1
EXHIBIT (h)(1)
▇▇▇▇▇ ▇▇▇▇▇ PENNSYLVANIA MUNICIPAL INCOME TRUST
900 AUCTION PREFERRED SHARES
UNDERWRITING AGREEMENT
March 1, 1999
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC.
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
c/o PaineWebber Incorporated
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇ ▇▇▇▇▇ Pennsylvania Municipal Income Trust, a
Massachusetts business trust (the "Trust"), proposes to issue and sell to the
underwriters named in Schedule 1 hereto (the "Underwriters"), an aggregate of
900 preferred shares of beneficial interest, par value $0.01 per share,
designated Auction Preferred Shares of the Trust, with a liquidation preference
of $25,000 per share (the "APS").
▇▇▇▇▇ ▇▇▇▇▇ Management, a Massachusetts business trust ("▇▇▇▇▇
▇▇▇▇▇" or the "Investment Adviser"), will act as the Trust's investment adviser
pursuant to an Investment Advisory Agreement by and between the Trust and the
Investment Adviser, dated as of December 21, 1998 (the "Investment Advisory
Agreement"). The Trust has engaged ▇▇▇▇▇ ▇▇▇▇▇ to act as its administrator
pursuant to an Administration Agreement, dated as of December 21, 1998.
Investors Bank & Trust Company ("IBT") will act as the custodian (the
"Custodian") of the Trust's cash and portfolio assets pursuant to a Custody
Agreement, effective as of December 21, 1998 (the "Custody Agreement"). First
Data Investor Services Group will act as the Trust's transfer agent and dividend
disbursing agent (the "Transfer Agent") pursuant to a transfer agency agreement,
dated as of December 21, 1998 (the "Transfer Agency Agreement"). Banker's Trust
Corporation will act as the Trust's auction agent (the "Auction Agent") pursuant
to an Auction Agency Agreement, dated as of March 4, 1999 (the "Auction
2
Agency Agreement"). The Trust has entered into a Letter Agreement, dated as of
March 4, 1999 with the Depository Trust Company (the "DTC Agreement"). In
addition, ▇▇▇▇▇ ▇▇▇▇▇ has retained PaineWebber Incorporated, which is also one
of the Underwriters, to serve as the Trust's Shareholder Servicing Agent
pursuant to a shareholder servicing agreement (the "Shareholder Servicing
Agreement"), dated as of January 29, 1999.
The Trust and the Investment Adviser each hereby confirms as
follows their agreements with the Underwriters.
1. Sale and Purchase; Compensation
(a) The Trust will issue and sell to each
Underwriter, and each Underwriter will purchase from the Trust, the number APS
set forth opposite such Underwriter's name in Schedule 1 hereto, at the purchase
price per share of $24,750.
(b) The obligations of the Underwriters under this
Underwriting Agreement are several and not joint and are undertaken on the basis
of the representations and are subject to the conditions set forth in this
Underwriting Agreement.
2. Payment and Delivery. Delivery by the Trust of the APS (the
"APS Closing") to the Underwriters against payment of the purchase price by wire
transfer of Federal Funds or similar same day funds to the Trust for the APS,
will take place at the offices of PaineWebber Incorporated (the "Managing
Representative"), 1285 Avenue of the Americas, New York, New York or such other
location as is agreed upon by the parties hereto, or through the facilities of
the Depository Trust Company or another mutually agreeable facility, at 9:00
a.m., New York City time, on the third business day following the date of this
Underwriting Agreement, or at such time on such other date, not later than ten
business days after the date of this Underwriting Agreement, as may be agreed
upon by the Trust and the Managing Representative (the "APS Closing Date").
A certificate in definitive form representing the APS to be
purchased by the Underwriters registered in the name of Cede & Co., as nominee
for the Depository Trust Company, shall be delivered by or on behalf of the
Trust to DTC for the account of the Underwriters.
3. Registration Statement and Prospectus; Public Offering. The
Trust has filed with the Securities and Exchange Commission (the "Commission"),
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), the
Investment
2
3
Company Act of 1940, as amended (the "Investment Company Act"), and the
published rules and regulations adopted by the Commission under the Securities
Act (the "Securities Act Rules") and the Investment Company Act (the "Investment
Company Act Rules"), a Notification of Registration on Form N-8A (the
"Notification") pursuant to Section 8 of the Investment Company Act and a
registration statement on Form N-2 (File Nos. 333-72025 and 811-09141) relating
to the APS (the "registration statement"), including a preliminary prospectus
(including any preliminary statement of additional information), and such
amendments to such registration statement as may have been required to the date
of this Underwriting Agreement. The preliminary prospectus (including any
preliminary statement of additional information) is to be used in connection
with the offering and sale of the APS. The term "Preliminary Prospectus" as used
herein means any preliminary prospectus (including any preliminary statement of
additional information) included at any time as a part of the registration
statement and any preliminary prospectus (including any preliminary statement of
additional information) omitted therefrom pursuant to the Securities Act Rules.
The Trust has furnished the Managing Representative copies of
such registration statement, each amendment to such registration statement filed
by the Trust with the Commission and the Preliminary Prospectus filed by the
Trust with the Commission or used by the Trust. If the registration statement
has not become effective, a further amendment (the "Final Amendment") to such
registration statement, including the forms of final prospectus (including any
final statement of additional information), necessary to permit such
registration statement to become effective will promptly be filed by the Trust
with the Commission. If such registration statement has become effective and any
prospectus (including any statement of additional information) contained therein
omits certain information at the time of effectiveness pursuant to Rule 430A of
the Securities Act Rules, a final prospectus (the "Rule 430A Prospectus")
containing such omitted information will be filed by the Trust with the
Commission in accordance with Rule 497(h) of the Securities Act Rules. The
registration statement as amended at the time it becomes or became effective
(the "Effective Date"), including financial statements and all exhibits, and any
information deemed to be included by Rule 430A, is called the "Registration
Statement." The term "Prospectus" means the prospectus (including any statement
of additional information) in the form in which it is first filed with the
Commission pursuant to Rule 497(b), (h) or (j) of the Securities Act Rules, as
the case may be.
The Trust and the Investment Adviser understand that the
Underwriters propose to make a public offering of the APS, as described in the
Prospectus, as soon after the Effective Date (or, if later, after the date this
Underwriting Agreement is
3
4
signed) as the Managing Representative deems advisable. The Trust confirms that
the Underwriters and dealers have been authorized to distribute the Preliminary
Prospectus relating to the APS included in the initial filing of the
registration statement and are authorized to distribute the Prospectus and any
amendments or supplements thereto.
4. Representations.
(a) Each of the Trust and the Investment Adviser
jointly and severally represents to each Underwriter as follows:
(i) On (A) the Effective Date and the date
on which the Prospectus is first filed with the Commission pursuant to
Rule 497(b), (h) or (j) of the Securities Act Rules, as the case may
be, (B) the date on which any post-effective amendment to the
Registration Statement (except any post-effective amendment which is
filed with the Commission after the later of (x) one year from the date
of this Underwriting Agreement or (y) the date on which the
distribution of the APS is completed) became or becomes effective or
any amendment or supplement to the Prospectus was or is filed with the
Commission and (C) the APS Closing Date, the Registration Statement,
the Prospectus and any such amendment or supplement thereto and the
Notification complied or will comply in all material respects with the
requirements of the Securities Act, the Investment Company Act, the
Securities Act Rules and the Investment Company Act Rules, as the case
may be. On the Effective Date and on the date that any post-effective
amendment to the Registration Statement (except any post-effective
amendment which is filed with the Commission after the later of (x) one
year from the date of this Underwriting Agreement or (y) the date on
which the distribution of the APS is completed) became or becomes
effective, neither the Registration Statement nor any such amendment
did or will contain any untrue statement of a material fact or omit to
state a material fact required to be stated in it or necessary to make
the statements in it not misleading. At the Effective Date and, if
applicable, the date the Prospectus or any amendment or supplement to
the Prospectus was or is filed with the Commission and at the APS
Closing Date, the Prospectus did not or will not, as the case may be,
contain any untrue statement of a material fact or omit to state a
material fact required to be stated in it or necessary to make the
statements in it, in light of the circumstances under which they were
made, not misleading. The foregoing representa-
4
5
tions in this Section 4(a)(i) do not apply to statements or omissions
relating to the Underwriters made in reliance on and in conformity with
information furnished in writing to the Trust by the Underwriters
expressly for use in the Registration Statement, the Prospectus, or any
amendments or supplements thereto, as described in Section 7(f) hereof.
(ii) The Trust has been duly formed and is
validly existing as a business trust under the laws of The Commonwealth
of Massachusetts; the Agreement and Declaration of Trust of the Trust,
as amended through the date hereof (the "Declaration of Trust"), and
the Amended Bylaws of the Trust, adopted in connection with the
issuance of the APS and as amended through the date hereof (the
"Amended Bylaws"), confer upon the Trust full power and authority to
conduct all the activities conducted by it, to own or lease all assets
owned or leased by it and to conduct its business as described in the
Registration Statement and Prospectus; the Trust is duly licensed and
qualified to do business and in good standing in each jurisdiction in
which its ownership or leasing of property or its conducting of
business requires such qualification, except where the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Trust; and the Trust owns, possesses or has obtained and
currently maintains all governmental licenses, permits, consents,
orders, approvals and other authorizations, whether foreign or
domestic, necessary to carry on its business as contemplated in the
Prospectus. The Trust has no subsidiaries.
(iii) The capitalization of the Trust is as
set forth in the Registration Statement and the Prospectus. The common
shares of beneficial interest of the Trust, par value $.01 per share
(the "Common Shares"), and the APS conform in all material respects to
the description of them in the Prospectus. All the outstanding Common
Shares have been duly authorized and are validly issued, fully paid and
nonassessable (except as described in the Registration Statement). The
APS to be issued and delivered to and paid for by the Underwriters in
accordance with this Underwriting Agreement against payment therefor as
provided by this Underwriting Agreement have been duly authorized and
when issued and delivered to the Underwriters will have been validly
issued and will be fully paid and nonassessable (except as described in
the Registration Statement). No person is entitled to any
5
6
preemptive or other similar rights in connection with the issuance of
the APS.
(iv) The Trust is duly registered with the
Commission under the Investment Company Act as a non-diversified,
closed-end management investment company, and, subject to the filing of
the Final Amendment, if not already filed, all action under the
Securities Act, the Investment Company Act, the Securities Act Rules
and the Investment Company Act Rules, as the case may be, necessary to
make the public offering and consummate the sale of the APS as provided
in this Underwriting Agreement has or will have been taken by the
Trust.
(v) The Trust has full power and authority
to enter into each of this Underwriting Agreement, the Investment
Advisory Agreement, the Administration Agreement, the Custody
Agreement, the Transfer Agency Agreement, the Auction Agency Agreement
and the DTC Agreement (collectively, the "Trust Agreements") and to
perform all of the terms and provisions hereof and thereof to be
carried out by it and (A) each Trust Agreement has been duly and
validly authorized, executed and delivered by or on behalf of the
Trust, (B) each Trust Agreement does not violate in any material
respect any of the applicable provisions of the Investment Company Act,
the Investment Advisers Act of 1940 (the "Advisers Act"), the
Investment Company Act Rules and the rules and regulations adopted by
the Commission under the Advisers Act (the "Advisers Act Rules"), as
the case may be, and (C) assuming due authorization, execution and
delivery by the other parties thereto, each Trust Agreement constitutes
the legal, valid and binding obligation of the Trust enforceable in
accordance with its terms, (1) subject, as to enforcement, to
applicable bankruptcy, insolvency and 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 federal
or state securities laws.
(vi) None of (A) the execution and delivery
by the Trust of the Trust Agreements, (B) the issue and sale by the
Trust of the APS as contemplated by this Underwriting Agreement and (C)
the performance by the Trust of its obligations under any of the Trust
6
7
Agreements or consummation by the Trust of the other transactions
contemplated by the Trust Agreements conflicts with or will conflict
with, or results or will result in a breach of, the Agreement and
Declaration of Trust of the Trust, dated as of December 10, 1998 (the
"Declaration of Trust") or the Bylaws of the Trust, as amended through
the date hereof, establishing the powers, preferences and rights of the
APS (the "Amended Bylaws") or any agreement or instrument to which the
Trust is a party or by which the Trust is bound, or any law, rule or
regulation, or order of any court, governmental instrumentality,
securities exchange or association or arbitrator, whether foreign or
domestic, applicable to the Trust, other than state securities or "blue
sky" laws applicable in connection with the purchase and distribution
of the APS by the Underwriters pursuant to this Underwriting Agreement.
(vii) The Trust is not currently in breach
of, or in default under, any written agreement or instrument to which
it is a party or by which it or its property is bound or affected.
(viii) No person has any right to the
registration of any securities of the Trust because of the filing of
the registration statement.
(ix) No consent, approval, authorization or
order of any court or governmental agency or body or securities
exchange or association, whether foreign or domestic, is required by
the Trust for the consummation by the Trust of the transactions to be
performed by the Trust or the performance by the Trust of all the terms
and provisions to be performed by or on behalf of it in each case as
contemplated in the Trust Agreements, except such as (A) have been
obtained under the Securities Act, the Investment Company Act, the
Advisers Act, the Securities Act Rules, the Investment Company Act
Rules, and the Advisers Act Rules, and (B) 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 APS by the
Underwriters pursuant to this Underwriting Agreement.
(x) Deloitte & Touche LLP, whose report
appears in the Prospectus, are independent public accountants with
respect to the
7
8
Trust as required by the Securities Act, the Investment Company Act,
the Securities Act Rules and the Investment Company Act Rules.
(xi) The financial statements included in
the Registration Statement and the Prospectus present fairly in all
material respects, in accordance with generally accepted accounting
principles in the United States applied on a consistent basis, the
financial condition of the Trust at the dates and for the periods
indicated.
(xii) The Trust will maintain a system of
internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is permitted
only in accordance with management's general or specific authorization;
and (D) the recorded accountability for assets is compared with
existing assets through an asset reconciliation procedure or otherwise
at reasonable intervals and appropriate action is taken with respect to
any differences.
(xiii) Other than as set forth in the
Prospectus, subsequent to the date of the unaudited financial
statements in the Registration Statement and Prospectus, (A) the Trust
has not incurred any liabilities or obligations, direct or contingent
(whether or not in the ordinary course of business), or entered into
any transactions, not in the ordinary course of business, that are
material to the Trust, (B) there has not been any material change in
the Common Shares or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, shareholders' equity
or results of operations of the Trust, that might materially and
adversely affect the property or assets thereof, (C) there has been no
dividend or distribution paid or declared in respect of any class of
the Trust's shares of beneficial interest, and (D) the Trust has not
incurred any debt or issued any senior security;
(xiv) There is no action, suit or proceeding
before or by any court, commission, regulatory body, administrative
agency or other governmental agency or body, foreign or domestic, now
pending,
8
9
or, to the knowledge of the Trust, threatened against or affecting the
Trust, which (A) might result in any material adverse change in the
condition, financial or otherwise, business affairs or business
prospects of the Trust or might materially adversely affect the
properties or assets of the Trust or (B) is of a character required to
be described in the Registration Statement or the Prospectus; and there
are no contracts, franchises or other documents that are of a character
required to be described in, or that are required to be filed as
exhibits to, the Registration Statement that have not been described or
filed as required.
(xv) The Trust intends to direct the
investment of the proceeds of the offering of the APS in such a manner
as to comply with the requirements of Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code").
(xvi) The Common Shares are listed on the
New York Stock Exchange.
(xvii) The APS have been, or prior to the
APS Closing Date will be, assigned a rating of "AAA" by Standard &
Poor's Ratings Group ("Standard & Poor's").
(xviii) All advertisements and other sales
literature (collectively, "sales materials") authorized in writing or
prepared by the Trust for use in connection with the public offering of
the APS complied and comply with the requirements of the Securities
Act, the Securities Act Rules and the rules and interpretations of the
NASD and no such sales materials contained or contain any untrue
statement of a material fact or omitted or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading in light of the circumstances in
which they were made, including the Securities Act and the Securities
Act Rules.
(b) The Investment Adviser represents to each
Underwriter as follows:
(i) The Investment Adviser has been duly
formed, is validly existing as a business trust under the laws of The
Commonwealth of Massachusetts with full power and authority to conduct
all of
9
10
the activities conducted by it, 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 the Investment Adviser is
duly licensed and qualified to do business and in good standing in each
jurisdiction in which it is required to be so qualified, except to the
extent that failure to be so qualified or be in good standing would not
have a material adverse affect on the Investment Adviser; and the
Investment Adviser owns, possesses or has obtained and currently
maintains all governmental licenses, permits, consents, orders,
approvals and other authorizations, whether foreign or domestic,
necessary to carry on its business as contemplated in the Registration
Statement and the Prospectus.
(ii) The Investment Adviser is (A) duly
registered as an investment adviser under the Advisers Act and (B) not
prohibited by the Advisers Act, the Investment Company Act, the
Advisers Act Rules or the Investment Company Act Rules from acting as
the investment adviser for the Trust as contemplated by the Investment
Advisory Agreement, the Registration Statement and the Prospectus.
(iii) The Investment Adviser has full power
and authority to enter into each of this Underwriting Agreement, the
Investment Advisory Agreement, the Administration Agreement and the
Shareholder Servicing Agreement (collectively, this Underwriting
Agreement, the Investment Advisory Agreement, the Administration
Agreement and the Shareholder Servicing Agreement being referred to as
the "Investment Adviser Agreements") and to carry out all the terms and
provisions hereof and thereof to be carried out by it; and each
Investment Adviser Agreement has been duly and validly authorized,
executed and delivered by the Investment Adviser; none of the
Investment Adviser Agreements violate in any material respect any of
the applicable provisions of the Investment Company Act, the Advisers
Act, the Investment Company Act Rules and the Advisers Act Rules; and
assuming due authorization, execution and delivery by the other parties
thereto, each Investment Adviser Agreement constitutes a legal, valid
and binding obligation of the Investment Adviser, enforceable in
accordance with its terms, (1) subject, as to enforcement, to
applicable bankruptcy, insolvency and 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
10
11
as rights to indemnity thereunder may be limited by federal or state
securities laws.
(iv) Neither (A) the execution and delivery
by the Investment Adviser of any Investment Adviser Agreement by the
Investment Adviser nor (B) the consummation by the Investment Adviser
of the transactions contemplated by, or the performance of its
obligations under any Investment Adviser Agreement conflicts or will
conflict with, or results or will result in a breach of, the Agreement
and Declaration of Trust or Bylaws of the Investment Adviser or any
agreement or instrument to which the Investment Adviser is a party or
by which the Investment Adviser is bound, or any law, rule or
regulation, or order of any court, governmental instrumentality,
securities exchange or association or arbitrator, whether foreign or
domestic, applicable to the Investment Adviser.
(v) No consent, approval, authorization or
order of any court, governmental agency or body or securities exchange
or association, whether foreign or domestic, is required for the
consummation of the transactions contemplated in, or the performance by
the Investment Adviser of its obligations under, any Investment Adviser
Agreement, as the case may be, except such as (A) have been obtained
under the Investment Company Act, the Advisers Act, the Securities Act,
the Investment Company Act Rules, the Advisers Act Rules and the
Securities Act Rules, and (B) may be required under state securities or
"blue sky" laws, in connection with the purchase and distribution of
the APS by the Underwriters pursuant to this Underwriting Agreement.
(vi) The description of the Investment
Adviser and its business, and the statements attributable to the
Investment Adviser, in the Registration Statement and the Prospectus
complies with the requirements of the Securities Act, the Investment
Company Act, the Securities Act Rules and the Investment Company Act
Rules and do not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
(vii) There is no action, suit or proceeding
before or by any court, commission, regulatory body, administrative
agency or
11
12
other governmental agency or body, foreign or domestic, now pending or,
to the knowledge of the Investment Adviser, threatened against or
affecting the Investment Adviser of a nature required to be disclosed
in the Registration Statement or Prospectus or that might reasonably be
expected to result in any material adverse change in the condition,
financial or otherwise, business affairs or business prospects of the
Investment Adviser or the ability of the Investment Adviser to fulfill
its respective obligations under any Investment Adviser Agreement.
(viii) In the event that the Trust or the
Investment Adviser makes available any promotional materials (other
than the sales materials) intended for use only by qualified
broker-dealers and registered representatives thereof by means of an
Internet web site or similar electronic means, the Investment Adviser
will install and maintain pre-qualification and password-protection or
similar procedures which will effectively prohibit access to such
promotional materials by persons other than qualified broker-dealers
and registered representatives thereof.
5. Agreements of the Parties.
(a) If the registration statement relating to the APS
has not yet become effective, the Trust will promptly file the Final Amendment,
if not previously filed, with the Commission, and will use its best efforts to
cause such registration statement to become effective and, as soon as the Trust
is advised, will advise the Representative when the Registration Statement or
any amendment thereto has become effective. 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 Securities Act Rules,
the Trust will file a 430A Prospectus pursuant to Rule 497(h) of the Securities
Act Rules as promptly as practicable, but no later than the second business day
following the earlier of the date of the determination of the offering price of
the APS or the date the Prospectus is first used after the Effective Date. If
the Registration Statement has become effective and the Prospectus contained
therein does not so omit such information, the Trust will file a Prospectus
pursuant to Rule 497(b) or (j) of the Securities Act Rules as promptly as
practicable, but no later than the fifth business day following the date of the
later of the Effective Date or the commencement of the public offering of the
APS after the Effective Date. In either case, the Trust will provide the
Managing Representative satisfactory evidence of the filing. The Trust will not
file with the Commission any Prospectus or any other amendment (except any
post-
12
13
effective amendment which is filed with the Commission after the later of (x)
one year from the date of this Underwriting Agreement or (y) the date on which
distribution of the APS is completed) or supplement to the Registration
Statement or the Prospectus unless a copy has first been submitted to the
Managing Representative a reasonable time before its filing and the Managing
Representative has not objected to it in writing within a reasonable time after
receiving the copy.
(b) For the period of three years from the date
hereof, the Trust will advise the Managing Representative promptly (1) of the
issuance by the Commission of any order in respect of the Trust or the
Investment Adviser which relates to the Trust, or which relates to any material
arrangements or proposed material arrangements involving the Trust or the
Investment Adviser, (2) of the initiation or threatening of any proceedings for,
or receipt by the Trust of any notice with respect to, the suspension of the
qualification of the APS for sale in any jurisdiction or the issuance of any
order by the Commission suspending the effectiveness of the Registration
Statement, (3) of receipt by the Trust, or any representative or attorney of the
Trust, of any other communication from the Commission relating in any material
way to the Trust, the Registration Statement, the Notification, any Preliminary
Prospectus, the Prospectus or to the transactions contemplated by this
Underwriting Agreement and (4) the issuance by any court, regulatory body,
administrative agency or other governmental agency or body, whether foreign or
domestic, of any order, ruling or decree, or the threat to initiate any
proceedings with respect thereto, regarding the Trust, which relates in any
material way to the Trust or any material arrangements or proposed material
arrangements involving the Trust. The Trust will make every reasonable effort to
prevent the issuance of any order suspending the effectiveness of the
Registration Statement and, if any such order is issued, to obtain its lifting
as soon as possible.
(c) If not delivered prior to the date of this
Underwriting Agreement, the Trust will deliver to the Managing Representative,
without charge, a signed copy of the registration statement and the Notification
and of any amendments (except any post-effective amendment which is filed with
the Commission after the later of (x) one year from the date of this
Underwriting Agreement or (y) the date on which the distribution of the APS is
completed) to either the Registration Statement or the Notification (including
all exhibits filed with any such document) and as many conformed copies of the
registration statement and any amendments thereto (except any post-effective
amendment which is filed with the Commission after the later of (x) one year
from the date of this Underwriting Agreement or (y) the date on which the
distribution of the APS is completed) (excluding exhibits) as the Managing
Representative may reasonably request.
13
14
(d) During such period as a prospectus is required by
law to be delivered by an underwriter or a dealer, the Trust will deliver,
without charge, to the Underwriters and any dealers, at such office or offices
as the Underwriters may designate, as many copies of the Prospectus as the
Underwriters may reasonably request, and, if any event occurs during such period
as a result of which it is necessary to amend or supplement the Prospectus, in
order to make the statements therein, in light of the circumstances existing
when such Prospectus is delivered to a purchaser of APS, not misleading in any
material respect, or if during such period it is necessary to amend or
supplement the Prospectus to comply with the Securities Act, the Investment
Company Act, the Securities Act Rules or the Investment Company Act Rules, the
Trust promptly will prepare, submit to the Managing Representative, file with
the Commission and deliver, without charge, to the Underwriters and to dealers
(whose names and addresses the Managing Representative will furnish to the
Trust) to whom APS may have been sold by the Underwriters, and to other dealers
on request, amendments or supplements to the Prospectus so that the statements
in such Prospectus, as so amended or supplemented, will not, in light of the
circumstances existing when such Prospectus is delivered to a purchaser, be
misleading in any material respect and will comply with the Securities Act, the
Investment Company Act, the Securities Act Rules and the Investment Company Act
Rules. Delivery by the Underwriters of any such amendments or supplements to the
Prospectus will not constitute a waiver of any of the conditions in Section 6
hereof.
(e) The Trust will make generally available to
holders of the Trust's securities, 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 falls, an earnings statement, if applicable,
satisfying the provisions of Section 11(a) of the Securities Act and, at the
option of the Trust, Rule 158 of the Securities Act Rules.
(f) The Trust will take such actions as the Managing
Representative reasonably requests in order to qualify the APS for offer and
sale under the securities or "blue sky" laws of such jurisdictions as the
Underwriters reasonably designate; provided that the Trust shall not be required
in connection therewith or as a condition thereof to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction.
(g) The Trust will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the Trust's counsel and
accountants in connection with the registration of the APS and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary
14
15
Prospectus and the Prospectus and amendments and supplements thereto and the
mailing and delivering of copies thereof to the Underwriters and dealers; (ii)
the cost of printing or reproducing this Underwriting Agreement and any other
documents in connection with the offering, purchase, sale and delivery of the
APS (including advertising expenses of the Underwriters, if any); (iii) the cost
of preparing share certificates; (iv) the expenses (including, but not limited
to, travel, hotels and other accommodations) incurred by the Trust's or the
Investment Adviser's directors, officers, employees and other personnel in
connection with meetings held with registered brokers in connection with the
offering of the APS, the preparing to market and the marketing of the APS; (v)
any fees charged by securities rating services for rating the APS; (vi) the fees
and expenses of the Depository Trust Company and its nominee, the Custodian and
the Auction Agent; and (vii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for. It is understood, however, that, except as provided in this
Section 5 and Section 7 hereof, the Underwriters will pay all of their own costs
and expenses, including the fees of their counsel and stock transfer taxes, if
any, on resale of any of the APS by them, except any advertising expenses
connected with any offers they may make.
(h) If the transactions contemplated by this
Underwriting Agreement are not consummated, except as otherwise provided herein,
no party will be under any liability to any other party, except that (1) if this
Underwriting Agreement is terminated by (x) the Trust or the Investment Adviser
pursuant to any of the provisions hereof (otherwise than pursuant to Section 8
hereof) or (y) by the Underwriters because of any inability, failure or refusal
on the part of the Trust or the Investment Adviser to comply with any material
terms or because any of the conditions in Section 6 are not satisfied, ▇▇▇▇▇
▇▇▇▇▇ or an affiliate and the Trust, jointly and severally, will reimburse the
Underwriters for all out-of-pocket expenses (including the reasonable fees,
disbursements and other charges of their counsel) reasonably incurred by them in
connection with the proposed purchase and sale of the APS and (2) no Underwriter
who has failed or refused to purchase the APS agreed to be purchased by it under
this Underwriting Agreement, in breach of its obligations pursuant to this
Underwriting Agreement, will be relieved of liability to the Trust and the
Investment Adviser and the other Underwriters for damages occasioned by its
default.
(i) Without the prior written consent of the Managing
Representative, the Trust will not offer, sell or register with the Commission,
or announce an offering of, any equity securities of the Trust, within 180 days
after the Effective Date, except for the APS as described in the Prospectus and
any issuances of Common Shares pursuant to the dividend reinvestment plan
established by the Trust.
15
16
(j) The Trust will direct the investment of the net
proceeds of the offering of the APS in such a manner as to comply with the
investment objective and policies of the Trust as described in the Prospectus.
(k) No later than the APS Closing Date, the
Underwriters will provide, and will cause any selling group member to whom they
have sold APS to provide, the Auction Agent with a list of the record names of
the persons to whom they have sold APS, the number of APS sold to each such
person, and the number of APS they are holding as of the APS Closing Date;
provided that in lieu of thereof, an Underwriter may provide the Auction Agent
with a list indicating itself as the sole holder of all the APS sold by such
Underwriter.
6. Conditions of the Underwriters' Obligations. The
obligations of the Underwriters to purchase the APS are subject to the accuracy
on the date of this Underwriting Agreement, and on the APS Closing Date, of the
representations of the Trust and the Investment Adviser in this Underwriting
Agreement, to the accuracy and completeness of all statements made by the Trust
or the Investment Adviser or any of their respective officers in any certificate
delivered to the Managing Representative or its counsel pursuant to this
Underwriting Agreement, to performance by the Trust and the Investment Adviser
of their respective obligations under this Underwriting Agreement and to each of
the following additional conditions:
(a) The registration statement must have become
effective by 5:30 p.m., New York City time, on the date of this Underwriting
Agreement or such later date and time as the Managing Representative consents to
in writing. The Prospectus must have been filed in accordance with Rule 497(b),
(h) or (j), as the case may be, of the Securities Act Rules.
(b) No order suspending the effectiveness of the
Registration Statement may be in effect and no proceedings for such purpose may
be pending before or, to the knowledge of counsel to the Underwriters,
threatened by the Commission, and any requests for additional information on the
part of the Commission (to be included in the Registration Statement or the
Prospectus or otherwise) must be complied with or waived to the reasonable
satisfaction of the Managing Representative.
(c) Since the dates as of which information is given
in the Registration Statement and the Prospectus, (1) there must not have been
any material change in the Common Shares, the APS or the liabilities of the
Trust except as set forth in or contemplated by the Prospectus; (2) there must
not have been any material adverse
16
17
change in the general affairs, prospects, management, business, financial
condition or results of operations of the Trust or the Investment Adviser
whether or not arising from transactions in the ordinary course of business as
set forth in or contemplated by the Prospectus; (3) the Trust must not have
sustained any material loss or interference with its business from any court or
from legislative or other governmental action, order or decree, whether foreign
or domestic, or from any other occurrence not described in the Registration
Statement and Prospectus; and (4) there must not have occurred any event that
makes untrue or incorrect in any material respect any statement or information
contained in the Registration Statement or Prospectus or that is not reflected
in the Registration Statement or Prospectus but should be reflected therein in
order to make the statements or information therein (in the case of the
Prospectus, in light of the circumstances in which they were made) not
misleading in any material respect; if, in the judgment of the Managing
Representative, any such development referred to in clause (1), (2), (3) or (4)
of this paragraph (c) makes it impracticable or inadvisable to consummate the
sale and delivery of the APS pursuant to this Underwriting Agreement by the
Underwriters, at the initial public offering price of the APS.
(d) The Managing Representative must have received on
the APS Closing Date a certificate, dated such date, of the President or a
Vice-President and the chief financial or accounting officer of each of the
Trust and the Investment Adviser certifying that (1) the signers have carefully
examined the Registration Statement, the Prospectus, and this Underwriting
Agreement, (2) the representations of the Trust (with respect to the
certificates from such Trust officers) and the representations of the Investment
Adviser (with respect to the certificates from such officers of the Investment
Adviser) in this Underwriting Agreement are accurate on and as of the date of
the certificate, (3) there has not been any material adverse change in the
general affairs, prospects, management, business, financial condition or results
of operations of the Trust (with respect to the certificates from such Trust
officers) or the Investment Adviser (with respect to the certificates from such
officers of the Investment Adviser), which change would materially and adversely
affect the ability of the Trust or the Investment Adviser, as the case may be,
to fulfill its obligations under this Underwriting Agreement or the Investment
Advisory Agreement, whether or not arising from transactions in the ordinary
course of business, (4) with respect to the Trust only, to the knowledge of such
officers after reasonable investigation, no order suspending the effectiveness
of the Registration Statement, prohibiting the sale of any of the APS or
otherwise having a material adverse effect on the Trust has been issued and no
proceedings for any such purpose are pending before or threatened by the
Commission or any other regulatory body, whether foreign or domestic, (5) to the
knowledge of the officers of the Investment Adviser, after reasonable
investigation, no order having a
17
18
material adverse effect on the ability of the Investment Adviser to fulfill its
obligations under this Underwriting Agreement or the Investment Advisory
Agreement, as the case may be, has been issued and no proceedings for any such
purpose are pending before or threatened by the Commission or any other
regulatory body, whether foreign or domestic, and (6) each of the Trust (with
respect to the certificates from such Trust officers) and the Investment Adviser
(with respect to the certificates from such officers of the Investment Adviser)
has performed all of its respective agreements that this Underwriting Agreement
requires it to perform by the APS Closing Date (to the extent not waived in
writing by the Managing Representative).
(e) The Underwriters must receive on the APS Closing
Date the opinions dated such date substantially in the form of Annexes A, B and
C to this Underwriting Agreement from the counsel identified in each such Annex.
(f) The Underwriters must receive on the APS Closing
Date from Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP and its affiliated entities,
their counsel, an opinion dated such date with respect to the Trust, the APS,
the Registration Statement and the Prospectus, this Underwriting Agreement and
the proceedings taken in connection with the sale and delivery of the APS. Such
opinion and proceedings shall fulfill the requirements of this Section 6(f) only
if such opinion and proceedings are satisfactory in all respects to the Managing
Representative. The Trust and the Investment Adviser must have furnished to such
counsel such documents as counsel may reasonably request for the purpose of
enabling them to render such opinion.
(g) The Underwriters must receive on the date this
Underwriting Agreement is signed and delivered by the Underwriters a signed
letter, dated such date, substantially in the form of Annex D to this
Underwriting Agreement from the firm of accountants designated in such Annex.
The Underwriters also must receive on the APS Closing Date a signed letter from
such accountants, dated as of such date, confirming on the basis of a review in
accordance with the procedures set forth in their earlier 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 such date, that would
require any change in their letter referred to in the foregoing sentence.
(h) The APS shall have been accorded a rating of
"AAA" by Standard & Poor's and a letter to such effect, dated the APS Closing
Date, shall have been delivered to the Managing Representative.
18
19
(i) As of the APS Closing Date and assuming the
receipt of the net proceeds from the sale of the APS, the 1940 Act Asset
Coverage and the APS Basic Maintenance Amount (each as defined in the
Prospectus) each will be met.
All opinions, letters, evidence and certificates
mentioned above or elsewhere in this Underwriting Agreement will comply only if
they are in form and scope reasonably satisfactory to counsel for the
Underwriters, provided that any such documents, forms of which are annexed
hereto, shall be deemed satisfactory to such counsel if substantially in such
form.
7. Indemnification and Contribution.
(a) Each of the Trust and the Investment Adviser,
jointly and sever- ally, will indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of such Underwriter and each person,
if any, who controls such Underwriter within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act from and against any and all
losses, claims, liabilities, expenses and damages (including, but not limited
to, any and all investigative, legal and other expenses reasonably incurred in
connection with, and any and all amounts paid in settlement of, any action, suit
or proceeding between any of the indemnified parties and any indemnifying
parties or between any indemnified party and any third party, or otherwise, or
any claim asserted), to which such Underwriter or any such person, or any of
them, may become subject under the Securities Act, the Exchange Act, the
Investment Company Act, the Advisers Act or other federal or state statutory law
or regulation, at common law or otherwise, whether foreign or domestic, insofar
as such losses, claims, liabilities, expenses or damages arise out of or are
based on (i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Preliminary Prospectus, the
Prospectus, the sales materials, or any amendment or supplement to the
Registration Statement, the Preliminary Prospectus, the Prospectus, the sales
materials or in any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Registration Statement, the Preliminary
Prospectus, the Prospectus, or in any application or other document executed by
or on behalf of the Trust or based on written information furnished by or on
behalf of the Trust filed in any jurisdiction in order to qualify the APS under
the securities laws thereof or filed with the Commission, (ii) the omission or
alleged omission to state, in any or all such documents, a material fact
required to be stated therein or necessary to make the statements therein not
misleading or (iii) any act or failure to act or any alleged act or failure to
act by such Underwriter in connection with, or relating in any manner to, the
APS or the offering contemplated hereby, and which
19
20
is included as part of or referred to in any loss, claim, liability, expense or
damage arising out of or based upon matters covered by clause (i) or (ii) above
(provided, however, that neither the Trust nor the Investment Adviser shall be
liable under this clause (iii) to the extent it is finally judicially determined
by a court of competent jurisdiction that such loss, claim, liability, expense
or damage resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such Underwriter through its gross negligence, bad faith
or willful misconduct); provided that neither the Trust nor the Investment
Adviser will be liable to the extent that such losses, claims, liabilities,
expenses or damages are based on an untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Trust by
such Underwriter expressly for inclusion in the Registration Statement, the
Preliminary Prospectus or the Prospectus. This indemnity agreement will be in
addition to any liability that the Trust or the Investment Adviser might
otherwise have.
(b) Each Underwriter will indemnify and hold harmless
the Trust and the Investment Adviser, each person, if any, who controls the
Trust or the Investment Adviser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each trustee of the Trust and
each officer of the Trust who signs the Registration Statement to the same
extent as the foregoing indemnity from the Trust or the Investment Adviser to
the Underwriter, but only insofar as losses, claims, liabilities, expenses or
damages arise out of or are based on any untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with
information relating to such Underwriter furnished in writing to the Trust by
such Underwriter expressly for use in the Registration Statement, the
Preliminary Prospectus or Prospectus. This indemnity will be in addition to any
liability that such Underwriter might otherwise have; provided, however, that in
no case shall such Underwriter be liable or responsible for any amount in excess
of the fees and commissions received by the Underwriter.
(c) Any party that proposes to assert the right to be
indemnified under this Section 7 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 7, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission to so notify such indemnifying party
will not relieve it from any liability that it may have to any indemnified party
under the foregoing provision of this Section 7 unless, and only to the extent
that, such omission results in the forfeiture of substantive rights or defenses
by the indemnifying party. If any such action is brought against any
20
21
indemnified party and it notifies the indemnifying party of its commencement,
the indemnifying party will be entitled to participate in and, to the extent
that it elects by delivering written notice to the indemnified party promptly
after receiving notice of the commencement of the action from the indemnified
party, jointly with any other indemnifying party similarly notified, to assume
the defense of the action, with counsel reasonably satisfactory to the
indemnified party, and after notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying party
will not be liable to the indemnified party for any legal or other expenses
except as provided below and except for the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with the defense.
The indemnified party will have the right to employ its own counsel in any such
action, but the fees, disbursements and other charges of such counsel will be at
the expense of such indemnified party unless (1) the employment of counsel by
the indemnified party has been authorized in writing by the indemnifying party,
(2) the indemnified party has reasonably concluded (based on the advice of
counsel) that there may be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to the
indemnifying party (3) a conflict or potential conflict exists (based on advice
of counsel to the indemnified party) between the indemnified party and the
indemnifying party (in which case the indemnifying party will not have the right
to direct the defense of such action on behalf of the indemnified party) or (4)
the indemnifying party has not in fact employed counsel reasonably satisfactory
to the indemnified party to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. Subject to
the requirements of Investment Company Act Release No. 11330, all such fees,
disbursements and other charges will be reimbursed by the indemnifying party
promptly as they are incurred. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm admitted to practice in such
jurisdiction at any one time for all such indemnified party or parties. An
indemnifying party will not be liable for any settlement of any action or claim
effected without its written consent (which consent will not be unreasonably
withheld). No indemnifying party shall, without the prior written consent of
each indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding relating to
the matters contemplated by this Section 7 (whether or not any indemnified party
is a party thereto), unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising or
that may arise out of such claim, action or proceeding.
21
22
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in this
Section 7 is applicable but for any reason is held to be unavailable from the
Trust, the Investment Adviser or the Underwriters, the Trust, the Investment
Adviser and the Underwriters will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, but after
deducting any contribution received by the Trust and the Investment Adviser from
persons other than the Underwriter, such as persons who control the Trust or the
Investment Adviser within the meaning of the Securities Act or the Exchange Act,
officers of the Trust who signed the Registration Statement and directors of the
Trust, who may also be liable for contribution) to which the Trust, the
Investment Adviser and the Underwriters may be subject in such proportion as
shall be appropriate to reflect the relative benefits received by the Trust and
the Investment Adviser on the one hand and the Underwriters on the other. The
relative benefits received by the Trust and the Investment Adviser (treated
jointly for this purpose as one person) on the one hand and the Underwriters on
the other hand shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Trust
bear to the total fees and commissions received by the Underwriters. If, but
only if, the allocation provided by the foregoing sentence is not permitted by
applicable law, the allocation of contribution shall be made in such proportion
as is appropriate to reflect not only such relative benefits referred to in the
foregoing sentence but also the relative fault of the Trust and the Investment
Adviser (treated jointly for this purpose as one person) on the one hand and the
Underwriters on the other hand in connection with respect to the statements or
omissions or alleged statements or omissions that resulted in the losses,
claims, liabilities, expenses or damages (including any investigative, legal or
other expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted), as well as
any other relevant equitable considerations appropriate in the circumstances.
Such relative fault of the parties shall be determined by reference to 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
Trust, the Investment Adviser or the Underwriters, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission and any other equitable considerations
appropriate in the circumstances. The Trust, the Investment Adviser and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 7(d) were to be determined by pro rata allocation or by
any other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, liability,
22
23
expense or damage, or action in respect thereof, referred to above in this
Section 7(d) shall be deemed to include, for purposes of this Section 7(d) any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding any other provisions of this Section 7(d), the Underwriters
shall not be required to contribute any amount in excess of the fees and
commissions received by them and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7(d), any person who
controls a party to this Underwriting Agreement within the meaning of the
Securities Act will have the same rights to contribution as that party, and each
trustee of the Trust and each officer of the Trust who signed the Registration
Statement will have the same rights to contribution as the Trust, subject in
each case to the provisions hereof. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action against such
party in respect of which a claim for contribution may be made under this
Section 7(d), notify such party or parties from whom contribution may be sought,
but the omission so to notify will not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have under
this Section 7(d). No party will be liable for contribution with respect to any
action or claim settled without its written consent (which consent shall not be
unreasonably withheld). The Underwriters' obligations to contribute pursuant to
this Section 7 are several in proportion to the respective number of APS set
forth opposite their names in Schedule 1 (or such number of APS as determined
pursuant to Section 9 hereof) and not joint.
(e) Notwithstanding any other provisions in this
Section 7, no party shall be entitled to indemnification or contribution under
this Underwriting Agreement against any loss, claim, liability, expense or
damage arising by reason of such person's willful misfeasance, bad faith or
gross negligence in the performance of its duties hereunder, or by reason of
such person's reckless disregard of such person's obligations and duties
hereunder.
(f) The Trust and the Investment Adviser acknowledge
that the statements with respect to (1) the public offering of the APS as set
forth on the cover page of and (2) the statements relating to selling
concessions and reallowances of selling concessions under the caption
"Underwriting" in the Prospectus constitute the only information furnished in
writing to the Trust by the Underwriters expressly for use in such document. 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.
23
24
8. Termination. This Underwriting Agreement may be terminated
by the Managing Representative by notifying the Trust at any time:
(a) before the later of the effectiveness of the
Registration Statement and the time when any of the APS are first generally
offered pursuant to this Underwriting Agreement by the Managing Representative
to dealers by letter or telegram;
(b) at or before the APS Closing Date if, in the sole
judgment of the Managing Representative, payment for and delivery of any APS is
rendered impracticable or inadvisable because (1) trading in the APS or the
Common Shares of the Trust is suspended by the Commission or trading in the
Common Shares is suspended by the principal exchange that lists the Common
Shares, (2) trading in securities generally on the New York Stock Exchange or
the Nasdaq Stock Market shall have been suspended or limited or minimum or
maximum prices shall have been generally established on such exchange or
over-the-counter market, or, (3) additional material governmental restrictions,
not in force on the date of this Underwriting Agreement, have been imposed upon
trading in securities or trading has been suspended on any U.S. securities
exchange, (4) a general banking moratorium has been established by U.S. federal
or New York authorities or (5) any material adverse change in the financial or
securities markets in the United States or in political, financial or economic
conditions in the United States or any outbreak or material escalation of
hostilities or declaration by the United States of a national emergency or war
or other calamity or crisis shall have occurred the effect of any of which is
such as to make it, in the sole judgement of the Managing Representative,
impracticable or inadvisable to market the APS on the terms and in the manner
contemplated by the Prospectus; or
(c) at or before the APS Closing Date, if any of the
conditions specified in Section 6 have not been fulfilled when and as required
by this Underwriting Agreement.
9. Substitution of Underwriters. If one or more of the
Underwriters fails (other than for a reason sufficient to justify the
termination of this Underwriting Agreement) to purchase on the APS Closing Date
the APS agreed to be purchased on such date by such Underwriter or Underwriters,
the Managing Representative may find one or more substitute underwriters to
purchase such APS or make such other arrangements as the Managing Representative
deems advisable, or one or more of the remaining Underwriters may agree to
purchase such APS in such proportions as may be approved by the Managing
Representative, in each case upon the terms set forth in this
24
25
Underwriting Agreement. If no such arrangements have been made within 36 hours
after such date, and
(a) the number of APS to be purchased by the
defaulting Underwriters on such date does not exceed 10% of the APS that the
Underwriters are obligated to purchase on the APS Closing Date, each of the
nondefaulting Underwriters will be obligated to purchase such APS on the terms
set forth in this Underwriting Agreement in proportion to their respective
obligations under this Underwriting Agreement, or
(b) the number of APS to be purchased by the
defaulting Underwriters on the APS Closing Date exceeds 10% of the APS to be
purchased by all the Underwriters on the APS Closing Date, the Trust will be
entitled to an additional period of 24 hours within which to find one or more
substitute underwriters reasonably satisfactory to the Managing Representative
to purchase such APS on the terms set forth in this Underwriting Agreement.
In any such case, either the Managing Representative or the
Trust will have the right to postpone the APS Closing Date for not more than
five business days in order that necessary changes and arrangements (including
any necessary amendments or supplements to the Registration Statement or the
Prospectus) may be effected by the Managing Representative and the Trust. If the
number of APS to be purchased on the APS Closing Date by such defaulting
Underwriter or Underwriters exceeds 10% of the APS that the Underwriters are
obligated to purchase on such date, and none of the nondefaulting Underwriters
or the Trust makes arrangements pursuant to this Section within the period
stated for the purchase of the APS that the defaulting Underwriters agreed to
purchase, this Underwriting Agreement will terminate without liability on the
part of any nondefaulting Underwriter, the Trust or the Investment Adviser,
except as provided in Sections 5(g) and 7 hereof. This Section 9 will not affect
the liability of any defaulting Underwriter to the Trust or the nondefaulting
Underwriters arising out of such default. A substitute underwriter will become
an Underwriter for all purposes of this Underwriting Agreement.
25
26
10. Miscellaneous.
(a) The reimbursement, indemnification and
contribution agreements in Sections 5(g) and 7 hereof and the representations of
the Trust, the Investment Adviser and the Underwriters in this Underwriting
Agreement will remain in full force and effect regardless of any termination of
this Underwriting Agreement. The reimbursement, indemnification and contribution
agreements in Sections 5(g) and 7 hereof and the representations and agreements
of the Trust, the Investment Adviser and the Underwriters in this Underwriting
Agreement shall survive the APS Closing Date and shall remain in full force and
effect regardless of any investigation made by or on behalf of any Underwriter,
the Trust, the Investment Adviser or any controlling person and delivery of and
payment for the APS.
(b) This Underwriting Agreement is for the benefit of
the Underwriters, the Trust, the Investment Adviser and their successors and
assigns, and, to the extent expressed in this Underwriting Agreement, for the
benefit of persons controlling any of the Underwriters, the Trust, the
Investment Adviser and directors and officers of the Trust and the Investment
Adviser, and their respective successors and assigns, and no other person,
partnership, association or corporation will acquire or have any right under or
by virtue of this Underwriting Agreement. The term "successors and assigns" does
not include any purchaser of the APS from any Underwriter merely because of such
purchase.
(c) All notices and communications under this
Underwriting Agreement will be in writing, effective only on receipt and mailed
or delivered, by messenger, facsimile transmission or otherwise, to the
Underwriters in care of PaineWebber Incorporated, Attn: Financial Institutions
Group, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, to the Trust or
the Investment Adviser at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: Chief Legal
Officer.
(d) This Underwriting Agreement may be signed in
multiple counterparts that taken as a whole constitute one agreement.
(e) This Underwriting Agreement will be governed by
and construed in accordance with the laws of the State of New York without
reference to choice of law principles thereof.
(f) A copy of the Agreement and Declaration of Trust
of each of the Trust and the Investment Adviser is on file with the Secretary of
State of The
26
27
Commonwealth of Massachusetts, and notice hereby is given that this Underwriting
Agreement is executed on behalf of the respective Trustees of the Trust and the
Investment Adviser as Trustees and not individually and that the obligations or
arising out of this Underwriting Agreement are not binding upon any of the
Trustees or beneficiaries individually but are binding only upon the respective
assets and properties of the Trust and the Investment Adviser.
27
28
Please confirm that the foregoing correctly sets
forth the agreement between us.
Very truly yours,
▇▇▇▇▇ ▇▇▇▇▇ Pennsylvania Municipal
Income Trust
By:_____________________________________
Name:
Title:
▇▇▇▇▇ ▇▇▇▇▇ Management
By:_____________________________________
Name:
Title:
Confirmed:
PaineWebber Incorporated
Prudential Securities Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
c/o PaineWebber Incorporated
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
By: PaineWebber Incorporated
By:_____________________________________
Name:
Title:
Acting on behalf of itself
and the Underwriters
named in Schedule 1
29
SCHEDULE 1
NAME NUMBER OF APS TO BE PURCHASED
PaineWebber Incorporated
Prudential Securities Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
30
ANNEX A
FORM OF OPINION OF
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP REGARDING THE TRUST
1. The Registration Statement and all post-effective
amendments, if any, are effective under the Securities Act and no stop order
with respect thereto has been issued and no proceeding for that purpose has been
instituted or, to the best of our knowledge, is threatened by the Commission.
Any filing of the Prospectus or any supplements thereto required under Rule 497
of the Securities Act Rules prior to the date hereof have been made in the
manner and within the time required by such rule.
2. The Trust has been duly formed and is validly existing as a
Massachusetts business trust under the laws of The Commonwealth of
Massachusetts, with full power and authority to conduct all the activities
conducted by it, to own or lease all assets owned (or to be owned) or leased (or
to be leased) by it and to conduct its business as described in the Registration
Statement and Prospectus, and the Trust is duly licensed and qualified to do
business and in good standing in each jurisdiction in which its ownership or
leasing of property or its conducting of business requires such qualification,
and the Trust owns, possesses or has obtained and currently maintains all
governmental licenses, permits, consents, orders, approvals and other
authorizations, whether foreign or domestic, necessary to carry on its business
as contemplated in the Prospectus. The Trust has no subsidiaries.
3. The capitalization of the Trust is as set forth in the
Registration Statement and the Prospectus. The Common Shares and the APS conform
in all respects to the description of them in the Prospectus. All the
outstanding Common Shares have been duly authorized and are validly issued,
fully paid and nonassessable. The APS to be issued and delivered to and paid for
by the Underwriters in accordance with the Underwriting Agreement against
payment therefor as provided by the Underwriting Agreement have been duly
authorized and when issued and delivered to the Underwriters will have been
validly issued and will be fully paid and nonassessable (except as described in
the Registration Statement). No person is entitled to any preemptive or other
similar rights in connection with the issuance of the APS.
4. The Trust is duly registered with the Commission under the
Investment Company Act as a non-diversified, closed-end management investment
company and all action under the Securities Act, the Investment Company Act, the
Securities Act Rules and the Investment Company Act Rules, as the case may be,
necessary to make the public offering and consummate the sale of the APS as
provided in the Underwriting Agreement has or will have been taken by the Trust.
31
5. The Trust has full power and authority to enter into each
of the Underwriting Agreement, the Investment Advisory Agreement, the Custody
Agreement and the Transfer Agency Agreement, the Auction Agency Agreement and
the DTC Agreement (collectively, the "Trust Agreements") and to perform all of
the terms and provisions thereof to be carried out by it and (A) each Trust
Agreement has been duly and validly authorized, executed and delivered by the
Trust, (B) each Trust Agreement complies in all material respects with all
applicable provisions of the Investment Company Act, the Advisers Act, the
Investment Company Act Rules and the Advisers Act Rules, as the case may be, and
(C) assuming due authorization, execution and delivery by the other parties
thereto, each Trust Agreement constitutes the legal, valid and binding
obligation of the Trust enforceable in accordance with its terms, (1) subject,
as to enforcement, to applicable bankruptcy, insolvency and 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) as rights to indemnity thereunder may be limited by federal or
state securities laws.
6. None of (A) the execution and delivery by the Trust of the
Trust Agreements, (B) the issue and sale by the Trust of the APS as contemplated
by the Underwriting Agreement and (C) the performance by the Trust of its
obligations under the Trust Agreements or consummation by the Trust of the other
transactions contemplated by the Trust Agreements conflicts with or will
conflict with, or results or will result in a breach of, the Declaration of
Trust or the Amended Bylaws of the Trust or any agreement or instrument to which
the Trust is a party or by which the Trust is bound, or any law, rule or
regulation, or order of any court, governmental instrumentality, securities
exchange or association or arbitrator, whether foreign or domestic, applicable
to the Trust, except that we express no opinion as to the securities or "blue
sky" laws applicable in connection with the purchase and distribution of the APS
by the Underwriters pursuant to the Underwriting Agreement.
7. The Trust is not currently in breach of, or in default
under, any written agreement or instrument to which it is a party or by which it
or its property is bound or affected.
8. No consent, approval, authorization or order of any court
or governmental agency or body or securities exchange or association, whether
foreign or domestic, is required by the Trust for the consummation by the Trust
of the transactions to be performed by the Trust or the performance by the Trust
of all the terms and provisions to be performed by or on behalf of it in each
case as contemplated in the Trust Agreements, except such as (A) have been
obtained under the Securities Act, the Investment Company Act, the Advisers Act,
the Securities Act Rules, the Investment Company Act Rules and the Advisers Act
Rules and (B) 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 APS by the Underwriters pursuant to the Underwriting Agreement.
▇-▇
▇▇
▇. There is no action, suit or proceeding before or by any
court, commission, regulatory body, administrative agency or other governmental
agency or body, foreign or domestic, now pending or, to our knowledge,
threatened against or affecting the Trust, which is required to be disclosed in
the Prospectus that is not disclosed in the Prospectus, and there are no
contracts, franchises or other documents that are of a character required to be
described in, or that are required to be filed as exhibits to, the Registration
Statement that have not been described or filed as required.
10. The Common Shares are listed on the New York Stock
Exchange.
11. The Trust does not require any tax or other rulings to
enable it to qualify as a regulated investment company under Subchapter M of the
Code.
12. Each of the sections in the Prospectus entitled "Taxes"
and the section in the Statement of Additional Information entitled "Taxes" is a
fair summary of the principal United States federal income tax rules currently
in effect applicable to the Trust and to the purchase, ownership and disposition
of the APS.
13. The Registration Statement (except the financial
statements and schedules and other financial data included therein as to which
we express no view), at the time it became effective, and the Prospectus (except
as aforesaid), as of the date thereof, complied as to form in all material
respects to the requirements of the Securities Act, the Investment Company Act
and the rules and regulations of the Commission thereunder.
In rendering our opinion, we have relied, as to factual
matters, upon the attached written certificates and statements of officers of
the Trust.
In connection with the registration of the APS, we have
advised the Trust as to the requirements of the Securities Act, the Investment
Company Act and the applicable rules and regulations of the Commission
thereunder and have rendered other legal advice and assistance to the Trust in
the course of its preparation of the Registration Statement and the Prospectus.
Rendering such assistance involved, among other things, discussions and
inquiries concerning various legal and related subjects and reviews of certain
corporate records, documents and proceedings. We also participated in
conferences with representatives of the Trust and its accountants at which the
contents of the Registration Statement and Prospectus and related matters were
discussed. With your permission, we have not undertaken, except as otherwise
indicated herein, to determine independently, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements in
the Registration Statement or Prospectus. On the basis of the information which
was developed in the course of the performance of the services referred to
above, no information has come to our attention that would lead us to believe
that the Registration Statement, at the time it became effective, contained any
untrue statement
A-3
33
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, as of its date and as of the date hereof, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading or that any amendment
or supplement to the Prospectus, as of its respective date, and as of the date
hereof, contained any untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements in the
Prospectus, in the light of the circumstances under which they were made, not
misleading (except the financial statements, schedules and other financial data
included therein, as to which we express no view).
A-4
34
ANNEX B
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING ▇▇▇▇▇ ▇▇▇▇▇ MANAGEMENT
1. ▇▇▇▇▇ ▇▇▇▇▇ has been duly formed and is validly existing as
a Massachusetts business trust under the laws of its jurisdiction of
incorporation with full power and authority to conduct all of the activities
conducted by it, 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 ▇▇▇▇▇ ▇▇▇▇▇ is duly licensed and qualified and in good standing in each
other jurisdiction in which it is required to be so qualified and ▇▇▇▇▇ ▇▇▇▇▇
owns, possesses or has obtained and currently maintains all governmental
licenses, permits, consents, orders, approvals and other authorizations, whether
foreign or domestic, necessary for ▇▇▇▇▇ ▇▇▇▇▇ to carry on its business as
contemplated in the Registration Statement and the Prospectus.
2. ▇▇▇▇▇ ▇▇▇▇▇ is duly registered as an investment adviser
under the Advisers Act and is not prohibited by the Advisers Act, the Investment
Company Act, the Advisers Act Rules or the Investment Company Act Rules from
acting as investment adviser for the Trust as contemplated by the Investment
Advisory Agreement, the Registration Statement and the Prospectus.
3. ▇▇▇▇▇ ▇▇▇▇▇ has full power and authority to enter into each
of the Underwriting Agreement, the Investment Advisory Agreement, the
Administration Agreement and the Shareholder Servicing Agreement (collectively,
the "▇▇▇▇▇ ▇▇▇▇▇ Agreements") and to carry out all the terms and provisions
thereof to be carried out by it, and each such agreement has been duly and
validly authorized, executed and delivered by ▇▇▇▇▇ ▇▇▇▇▇; each ▇▇▇▇▇ ▇▇▇▇▇
Agreement complies in all material respects with all provisions of the
Investment Company Act, the Advisers Act, the Investment Company Act Rules and
the Advisers Act Rules; and assuming due authorization, execution and delivery
by the other parties thereto, each ▇▇▇▇▇ ▇▇▇▇▇ Agreement constitutes a legal,
valid and binding obligation of ▇▇▇▇▇ ▇▇▇▇▇, enforceable in accordance with its
terms, (1) subject, as to enforcement, to applicable bankruptcy, insolvency and
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) as rights to indemnity thereunder may be limited by
federal or state securities laws.
4. Neither (A) the execution and delivery by ▇▇▇▇▇ ▇▇▇▇▇ of
any ▇▇▇▇▇ ▇▇▇▇▇ Agreement nor (B) the consummation by ▇▇▇▇▇ ▇▇▇▇▇ of the
transactions contemplated by, or the performance of its obligations under any
▇▇▇▇▇ ▇▇▇▇▇ Agreement conflicts or will conflict with, or results or will result
in a breach of, the Agreement and
B-1
35
Declaration of Trust or Bylaws of ▇▇▇▇▇ ▇▇▇▇▇ or any agreement or instrument to
which ▇▇▇▇▇ ▇▇▇▇▇ is a party or by which ▇▇▇▇▇ ▇▇▇▇▇ is bound, or any law, rule
or regulation, or order of any court, governmental instrumentality, securities
exchange or association or arbitrator, whether foreign or domestic, applicable
to ▇▇▇▇▇ ▇▇▇▇▇.
5. No consent, approval, authorization or order of any court,
governmental agency or body or securities exchange or association, whether
foreign or domestic, is required for the consummation of the transactions
contemplated in, or the performance by ▇▇▇▇▇ ▇▇▇▇▇ of its obligations under, any
▇▇▇▇▇ ▇▇▇▇▇ Agreement, except such as have been obtained under the Investment
Company Act, the Advisers Act, the Securities Act, the Investment Company Act
Rules, the Advisers Act Rules and the Securities Act Rules.
6. The description of ▇▇▇▇▇ ▇▇▇▇▇ and its business, and the
statements attributable to ▇▇▇▇▇ ▇▇▇▇▇, in the Registration Statement and the
Prospectus complies with the requirements of the Securities Act, the Investment
Company Act, the Securities Act Rules and the Investment Company Act Rules and
do not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading.
7. There is no action, suit or proceeding before or by any
court, commission, regulatory body, administrative agency or other governmental
agency or body, foreign or domestic, now pending or, to our knowledge,
threatened against or affecting ▇▇▇▇▇ ▇▇▇▇▇ of a nature required to be disclosed
in the Registration Statement or Prospectus or that might reasonably result in
any material adverse change in the condition, financial or otherwise, business
affairs or business prospects of ▇▇▇▇▇ ▇▇▇▇▇ or the ability of ▇▇▇▇▇ ▇▇▇▇▇ to
fulfill its respective obligations under any ▇▇▇▇▇ ▇▇▇▇▇ Agreement.
8. The Registration Statement (except the financial statements
and schedules and other financial data included therein as to which we express
no view), at the time it became effective, and the Prospectus (except as
aforesaid), as of the date thereof, appeared on their face to be appropriately
responsive in all material respects to the requirements of the Securities Act,
the Investment Company Act and the rules and regulations of the Commission
thereunder.
In rendering my opinion, I have relied, as to factual matters,
upon the attached written certificates and statements of officers of ▇▇▇▇▇
▇▇▇▇▇.
In connection with the registration of the APS, I have advised
▇▇▇▇▇ ▇▇▇▇▇ as to the requirements of the Securities Act, the Investment Company
Act and the applicable rules and regulations of the Commission thereunder and
have rendered other legal advice and assistance to ▇▇▇▇▇ ▇▇▇▇▇ in the course of
the preparation of the
B-2
36
Registration Statement and the Prospectus. Rendering such assistance involved,
among other things, discussions and inquiries concerning various legal and
related subjects and reviews of certain corporate records, documents and
proceedings. I also participated in conferences with representatives of the
Trust and its accountants and ▇▇▇▇▇ ▇▇▇▇▇ at which the contents of the
Registration Statement and Prospectus and related matters were discussed. With
your permission, I have not undertaken, except as otherwise indicated herein, to
determine independently, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements in the Registration Statement or
Prospectus. On the basis of the information which was developed in the course of
the performance of the services referred to above, no information has come to my
attention that would lead me to believe that the Registration Statement, at the
time it became effective, contained any 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, as of its
date and as of the date hereof, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading or that any amendment or supplement to the Prospectus,
as of its respective date, and as of the date hereof, contained any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements in the Prospectus, in the light of the
circumstances under which they were made, not misleading (except the financial
statements, schedules and other financial data included therein, as to which I
express no view).
B-3
37
ANNEX C
FORM OF OPINION OF ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
1. The statements contained in the Prospectus under the
heading "TAXES - State Taxes - Pennsylvania Taxes" and in Appendix E to the
Statement of Additional Information under the heading "STATE AND U.S. TERRITORY
INFORMATION - Pennsylvania," to the extent that such statements constitute
matters of law or legal conclusions, provide a fair summary of such law or
conclusions. Such statements are based on current Pennsylvania tax laws and our
understanding of the Trust's proposed operations, as disclosed in the
Prospectus.
2. Although we do not pass upon or assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, and have not made any independent
check or verification thereof, no facts have come to our attention which would
lead us to believe that the material contained in the Prospectus under the
heading "TAXES - State Taxes - Pennsylvania Taxes" and in Appendix E to the
Statement of Additional Information under the heading "STATE AND U.S. TERRITORY
INFORMATION - Pennsylvania," at the time the Registration Statement became
effective, contained any 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, as of its date and as
of the date hereof, contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or that any amendment or supplement to the Prospectus, as
of its respective date, and as of the date hereof, contained any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements in the Prospectus, in the light of the
circumstances under which they were made, not misleading.
In rendering the foregoing opinions, we have relied as to matters of
fact, to the extent we deem proper, on certificates of responsible officers of
the Trust and of the Investment Adviser, and of public officials.
C-1
38
ANNEX D
FORM OF ACCOUNTANT'S LETTER
March , 1999
The Board of Trustees of
▇▇▇▇▇ ▇▇▇▇▇ Pennsylvania Municipal Income Trust
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
PaineWebber Incorporated
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
as Managing Representative of the Underwriters
Ladies and Gentlemen:
We have audited the statement of assets and liabilities of
▇▇▇▇▇ ▇▇▇▇▇ Pennsylvania Municipal Income Trust (the "Trust") as of February 19,
1999 included in the Registration Statement on Form N-2 filed by the Trust under
the Securities Act of 1933 (the "Act") (File No. 333-72025) and under the
Investment Company Act of 1940 (the "1940 Act") (File No. 811-09151); 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 public accountants with respect to the
Trust within the meaning of the Act and the applicable rules
and regulations thereunder.
2. In our opinion, the statement of assets and liabilities
included in the Registration Statement and audited by us
complies as to form in all respects with the applicable
accounting requirements of the Act, the 1940 Act and the
respective rules and regulations thereunder.
3. We have not audited any financial statements of the Trust
as of any date or for any period subsequent to January 21,
1999, although have conducted an audit of the statement of
assets and liabilities as of January 21, 1999. Therefore, we
are unable to and do no express out opinion on the unaudited
statement of assets and liabilities as of February 19, 1999,
and the unaudited statements of operations, changes in net
assets and the
D-1
39
unaudited condensed financial information for the period from
January 21, 1999 to February 19, 1999 or on any other
financial statements or condensed financial information for
any period subsequent to January 21, 1999.
4. For purposes of this letter we have read the minutes of all
meetings of the shareholders, the Board of Trustees and all
Committees of the Board of Trustees of the Trust as set forth
in the minute books at the offices of the Trust, officials of
the Trust having advised us that the minutes of all such
meetings through March ___, 1999, were set forth therein. We
have carried out other procedures to March , 1999 as
follows:
(a) With respect to the period from January 21, 1999
to February 19, 1999, we have:
(i) Read the unaudited statement of assets
and liabilities as of February 19, 1999, and the unaudited statements
of operations, changes in net assets and the unaudited condensed
financial information for the period from January 21, 1999 to February
19, 1999; and
(ii) Made inquiries of certain officials of
the Trust who have responsibility for financial and accounting matters
regarding (1) whether the unaudited financial statements and unaudited
financial information referred to in 4(a)(i) comply in form in all
material respects with the applicable accounting requirements of the
Act and the 1940 Act and the related published rules and regulations
and (2) whether those unaudited financial statements and unaudited
condensed financial information are in conformity with generally
accepted accounting principles.
The foregoing procedures do not constitute an audit made in accordance with
generally accepted auditing standards. Also, they would not necessarily .reveal
matters of significance with respect to the comments in the following paragraph.
Accordingly, we make no representations as to the sufficiency of the foregoing
procedures for your purposes.
5. Nothing came to our attention as a result of the foregoing
procedures, however, that caused us to believe that (1) the
unaudited financial statements and unaudited condensed
financial information described in 4(a)(i) do not comply in
form in all material respects with the applicable accounting
requirements of the Act and the 1940 Act and the related
published rules and regulations and (2) the unaudited
financial statements
D-2
40
and unaudited condensed financial information are not in
conformity with generally accepted accounting principles.
6. Trust officials have advised us that no financial
statements as of any date subsequent to February 19, 1999, are
available. We have made inquiries of certain officials of the
Trust who have responsibility for financial and accounting
matters regarding whether there was any change at March ___,
1999, in the capital shares or net assets of the Trust as
compared with amounts shown in the February 19, 1999 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.
7. For the purposes of this letter, we have also read the
following and performed the procedures referenced below, set
forth in the Registration Statement under the headings
indicated:
(a) Cover Page. We have verified the mathematical
accuracy of the dollar amounts listed with respect to the Trust under the
headings "Sales load" and "Proceeds to Trust."
(b) "Prospectus Summary - Asset Maintenance." We have
verified the accuracy of the approximate percentage of the Trust's capital
attributable to the preferred shares of beneficial interest, par value $0.01 per
share, of the Trust (the "APS").
(c) "The Trust." We have verified the accuracy of the
dollar amount of the proceeds of the initial public offering of the Trust's
common shares of beneficial interest, par value $0.01 per share (the "Common
Shares") after the payment of organizational and offering expenses and the
number of additional Common Shares that the underwriters were given an option to
purchase to cover over-allotments.
(d) "Use of Proceeds." We have verified the accuracy
of the net proceeds of the offering of the APS of the Trust after payment of
offering expenses and the sales load.
(e) "Capitalization." We have verified accuracy of
unaudited capitalization of the Trust as of February 19, 1999 (as if the
over-allotment Common Shares of the Trust were issued on such date) and as
adjusted to give effect to the issuance of the APS is asset forth under such
heading.
▇-▇
▇▇
(▇) "Portfolio Composition." We have verified that
the number of issues, market value and percentage of total market value, by
rating category, which were invested in long-term and intermediate-term
municipal obligations by the Trust as of February 19, 1999, was as set forth
under such heading.
(g) "Description of the APS - Dividends -
Restrictions on Dividends and Other Payments." We have verified the accuracy of
the approximate asset coverage percentage set forth on the first paragraph under
such heading.
(h) "Description of the APS - Asset Maintenance -
1940 Act Asset Coverage." We have confirmed the accuracy of the dollar amounts
and percentages set forth with respect to the Trust in the table under such
heading.
(i) "Description of Capital Structure." We have
verified the accuracy of the numbers of authorized Common Shares and Auction
Preferred Shares and the numbers of outstanding Common Shares and Auction
Preferred Shares outstanding (exclusive of shares held by the Trust for its own
account).
(j) "Description of Capital Structure." We have
verified the accuracy of the net asset value per share and the closing price per
share for the Common Shares of the Trust as of February 19, 1999.
(k) "Statement of Additional Information - Appendix
B: Tax Equivalent Yield Tables." Based on the percentages set forth in the tax
equivalent yield table with respect to the Trust, we have verified the
mathematical accuracy of the percentages under the columns labeled "is
equivalent to a fully taxable yield of" set forth in such table.
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 Trust 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 pertaining to the offering of the securities covered by the
Registration Statement.
Very truly yours,
DELOITTE & TOUCHE LLP
D-4