Agreements.
15. Each of the Fund Agreements constitutes the legal, valid and binding
obligation of the Fund, enforceable against it in accordance with
its terms, except as the enforceability thereof may be limited by
the effect of bankruptcy, insolvency, fraudulent transfer,
reorganization, receivership, moratorium, and other, similar laws
affecting the rights and remedies of creditors generally and by
general principles of equity (whether applied by a court of law or
equity), and except as rights to indemnity thereunder may be limited
by federal or state securities laws.
In addition, such counsel shall state that they are not opining as to
factual matters, and the character of determinations involved in the
registration process is such that such counsel are not passing upon and do not
assume any responsibility for the accuracy, completeness or fairness of the
information included in the Registration Statement and the Prospectus or in any
amendment or supplement thereto. Such counsel may assume the correctness and
completeness of the information included therein, and such counsel need have
made no independent investigation or verification of that information. However,
such counsel shall state that they have participated in the preparation of the
Registration Statement and the Prospectus and in discussions with certain
officers and directors of the Fund, certain officers and employees of the
Advisers and your Representative, and such counsel shall have reviewed certain
Fund records and documents relative to the Fund, the Adviser and the
Sub-Adviser. Based on that participation and review, such counsel shall advise
you that nothing has come to such counsel's attention that causes such counsel
to believe that the Registration Statement, including any Rule 462(b)
Registration Statement and any Rule 430A Information, at the time it 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, at the time that the Prospectus was issued or at the Closing
Date, included an untrue statement of a material fact or omitted to state a
51
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. This paragraph
does not address, and such counsel need express no opinion with respect to, the
financial statements and related notes and schedules, and other financial,
accounting, and statistical information, included in, incorporated by reference
in, or omitted from the Registration Statement, the Prospectus, or any amendment
or supplement to either of them. Such counsel need also express no opinion with
respect to any matter relating to compliance with financial covenants or
financial requirements.
52
EXHIBIT B
FORM OF ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ADVISER OPINION
i. The Adviser is validly existing as a corporation under the laws of the State
of New York with full corporate power and authority to own or lease all of the
assets owned or leased by it and to conduct its business as described in the
Registration Statement and Prospectus and to enter into and perform its
obligations under the Underwriting Agreement and the Adviser Agreements.
ii. The Adviser is duly registered as an investment adviser under the Advisers
Act and is not prohibited by the Advisers Act or the Investment Company Act from
acting as investment adviser for the Fund under the Advisory Agreement as
contemplated by the Registration Statement and the Prospectus.
iii. The Underwriting Agreement and each Adviser Agreement has been duly and
validly authorized, executed and delivered by the Adviser; each Adviser
Agreement complies in all material respects with all provisions of the
Investment Company Act and the Advisers Act; and assuming due authorization,
execution and delivery by each of the other parties thereto, each Adviser
Agreement constitutes a legal, valid and binding obligation of the Adviser,
enforceable against the Adviser in accordance with its terms, (1) subject, as to
enforcement, to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and to general equitable principles (regardless of whether enforcement
is sought in a proceeding in equity or at law) and (2) except as rights to
indemnity thereunder may be limited by public policy or federal or state
securities laws (except that counsel may state that it expresses no opinion as
to the reasonableness or fairness of compensation payable under the Advisory
Agreement or the Sub-Advisory Agreement).
iv. Neither (A) the execution and delivery by the Adviser of the Underwriting
Agreement or of any Adviser Agreement nor (B) the consummation by the Adviser of
the transactions contemplated by, or the performance of its obligations under,
the Underwriting Agreement or any Adviser Agreement conflicts or will conflict
with, or results or will result in a breach of, (i) the charter or by-laws of
the Adviser, (ii) any agreement or instrument listed on an Annex to such opinion
(which the Adviser, in an officer's certificate accompanying such opinion or
53
otherwise delivered to the Underwriters on the Closing Date, shall have
identified as the only material agreements or instruments to which the Adviser
is a party or by which the Adviser is bound) or (iii) any applicable United
States federal or New York law, rule or regulation (other than state securities
or "blue sky" laws, as to which such counsel need express no opinion), or order
of any New York or United States federal court, governmental instrumentality,
securities exchange or association or arbitrator, (or any other orders of any
court, governmental instrumentality, securities exchange or association or
arbitrator, whether foreign or domestic, in any other jurisdiction, as set forth
on an Annex to such opinion (which the Adviser, in an officer's certificate
accompanying such opinion or otherwise delivered to the Underwriters on the
Closing Date, shall have identified as the only orders that are material to the
Adviser) in each case specifically naming the Adviser and (in the case of New
York or United States federal orders) known to such counsel, except in the case
of each of clauses (ii) and (iii) for such conflicts or breaches which do not,
either alone or in the aggregate, have a material adverse effect on the
Adviser's ability to perform its obligations under the Underwriting Agreement or
the Adviser Agreements.
v. To such counsel's knowledge, no consent, approval, authorization or order of
any New York or United States federal court, governmental agency or body or
securities exchange or association is required for the consummation of the
transactions contemplated in, or the performance by the Adviser of its
obligations under, the Underwriting Agreement or any Adviser Agreement, except
(i) such as have been obtained under the United States federal securities laws
and (ii) may be required by the New York Stock Exchange or under state
securities or "blue sky" laws, in connection with the purchase and distribution
of the Shares by the Underwriters pursuant to the Underwriting Agreement.
vi. To such counsel's knowledge, there is no legal or governmental proceeding
pending or threatened against the Adviser that is either (i) required to be
described in the Registration Statement or Prospectus that is not described
therein or (ii) which would, under Section 9 of the Investment Company Act, make
the Adviser ineligible to act as the Fund's investment adviser.
54
EXHIBIT C
FORM OF ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ SUB-ADVISER OPINION
i. The Sub-Adviser is validly existing as a limited liability company under the
laws of the State of Delaware with full power and authority to own or lease all
of the assets owned or leased by it and to conduct its business as described in
the Registration Statement and Prospectus and to enter into and perform its
obligations under the Underwriting Agreement and Sub-Advisory Agreement.
ii. The Sub-Adviser is duly registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act or the Investment Company
Act from acting as investment adviser for the Fund under the Sub-Advisory
Agreement as contemplated by the Registration Statement and the Prospectus.
iii. Each of the Underwriting Agreement and the Sub-Advisory Agreement has been
duly and validly authorized, executed and delivered by the Sub-Adviser; the
Sub-Advisory Agreement complies in all material respects with all provisions of
the Investment Company Act and the Advisers Act; and assuming due authorization,
execution and delivery by each of the other parties thereto, the Sub-Advisory
Agreement constitutes a legal, valid and binding obligation of the Sub-Adviser,
enforceable against the Sub-Adviser in accordance with its terms, (1) subject,
as to enforcement, to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and to general equitable principles (regardless of whether enforcement
is sought in a proceeding in equity or at law) and (2) except as rights to
indemnity thereunder may be limited by public policy or federal or state
securities laws (except that counsel my state that it expresses no opinion as to
the reasonableness or fairness of compensation payable under the Sub-Advisory
Agreement).
iv. Neither (A) the execution and delivery by the Sub-Adviser of the
Underwriting Agreement or the Sub-Advisory Agreement nor (B) the consummation by
the Sub-Adviser of the transactions contemplated by, or the performance of its
obligations under, the Underwriting Agreement or the Sub-Advisory Agreement
conflicts or will conflict with, or results or will result in a breach of, (i)
the organizational documents of the Sub-Adviser, (ii) any agreement or
55
instrument listed on an Annex to such opinion (which the Sub-Adviser, in an
officer's certificate accompanying such opinion or otherwise delivered to the
Underwriters on the Closing Date, shall have identified as the only material
agreements or instruments to which the Adviser is a party or by which the
Sub-Adviser is bound) or (iii) any applicable United States federal or Delaware
law, rule or regulation (other than state securities or "blue sky" laws, as to
which such counsel need express no opinion), or order of any Delaware or United
States federal court, governmental instrumentality, securities exchange or
association or arbitrator, (or any other orders of any court, governmental
instrumentality, securities exchange or association or arbitrator, whether
foreign or domestic, in any other jurisdiction, as set forth on an Annex to such
opinion (which the Sub-Adviser, in an officer's certificate accompanying such
opinion or otherwise delivered to the Underwriters on the Closing Date, shall
have identified as the only orders that are material to the Sub-Adviser) in each
case specifically naming the Sub-Adviser and (in the case of Delaware or United
States federal orders) known to such counsel, except in the case of each of
clauses (ii) and (iii) for such conflicts or breaches which do not, either alone
or in the aggregate, have a material adverse effect on the Sub-Adviser's ability
to perform its obligations under the Underwriting Agreement or the Sub-Advisory
Agreement.
v. To such counsel's knowledge, no consent, approval, authorization or order of
any New York or United States federal court, governmental agency or body or
securities exchange or association is required for the consummation of the
transactions contemplated in, or the performance by the Sub-Adviser of its
obligations under, the Underwriting Agreement or the Sub-Advisory Agreement,
except (i) such as have been obtained under the United States federal securities
laws and (ii) may be required by the New York Stock Exchange or under state
securities or "blue sky" laws, in connection with the purchase and distribution
of the Shares by the Underwriters pursuant to the Underwriting Agreement.
vi. To such counsel's knowledge, there is no legal or governmental proceeding
pending or threatened against the Sub-Adviser that is either (i) required to be
described in the Registration Statement or Prospectus that is not described
therein or (ii) which would, under Section 9 of the Investment Company Act, make
the Sub-Adviser ineligible to act as the Fund's investment adviser.
56
EXHIBIT D
FORM OF ERNST & YOUNG LLP COMFORT LETTER
June , 2003
The Board of Directors of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Realty Income Fund Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
as Managing Representative of the Underwriters
Ladies and Gentlemen:
We have audited the statement of assets and liabilities of ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Realty Income Fund Inc. (the "Fund") as of [ ], 2003 (the "financial
statement") included in Pre-effective Amendment No. [ ] to the Registration
Statement on Form N-2 filed by the Fund under the Securities Act of 1933 (the "
1933 Act") (File No. 333-105293) and under the Investment Company Act of 1940
(the "1940 Act," collectively, the 1933 Act and the 1940 Act, the "Acts") (File
No. 811-21315); such statement and our report with respect to such statement are
included in the Registration Statement.
In connection with the Registration Statement:
1. We are independent auditors with respect to the Fund within the
meaning of the Acts and the applicable rules and regulations adopted
thereunder by the Securities and Exchange Commission (the "SEC").
2. In our opinion, the financial statement audited by us and
included in the Registration Statement complies as to form in all respects
with the applicable accounting requirements of the Acts and the related
rules and regulations thereunder adopted by the SEC.
3. For purposes of this letter we have read the minutes of all
meetings of the Shareholders, the Board of Directors and all Committees of
the Board of Directors of the Fund as set forth in the minute books at the
offices of the Fund, officials of the Fund having advised us that the
57
minutes of all such meetings through [ ], 2003, were set forth therein.
4. Fund officials have advised us that no financial statements as of
any date subsequent to [ ], 2003, are available. We have made inquiries of
certain officials of the Fund who have responsibility for financial and
accounting matters regarding whether there was any change at [ ], 2003, in
the capital shares or net assets of the Fund as compared with amounts
shown in the [ ], 2003, statement of assets and liabilities included in
the Registration Statement, except for changes that the Registration
Statement discloses have occurred or may occur. On the basis of our
inquiries and our reading of the minutes as described in Paragraph 3,
nothing came to our attention that caused us to believe that there were
any such changes.
5. In addition to the procedures referred to in clauses 3 and 4
about, we have performed other specified procedures, not constituting an
audit, with respect to certain amounts, percentages, numerical data and
financial information appearing in the Registration Statement, which have
previously been specified by the Managing Representative and which shall
be specified in this letter, and have compared such items with, and have
found such items to be in agreement with, the accounting and financial
records of the Fund.
The foregoing procedures do not constitute an audit made in accordance
with generally accepted auditing standards. Accordingly, we make no
representations as to the sufficiency of the foregoing procedures for your
purposes.
This letter is solely for the information of the addressees and to assist
the underwriters in conducting and documenting their investigation of the
affairs of the Fund in connection with the offering of the securities covered by
the Registration Statement, and is not to be used, circulated, quoted or
otherwise referred to within or without the underwriting group for any other
purpose, including but not limited to the registration, purchase or sale of
securities, nor is it to be filed with or referred to in whole or in part in the
Registration Statement or any other document, except that reference may be made
to it in the underwriting agreement or in any list of closing documents
58
pertaining to the offering of the securities covered by the Registration
Statement.
59