▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ California Intermediate Municipal Fund Inc.
(a Maryland corporation)
[ ] Auction Market Preferred Shares ("AMPS")
[ ] Shares [ ]% AMPS, Series A
[ ] Shares [ ]% AMPS, Series B
Liquidation Preference $25,000 per share
PURCHASE AGREEMENT
December 11, 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ California Intermediate Municipal Fund Inc., a Maryland
corporation (the "Fund"), proposes, upon the terms and conditions set forth
herein, to issue and sell an aggregate of [ ] Shares of its Auction Market
Preferred Shares, Series [ ] and Series [ ], par value $.0001 per share,
liquidation preference $25,000 per share (the "AMPS"). The AMPS will be
authorized by, and subject to the terms and conditions of, the Articles of
Incorporation of the Fund, including the Articles Supplementary creating and
fixing the rights of AMPS (the "Articles Supplementary"), as amended through [
], 2002 (the "Charter"), in the form filed as an exhibit to the Registration
Statement referred to in the second following paragraph of this Agreement, as
the same may be amended from time to time. The Fund and the Fund's investment
adviser, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Management Inc., a New York corporation ("NB
Management"), and its investment sub-adviser, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC, a Delaware
limited liability company ("NB LLC") (each, an "Adviser" and together, the
"Advisers"), each confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇
Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the
other Underwriters named in Schedule A hereto (collectively, the "Underwriters",
which term shall also include any underwriter substituted as hereinafter
provided in Section 10 hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇ is acting as
representative (in such capacity, the "Representative"), with respect to the
issue and sale by the Fund and the purchase by the Underwriters, acting
severally and not jointly, of the respective number of AMPS set forth in said
SCHEDULE A.
The Fund understands that the Underwriters propose to make a public
offering of the AMPS as soon as the Representative deems advisable after this
Agreement has been executed and delivered.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-100914 and No.
811-21168) covering the registration of the AMPS under the Securities Act of
1933, as amended (the "1933 Act"), including the related preliminary prospectus
or prospectuses. Promptly after execution and delivery of this Agreement, the
Fund will either (i) prepare and file a prospectus in accordance with the
provisions of Rule 430A ("Rule 430A") of the Rules and Regulations and paragraph
(c) or (h) of Rule 497 ("Rule 497") of the Rules and Regulations or (ii) if the
Fund has elected to rely upon Rule 434 ("Rule 434") of the Rules and
Regulations, prepare and file a term sheet (a "Term Sheet") in accordance with
the provisions of Rule 434 and Rule 497. The information included in any such
prospectus or in any such Term Sheet, as the case may be, that was omitted from
such registration statement at the time it became effective but that is deemed
to be part of such registration statement at the time it became effective, if
applicable, (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information." Each prospectus used before such registration statement
became effective, and any prospectus that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto and schedules thereto at the time it became effective and including the
Rule 430A Information and the Rule 434 Information, as applicable, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the Rules and Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final
prospectus in the form first furnished to the Underwriters for use in connection
with the offering of the AMPS is herein called the "Prospectus." If Rule 434 is
relied on, the term "Prospectus" shall refer to the preliminary prospectus dated
December 6, 2002 together with the Term Sheet and all references in this
Agreement to the date of the Prospectus shall mean the date of the Term Sheet.
For purposes of this Agreement, all references to the Registration Statement,
any preliminary prospectus, the Prospectus or any Term Sheet or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) REPRESENTATIONS AND WARRANTIES BY THE FUND AND THE ADVISERS. The Fund
and the Advisers jointly and severally represent and warrant to each Underwriter
as of the date hereof and as of the Closing Time referred to in Section 2(c)
hereof, and agree with each Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act, or order of
suspension or revocation of registration pursuant to Section 8(e) of the
1940 Act, and no proceedings for any such purpose have been instituted or
are pending or, to the knowledge of the Fund or the Advisers, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time, the Registration Statement, the Rule
462(b) Registration Statement, the notification on Form N-8A and any
amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act, the 1940 Act and
the Rules and Regulations and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
2
be stated therein or necessary to make the statements therein not
misleading. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or supplement
was issued and at the Closing Time, included or will include an untrue
statement of a material fact or omitted or will omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. If Rule 434
is used, the Fund will comply with the requirements of Rule 434 and the
Prospectus shall not be "materially different", as such term is used in
Rule 434, from the prospectus included in the Registration Statement at
the time it became effective. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Fund in writing by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of
the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 497 under the 1933 Act,
complied when so filed in all material respects with the Rules and
Regulations and each preliminary prospectus and the Prospectus delivered
to the Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
If a Rule 462(b) Registration Statement is required in connection
with the offering and sale of the AMPS, the Fund has complied or will
comply with the requirements of Rule 111 under the 1933 Act Regulations
relating to the payment of filing fees thereof.
(ii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
statement of assets and liabilities included in the Registration Statement
are independent public accountants as required by the 1933 Act and the
Rules and Regulations.
(iii) FINANCIAL STATEMENTS. The financial statements included in the
Registration Statement and the Prospectus, together with the related
notes, presents fairly in accordance with generally accepted accounting
principles ("GAAP") in all material respects the financial position of the
Fund at the date indicated; said statement has been prepared in conformity
with GAAP.
(iv) EXPENSE SUMMARY. The information set forth in the Prospectus in
the Fee Table has been prepared in accordance in all material respects
with the requirements of Form N-2 and to the extent estimated or
projected, such estimates or projections are reasonably believed to be
attainable and reasonably based.
(v) NO MATERIAL ADVERSE CHANGE. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Fund, other
than as a result of a change in the financial markets generally, whether
or not arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the Fund,
other than those in the ordinary course of business, which are material
with respect to the Fund, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Fund on any class
of its capital stock.
(vi) GOOD STANDING OF THE FUND. The Fund has been duly organized and
is validly existing as a corporation in good standing under the laws of
the State of Maryland and has the corporate power and authority to own,
lease and operate its properties and to conduct its business as described
in the Prospectus and to enter into and perform its obligations under this
Agreement; and the Fund is duly qualified as a foreign corporation to
3
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect.
(vii) NO SUBSIDIARIES. The Fund has no subsidiaries.
(viii) INVESTMENT COMPANY STATUS. The Fund is duly registered with
the Commission under the 1940 Act as a closed-end non-diversified
management investment company, and no order of suspension or revocation of
such registration has been issued or proceedings therefor initiated or, to
the knowledge of the Fund, threatened by the Commission.
(ix) OFFICERS AND DIRECTORS. No person is serving or acting as an
officer, director or investment adviser of the Fund except in accordance
with the provisions of the 1940 Act and the Rules and Regulations and no
person is serving or acting as an investment adviser of the Fund except in
accordance with the provisions of the Investment Advisers Act of 1940, as
amended (the "Advisers Act"), and the rules and regulations of the
Commission promulgated under the Advisers Act (the "Advisers Act Rules and
Regulations"). Except as disclosed in the Registration Statement or the
Prospectus (or any amendment or supplement to either of them), to the
knowledge of the Fund after due inquiry, no director of the Fund is an
"interested person" (as defined in the 1940 Act) of the Fund or an
"affiliated person" (as defined in the 1940 Act) of any Underwriter.
(x) CAPITALIZATION. The authorized shares of common stock of the Fund
are as set forth in the Prospectus as of the date thereof under the
caption "Description of Common Shares." All issued and outstanding shares
of common stock of the Fund have been duly authorized and validly issued
and are fully paid and non-assessable and have been offered and sold or
exchanged by the Fund in compliance with all applicable laws (including,
without limitation, federal and state securities laws); none of the
outstanding shares of common stock of the Fund were issued in violation of
the preemptive or other similar rights of any securityholder of the Fund.
(xi) AUTHORIZATION AND DESCRIPTION OF AMPS. The AMPS to be purchased
by the Underwriters from the Fund have been duly authorized for issuance
and sale to the Underwriters pursuant to this Agreement and, when issued
and delivered by the Fund pursuant to this Agreement against payment of
the consideration set forth herein, will be validly issued and fully paid
and non-assessable. The AMPS conform in all material respects to all
statements relating thereto contained in the Prospectus and such
description conforms in all material respects to the rights of holders of
AMPS set forth in the Charter; and the issuance of the AMPS is not subject
to the preemptive or other similar rights of any securityholder of the
Fund.
(xii) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Fund.
(xiii) ABSENCE OF DEFAULTS AND CONFLICTS. The Fund is not in
violation of its Charter or by-laws, or in default in the performance or
observance of any obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which it is a
party or by which it is bound, or to which any of the property or assets
of the Fund is subject (collectively, "Agreements and Instruments") except
for such violations or defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance of this
Agreement, the Management Agreement, the Sub-Advisory Agreement, the
Administration Agreement, the Custodian Agreement, the Transfer Agent and
Service Agreement and the Auction Agency Agreement referred to in the
Registration Statement (as used herein, the "Management Agreement," the
4
"Sub-Advisory Agreement, the "Administration Agreement," the "Custodian
Agreement," the "Transfer Agency Agreement" and the "Auction Agency
Agreement," respectively) and the consummation of the transactions
contemplated herein and in the Registration Statement (including the
issuance and sale of the AMPS and the use of the proceeds from the sale of
the AMPS as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Fund with its obligations hereunder have
been duly authorized by all necessary corporate action and do not and will
not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Fund
pursuant to, the Agreements and Instruments (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
result in a Material Adverse Effect), nor will such action result in any
violation of the provisions of the Charter or by-laws of the Fund or any
applicable law, statute, rule, regulation, judgment, order, writ or decree
of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Fund or any of its assets,
properties or operations (except for such violations that would not result
in a Material Adverse Effect). As used herein, a "Repayment Event" means
any event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Fund.
(xiv) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Fund or the Advisers, threatened, against or affecting the Fund, which
is required to be disclosed in the Registration Statement (other than as
disclosed therein), or which would reasonably be expected to result in a
Material Adverse Effect, or which would reasonably be expected to
materially and adversely affect the properties or assets of the Fund or
the consummation of the transactions contemplated in this Agreement or the
performance by the Fund of its obligations hereunder. The aggregate of all
pending legal or governmental proceedings to which the Fund is a party or
of which any of its property or assets is the subject which are not
described in the Registration Statement, including ordinary routine
litigation incidental to the business, would not reasonably be expected to
result in a Material Adverse Effect.
(xv) ACCURACY OF EXHIBITS. There are no contracts or documents which
are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto by the 1933 Act, the 1940
Act or by the Rules and Regulations which have not been so described and
filed as required. (xvi) POSSESSION OF INTELLECTUAL PROPERTY. The Fund
owns, has the right to use or possesses, or can acquire on reasonable
terms, adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by the Fund, and the Fund has not received any notice or is
not otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any facts
or circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Fund therein, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect.
(xvii) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
5
is necessary or required for the performance by the Fund of its
obligations hereunder, in connection with the offering, issuance or sale
of the AMPS hereunder or the consummation of the transactions contemplated
by this Agreement, except such as have been already obtained or as may be
required under the 1933 Act, the 1940 Act, the Securities Exchange Act of
1934, as amended (the "1934 Act"), or as may be required under state
securities laws.
(xviii) POSSESSION OF LICENSES AND PERMITS. The Fund possesses such
permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to operate
its properties and to conduct the business as contemplated in the
Prospectus; the Fund is in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply would
not, singly or in the aggregate, have a Material Adverse Effect; all of
the Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and the Fund has not received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xix) SUBCHAPTER M. The Fund intends to direct the investment of the
proceeds of the offering described in the Registration Statement in such a
manner as to comply with the requirements of Subchapter M of the Internal
Revenue Code of 1986, as amended ("Subchapter M of the Code" and the
"Code," respectively), and intends to qualify as a regulated investment
company under Subchapter M of the Code.
(xx) DISTRIBUTION OF OFFERING MATERIALS. The Fund has not distributed
and, prior to the later to occur of (A) the Closing Time and (B)
completion of the distribution of the AMPS, will not distribute any
offering material in connection with the offering and sale of the AMPS
other than the Registration Statement, a preliminary prospectus, the
Prospectus or other materials, if any, permitted by the 1933 Act or the
1940 Act or the Rules and Regulations.
(xxi) MATERIAL AGREEMENTS. This Agreement, the Management Agreement,
the Administration Agreement, the Custodian Agreement, the Transfer Agency
Agreement and the Auction Agency Agreement have each been duly authorized
by all requisite action on the part of the Fund, executed and delivered by
the Fund, as of the dates noted therein and each complies with all
applicable provisions of the 1940 Act. Assuming due authorization,
execution and delivery by the other parties thereto with respect to the
Administration Agreement, the Custodian Agreement, the Transfer Agency
Agreement and the Auction Agency Agreement, each of the Management
Agreement, the Administration Agreement, the Custodian Agreement, the
Transfer Agency Agreement and the Auction Agency Agreement constitutes a
valid and binding agreement of the Fund, enforceable against it in
accordance with its terms, except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) or an
implied covenant of good faith and fair dealing.
(xxii) REGISTRATION RIGHTS. There are no persons with registration
rights or other similar rights to have any securities registered pursuant
to the Registration Statement or otherwise registered by the Fund under
the 1933 Act.
(b) REPRESENTATIONS AND WARRANTIES BY THE ADVISERS. The Advisers represent
and warrant to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof as follows:
6
(i) GOOD STANDING OF THE ADVISERS. NB Management has been duly
organized and is validly existing and in good standing as a corporation
under the laws of the State of New York, and NB LLC has been duly
organized and is validly existing and in good standing as a limited
liability company under the laws of the State of Delaware with full
corporate or limited liability company, respectively, power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus and each is duly qualified as a foreign
corporation or limited liability company, respectively, to transact
business and is in good standing in each other jurisdiction in which such
qualification is required except as would not, individually or in the
aggregate, result in a material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects
of such Adviser, whether or not arising in the ordinary course of business
(an "Adviser Material Adverse Effect").
(ii) INVESTMENT ADVISER STATUS. Each of the Advisers is duly
registered and in good standing with the Commission as an investment
adviser under the Advisers Act, and is not prohibited by the Advisers Act
or the 1940 Act, or the rules and regulations under such acts, from acting
under the Management Agreement for the Fund as contemplated by the
Prospectus.
(iii) CAPITALIZATION. Each of the Advisers has the financial
resources available to it necessary for the performance of its services
and obligations as contemplated in the Prospectus.
(iv) AUTHORIZATION OF AGREEMENTS; ABSENCE OF DEFAULTS AND CONFLICTS.
This Agreement, the Management Agreement and the Sub-Advisory Agreement
have each been duly authorized, executed and delivered by each Adviser
that is a party thereto, and (assuming the due authorization, execution
and delivery by each of the parties thereto) the Management Agreement and
the Sub-Advisory Agreement each constitutes a valid and binding obligation
of each respective Adviser that is a party thereto, enforceable against it
in accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at
law) or an implied covenant of good faith and fair dealing; and neither
the execution and delivery of this Agreement, the Management Agreement and
the Sub-Advisory Agreement nor the performance by either of the Advisers
of its obligations hereunder or thereunder will conflict with, or result
in a breach of any of the terms and provisions of, or constitute, with or
without the giving of notice or lapse of time or both, a default under,
(i) any agreement or instrument to which either Adviser is a party or by
which it is bound, (ii) the certificate of incorporation, the by-laws or
other organizational documents of the Advisers, or (iii) to each Adviser's
knowledge, any law, order, decree, rule or regulation applicable to it of
any jurisdiction, court, federal or state regulatory body, administrative
agency or other governmental body, stock exchange or securities
association having jurisdiction over the Advisers or their respective
properties or operations other than, in clauses (i) and (iii), any
conflict, breach or default that would not, individually or in the
aggregate, reasonably be expected to result in an Adviser Material Adverse
Effect; and no consent, approval, authorization or order of any court or
governmental authority or agency is required for the consummation by the
Advisers of the transactions contemplated by this Agreement, the
Management Agreement or the Sub-Advisory Agreement, except as have been
obtained or will have been obtained prior to the Closing Time or may be
required under the 1933 Act, the 1940 Act, the 1934 Act or state
securities laws.
(v) NO MATERIAL ADVERSE CHANGE. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred any
event which would reasonably be expected to have a material adverse effect
on the ability of either Adviser to perform its respective obligations
under this Agreement and the respective Management Agreement and
Sub-Advisory Agreement to which it is a party.
7
(vi) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Advisers, threatened against or affecting the Advisers or any
"affiliated person" of the Advisers (as such term is defined in the 1940
Act) or any partners, directors, officers or employees of the foregoing,
whether or not arising in the ordinary course of business, which would
reasonably be expected to result in any Adviser Material Adverse Effect or
materially and adversely affect the ability of the Advisers to function as
an investment adviser with respect to the Fund or perform their
obligations under the Management Agreement or the Sub-Advisory Agreement,
or which is required to be disclosed in the Registration Statement and the
Prospectus.
(vii) ABSENCE OF VIOLATION OR DEFAULT. Each Adviser is not in
violation of its certificate of incorporation, by-laws or other
organizational documents or in default under any agreement, indenture or
instrument, except for such violations or defaults that would not result
in an Adviser Material Adverse Effect.
(c) OFFICER'S CERTIFICATES. Any certificate signed by any officer of the
Fund or the Advisers delivered to the Representative or to counsel for the
Underwriters shall be deemed a representation and warranty by the Fund or the
Advisers, as the case may be, to each Underwriter as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) AMPS. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Fund
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Fund, at the
price per share set forth in SCHEDULE B, the number of AMPS set forth in
SCHEDULE A opposite the name of such Underwriter, plus any additional number of
AMPS which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b) COMMISSION. The Fund agrees to pay to the Underwriters a commission
set forth in Schedule B as compensation to the Underwriters for their
commitments under this Agreement.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the AMPS shall be made at the offices of ▇▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, or at such other place as shall be agreed upon by the
Representative and the Fund, at 10:00 A.M. (Eastern time) on the third (fourth,
if the pricing occurs after 4:30 P.M. (Eastern time) on any given day) business
day after the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business days after such date
as shall be agreed upon by the Representative and the Fund (such time and date
of payment and delivery being herein called "Closing Time").
Payment shall be made to the Fund by wire transfer of immediately
available funds to a bank account designated by the Fund, against delivery to
the Representative for the respective accounts of the Underwriters of
certificates for the AMPS to be purchased by them. It is understood that each
Underwriter has authorized the Representative, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for the AMPS
that it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the AMPS to be purchased by any Underwriter
whose funds have not been received by the Closing Time, but such payment shall
not relieve such Underwriter from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the AMPS shall be in
such denominations and registered in such names as the Representative may
request in writing at least one full business day before the Closing Time. The
certificates for the AMPS will be made available for examination and packaging
8
by the Representative in the City of New York not later than 10:00 A.M. (Eastern
time) on the business day prior to the Closing Time.
SECTION 3. Covenants.
(a) The Fund covenants with each Underwriter as follows:
(i) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.
The Fund, subject to Section 3(a)(ii), will comply with the requirements
of Rule 430A or Rule 434, as applicable, and will notify the
Representative immediately, and confirm the notice in writing, (i) when
any post-effective amendment to the Registration Statement shall become
effective, or any supplement to the Prospectus or any amended Prospectus
shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any amendment to
the Registration Statement or any amendment or supplement to the
Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of
the AMPS for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Fund will
promptly effect the filings necessary pursuant to Rule 497 and will take
such steps as it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 497 was received for filing
by the Commission and, in the event that it was not, it will promptly file
such prospectus. The Fund will make every reasonable effort to prevent the
issuance of any stop order, or order of suspension or revocation of
registration pursuant to Section 8(e) of the 1940 Act, and, if any such
stop order or order of suspension or revocation of registration is issued,
to obtain the lifting thereof at the earliest possible moment.
(ii) FILING OF AMENDMENTS. The Fund will give the Representative
notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or
to the Prospectus, will furnish the Representative with copies of any such
documents a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file or use any such document to
which the Representative or counsel for the Underwriters shall object.
(iii) DELIVERY OF REGISTRATION STATEMENTS. The Fund has furnished or
will deliver to the Representative and counsel for the Underwriters,
without charge, signed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the Representative,
without charge, a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) for each
of the Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(iv) DELIVERY OF PROSPECTUSES. The Fund has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Fund hereby consents to
the use of such copies for purposes permitted by the 1933 Act. The Fund
will furnish to each Underwriter, without charge, during the period when
the Prospectus is required to be delivered under the 1933 Act or the 1934
Act, such number of copies of the Prospectus (as amended or supplemented)
as such Underwriter may reasonably request. The Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
9
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
(v) CONTINUED COMPLIANCE WITH SECURITIES LAWS. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with
sales of the AMPS, any event shall occur or condition shall exist as a
result of which it is necessary, in the reasonable opinion of counsel for
the Underwriters or for the Fund, to amend the Registration Statement or
amend or supplement the Prospectus in order that the Prospectus will not
include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of
such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the
requirements of the 1933 Act or the Rules and Regulations, the Fund will
promptly prepare and file with the Commission, subject to Section
3(a)(ii), such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Fund will furnish to the
Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(vi) BLUE SKY QUALIFICATIONS. The Fund will cooperate with the
Underwriters, to qualify the AMPS for offering and sale under the
applicable securities laws of such states and other jurisdictions of the
United States as the Representative may designate and to maintain such
qualifications so long as required for the distribution of the AMPS;
provided, however, that the Fund shall not be obligated to file any
general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.
(vii) RULE 158. The Fund will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(viii) USE OF PROCEEDS. The Fund will use the net proceeds received
by it from the sale of the AMPS in the manner specified in the Prospectus
under "Use of Proceeds".
(ix) REPORTING REQUIREMENTS. The Fund, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant
to the 1940 Act and the 1934 Act within the time periods required by the
1940 Act and the Rules and Regulations and the 1934 Act and the rules and
regulations of the Commission thereunder, respectively.
(x) SUBCHAPTER M. The Fund will use its best efforts to maintain its
qualification as a regulated investment company under Subchapter M of the
Code.
(xi) NO MANIPULATION OF MARKET FOR AMPS. Except for the authorization
of actions permitted to be taken by the Underwriters as contemplated
herein or in the Prospectus, the Fund will not (a) take, directly or
indirectly, any action designed to cause or to result in, or that would
reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Fund to facilitate the sale or resale of
the AMPS, and (b) until the Closing Time, (i) sell, bid for or purchase
the AMPS or pay any person any compensation for soliciting purchases of
the AMPS or (ii) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the Fund.
10
(xii) RULE 462(B) REGISTRATION STATEMENT. If the Fund elects to rely
upon Rule 462(b), the Fund shall file a Rule 462(b) Registration Statement
with the Commission in compliance with Rule 462(b) by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement, and the Fund shall
at the time of filing either pay to the Commission the filing fee for the
Rule 462(b) Registration Statement or give irrevocable instructions for
the payment of such fee pursuant to Rule 111(b) under the 1933 Act.
(xiii) ACCOUNTANT'S CERTIFICATE. The Fund will furnish to the
Representative, on the date on which delivery is made to the Rating
Agencies, the Accountant's Certificate (as defined in the Charter)
corresponding to the Certificate of Dividend Coverage and Certificate of
Eligible Asset Coverage (as defined in the Charter) for the first
Valuation Date (as defined in the Charter) following the Closing Time.
(b) Except as provided in this Agreement, the Fund will not sell, contract
to sell or otherwise dispose of any of its shares of preferred stock of the same
series as the AMPS or any securities convertible into or exercisable or
exchangeable for its shares of preferred stock of the same series as the AMPS,
or grant any options or warrants to purchase its shares of preferred stock of
the same series as the AMPS, for a period of 180 days after the date of the
Prospectus, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇.
(c) On the date of the purchase and sale contemplated by this Agreement
(the "Closing Date"), and assuming the receipt of the proceeds of the issuance
of the AMPS on such date, the Fund will use all or a portion of such proceeds to
repay any liability that the Fund has for borrowed money outstanding on the
Closing Date (except for short-term liabilities in connection with settling
sales or purchases of portfolio securities), including interest thereon,
including for this purpose any liability of the Fund outstanding on such date
under any reverse repurchase agreement.
SECTION 4. Payment of Expenses.
(a) EXPENSES. The Fund will pay all expenses incident to the performance
of its obligations under this Agreement, including (i) the preparation, printing
and filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery to the Underwriters of this Agreement, any
Agreement among Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the AMPS,
(iii) the preparation, issuance and delivery of the certificates for the AMPS to
the Underwriters, including any stock or other transfer taxes and any stamp or
other duties payable upon the sale, issuance or delivery of the AMPS to the
Underwriters, (iv) the fees and disbursements of the Fund's counsel, accountants
and other advisors, (v) the qualification of the AMPS under securities laws in
accordance with the provisions of Section 3(a)(vi) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith, (vi) the printing and delivery to the Underwriters of
copies of each preliminary prospectus, Prospectus and any amendments or
supplements thereto, (vii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto, (viii)
the fees and expenses of any transfer agent or registrar for the AMPS, and (ix)
the filing fees incident to, and the reasonable fees and disbursements of
counsel to the Underwriters in connection with, the review by the NASD of the
terms of the sale of the AMPS and marketing materials.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section 9(a)
hereof, the Fund or the Advisers shall reimburse the Underwriters for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
11
SECTION 5. Conditions of Underwriters' Obligations.
The obligations of the several Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Fund and the Advisers
contained in Section 1 hereof or in certificates of any officer of the Fund or
the Advisers delivered pursuant to the provisions hereof, to the performance by
the Fund and the Advisers of their respective covenants and other obligations
hereunder, and to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act, no notice or order pursuant
to Section 8(e) of the 1940 Act shall have been issued, and no proceedings with
respect to either shall have been initiated or threatened by the Commission, and
any request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
Underwriters. A prospectus containing the Rule 430A Information shall have been
filed with the Commission in accordance with Rule 497 (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the Fund has
elected to rely upon Rule 434, a Term Sheet shall have been filed with the
Commission in accordance with Rule 497.
(b) OPINIONS OF COUNSEL FOR THE FUND AND THE ADVISERS. At Closing Time,
the Representative shall have received the favorable opinions, dated as of
Closing Time, of ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ LLP, counsel for the Fund and of
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel to the Advisers, in form and substance
satisfactory to counsel for the Underwriters, together with signed or reproduced
copies of such letters for each of the other Underwriters as to the matters set
forth in EXHIBIT A and EXHIBIT B hereto.
(c) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of Clifford Chance US LLP, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in clauses (i), (ii), (iv), (v) (solely as
to preemptive or other similar rights arising by operation of law or under the
articles or by-laws of the Fund), (vii), (viii), (x), (xi) (solely as to the
information in the Prospectus under "Description of AMPS"), (xvi), (xvii) and
the penultimate paragraph of EXHIBIT A hereto. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the law of the State of New York and the federal law of the United States,
upon the opinions of counsel satisfactory to the Representative. Such counsel
may also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Fund and certificates of public officials.
(d) OPINION OF SPECIAL COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel for the
Underwriters, in form and substance satisfactory to counsel for the
Underwriters.
(e) OFFICERS' CERTIFICATES. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Fund, whether or not arising in the ordinary course of business, and the
Representative shall have received a certificate of the President or a Vice
President of the Fund and of the chief financial or chief accounting officer of
the Fund and of the President or a Vice President of each of the Advisers, dated
as of Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Sections 1(a) and (b)
hereof are true and correct with the same force and effect as though expressly
made at and as of Closing Time, (iii) each of the Fund and the Advisers,
respectively, has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement, or order
12
of suspension or revocation of registration pursuant to Section 8(e) of the 1940
Act, has been issued and no proceedings for any such purpose have been
instituted or are pending or, to the knowledge of the Fund or the Advisers, are
contemplated by the Commission.
(f) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the Representative shall have received from ▇▇▇▇▇ & Young LLP a
letter dated such date, in form and substance satisfactory to the
Representative, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(g) BRING-DOWN COMFORT LETTER. At Closing Time, the Representative shall
have received from Ernst & Young LLP a letter, dated as of Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (f) of this Section, except that the specified date referred to
shall be a date not more than three business days prior to Closing Time.
(h) RATING. The Fund shall have delivered and the Representative shall
have received evidence satisfactory to the Representative that the AMPS are
rated `Aaa' by ▇▇▇▇▇'▇ and `AAA' by Fitch as of the Closing Time, and there
shall not have been given any written notice of any intended or potential
downgrading, or of any review for a potential downgrading, in the rating
accorded to the AMPS by ▇▇▇▇▇'▇ or by Fitch.
(i) ASSET COVERAGE. As of the Closing Time and assuming the receipt of the
net proceeds from the sale of the AMPS, and, with respect to the Preferred
Shares Basic Maintenance Amount only, using portfolio holdings and valuations as
of the close of business of any day not more than six business days preceding
the Closing Time (provided that the total net assets of the Fund as of the
Closing Time have not delivered by 5% or more from such valuation date), the
1940 Act Preferred Shares Asset Coverage and the Preferred Shares Basic
Maintenance Amount (each as defined in the Charter) each will be met.
(j) MATERIAL AGREEMENTS. At Closing Time, the Representative shall have
received a certificate from the President or a Vice President of each of the
Advisers, dated as of Closing Time, to the effect that EXHIBIT C is a true and
complete list of all contracts, indentures, mortgages, deeds of trust, loan or
credit agreements, notes, leases or other agreements or instruments of each of
the Advisers that are material to the business or operations of each of the
Advisers.
(k) ADDITIONAL DOCUMENTS. At Closing Time, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the issuance
and sale of the AMPS as herein contemplated, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Fund and
the Advisers in connection with the organization and registration of the Fund
under the 1940 Act and the issuance and sale of the AMPS as herein contemplated
shall be reasonably satisfactory in form and substance to the Representative and
counsel for the Underwriters.
(l) TERMINATION OF AGREEMENT. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representative by notice to the Fund at any
time at or prior to Closing Time and such termination shall be without liability
of any party to any other party except as provided in Section 4 and except that
Sections 1, 6, 7, 8 and 13 shall survive any such termination and remain in full
force and effect.
13
SECTION 6. Indemnification.
(a) INDEMNIFICATION OF UNDERWRITERS. The Fund and the Advisers, jointly
and severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, and any director, officer, employee
or affiliate thereof as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information
and the Rule 434 Information, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(e) below) any such settlement is effected with the prior written consent
of the Fund and the Advisers; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund or the
Advisers by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); and
provided further that the Fund or the Advisers will not be liable to any
Underwriter with respect to any Prospectus to the extent that the Fund or the
Advisers shall sustain the burden of proving that any such loss, liability,
claim, damage or expense resulted from the fact that such Underwriter, in
contravention of a requirement of this Agreement or applicable law, sold AMPS to
a person to whom such Underwriter failed to send or give, at or prior to the
Closing Time, a copy of the final Prospectus, as then amended or supplemented
if: (i) the Company has previously furnished copies thereof (sufficiently in
advance of the Closing Time to allow for distribution by the Closing Time) to
the Underwriter and the loss, liability, claim, damage or expense of such
Underwriter resulted from an untrue statement or omission of a material fact
contained in or omitted from the preliminary Prospectus which was corrected in
the final Prospectus as, if applicable, amended or supplemented prior to the
Closing Time and such final Prospectus was required by law to be delivered at or
prior to the written confirmation of sale to such person and (ii) such failure
to give or send such final Prospectus by the Closing Time to the party or
parties asserting such loss, liability, claim, damage or expense would have
constituted a defense to the claim asserted by such person.
14
(b) INDEMNIFICATION OF FUND, ADVISERS, DIRECTORS, DIRECTORS AND OFFICERS.
Each Underwriter severally agrees to indemnify and hold harmless the Fund and
the Advisers, their respective directors and officers, each of the Fund's
officers who signed the Registration Statement, and each person, if any, who
controls the Fund or the Advisers within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a) of
this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Fund or the Advisers by
such Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Fund and the Advisers. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement; provided that an indemnifying party shall not be liable for any such
settlement effected without its consent if such indemnifying party, prior to the
date of such settlement, (1) reimburses such indemnified party in accordance
with such request for the amount of such fees and expenses of counsel as the
indemnifying party believes in good faith to be reasonable, and (2) provides
written notice to the indemnified party that the indemnifying party disputes in
good faith the reasonableness of the unpaid balance of such fees and expenses.
15
(e) INDEMNIFICATION OR CONTRIBUTION BY THE FUND. Any indemnification or
contribution by the Fund shall be subject to the requirements and limitations of
Section 17(i) of the 1940 Act.
SECTION 7. Contribution.
If the indemnification provided for in Section 6 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Fund and the Advisers on the one hand and the
Underwriters on the other hand from the offering of the AMPS pursuant to this
Agreement or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Fund and the Advisers on the one hand and of the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Fund and the Advisers on the one
hand and the Underwriters on the other hand in connection with the offering of
the AMPS pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the AMPS pursuant to
this Agreement (before deducting expenses) received by the Fund and the total
underwriting discount received by the Underwriters (whether from the Fund or
otherwise), in each case as set forth on the cover of the Prospectus, or, if
Rule 434 is used, the corresponding location on the Term Sheet, bear to the
aggregate initial public offering price of the AMPS as set forth on such cover.
The relative fault of the Fund and the Advisers on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Fund or the Advisers or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Fund, the Advisers and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the AMPS underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Fund and each director of the Advisers, respectively, each
officer of the Fund who signed the Registration Statement, and each person, if
any, who controls the Fund or the Advisers, within the meaning of Section 15 of
16
the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Fund and the Advisers, respectively. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of AMPS set forth opposite their respective names in
SCHEDULE A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement
or in certificates of officers of the Fund or the Advisers submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or controlling person, or
by or on behalf of the Fund or the Advisers, and shall survive delivery of the
AMPS to the Underwriters.
SECTION 9. Termination of Agreement.
(a) TERMINATION; GENERAL. The Representative may terminate this Agreement,
by notice to the Fund, at any time at or prior to Closing Time (i) if there has
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Fund or the Advisers, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Representative, impracticable or inadvisable to market the AMPS or to enforce
contracts for the sale of the AMPS, or (iii) if trading in the shares of common
stock of the Fund has been suspended or materially limited by the Commission or
the AMEX, or if trading generally on the New York Stock Exchange or the AMEX or
in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the NASD or any other governmental authority, or a
material disruption has occurred in commercial banking or securities settlement
or clearance services in the United States, or (iv) if a banking moratorium has
been declared by either Federal or New York authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7, 8 and 13 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at Closing Time to purchase
the AMPS which it or they are obligated to purchase under this Agreement (the
"Defaulted AMPS"), the Representative shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted AMPS in such amounts as may be agreed upon and upon the terms
herein set forth; if, however, the Representative shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted AMPS does not exceed 10% of the number of
AMPS to be purchased on such date, each of the non-defaulting Underwriters shall
be obligated, severally and not jointly, to purchase the full amount thereof in
the proportions that their respective underwriting obligations hereunder bear to
the underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted AMPS exceeds 10% of the number of AMPS to
be purchased on such date, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter.
17
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representative or the Fund shall have the right to
postpone Closing Time for a period not exceeding seven days in order to effect
any required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10.
SECTION 11. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representative, c/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., 4 World Financial Center, New York, New
York 10080, attention of Equity Capital Markets; notices to the Fund shall be
directed to the office of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Management Inc. at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, cc: ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇; and
notices to the Advisers shall be directed to the office of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Management Inc. at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention of
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, cc: ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Management Inc., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
SECTION 12. Parties.
This Agreement shall inure to the benefit of and be binding upon the
Underwriters, the Fund, the Advisers and their respective partners and
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Fund, the Advisers and their respective successors and the
controlling persons and officers, directors and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the
Underwriters, the Fund, the Advisers and their respective partners and
successors, and said controlling persons and officers, and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of AMPS from any Underwriter shall be deemed to be a
successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SAID STATE. UNLESS OTHERWISE EXPLICITLY PROVIDED, SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings.
The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.
18
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriters, the Fund and the Advisers in accordance with its terms.
Very truly yours,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ CALIFORNIA
INTERMEDIATE MUNICIPAL FUND INC.
By:__________________________
Name:
Title:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ MANAGEMENT
INC.
By:__________________________
Name:
Title:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC
By:__________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: ______________________________________
Authorized Signatory
For themselves and as Representative
of the other Underwriters named in
SCHEDULE A hereto.
19
SCHEDULE A
Number of
NAME OF UNDERWRITER AMPS
------------------- ------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated................. [ ]
[ ]
------------
[ ]
------------
Sch A-1
SCHEDULE B
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ CALIFORNIA INTERMEDIATE MUNICIPAL FUND INC.
[ ] Auction Market Preferred Shares
Series A
Series B
Liquidation Preference $25,000 per Share
1. The liquidation preference per share for the AMPS, determined as
provided in said Section 2, shall be $25,000.
2. The purchase price per share for the AMPS to be paid by the several
Underwriters shall be $24,750, such discount from the liquidation preference
representing the commission to be paid to the Underwriters for their commitment
hereunder of $250.
3. The initial dividend rate of the AMPS, Series A shall be [ ]% per annum
and the initial dividend rate of the AMPS, Series B shall be [ ]% per annum.
Sch B-1
Exhibit A
FORM OF OPINION OF FUND'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
__, 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
and Each of the Other Underwriters Named on Schedule A to
the Below-Referenced Purchase Agreement
c/▇ ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
North Tower
World Financial
Center New York, New York 10080
Re: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ California Intermediate Municipal Fund Inc.
Ladies and Gentlemen:
We have acted as special counsel for ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ California
Intermediate Municipal Fund Inc. ("Fund") in connection with the preparation of
the Fund's Registration Statement on Form N-2 (File Nos. 333-100918; 811-21167)
under the Securities Act of 1933, as amended ("Securities Act"), and the
Investment Company Act of 1940, as amended ("Investment Company Act"), initially
filed with the Securities and Exchange Commission ("Commission") on [ ], 2002
and amended on [ ], 2002 and on [ ], 2002, and the prospectus constituting a
part thereof. We also have acted as counsel to the Fund in connection with the
issuance by the Fund, and the sale in a public offering pursuant to such
Registration Statement, of the Fund's Auction Market Preferred Shares (the
"AMPS").
As such counsel, we have been requested to render our opinion as to
certain matters pursuant to Section 5(b) of the Purchase Agreement ("Purchase
Agreement"), dated December 11, 2002, entered into among you, the Fund,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Management Inc. and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLC in connection with the
public offering of _____________ AMPS. Unless otherwise defined herein or the
context otherwise requires, capitalized terms used herein have the same meanings
as in the Purchase Agreement.
We are familiar with the Registration Statement and the Prospectus, and in
connection with rendering this opinion, we have examined originals or copies of
the following agreements (collectively, the "Fund Agreements"):
1. the Purchase Agreement;
2. the Management Agreement;
3. the Sub-Advisory Agreement;
4. the Administration Agreement;
5. the Custodian Agreement; and
6. the Transfer Agency Agreement.
A-1
7. the Auction Agency Agreement
In addition, we have examined the Charter and bylaws of the Fund and the
records of the proceedings and actions of the directors of the Fund with respect
to the transactions contemplated by the Purchase Agreement, and we have made
such other investigation as we have deemed relevant or necessary in connection
with this opinion.
We have relied upon certificates and statements of public officials and,
as to certain matters of fact that are material to our opinions, we have also
relied upon statements and certificates of officers of the Fund or the Advisers,
the Fund's representations set forth in the Purchase Agreement, and
certificates, opinions and other documents delivered by or on behalf of the Fund
pursuant to the Purchase Agreement as to the matters set forth therein. We have
not independently verified the facts stated in such statements, certificates or
other documents.
In rendering our opinion on the matters hereinafter set forth, we also
have made the assumptions that are customary in opinion letters of this kind,
including the assumptions that each document submitted to us is accurate and
complete, that each such document that is an original is authentic, that each
such document that is a copy conforms to an authentic original, and that all
signatures on each such document are genuine. We have further assumed the legal
capacity of natural persons, and we have assumed that each party (other than the
Fund) has the legal capacity and has satisfied all legal requirements that are
applicable to that party to the extent necessary to make Fund Agreements
enforceable against that party. We have not independently verified such
assumptions.
Our opinion, as set forth herein, is based on the facts in existence and
the laws (which, as used herein, includes rules and regulations) in effect on
the date hereof and is limited to: (i) the federal laws of the United States of
America that based on our experience, are applicable to the transactions of the
type covered by the Fund Agreements; (ii) the General Corporation Law of the
State of Maryland; (iii) with respect to the enforceability of the Fund
Agreements other than the Custodian Agreement, the laws of the State of New York
that, based on our experience, are applicable to transactions of the type
covered by those agreements; and (iv) with respect to the enforceability of the
Custodian Agreement, the laws of the Commonwealth of Massachusetts that based on
our experience, are applicable to transactions of the type covered thereby
(collectively, the "Covered Laws"). We express no opinion with respect to any
other laws or the laws of any other jurisdiction or with respect to the
securities or "blue sky" laws of any state, territory or possession of the
United States.
References in this opinion to "our knowledge," "known to us," "aware" and
similar references mean the conscious awareness of facts by attorneys presently
with this firm who have devoted substantive attention to representation of Fund
in matters directly related to the issuance of the Shares or the Fund
Agreements.
On the basis of and subject to the foregoing, we are of the opinion that:
1. The Fund is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Maryland and is
qualified to do business as a foreign corporation in the State of New
York, which we have been advised by an officer of the Fund is the
only state in which the Fund maintains an office for the conduct of
its business.
2. The Fund has the corporate power and authority to: (i) own its
properties and conduct its business as described in the Registration
Statement and the Prospectus; and (ii) execute, deliver, and perform
its obligations under the Purchase Agreement.
3. To our knowledge, the Fund does not have any subsidiaries.
A-2
4. [The form of certificate approved by the Fund's board of directors
for the purpose of representing the AMPS complies in all material
respects with any applicable requirement of the Maryland General
Corporation Law, and the Fund's Charter and by-laws.]
5. The AMPS conform in all material respects as to all statements as to
legal matters relating thereto contained in the Prospectus. No person
is entitled to any preemptive or other similar rights with respect to
the AMPS.
6. The number of authorized Common Shares is as set forth in the
Prospectus under the caption "Description of Shares - Common Shares"
All Common Shares that to our knowledge have been issued and are
outstanding prior to the issuance of the AMPS: (i) have been duly
authorized, validly issued and are fully paid and non-assessable; and
(ii) have been offered and sold by the Fund in compliance with
applicable law.
7. The AMPS have been duly authorized for issuance and sale to the
Underwriters pursuant to the Purchase Agreement and, when issued and
delivered by the Fund pursuant to the Purchase Agreement against
payment of the consideration set forth in the Purchase Agreement,
will be validly issued and fully paid and non-assessable.
8. To our knowledge, no holders of outstanding Common Shares are
entitled as such to any preemptive or other rights to subscribe for
any AMPS under any contract, under the Charter or by-laws of the Fund
or under the Maryland General Corporation Law.
9. The Registration Statement, including any Rule 462(b) Registration
Statement, has become effective under the 1933 Act, any required
filing of the Prospectus pursuant to Rule 497(c) or Rule 497(h) has
been made in the manner and within the time period required by Rule
497, and to our knowledge, no stop order suspending the effectiveness
of the Registration Statement or of any Rule 462(b) Registration
Statement has been issued under the 1933 Act.
10. The Fund is duly registered with the Commission under the 1940 Act as
a closed-end non-diversified management investment company, and to
our knowledge, no order of suspension or revocation of such
registration pursuant to Section 8(e) of the 1940 Act has been issued
and no proceedings for any such purpose have been instituted or are
threatened by the Commission.
11. Other than with respect to financial statements and related notes and
schedules and any other financial and accounting information that is
included or incorporated by reference in, or omitted from, the
following documents, as to which we express no opinion: (i) the
Registration Statement, including any Rule 462(b) Registration
Statement and any Rule 430A Information, the Prospectus and any
amendment or supplement thereto through the date hereof complied as
to form in all material respects with the requirements of the 1933
Act and the Rules and Regulations thereunder; and (ii) the Fund's
notification of registration on Form N-8A complied as to form in all
material respects with the requirements of the 1940 Act and the Rules
and Regulations thereunder.
12. Insofar as the statements in the Prospectus under the captions
"Description of AMPS," "The Auction," "Description of Shares - Common
Shares," "Tax Matters - General; Taxation of the Fund" and ""Tax
Matters - Taxation of the Fund's Shareholders" and in the
Registration Statement under Item 29 (Indemnification) constitute
summaries of legal matters, provisions of the Fund's articles of
incorporation or by-laws or legal proceedings or legal conclusions
referred to therein, those statements fairly present the information
called for with respect to those legal matters, documents,
proceedings or conclusions.
A-3
13. To our knowledge: (i) there are no United States federal statutes or
regulations that are required to be described in the Prospectus that
are not so described; (ii) all contracts and other documents required
to be described or referred to in the Registration Statement or filed
as exhibits thereto have been so described, referred to or filed, as
the case may be; and (iii) the descriptions of the contracts and
other documents referenced in clause (ii) of this paragraph are
accurate in all material respects.
14. To our knowledge, there is no action, suit, proceeding, inquiry or
investigation by or before any court or governmental agency that is
pending against the Fund or to which any of its properties are
subject or that is threatened against the Fund, which may reasonably
be expected to result in a Material Adverse Effect or to materially
and adversely affect the properties or assets of the Fund, the
consummation by the Fund of the transactions contemplated in the
Purchase Agreement or the performance by the Fund of its obligations
thereunder.
15. To the extent they call for representations, warranties, or
performance by the Fund, the terms of each of the Fund Agreements do
not violate in any material respect any applicable provision of 1940
Act, the Rules and Regulations thereunder, the Advisers Act or the
Advisers Act Rules and Regulations.
16. Neither the execution and delivery by the Fund of, and the
performance by the Fund of its obligations under, the Purchase
Agreement, nor the issuance and sale of the AMPS to the Underwriters
and the use by the Fund of the proceeds thereof as described in the
Prospectus under the caption "Use of Proceeds": (i) violate the
Fund's Charter or bylaws; (ii) violate, breach or constitute a
default or event of default under the terms of any agreement or
instrument known to us to which the Fund is a party or by which its
property may be bound, except for violations, breaches or defaults
that would not have a Material Adverse Effect; (iii) result in the
creation or imposition of any lien, charge or encumbrance on any of
the property of the Fund pursuant to the express terms of any such
agreement or instrument, except for liens, charges or encumbrances
that would not have a Material Adverse Effect; (iv) violate the
Covered Laws or any applicable judgment, order, writ or decree under
the Covered Laws, known to us, of any New York, Maryland (insofar as
Maryland general corporate law is concerned), Massachusetts (insofar
as Massachusetts law is concerned), or United States federal
government, government instrumentality or court, having jurisdiction
over the Fund or any of its properties, assets or operations (except
for such violations that would not have an Adviser Material Adverse
Effect); or (v) require the Fund to obtain any consent or approval
by, or make any filing with, any court, regulatory body,
administrative or other governmental body, agency or official under
any statute, rule, or regulation of the State of Maryland or of the
United States, other than consents, approvals and filings previously
obtained or made and in full force and effect.
17. The execution and delivery of, and performance of the Fund's
obligations under, each of the Fund Agreements have been duly
authorized by all necessary action of the Fund, and the Fund has duly
executed and delivered each of the Fund Agreements.
18. Each of the Fund Agreements constitutes the legal, valid and binding
obligation of the Fund, enforceable against it in accordance with its
terms, except as the enforceability thereof may be limited by the
effect of bankruptcy, insolvency, fraudulent transfer,
reorganization, receivership, moratorium, and other, similar laws
affecting the rights and remedies of creditors generally and by
general principles of equity (whether applied by a court of law or
equity), and except as rights to indemnity thereunder may be limited
by federal or state securities laws.
A-4
We are not opining as to factual matters, and the character of
determinations involved in the registration process is such that we are not
passing upon and do not assume any responsibility for the accuracy, completeness
or fairness of the information included in the Registration Statement and the
Prospectus or in any amendment or supplement thereto. We assume the correctness
and completeness of the information included therein, and we have made no
independent investigation or verification of that information. However, we have
participated in the preparation of the Registration Statement and the Prospectus
and in discussions with certain officers and directors of the Fund, certain
officers and employees of the Adviser and your Representative, and we have
reviewed certain Fund records and documents. Based on that participation and
review, we can advise you that nothing has come to our attention that causes us
to believe that the Registration Statement, including any Rule 462(b)
Registration Statement and any Rule 430A Information, at the time it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus or any amendment or
supplement thereto, at the time that the Prospectus was issued or at the Closing
Time, included an untrue statement of a material fact or omitted 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. This paragraph
does not address, and we express no opinion with respect to, the financial
statements and related notes and schedules, and other financial and accounting
information, included in, incorporated by reference in, or omitted from the
Registration Statement, the Prospectus, or any amendment or supplement to either
of them. We also express no opinion with respect to any matter relating to
compliance with financial covenants or financial requirements.
This opinion is rendered solely for your use in connection with the public
offering of the AMPS pursuant to the Purchase Agreement and may not be relied
upon by you for any other purpose or by any other person or agency for any
purpose or transaction without our prior written consent, except that you may,
if so required, furnish a copy of this opinion to any regulatory agency having
regulatory jurisdiction over you or as required by law or legal process and
except that Clifford Chance US LLP may rely upon those portions of this opinion
that address Maryland law for the purpose of rendering their opinion, dated of
even date herewith, to you pursuant to Section 5 of the Purchase Agreement.
Sincerely yours,
A-5
Exhibit B
FORM OF OPINION OF ADVISERS' COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(b)
(i) NB Management is validly existing as a corporation in good
standing under the laws of New York, and NB LLC is validly existing as a
limited liability company in good standing under the laws of Delaware.
(ii) Each Adviser has full corporate or limited liability company, as
the case may be, power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and
to enter into and perform its obligations under the Purchase Agreement.
(iii) Each Adviser is duly qualified as a foreign corporation or
limited liability company, as the case may be, to transact business and is
in good standing in each state set forth opposite its name on Annex A
hereto (such counsel being entitled to rely in respect of the opinion in
this clause upon certificates of government officials in the relevant
jurisdictions regarding each Adviser's qualification as a foreign
corporation or limited liability company, as the case may be, and in good
standing and in respect of matters of fact upon certificates of the
Advisers).
(iv) Each Adviser is duly registered with the Commission as an
investment adviser under the Advisers Act and is not prohibited by the
Advisers Act, the Advisers Act Rules and Regulations, the 1940 Act or the
Rules and Regulations from acting (with respect to NB Management) under
the Management Agreement and (with respect to NB LLC) under the
Sub-Advisory Agreement for the Fund as contemplated by the Prospectus.
(v) The Purchase Agreement, the Management Agreement and the
Sub-Advisory Agreement have been duly authorized, executed and delivered
by each Adviser that is party thereto, and (assuming the due
authorization, execution and delivery by each of the other parties
thereto) the Management Agreement and the Sub-Advisory Agreement each
constitutes a valid and binding obligation of each Adviser that is party
thereto, enforceable against it in accordance with its terms, as rights to
indemnity and contribution hereunder and thereunder may be limited by
public policy or federal or state securities laws and except as affected
by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing (except that counsel may state that it expresses no opinion
as to the reasonableness or fairness of compensation payable under the
Management Agreement and the Sub-Advisory Agreement).
(vi) To our knowledge, there is not pending or threatened any action,
suit, proceeding, inquiry or investigation, to which the Advisers are a
party, or to which the property of the Advisers is subject, before or
brought by any court or governmental agency or body, domestic or foreign,
which would, individually or in the aggregate, reasonably be expected to
result in any Adviser Material Adverse Effect or materially and adversely
affect the ability of the Advisers to function as investment advisers or
perform their obligations under the Management Agreement or the
Sub-Advisory Agreement.
(vii) To our knowledge, no filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of, any New
York, Delaware (insofar as Delaware limited liability company law is
concerned) or United States federal court or governmental authority or
agency (other than under the 1933 Act, the 1940 Act and the Rules and
Regulations, which have been obtained, or as may be required under the
securities or blue sky laws of the various states, in each case, as to
B-1
which we need express no opinion) is necessary or required in connection
with the due authorization, execution and delivery of the Purchase
Agreement by the Advisers.
(viii) The execution, delivery and performance of the Purchase
Agreement, the Management Agreement, the Sub-Advisory Agreement and the
Administration Agreement by each Adviser that is party thereto, and the
consummation by each Adviser that is party thereto, of the transactions
contemplated in the Purchase Agreement, the Management Agreement, the
Sub-Advisory Agreement and the Administration Agreement and, by each
Adviser, in the Registration Statement and compliance by each Adviser that
is a party thereto with their obligations under the Purchase Agreement,
the Management Agreement, the Sub-Advisory Agreement and the
Administration Agreement (i) do not and will not, whether with or without
the giving of notice or lapse of time or both, conflict with or constitute
a breach of, or default or Repayment Event (as defined in Section
1(a)(xiii) of the Purchase Agreement) under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Advisers pursuant to any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or any other agreement or
instrument, set forth in the certificate provided by each of the Advisers
pursuant to Section 5(l) of the Purchase Agreement, (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that
would not have an Adviser Material Adverse Effect), (ii) nor will such
action result in any violation of (A) the provisions of the certificate of
incorporation or by-laws of NB Management or the certificate of formation
on limited liability company operating agreement of NB LLC of the
Advisers, or (B) any applicable law, statute, rule, regulation, judgment,
order, writ or decree, known to us, of any New York, Delaware (insofar as
Delaware limited liability company law is concerned) or United States
federal government, government instrumentality or court, having
jurisdiction over the Advisers or any of its properties, assets or
operations (except for such violations that would not have an Adviser
Material Adverse Effect).
B-2
Annex A
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Management Inc.
--------------------------------
California
Georgia
Illinois
Maryland
Massachusetts
Texas
Colorado
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC
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California
District of Columbia
Florida
Georgia
Illinois
Massachusetts
Missouri
New York
North Dakota
Ohio
Oklahoma
Pennsylvania
Texas
B-3