[ ] Shares
THE HYPERION STRATEGIC
MORTGAGE INCOME FUND, INC.
Common Stock
UNDERWRITING AGREEMENT
July[ ], 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
As Representatives of the Several Underwriters
c/o Raymond ▇▇▇▇▇ & Associates, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned, The Hyperion Strategic Mortgage Income Fund, Inc., a
Maryland corporation (the "Fund"), Hyperion Capital Management, Inc., a Delaware
corporation (the "Adviser"), and Lend Lease Hyperion Capital Advisers, L.L.C., a
Delaware limited liability company (the "Sub-Adviser"), address you as
Underwriters and as the Representatives (the "Representatives") of each of the
other persons, firms and corporations, if any, listed in Schedule I hereto
(herein collectively called "Underwriters"). The Fund proposes to issue and sell
an aggregate of [ ] shares of its common stock, $.01 par value per share (the
"Firm Shares"), to the several Underwriters. The Fund also proposes to sell upon
the terms and conditions contained in Section 2 hereof, up to [ ] additional
common shares (the "Additional Shares" which together with the Firm Shares are
hereinafter collectively referred to as the "Shares").
The Fund, the Adviser and the Sub-Adviser wish to confirm as follows
their agreements with you and the other several Underwriters on whose behalf you
are acting in connection with the several purchases of the Shares by the
Underwriters.
The Fund has entered into an investment advisory agreement with the
Adviser dated June 18, 2002 (the "Advisory Agreement"), a Custodian Contract
with State Street Bank and Trust Company ("State Street") dated June 20, 2002
(the "Custodian Contract"), an Administration Agreement with the Adviser dated
June 18, 2002 (the "Administration Agreement"), a Sub-Administration Agreement
with State Street dated June 20, 2002 (the "Sub-Administration Agreement", a
Registrar Transfer Agency Agreement with American Stock Transfer & Trust Company
dated June 20, 2002 (the "Transfer Agency Agreement") and a Seed Capital
Agreement with the Adviser dated July 15, 2002 (the "Seed Capital Agreement").
Collectively, the Advisory Agreement, Custodian Contract, Administration
Agreement, Transfer Agency Agreement and Seed Capital Agreement are herein
referred to as the "Fund Agreements." This Underwriting Agreement is herein
referred to as the "Agreement." The Adviser has entered into an Investment
Sub-Advisory Agreement with the Sub-Adviser dated June 18, 2002 (the
"Sub-Advisory Agreement") and the Adviser is a party to the Sub-Administration
Agreement, which is referred to herein from time to time together with the
Administration Agreement referenced above as the "Administration Agreements" and
the Seed Capital Agreement.
1. Registration Statement and Prospectus. The Fund has prepared and filed with
the Securities and Exchange Commission (the "Commission") in accordance with the
provisions of the Securities Act of 1933, as amended (the "1933 Act"), the
Investment Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Rules and
Regulations") and the 1940 Act (the "1940 Act Rules and Regulations" and
together with the 1933 Act Rules and Regulations, the "Rules and Regulations") a
registration statement on Form N-2 (File No. 333-88788 under the 1933 Act) (the
"registration statement"), including a prospectus and statement of additional
information relating to the Shares, and a notification of registration of the
Fund as an investment company under the 1940 Act on Form N-8A (File No.
811-21102 under the 1940 Act, the "1940 Act Notification"), and may pursuant to
the Rules and Regulations prepare and file an additional registration statement
relating to a portion of the Shares pursuant to Rule 462(b) of the 1933 Act
Rules and Regulations (a "Rule 462 registration statement"). The term
"Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended at the
time it becomes effective under the 1933 Act or, if the registration statement
became effective under the 1933 Act prior to the execution of this Agreement, as
amended or supplemented thereto, prior to the execution of this Agreement and
includes any information deemed to be included by Rule 430A under the 1933 Act
Rules and Regulations. If it is contemplated, at the time this Agreement is
executed, that a post-effective amendment to the registration statement will be
filed under the 1933 Act and must be declared effective before the offering of
Shares may commence, the term "Registration Statement" as used in this Agreement
means the Registration Statement as amended by said post-effective amendment. If
the Fund has filed a Rule 462 registration statement, then the reference herein
to the term "Registration Statement" shall include such Rule 462 registration
statement. The term "Prospectus" as used in this Agreement means the prospectus
and statement of additional information in the forms included in the
Registration Statement or, if the prospectus and statement of additional
information included in the Registration Statement omit information in reliance
on Rule 430A under the 1933 Act Rules and Regulations and such information is
included in a prospectus and statement of additional information filed with the
Commission pursuant to Rule 497(h) under the 1933 Act Rules and Regulations, the
term "Prospectus" as used in this Agreement means the prospectus and statement
of additional information in the forms included in the Registration Statement as
supplemented by the addition of the information contained in the prospectus
(including the statement of additional information) filed with the Commission
pursuant to Rule 497(h). The term "Prepricing Prospectus" as used in this
Agreement means the prospectus and statement of additional information subject
to completion in the form included in the registration statement at the time of
the initial filing of the registration statement with the Commission and as such
prospectus and statement of additional information shall have been amended from
time to time prior to the date of the Prospectus, together with any other
prospectus (including any other statement of additional information) relating to
the Fund other than the Prospectus. The terms "Registration Statement,"
"Prospectus" and "Prepricing Prospectus" shall also include any financial
statements and other information included or incorporated by reference therein.
The Fund has furnished the Representatives with copies of such
Registration Statement, each amendment to such Registration Statement filed with
the Commission and each Prepricing Prospectus.
2. Agreements to Sell and Purchase. The Fund hereby agrees, subject to all the
terms and conditions set forth herein, to issue and to sell to each Underwriter
and, upon the basis of the representations, warranties and agreements of the
Fund, the Adviser and the Sub-Adviser herein contained and subject to all of the
other terms and conditions set forth herein, each Underwriter agrees, severally
and not jointly, to purchase from the Fund at a purchase price of $14.25 per
Share (the "Price per Share"), the number of Shares set forth opposite the name
of such Underwriter in Schedule I hereto.
The Fund also agrees, subject to all the terms and conditions set forth
herein, to issue and to sell to the Underwriters and, upon the basis of the
representations, warranties and agreements of the Fund, the Adviser and the
Sub-Adviser herein contained and subject to all the terms and conditions set
forth herein, the Underwriters shall have the right to purchase from the Fund,
at the purchase price per share, pursuant to an option (the "over-allotment
option") which may be exercised at any time and from time to time prior to 9:00
A.M., New York City time, on the 45th day after the date of the Prospectus (or
if such 45th day shall be a Saturday or a Sunday or a holiday, on the next
business day thereafter when the New York Stock Exchange (the "NYSE") is open
for trading), Additional Shares. Additional Shares may be purchased solely for
the purpose of covering over-allotments made in connection with the offering of
the Shares. Upon any exercise of the over-allotment option, upon the basis of
the representations, warranties and agreements of the Fund, the Adviser and the
Sub-Adviser, herein contained and subject to all of the other terms and
conditions set forth herein, each Underwriter agrees, severally and not jointly,
to purchase from the Fund the number of Additional Shares (subject to such
adjustments as you may determine to avoid fractional shares) which bears the
same proportion to the number of Additional Shares to be purchased by the
Underwriters as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I (or such number of Firm Shares increased as set forth
in Section 11 hereof) bears to the aggregate number of Firm Shares.
3. Terms of Public Offering. The Fund and the Adviser have been advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable and initially
to offer the Shares upon the terms set forth in the Prospectus.
4. Delivery of Shares and Payments Therefor.
----------------------------------------
(a) Delivery to the Underwriters of and payment to the Fund for the Firm Shares
and compensation of the Underwriters with respect thereto shall be made at
the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ at 9:00 a.m. New York City time on July [ ], 2002
(the "Closing Date"). The place of closing for the Firm Shares and the
Closing Date may be varied by agreement between you and the Fund.
(b) Delivery to the Underwriters of and payment to the Fund for any Additional
Shares to be purchased by the Underwriters and compensation of the
Underwriters with respect thereto shall be made at the aforementioned
office of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, LLP at such time on such
date (an "Option Closing Date"), which may be the same as the Closing Date,
but shall in no event be earlier than the Closing Date nor earlier than two
nor later than three business days after the giving of the notice
hereinafter referred to, as shall be specified in a written notice from you
on behalf of the Underwriters to the Fund of the Underwriters'
determination to purchase a number, specified in said notice, of Additional
Shares. The place of closing for any Additional Shares and the Option
Closing Date for such Additional Shares may be varied by agreement between
you and the Fund.
(c) The Shares shall be registered in such names and in such denominations as
the Underwriters shall request prior to 1:00 P.M., New York City time, (i)
with respect to the Firm Shares, on the second business day preceding the
Closing Date (ii) with respect to the Additional Shares, on the day of the
giving of the written notice in respect of such Additional Shares.
Certificates for shares will be made available to you in New York City for
inspection and packaging not later than 9:00 A.M., New York City time, on
the business day next preceding the Closing Date or any Option Closing
Date, as the case may be. The certificates evidencing the Firm Shares and
any Additional Shares to be purchased hereunder shall be delivered to you
on the Closing Date or the Option Closing Date, as the case may be, against
payment of the purchase price therefor in immediately available funds.
5. Agreements of the Fund, the Adviser and the Sub-Adviser. The Fund, the
Adviser and the Sub-Adviser, jointly and severally, agree with the several
Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered,
it is necessary for the Registration Statement or a post-effective
amendment thereto to be declared effective under the 1933 Act before
the offering of the Shares may commence, the Fund will use its best
efforts to cause the Registration Statement or such post-effective
amendment to become effective under the 1933 Act as soon as possible.
If the Registration Statement has become effective and the Prospectus
contained therein omits certain information at the time of
effectiveness pursuant to Rule 430A of the 1933 Act Rules and
Regulations, the Fund will file a prospectus including such information
pursuant to Rule 497(h) of the 1933 Act Rules and Regulations, as
promptly as practicable, but no later than the second business day
following the earlier of the date of the determination of the offering
price of the Shares or the date the Prospectus is first used after the
effective date of the Registration Statement. If the Registration
Statement has become effective and the Prospectus contained therein
does not so omit such information, the Fund will file a Prospectus or
certification pursuant to Rule 497(c) or (j), as the case may be, of
the 1933 Act Rules and Regulations as promptly as practicable, but no
later than the fifth business day following the date of the later of
the effective date of the Registration Statement or the commencement of
the public offering of the Shares after the effective date of the
Registration Statement. The Fund will advise you promptly and, if
requested by you, will confirm such advice in writing (i) when the
Registration Statement or such post-effective amendment has become
effective, (ii) when the Prospectus has been timely filed pursuant to
Rule 497(c) or Rule 497(h) of the 1933 Act Rules and Regulations or
(iii) when the certification permitted pursuant to Rule 497(j) of the
1933 Act Rules and Regulations has been timely filed, whichever is
applicable.
(b) The Fund, and in the case of (iii)(B) below, the Adviser
or the Sub-Adviser, will advise you promptly and, if requested by you,
will confirm such advice in writing: (i) of any request made by the
Commission for amendment of or a supplement to the Registration
Statement, the Prospectus or any Prepricing Prospectus (or any
amendment or supplement to any of the foregoing) or for additional
information, (ii) of the issuance by the Commission, the National
Association of Securities Dealers, Inc. (the "NASD"), any state
securities commission, any national securities exchange, any
arbitrator, any court or any other governmental, regulatory,
self-regulatory or administrative agency or any official of any order
suspending the effectiveness of the Registration Statement, prohibiting
or suspending the use of the Prospectus, any Prepricing Prospectus or
any sales material (as hereinafter defined), of any notice pursuant to
Section 8(e) of the 1940 Act, of the suspension of qualification of the
Shares for offering or sale in any jurisdiction, or the initiation or
contemplated initiation of any proceeding for any such purposes, (iii)
of receipt by (A) the Fund, any affiliate of the Fund or any
Representatives or attorney of the Fund of any other material
communication from the Commission, or (B) the Fund, the Adviser, the
Sub-Adviser, any affiliate of the Fund, the Adviser or the Sub-Adviser
or any Representatives or attorney of the Fund, the Adviser or the
Sub-Adviser of any other material communication from the Commission,
the NASD, any state securities commission, any national securities
exchange, any arbitrator, any court or any other governmental,
regulatory, self-regulatory or administrative agency or any official
relating, in the case of either clause (A) or (B), to the Fund (if such
communication relating to the Fund is received by such person within
three years after the date of this Agreement), the Registration
Statement, the 1940 Act Notification, the Prospectus, any Prepricing
Prospectus, any sales material (as hereinafter defined) (or any
amendment or supplement to any of the foregoing) or this Agreement, any
of the Fund Agreements, the Sub-Advisory Agreement or the
Sub-Administration Agreement and (iv) within the period of time
referred to in paragraph (f) below, of any material, adverse change in
the condition (financial or other), general affairs, business,
prospects, properties, net assets or results of operations of the Fund
or any event which should reasonably be expected to have a material
adverse effect on the ability of the Adviser or the Sub-Adviser to
perform their respective obligations under this Agreement, the Advisory
Agreement, the Sub-Advisory Agreement or the Sub-Administration
Agreement, as the case may be, (other than as a result of changes in
market conditions generally) or of the happening of any event which
makes any statement of a material fact made in the Registration
Statement, the Prospectus, any Prepricing Prospectus or any sales
material (or any amendment or supplement to any of the foregoing)
untrue or which requires the making of any additions to or changes in
the Registration Statement, the Prospectus, any Prepricing Prospectus
or any sales material (or any amendment or supplement to any of the
foregoing) in order to state a material fact required by the 1933 Act,
the 1940 Act or the Rules and Regulations to be stated therein or
necessary in order to make the statements therein (in the case of a
prospectus or any sales material, in light of the circumstances under
which they were made) not misleading or of the necessity to amend or
supplement the Registration Statement, the Prospectus, any Prepricing
Prospectus or any sales material (or any amendment or supplement to any
of the foregoing) to comply with the 1933 Act, the 1940 Act, the Rules
and Regulations or any other law or order of any court or regulatory
body. If at any time the Commission shall issue any order suspending
the effectiveness of the Registration Statement, prohibiting or
suspending the use of the Prospectus or any sales material (or any
amendment or supplement to any of the foregoing) or suspending the
qualification of the Shares for offering or sale in any jurisdiction,
the Fund, the Adviser and the Sub-Adviser will use their best efforts
to obtain the withdrawal of such order at the earliest possible time.
If at any time the NASD, any national securities exchange, any state
securities commission, any arbitrator, any court or any other
governmental, regulatory, self-regulatory or administrative agency or
any official shall issue any order suspending the effectiveness of the
Registration Statement, prohibiting or suspending the use of the
Prospectus or any sales material (or any amendment or supplement to any
of the foregoing) or suspending the qualification of the Shares for
offering or sale in any jurisdiction, the Fund, the Adviser and the
Sub-Adviser will use their respective best efforts to obtain the
withdrawal of such order at the earliest possible time.
(c) The Fund will furnish to you, without charge, three signed
copies of the registration statement and the 1940 Act Notification as
originally filed with the Commission and of each amendment thereto,
including financial statements and all exhibits thereto and will also
furnish to you, without charge, such number of conformed copies of the
registration statement as originally filed and of each amendment
thereto, with or without exhibits, as you may reasonably request.
(d) The Fund will not (i) file any amendment to the
registration statement or the Registration Statement or make any
amendment or supplement to the Prospectus, any Prepricing Prospectus or
any sales material (or any amendment or supplement to any of the
foregoing) of which you shall not previously have been advised or to
which you shall reasonably object within a reasonable time after being
so advised or (ii) so long as, in the opinion of counsel for the
Underwriters, a Prospectus is required to be delivered in connection
with sales by any Underwriter or dealer, file any information,
documents or reports pursuant to the 1933 Act, the 1940 Act or the
Securities Exchange Act of 1934, as amended (the "1934 Act"), without
delivering a copy of such information, documents or reports to you, as
Representatives of the Underwriters, prior to or concurrently with such
filing.
(e) Prior to the execution and delivery of this Agreement, the
Fund has delivered to you, without charge, in such quantities as you
have reasonably requested, copies of each form of any Prepricing
Prospectus. The Fund consents to the use, in accordance with the
provisions of the 1933 Act and with the securities or Blue Sky laws of
the jurisdictions in which the Shares are offered by the several
Underwriters and by dealers, prior to the date of the Prospectus, of
each Prepricing Prospectus so furnished by the Fund.
(f) As soon after the execution and delivery of this Agreement
as possible and thereafter from time to time, for such period as in the
opinion of counsel for the Underwriters a prospectus is required by the
1933 Act to be delivered in connection with sales of Shares by any
Underwriter or dealer, the Fund will expeditiously deliver to each
Underwriter and each dealer, without charge, as many copies of the
Prospectus (and of any amendment or supplement thereto) as you may
reasonably request. The Fund consents to the use of the Prospectus (and
of any amendments or supplements thereto) in accordance with the
provisions of the 1933 Act and with the securities or Blue Sky laws of
the jurisdictions in which the Shares are offered by the several
Underwriters and by all dealers to whom Shares may be sold, both in
connection with the offering or sale of the Shares and for such period
of time thereafter as the Prospectus is required by law to be delivered
in connection with sales of Shares by any Underwriter or dealer. If
during such period of time any event shall occur that in the judgment
of the Fund or in the opinion of counsel for the Underwriters is
required to be set forth in the Registration Statement or the
Prospectus (as then amended or supplemented) or should be set forth
therein in order to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made)
not misleading or if it is necessary to supplement or amend the
Registration Statement or the Prospectus to comply with the 1933 Act,
the 1940 Act, the Rules and Regulations or any other law, rule or
regulation, the Fund will forthwith notify you of such event, prepare
and, subject to the provisions of paragraph (d) above, promptly file
with the Commission an appropriate amendment or supplement thereto and
will expeditiously furnish to the Underwriters and dealers, without
charge, such number of copies thereof as they may reasonably request.
In the event that the Registration Statement or the Prospectus is to be
amended or supplemented, the Fund, if requested by you, will promptly
issue a press release announcing or disclosing the matters to be
covered by the proposed amendment or supplement.
(g) The Fund will cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of
the Shares for offering and sale by the several Underwriters and by
dealers under the securities or Blue Sky laws of such jurisdictions as
you may designate and will file such consents to service of process or
other documents necessary or appropriate in order to effect such
registration or qualification.
(h) Each of the Adviser and the Sub-Adviser will make
generally available to the Underwriters its staff, for assistance with
roadshow presentations as the Underwriters may reasonably request.
(i) As soon as practicable, but in no event later than the
last day of the 18th full calendar month following the calendar quarter
in which the effective date of the Registration Statement falls, the
Fund will make generally available to its security holders an earnings
statement, which need not be audited, which earnings statement shall
satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158 of
the 1933 Act Rules and Regulations.
(j) The Fund will comply with the undertaking set forth in
paragraph (b)(5) of Item 33 of Part C of the Registration Statement.
(k) During the period of three years hereafter, the Fund will
furnish or will have furnished to you (i) as soon as available, a copy
of each report of the Fund mailed to shareholders or filed with the
Commission or furnished to the NYSE and (ii) from time to time such
other information concerning the Fund as you may reasonably request.
(l) If this Agreement shall terminate or be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to
the second paragraph of Section 11 hereof or by notice given by you
terminating this Agreement pursuant to Section 12 hereof) or if this
Agreement shall be terminated by the Underwriters because of (i) any
failure or refusal on the part of the Fund, the Adviser or the
Sub-Adviser to comply with any term or fulfill any of the conditions of
this Agreement required to be complied with or fulfilled by them, or
(ii) the non-occurrence of any other condition, the Fund, the Adviser
and the Sub-Adviser, jointly and severally, agree to reimburse the
Representatives for all out-of-pocket expenses not to exceed the
amounts set forth in Section 13 of this Agreement (including fees and
expenses of counsel for the Underwriters) incurred by you in connection
herewith.
(m) The Fund will direct the investment of the net proceeds of
the offering of the Shares (i) in accordance with the description set
forth in the Prospectus and (ii) in such a manner as to comply with the
investment objectives, policies and restrictions of the Fund as
described in the Prospectus.
(n) The Fund will file the requisite copies of the Prospectus
with the Commission in a timely fashion pursuant to Rule 497(c) or Rule
497(h) of the 1933 Act Rules and Regulations, whichever is applicable
or, if applicable, will file in a timely fashion the certification
permitted by Rule 497(j) of the 1933 Act Rules and Regulations and will
advise you of the time and manner of such filing.
(o) The Fund will use its best efforts to have the shares
listed, subject to notice of issuance, on the NYSE concurrently with
the effectiveness of the Registration Statement and to comply with the
rules or regulations of such exchange.
(p) Except as provided in this Agreement or pursuant to any
dividend reinvestment plan of the Fund, none of the Fund, the Adviser,
the Sub-Adviser or their respective officers or directors or, in the
case of the Sub-Adviser, managers or members will sell, contract to
sell or otherwise dispose of, any common stock or any securities
convertible into or exercisable or exchangeable for common stock or
grant any options or warrants to purchase common stock, for a period of
180 days after the date of the Prospectus, without the prior written
consent of the Representatives.
(q) Except as stated in this Agreement and in the Prospectus,
none of the Fund, the Adviser or the Sub-Adviser will take, directly or
indirectly, any action designed to or that might reasonably be expected
to cause or result in stabilization or manipulation of the price of the
Shares.
(r) The Fund will direct the investment of the proceeds of
the offering of the Shares so as to comply with the requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), to qualify as a regulated investment company under the Code.
6. Representations and Warranties of the Fund, the Adviser and the
Sub-Adviser. The Fund, the Adviser and the Sub-Adviser, jointly and
severally, represent and warrant to each Underwriter that:
(a) Each Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment
or supplement thereto or filed pursuant to Rule 497 of the 1933 Act
Rules and Regulations, complied when so filed in all material respects
with the provisions of the 1933 Act, the 1940 Act and the Rules and
Regulations and the Commission has not issued any order preventing or
suspending the use of the Prepricing Prospectus.
(b) The registration statement, in the form in which it was
originally filed, in the form in which it became or becomes effective
and also in such form as it may be when any post-effective amendment
thereto shall become effective, the Prospectus and any amendment or
supplement thereto when filed with the Commission under Rule 497 of the
1933 Act Rules and Regulations and the 1940 Act Notification when
originally filed with the Commission and any amendment or supplement
thereto when filed with the Commission complied or will comply in all
material respects with the provisions of the 1933 Act, the 1940 Act and
the Rules and Regulations and each of the Registration Statement and
the Prospectus (or any supplement or amendment to either of them) did
not or will not at any such times contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made)
not misleading; except that this representation and warranty does not
apply to statements in or omissions from the Registration Statement and
the Prospectus (and any amendment or supplement to either of them) made
in reliance upon and in conformity with information relating to any
Underwriter furnished to the Fund in writing by or on behalf of any
Underwriter through you expressly for use therein.
(c) All the outstanding shares of capital stock of the Fund
have been duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or similar rights, the
Shares have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor in accordance with the terms
hereof, will be validly issued, fully paid and nonassessable and free
of any preemptive or similar rights and the capital stock of the Fund
conforms to the description thereof in the Registration Statement or
the Prospectus (or any amendment or supplement to either of them).
Except for the Shares and the shares of common stock issued in
accordance with Section 14(a) of the 1940 Act, no other shares of
capital stock are issued or outstanding and the capitalization of the
Fund conforms in all respects to the description thereof in the
Registration Statement and the Prospectus (or any amendment or
supplement to either of them).
(d) The Fund has been duly formed and is validly existing in
good standing as a corporation under the laws of the State of Maryland,
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement to either
of them) and is duly registered and qualified to conduct business and
is in good standing in each jurisdiction or place where the nature of
its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register
or to qualify does not have a material, adverse effect on the condition
(financial or other), general affairs, business, properties, net assets
or results of operations of the Fund. The Fund has no subsidiaries.
(e) There are no legal or governmental proceedings pending or,
to the knowledge of the Fund, threatened, against the Fund, or to which
the Fund or any of its properties is subject, that are required to be
described in the Registration Statement or the Prospectus (and any
amendment or supplement to either of them) but are not described as
required and there are no agreements, contracts, indentures, leases or
other instruments that are required to be described in the Registration
Statement or the Prospectus (or any amendment or supplement to either
of them) or to be filed as an exhibit to the Registration Statement
that are not described or filed as required by the 1933 Act, the 1940
Act or the Rules and Regulations.
(f) The Fund is not in violation of its Articles of
Incorporation ("Articles"), by-laws or other organizational documents
or any law, ordinance, administrative or governmental rule or
regulation applicable to the Fund or of any decree of the Commission,
the NASD, any state securities commission, any national securities
exchange, any arbitrator, any court or any other governmental,
regulatory, self-regulatory or administrative agency or any other
agency or any body or official having jurisdiction over the Fund or in
breach or default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence
of indebtedness or in any agreement, indenture, lease or other
instrument to which the Fund is a party or by which it or any of its
properties may be bound.
(g) Neither the issuance and sale of the Shares, the
execution, delivery or performance of this Agreement or any of the Fund
Agreements by the Fund, nor the consummation by the Fund of the
transactions contemplated hereby or thereby (i) requires any consent,
approval, authorization or order of or registration or filing with the
Commission, the NASD, any state securities commission, any national
securities exchange, any arbitrator, any court, regulatory, body,
administrative agency or other governmental body, agency or official
having jurisdiction over the Fund (except compliance with the
securities or Blue Sky laws of various jurisdictions which have been or
will be effected in accordance with this Agreement and except for
compliance with the filing requirements of the NASD Division of
Corporate Finance) or conflicts or will conflict with or constitutes or
will constitute a breach of the Articles, bylaws, or other
organizational documents of the Fund or (ii) (A) conflicts or will
conflict with or constitutes or will constitute a breach of or a
default under any agreement, indenture, lease or other instrument to
which the Fund is a party or by which it or any of its properties may
be bound or violates or (B) will violate any statute, law, regulation
or filing or judgment, injunction, order or decree applicable to the
Fund or any of its properties or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Fund pursuant to the terms of any agreement or instrument
to which it is a party or by which it may be bound or to which any of
the property or assets of the Fund is subject. As of the date hereof,
the Fund is not subject to any order of any court or of any arbitrator,
governmental authority or administrative agency.
(h) Since the date as of which information is given in the
Registration Statement and the Prospectus (and any amendment or
supplement to either of them), except as otherwise stated therein, (i)
there has been no material, adverse change in the condition (financial
or other), general affairs, business, properties, net assets or results
of operations of the Fund or business prospects (other than as a result
of a change in the financial markets generally) of the Fund, whether or
not arising in the ordinary course of business, (ii) there have been no
transactions entered into by the Fund other than those in the ordinary
course of its business as described in the Prospectus (and any
amendment or supplement thereto) and (iii) there has been no dividend
or distribution of any kind declared, paid or made by the Fund on any
class of its common stock.
(i) The accountants, PricewaterhouseCoopers LLP who have
audited the Statement of Assets and Liabilities [and Statement of
Operations] included in the Registration Statement and the Prospectus
(and any amendment or supplement to either of them), are an independent
public accounting firm as required by the 1933 Act, the 1940 Act and
the Rules and Regulations.
(j) The financial statements, together with related schedules
and notes, included or incorporated by reference in the Registration
Statement or the Prospectus (or any amendment or supplement to either
of them) present fairly the financial position of the Fund on the basis
stated in the Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved except as disclosed therein; and the other financial
and statistical information and data included in the Registration
Statement or the Prospectus (or any amendment or supplement thereto)
are accurately derived from such financial statements and the books and
records of the Fund.
(k) The Fund, subject to the Registration Statement having
been declared effective and the filing of the Prospectus under Rule 497
under the 1933 Act Rules and Regulations, has taken all required action
under the 1933 Act, the 1940 Act and the Rules and Regulations to make
the public offering and consummate the sale of the Shares as
contemplated by this Agreement.
(l) The execution and delivery of and the performance by the
Fund of its obligations under this Agreement and the Fund Agreements
have been duly and validly authorized by the Fund and this Agreement
and each of the Fund Agreements have been duly executed and delivered
by the Fund and each constitutes the valid and legally binding
agreement of the Fund, enforceable against the Fund in accordance with
its terms, except as rights to indemnity and contribution hereunder may
be limited by federal or state securities laws and subject to the
qualification that the enforceability of the Fund's obligations
hereunder and thereunder may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and by general equitable principles.
(m) Except as disclosed in or contemplated by the Registration
Statement or the Prospectus (or any amendment or supplement to either
of them), subsequent to the respective dates as of which such
information is given in the Registration Statement and the Prospectus
(and any amendment or supplement to either of them), the Fund has not
incurred any liability or obligation, direct or contingent or entered
into any transaction, not in the ordinary course of business, and there
has not been any change in the capital stock or any material, adverse
change or any development involving or which should reasonably be
expected to involve a material, adverse change in the condition
(financial or other), general affairs, business, properties, net assets
or results of operations of the Fund or its capitalization, or the
incurrence of any debt by, the Fund.
(n) The Fund has not distributed and, prior to the later to
occur of (i) the Closing Date and (ii) completion of the distribution
of the Shares, will not distribute to the public any offering material
in connection with the offering and sale of the Shares other than the
Registration Statement, the Prepricing Prospectus included in
Pre-Effective Amendment No. [1] to the registration statement, the
Prospectus and the investor sales material (as hereinafter defined)
filed with the NASD on May 24, 2002.
(o) The Fund has such licenses, permits, and authorizations of
governmental or regulatory authorities ("permits") as are necessary to
own its property and to conduct its business in the manner described in
the Prospectus (and any amendment or supplement thereto); the Fund has
fulfilled and performed all its material obligations with respect to
such permits and no event has occurred which allows or, after notice or
lapse of time, would allow, revocation or termination thereof or
results in any other material impairment of the rights of the Fund
under any such permit, subject in each case to such qualification as
may be set forth in the Prospectus (and any amendment or supplement
thereto); and, except as described in the Prospectus (and any amendment
or supplement thereto), none of such permits contains any restriction
that is materially burdensome to the Fund.
(p) The Fund maintains and will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with the Board of
Directors' general or specific authorization and with the investment
policies and restrictions of the Fund and the applicable requirements
of the 1940 Act, the 1940 Act Rules and Regulations and the Code; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles, to calculate net asset value and fee accruals, to maintain
accountability for assets and to maintain compliance with the books and
records requirements under the 1940 Act and the 1940 Act Rules and
Regulations; (iii) access to assets is permitted only in accordance
with the Board of Directors' general or specific authorization; and
(iv) the recorded account for assets is compared with existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
(q) The conduct by the Fund of its business (as described in
the Prospectus) does not require it to be the owner, possessor or
licensee of any patents, patent licenses, trademarks, service marks or
trade names which it does not own, possess or license.
(r) Except as stated in this Agreement and in the Prospectus
(and any amendment or supplement thereto), the Fund has not taken and
will not take, directly or indirectly, any action designed to or which
could cause or result in or which will constitute stabilization or
manipulation of the price of the Shares in violation of federal
securities laws and no such action has been, or will be, taken by any
affiliates of the Fund.
(s) The Fund is duly registered under the 1940 Act and Rules
and Regulations as a closed-end, diversified management investment
company and the 1940 Act Notification has been duly filed with the
Commission and, at the time of filing thereof and at all times through
the date hereof the 1940 Act Notification conformed in all material
respects with all applicable provisions of the 1940 Act and the Rules
and Regulations; no order of suspension or revocation of such
registration under the 1940 Act and the Rules and Regulations has been
issued or proceedings therefor initiated or threatened by the
Commission. The provisions of the Articles, and the investment policies
and restrictions described in each of the Registration Statement and
the Prospectus, comply in all material respects with the requirements
of the 1940 Act and the Rules and Regulations.
(t) All advertising, sales literature or other promotional
material (including "prospecting letters" and "prospectus wrappers"
(collectively, "investor sales material") and "broker kits," "road show
slides," "road show scripts," "broker post-cards" and "broker reference
cards" (collectively, "broker sales material") authorized in writing by
or prepared by the Fund or the Adviser for use in connection with the
offering and sale of the Shares (investor sales material and broker
sales material is collectively referred to as "sales material"))
complied and comply in all respects with the applicable requirements of
the 1933 Act, the 1933 Act Rules and Regulations and the rules and
interpretations of the NASD and, if required to be filed with the NASD
under the NASD's conduct rules, were so filed and no such sales
material, when read together with the Prospectus, contained or contains
an untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(u) This Agreement and each of the Fund Agreements complies in
all material respects with all applicable provisions of the 1933 Act,
the 1940 Act, the Rules and Regulations, the Investment Advisers Act of
1940, as amended (the "Advisers Act"), and the rules and regulations of
the Commission promulgated under the Advisers Act (the "Advisers Act
Rules and Regulations").
(v) No holder of any security of the Fund has any right to
require registration of any Shares, capital stock or any other security
of the Fund because of the filing of the registration statement or
consummation of the transactions contemplated by this Agreement.
(w) The Fund, the Adviser and the Sub-Adviser intend to direct
the investment of the proceeds of the offering of the Shares in such a
manner as to comply with the requirements of Subchapter M of the Code.
(x) In the event that the Fund, the Adviser or the Sub-Adviser
makes available any promotional materials intended for use only by
qualified broker-dealers and registered Representatives thereof by
means of an Internet web site or similar electronic means, the Fund,
the Adviser or Sub-Adviser will install and maintain pre-qualification
and password-protection or similar procedures which are reasonably
designed to effectively prohibit access to such promotional materials
by persons other than qualified broker-dealers and registered
Representatives thereof.
(y) The Commission has not issued any order preventing or
suspending the use of any Prepricing Prospectus or the Prospectus.
(z) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), no
director of the Fund is an "interested person" (as defined in the ▇▇▇▇
▇▇▇) of the Fund or an "affiliated person" (as defined in the ▇▇▇▇ ▇▇▇)
of any Underwriter listed in Schedule I hereto.
(aa) The Shares have been approved for listing on the NYSE and
that the Fund's registration statement on Form 8-A under the 1934 Act
has become effective.
7. Representations and Warranties of the Adviser. The Adviser represents and
warrants to each Underwriter as follows:
(a) The Adviser is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware, with
full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in each of the
Registration Statement and the Prospectus (or any amendment or
supplement to either of them) and is duly registered and qualified to
conduct business and is in good standing in each jurisdiction or place
where the nature of its properties or conduct of its business requires
such registration or qualification, except where the failure so to
register or to qualify would not have a material, adverse affect on the
condition (financial or other), general affairs, business, properties,
net assets or results of operations of the Adviser or the Fund.
(b) The Adviser is duly registered with the Commission as an
investment adviser under the Advisers Act and is not prohibited by the
Advisers Act, the 1940 Act, the Advisers Act Rules and Regulations or
the 1940 Act Rules and Regulations from acting under the Advisory
Agreement for the Fund as contemplated by the Registration Statement or
the Prospectus (or any amendment or supplement to either of them).
There does not exist any proceeding which could have a material adverse
affect on the registration of the Adviser with the Commission.
(c) There are no legal or governmental proceedings pending or,
to the knowledge of the Adviser, threatened against the Adviser that
are required to be described in the Registration Statement or the
Prospectus (or any amendment or supplement to either of them) but are
not described as required or that could result in any material, adverse
change in the condition (financial or other), properties, net assets or
results of operations of the Adviser or that may have a material,
adverse effect on the ability of the Adviser to perform its obligations
under this Agreement, the Advisory Agreement, the Sub-Advisory
Agreement or the Administration Agreements.
(d) Neither the execution, delivery or performance of this
Agreement, the Advisory Agreement, the Sub-Advisory Agreement or the
Administration Agreements by the Adviser, nor the consummation by the
Adviser of the transactions contemplated hereby or thereby (i) requires
the Adviser to obtain any consent, approval, authorization or other
order of, or registration or filing with, the Commission, the NASD, any
state securities commission, any national securities exchange, any
arbitrator, any court, regulatory body, administrative agency or other
governmental body, agency or official having jurisdiction over the
Adviser or conflicts or will conflict with or constitutes or will
constitute a breach of or a default under, the certificate of
incorporation or bylaws, or other organizational documents of the
Adviser or (ii) conflicts or will conflict with or constitutes or will
constitute a material breach of or a default under, any material
agreement, indenture, lease or other instrument to which the Adviser is
a party or by which the Adviser or any of its properties may be bound,
or materially violates or will materially violate any material statute,
law, regulation or judgment, injunction, order or decree applicable to
the Adviser or any of its properties or will result in the creation or
imposition of any material lien, charge or encumbrance upon any
property or assets of the Adviser pursuant to the terms of any
agreement or instrument to which it is a party or by which it may be
bound or to which any of the property or assets of the Adviser is
subject, except in any case under clause (i) or (ii) as would not have
a material adverse effect on the ability of the Adviser to perform its
obligations under this Agreement, the Advisory Agreement, the
Sub-Advisory Agreement or the Administration Agreements. The Adviser is
not subject to any order of any court or of any arbitrator, regulatory
body, administrative agency or other governmental body, agency or
official.
(e) The Adviser has full power and authority to enter into
this Agreement, the Advisory Agreement, the Sub-Advisory Agreement and
the Administration Agreements, the execution and delivery of, and the
performance by the Adviser of its obligations under, this Agreement,
the Advisory Agreement, the Sub-Advisory Agreement and the
Administration Agreements have been duly and validly authorized by the
Adviser and this Agreement, the Advisory Agreement, the Sub-Advisory
Agreement and the Administration Agreements have been duly executed and
delivered by the Adviser and constitute the valid and legally binding
agreements of the Adviser, enforceable against the Adviser in
accordance with their terms, except as rights to indemnity and
contribution hereunder may be limited by federal or state securities
laws and subject to the qualification that the enforceability of the
Adviser's obligations hereunder and thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights
generally and by general equitable principles whether enforcement is
considered in a proceeding in equity or at law.
(f) The Adviser has the financial resources necessary for the
performance of its services and obligations as contemplated in the
Registration Statement and the Prospectus (or any amendment or
supplement to either of them) or under this Agreement, the Advisory
Agreement, the Sub-Advisory Agreement or the Administration Agreements.
(g) The description of the Adviser and its business, and the
statements attributable to the Adviser, in the Registration Statement
or the Prospectus (or any amendment or supplement to either of them)
complied and comply in all material respects with the provisions of the
1933 Act, the 1940 Act, the Advisers Act, the Rules and Regulations and
the Advisers Act Rules and Regulations and did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading.
(h) Since the date as of which information is given in the
Registration Statement or the Prospectus (or any amendment or
supplement to either of them), except as otherwise stated therein, (i)
there has been no material adverse change in the condition (financial
or other), business, properties, net assets or results of operations or
business prospects of the Adviser, whether or not arising from the
ordinary course of business and (ii) there have been no transactions
entered into by the Adviser which are material to the Adviser other
than those in the ordinary course of its business as described in the
Prospectus.
(i) The Adviser has such licenses, permits and authorizations
of governmental or regulatory authorities ("permits") as are necessary
to own its property and to conduct its business in the manner described
in the Prospectus (and any amendment or supplement thereto); the
Adviser has fulfilled and performed all its obligations with respect to
such permits and no event has occurred which allows, or after notice or
lapse of time would allow, revocation or termination thereof or results
in any other impairment of the rights of the Adviser under any such
permit.
(j) This Agreement, the Advisory Agreement and the
Sub-Advisory Agreement each do not violate any applicable provisions of
the 1940 Act, the 1940 Act Rules and Regulations, the Advisers Act and
the Advisers Act Rules and Regulations.
(k) Except as stated in this Agreement, the Registration
Statement or the Prospectus (or in any amendment or supplement to any
of the foregoing), the Adviser has not taken and will not take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in or which will constitute
stabilization or manipulation of the price of the Shares or of any
securities issued by the Fund to facilitate the sale or resale of the
Shares, in each case, in violation of federal securities laws and the
Adviser is not aware of any such action taken or to be taken by any
affiliates of the Adviser.
8. Representations and Warranties of the Sub-Adviser. The Sub-Adviser
represents and warrants to each Underwriter as follows:
(a) The Sub-Adviser is a limited liability company duly formed
and validly existing in good standing under the laws of the State of
Delaware, with full limited liability company power and authority to
own, lease and operate its properties and to conduct its business as
described in each of the Registration Statement and the Prospectus (or
any amendment or supplement to either of them) and is duly registered
and qualified to conduct business and is in good standing in each
jurisdiction or place where the nature of its properties or conduct of
its business requires such registration or qualification, except where
the failure so to register or to qualify would not have a material,
adverse affect on the condition (financial or other), general affairs,
business, properties, net assets or results of operations of the
Sub-Adviser, the Adviser or the Fund.
(b) The Sub-Adviser is duly registered with the Commission as
an investment adviser under the Advisers Act and is not prohibited by
the Advisers Act, the 1940 Act, the Advisers Act Rules and Regulations
or the 1940 Act Rules and Regulations from acting under the
Sub-Advisory Agreement for the Fund as contemplated by the Registration
Statement or the Prospectus (or any amendment or supplement to either
of them). There does not exist any proceeding which could have a
material adverse affect on the registration of the Sub-Adviser with the
Commission.
(c) There are no legal or governmental proceedings pending or,
to the knowledge of the Sub-Adviser, threatened against the Sub-Adviser
that are required to be described in the Registration Statement or the
Prospectus (or any amendment or supplement to either of them) but are
not described as required or that could result in any material, adverse
change in the condition (financial or other), properties, net assets or
results of operations of the Sub-Adviser or that may have a material,
adverse effect on the ability of the Sub-Adviser to perform its
obligations under this Agreement or the Sub-Advisory Agreement.
(d) Neither the execution, delivery or performance of this
Agreement or the Sub-Advisory Agreement by the Sub-Adviser, nor the
consummation by the Sub-Adviser of the transactions contemplated hereby
or thereby (i) requires the Sub-Adviser to obtain any consent,
approval, authorization or other order of, or registration or filing
with, the Commission, the NASD, any state securities commission, any
national securities exchange, any arbitrator, any court, regulatory
body, administrative agency or other governmental body, agency or
official having jurisdiction over the Sub-Adviser or conflicts or will
conflict with or constitutes or will constitute a breach of or a
default under, the certificate of incorporation or bylaws, or other
organizational documents of the Sub-Adviser or (ii) conflicts or will
conflict with or constitutes or will constitute a material breach of or
a default under, any material agreement, indenture, lease or other
instrument to which the Sub-Adviser is a party or by which the
Sub-Adviser or any of its properties may be bound, or materially
violates or will materially violate any material statute, law,
regulation or judgment, injunction, order or decree applicable to the
Sub-Adviser or any of its properties or will result in the creation or
imposition of any material lien, charge or encumbrance upon any
property or assets of the Sub-Adviser pursuant to the terms of any
agreement or instrument to which it is a party or by which it may be
bound or to which any of the property or assets of the Sub-Adviser is
subject, except in any case under clause (i) or (ii) as would not have
a material adverse effect on the ability of the Sub-Adviser to perform
its obligations under this Agreement and the Sub-Advisory Agreement.
The Sub-Adviser is not subject to any order of any court or of any
arbitrator, regulatory body, administrative agency or governmental
body, agency or official.
(e) The Sub-Adviser has full power and authority to enter into
this Agreement and the Sub-Advisory Agreement, the execution and
delivery of, and the performance by the Sub-Adviser of its obligations
under, this Agreement and the Sub-Advisory Agreement have been duly and
validly authorized by the Sub-Adviser and this Agreement and the
Sub-Advisory Agreement have been duly executed and delivered by the
Sub-Adviser and constitute the valid and legally binding agreements of
the Sub-Adviser, enforceable against the Sub-Adviser in accordance with
their terms, except as rights to indemnity and contribution hereunder
may be limited by federal or state securities laws and subject to the
qualification that the enforceability of the Sub-Adviser's obligations
hereunder and thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and by general
equitable principles whether enforcement is considered in a proceeding
in equity or at law.
(f) The Sub-Adviser has the financial resources necessary for
the performance of its services and obligations as contemplated in the
Registration Statement and the Prospectus (or any amendment or
supplement to either of them) or under this Agreement or the
Sub-Advisory Agreement.
(g) The description of the Sub-Adviser and its business, and
the statements attributable to the Sub-Adviser, in the Registration
Statement or the Prospectus (or any amendment or supplement to either
of them) complied and comply in all material respects with the
provisions of the 1933 Act, the 1940 Act, the Advisers Act, the Rules
and Regulations and the Advisers Act Rules and Regulations and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of
the circumstances under which they were made) not misleading.
(h) Since the date as of which information is given in the
Registration Statement or the Prospectus (or any amendment or
supplement to either of them), except as otherwise stated therein, (i)
there has been no material adverse change in the condition (financial
or other), business, properties, net assets or results of operations or
business prospects of the Sub-Adviser, whether or not arising from the
ordinary course of business and (ii) there have been no transactions
entered into by the Sub-Adviser which are material to the Sub-Adviser
other than those in the ordinary course of its business as described in
the Prospectus.
(i) The Sub-Adviser has such licenses, permits and
authorizations of governmental or regulatory authorities ("permits") as
are necessary to own its property and to conduct its business in the
manner described in the Prospectus (and any amendment or supplement
thereto); the Sub-Adviser has fulfilled and performed all its
obligations with respect to such permits and no event has occurred
which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other impairment of the rights
of the Sub-Adviser under any such permit.
(j) This Agreement and the Sub-Advisory Agreement each do not
violate any applicable provisions of the 1940 Act, the 1940 Act Rules
and Regulations, the Advisers Act and the Advisers Act Rules and
Regulations.
(k) Except as stated in this Agreement, the Registration
Statement or the Prospectus (or in any amendment or supplement to any
of the foregoing), the Sub-Adviser has not taken and will not take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in or which will constitute
stabilization or manipulation of the price of the Shares or of any
securities issued by the Fund to facilitate the sale or resale of the
Shares, in each case, in violation of federal securities laws and the
Sub-Adviser is not aware of any such action taken or to be taken by any
affiliates of the Sub-Adviser.
9. Indemnification and Contribution.
--------------------------------
(a) The Fund, the Adviser and the Sub-Adviser, jointly and
severally, agree to indemnify and hold harmless each of you and each
other Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act, from and against any and all losses, claims, damages,
liabilities and expenses, joint or several (including reasonable costs
of investigation), arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectus, any Prepricing Prospectus, any
sales material (as defined in Section 6(t) of this Agreement) (or any
amendment or supplement to any of the foregoing) or arising out of or
based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein (in the case of a prospectus, in light of the circumstances
under which they were made) not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are
based upon any untrue statement or omission or alleged untrue statement
or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to such
Underwriters furnished in writing to the Fund by or on behalf of any
Underwriter through you expressly for use in connection therewith;
provided, however, that the foregoing indemnification contained in this
paragraph (a) with respect to the Prepricing Prospectus contained in
Pre-Effective Amendment No. 1 to the registration statement shall not
inure to the benefit of any Underwriter (or to the benefit of any
person controlling such Underwriter) on account of any such loss,
claim, damage, liability or expense arising from the sale of the Shares
by such Underwriter to any person if it is shown that a copy of the
Prospectus (which term as used in this proviso shall not include any
statement of additional information) was not delivered or sent to such
person within the time required by the 1933 Act and the 1933 Act Rules
and Regulations and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such
Prepricing Prospectus was corrected in the Prospectus, provided that
the Fund has delivered the Prospectus to the several Underwriters in
requisite quantity on a timely basis to permit proper delivery or
sending. The foregoing indemnity agreement shall be in addition to any
liability which the Fund, the Adviser or the Sub-Adviser may otherwise
have.
(b) If any action, suit or proceeding shall be brought against
any Underwriter or any person controlling any Underwriter in respect of
which indemnity may be sought against the Fund, the Adviser or the
Sub-Adviser, such Underwriter or such controlling person shall promptly
notify the Fund, the Adviser or the Sub-Adviser and the Fund, the
Adviser or the Sub-Adviser shall assume the defense thereof, including
the employment of counsel and the payment of all fees and expenses.
Such Underwriter or any such controlling person shall have the right to
employ separate counsel in any such action, suit or proceeding and to
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or controlling
person unless (i) the Fund, the Adviser or the Sub-Adviser have agreed
in writing to pay such fees and expenses, (ii) the Fund, the Adviser or
the Sub-Adviser have failed within a reasonable time to assume the
defense and employ counsel or (iii) the named parties to any such
action, suit or proceeding (including any impleaded parties) include
both such Underwriter or such controlling person and the Fund, the
Adviser or the Sub-Adviser and such Underwriter or such controlling
person shall have been advised by its counsel that representation of
such indemnified party and the Fund, the Adviser or the Sub-Adviser by
the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same
counsel has been proposed) due to actual or potential differing
interests between them (in which case the Fund, the Adviser and the
Sub-Adviser shall not have the right to assume the defense of such
action, suit or proceeding on behalf of such Underwriter or such
controlling person). It is understood, however, that the Fund, the
Adviser and the Sub-Adviser shall, in connection with any one such
action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of only one separate firm of attorneys (in
addition to any local counsel if there is any action, suit or
proceeding in more than one jurisdiction) at any time for all such
Underwriters and controlling persons not having actual or potential
differing interests with you or among themselves, which firm shall be
designated in writing by the Representatives and that, subject to the
requirements of 1940 Act Release No. 11330, all such fees and expenses
shall be reimbursed promptly as they are incurred. The Fund, the
Adviser and the Sub-Adviser shall not be liable for any settlement of
any such action, suit or proceeding effected without the written
consent of the Fund, the Adviser or the Sub-Adviser, but if settled
with such written consent or if there be a final judgment for the
plaintiff in any such action, suit or proceeding, the Fund, the Adviser
and the Sub-Adviser agree to indemnify and hold harmless any
Underwriter, to the extent provided in the preceding paragraph and any
such controlling person from and against any loss, liability, damage or
expense by reason by such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Fund, the Adviser and the Sub-Adviser,
their directors members or managers, any officers of the Fund who sign
the Registration Statement and any person who controls the Fund, the
Adviser or the Sub-Adviser within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act, to the same extent as the foregoing
indemnity from the Fund, the Adviser and the Sub-Adviser to each
Underwriter, but only with respect to information relating to such
Underwriter furnished in writing by or on behalf of such Underwriter
through you expressly for use in the Registration Statement, the
Prospectus or any Prepricing Prospectus (or any amendment or supplement
thereto). If any action, suit or proceeding shall be brought against
the Fund, the Adviser or the Sub-Adviser, any of their directors,
members or managers, any such officer or any such controlling person,
based on the Registration Statement, the Prospectus or any Prepricing
Prospectus (or any amendment or supplement thereto) and in respect of
which indemnity may be sought against any Underwriter pursuant to this
paragraph (c), such Underwriter shall have the rights and duties given
to each of the Fund, the Adviser and the Sub-Adviser by paragraph (b)
above (except that if the Fund, the Adviser or the Sub-Adviser shall
have assumed the defense thereof such Underwriter shall not be required
to do so, but may employ separate counsel therein and participate in
the defense thereof, but the fees and expenses of such counsel shall be
at such Underwriter's expense) and the Fund, the Adviser and the
Sub-Adviser, their directors, managers or members, any such officer and
any such controlling person shall have the rights and duties given to
the Underwriters by paragraph (b) above. The foregoing indemnity
agreement shall be in addition to any liability which the Underwriters
may otherwise have.
(d) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof
in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then an indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Fund, the
Adviser and the Sub-Adviser on the one hand (treated jointly for this
purpose as one person) and the Underwriters on the other from the
offering of the Shares or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Fund, the Adviser
and the Sub-Adviser on the one hand (treated jointly for this purpose
as one person) and of the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Fund,
the Adviser and the Sub-Adviser on the one hand (treated jointly for
this purpose as one person) and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Fund bear to the
total underwriting discounts and commissions received by the
Underwriters, in each case, as set forth in the table on the cover page
of the Prospectus. The relative fault of the Fund, the Adviser and the
Sub-Adviser on the one hand (treated jointly for this purpose as one
person) and of the Underwriters on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Fund, the
Adviser and the Sub-Adviser on the one hand (treated jointly for this
purpose as one person) or by the Underwriters on the other and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) The Fund, the Adviser, the Sub-Adviser and the
Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages, liabilities and expenses referred to in
paragraph (d) above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating any
claim or defending any such action, suit or proceeding. Notwithstanding
the provisions of this Section 9, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price
of the Shares underwritten by it and distributed to the public exceeds
the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares set forth opposite their names in Schedule
I (or such number of Shares increased as set forth in Section 11
hereof) and not joint.
(f) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending
or threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party
from all liability from claimants on claims that are the subject matter
of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or
contribution under this Section 9 shall, subject to the requirements of
Release No. 11330, be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are
incurred. The indemnity and contribution agreements contained in this
Section 9 and the representations and warranties of each of the Fund,
the Adviser and the Sub-Adviser set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Fund, the Adviser, the Sub-Adviser or
their directors, managers, members, officers or any person controlling
the Fund, the Adviser or the Sub-Adviser, (ii) acceptance of any Shares
and payment therefor hereunder and (iii) any termination of this
Agreement. A successor to any Underwriter or to the Fund, the Adviser
or the Sub-Adviser or their directors, managers, members, officers or
any person controlling the Fund, the Adviser or the Sub-Adviser shall
be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 9.
10. Conditions of Underwriters' Obligations. The several obligations of the
Underwriters to purchase the Shares hereunder are subject to the accuracy of and
compliance with the representations, warranties and agreements of and by each of
the Fund, the Adviser and the Sub-Adviser contained herein on and as of the date
on which the Registration Statement becomes or became effective, the date of the
Prospectus (and of any amendment or supplement thereto) and the Closing Date
and, with respect to any Additional Shares, any Option Closing Date; to the
accuracy and completeness of all statements made by the Fund, the Adviser, the
Sub-Adviser or any of their respective officers in any certificate delivered to
the Representatives or their counsel pursuant to this Agreement, and to the
following conditions:
(a) If, at the time this Agreement is executed and delivered,
it is necessary for the Registration Statement or a post-effective
amendment thereto to be declared effective before the offering of the
Shares may commence, the Registration Statement or such post-effective
amendment shall have become effective not later than 5:30 p.m., New
York City time, on the date hereof or at such later date and time as
shall be consented to in writing by you and all filings, if any,
required by Rules 497 and 430A under the 1933 Act and the 1933 Act
Rules and Regulations shall have been timely made; no stop order
suspending the effectiveness of the Registration Statement or order
pursuant to Section 8(e) of the 1940 Act shall have been issued and no
proceeding for that purpose shall have been instituted or, to the
knowledge of the Fund, the Adviser or any Underwriter, threatened by
the Commission and any request of the Commission for additional
information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to your
satisfaction.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change or any development involving a
prospective change in or affecting the condition (financial or other),
business, general affairs, properties, net assets, or results of
operations of the Fund, the Adviser or the Sub-Adviser not contemplated
by the Prospectus, which in your opinion, would materially adversely
affect the market for the Shares, or (ii) any event or development
relating to or involving the Fund, the Adviser or the Sub-Adviser or
any officer, director, manager or member of the Fund, the Adviser or
the Sub-Adviser which makes any statement made in the Prospectus untrue
or which, in the opinion of the Fund and its counsel or the
Underwriters and their counsel, requires the making of any addition to
or change in the Prospectus in order to state a material fact required
by the 1933 Act, the 1940 Act or the Rules and Regulations or any other
law to be stated therein or necessary in order to make the statements
therein not misleading, if amending or supplementing the Prospectus to
reflect such event or development would, in your opinion, materially
adversely affect the market for the Shares.
(c) That you shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇▇▇ & Worcester LLP, special counsel for the Fund,
dated the Closing Date and addressed to you, as the Representatives of
the several Underwriters, in substantially the form attached hereto as
Exhibit A.
(d) That you shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, special counsel for the Adviser,
dated the Closing Date and addressed to you, as Representatives of the
several Underwriters, in substantially the form attached hereto as
Exhibit B.
(e) That you shall have received on the Closing Date an
Opinion of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, special counsel for the
Sub-Adviser, dated the Closing Date and addressed to you, as the
Representatives of the several underwriter, in substantially the form
attached hereto as Exhibit C.
(f) That you shall have received on the Closing Date an
opinion as to Maryland law of ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, special counsel for
the Fund, dated the Closing Date and addressed to you, as the
Representatives of the several Underwriters, in substantially the form
attached hereto as Exhibit D.
(g) That you shall have received on the Closing Date an
opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, dated the Closing
Date and addressed to you, as the Representatives of the several
underwriters, with respect to such matters as you may require and the
Fund, the Adviser, the Sub-Adviser and their respective counsel shall
have furnished to such counsel such documents as they may request for
the purpose of enabling them to pass upon such matters.
(h) That you shall have received letters addressed to you, as
the Representatives of the several Underwriters and dated each of the
date hereof and the Closing Date from PricewaterhouseCoopers LLP,
independent certified public accountants, substantially in the forms
heretofore approved by you.
(i) (i) No order suspending the effectiveness of the
Registration Statement or prohibiting or suspending the use of the
Prospectus (or any amendment or supplement to any of the foregoing) or
any Prepricing Prospectus or any sales material shall have been issued
and no proceedings for such purpose or for the purpose of commencing an
enforcement action against the Fund, the Adviser or the Sub-Adviser or,
with respect to the transactions contemplated by the Prospectus (or any
amendment or supplement thereto) and this Agreement, may be pending
before or, to the knowledge of the Fund, the Adviser, the Sub-Adviser
or any Underwriter or in the reasonable view of counsel to the
Underwriters, shall be threatened or contemplated by the Commission at
or prior to the Closing Date and that any request for additional
information on the part of the Commission (to be included in the
Registration Statement, the Prospectus or otherwise) be complied with
to the satisfaction of the Representatives, (ii) there shall not have
been any change in the capital stock of the Fund nor any increase in
debt of the Fund from that set forth in the Registration Statement or
the Prospectus (or any amendment or supplement to either of them) and
the Fund shall not have sustained any material liabilities or
obligations, direct or contingent, other than those reflected in or
contemplated by the Registration Statement or the Prospectus (or any
amendment or supplement to either of them), (iii) since the date of the
Prospectus there shall not have been any material, adverse change in
the condition (financial or other), general affairs, business,
prospects, properties, net assets or results of operations of the Fund,
the Adviser or the Sub-Adviser, (iv) none of the Fund, the Adviser or
the Sub-Adviser shall have sustained any material loss or interference
with their businesses from any court or from legislative or other
governmental action, order or decree or from any other occurrence not
described in the Registration Statement or the Prospectus (or any
amendment or supplement to either of them), and (v) all of the
representations and warranties of each of the Fund, the Adviser or the
Sub-Adviser contained in this Agreement shall be true and correct on
and as of the date hereof and as of the Closing Date as if made on and
as of the Closing Date.
(j) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change or any development involving a
prospective change, in or affecting the condition (financial or other),
general affairs, business, prospects, properties, net assets or results
of operations of the Fund, the Adviser or the Sub-Adviser not
contemplated by the Prospectus (and any amendment or supplement
thereto), which in your opinion, as the Representatives of the several
Underwriters, would materially, adversely affect the market for the
Shares or (ii) any event or development relating to or involving the
Fund, the Adviser, the Sub-Adviser or any officer, director, manager or
member of the Fund, the Adviser or the Sub-Adviser which makes any
statement of a material fact made in the Prospectus (or any amendment
or supplement thereto) untrue or which, in the opinion of the Fund and
its counsel or the Underwriters and their counsel, requires the making
of any addition to or change in the Prospectus (or any amendment or
supplement thereto) in order to state a material fact required by the
1933 Act, the 1940 Act, the Rules and Regulations, the Advisers Act,
the Advisers Act Rules and Regulations or any other law to be stated
therein or necessary in order to make the statements therein (in the
case of a prospectus, in light of the circumstances under which they
were made) not misleading, if amending or supplementing the Prospectus
(or any amendment or supplement thereto) to reflect such event or
development would, in your opinion, as the Representatives of the
several Underwriters, materially, adversely affect the market for the
Shares.
(k) That none of the Fund, the Adviser, or the Sub-Adviser
shall have failed at or prior to the Closing Date to have performed or
complied with any of the agreements herein contained and required to be
performed or complied with by them at or prior to the Closing Date.
(l) That you shall have received on the Closing Date a
certificate, dated such date, of each of the chief executive officer
and chief financial officer of each of the Fund, the Adviser and the
Sub-Adviser certifying that (i) the signers have carefully examined the
Registration Statement, the Prospectus (and any amendments or
supplements to either of them) and this Agreement, (ii) the
representations and warranties of the Fund (with respect to the
certificates from such Fund officers), the representations and
warranties of the Adviser (with respect to the certificates from such
officers of the Adviser), and the representations and warranties of the
Sub-Adviser (with respect to the certificates from such officers of the
Sub-Adviser) in this Agreement are true and correct on and as of the
date of the certificate as if made on such date, (iii) since the date
of the Prospectus (and any amendment or supplement thereto) there has
not been any material, adverse change in the condition (financial or
other), business, prospects (other than as a result of a change in the
financial markets generally), properties, net assets or results of
operations of the Fund (with respect to the certificates from such Fund
officers) or the Adviser (with respect to the certificates from such
officers of the Adviser) or the Sub-Adviser (with respect to the
certificates from such officers of the Sub-Adviser), (iv) to the
knowledge of such officers after reasonable investigation, no order
suspending the effectiveness of the Registration Statement or
prohibiting the sale of any of the Shares or having a material, adverse
effect on the Fund (with respect to the certificates from such Fund
officers) or the Adviser (with respect to the certificates from such
officers of the Adviser) or the Sub-Adviser (with respect to the
certificates from such officers of the Sub-Adviser) has been issued and
no proceedings for any such purpose are pending before or threatened by
the Commission or any court or other regulatory body, the NASD, any
state securities commission, any national securities exchange, any
arbitrator, any court or any other governmental, regulatory,
self-regulatory or administrative agency or any official, (v) each of
the Fund (with respect to certificates from such Fund officers), the
Adviser (with respect to certificates from such officers of the
Adviser) and the Sub-Adviser(with respect to the certificates from such
officers of the Sub-Adviser) has performed and complied with all
agreements that this Agreement require it to perform by such Closing
Date, (vi) none of the Fund (with respect to the certificate from such
officers of the Fund), the Adviser (with respect to the certificate
from such officers of the Adviser) or the Sub-Adviser (with respect to
the certificates from such officers of the Sub-Adviser) has sustained
any material loss or interference with its business from any court or
from legislative or other governmental action, order or decree or from
any other occurrence not described in the Registration Statement or the
Prospectus and any amendment or supplement to either of them and (vii)
with respect to the certificate from such officers of the Fund, there
has not been any change in the capital stock of the Fund nor any
increase in the debt of the Fund from that set forth in the Prospectus
(or any amendment or supplement thereto) and the Fund has not sustained
any material liabilities or obligations, direct or contingent, other
than those reflected in the Prospectus (or any amendment or supplement
thereto).
(m) That the Fund, the Adviser and the Sub-Adviser shall have
furnished to you such further certificates, documents and opinions of
counsel as you shall reasonably request (including certificates of
officers of the Fund, the Adviser and the Sub-Adviser).
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and your counsel acting in good faith.
Any certificate or document signed by any officer of the Fund, the
Adviser or the Sub-Adviser and delivered to you, as the Representatives of the
Underwriters or to Underwriters' counsel, shall be deemed a representation and
warranty by the Fund, the Adviser or the Sub-Adviser to each Underwriter as to
the statements made therein.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to (i) the accuracy of and compliance with the
representations and warranties of the Fund, the Adviser and the Sub-Adviser
contained herein on and as of the Option Closing Date as though made on any
Option Closing Date, (ii) satisfaction on and as of any Option Closing Date of
the conditions set forth in this Section 10 except that, if any Option Closing
Date is other than the Closing Date, the certificates, opinions and letters
referred to in ▇▇▇▇▇▇▇▇ ▇▇ (▇), (▇), (▇), (▇), (▇), (▇) and (m) and this
paragraph shall be dated the Option Closing Date in question and the opinions
called for by Sections 10 (c), (d), (e), (f), (h) shall be revised to reflect
the sale of Additional Shares and (iii) the absence of circumstances on or prior
to the Option Closing Date which would permit termination of this Agreement
pursuant to Section 12 hereof if they existed on or prior to the Closing Date.
11. Effective Date of Agreement. This Agreement shall become effective: (i) upon
the execution and delivery hereof by the parties hereto; or (ii) if, at the time
this Agreement is executed and delivered, it is necessary for the Registration
Statement or a post-effective amendment thereto to be declared effective before
the offering of the Shares may commence, when the Registration Statement or such
post-effective amendment has become effective. Until such time as this Agreement
shall have become effective, it may be terminated by the Fund by notifying you,
or by you by notifying the Fund.
If any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they have agreed to purchase hereunder and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares, each non-defaulting Underwriter shall be obligated, severally, in
the proportion which the aggregate number of Shares set forth opposite its name
in Schedule I hereby bears to the aggregate number of Shares set forth opposite
the names of all non-defaulting Underwriters or in such other proportion as you
may specify in accordance with Section 7 of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Master Agreement
Among Underwriters, to purchase Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase. If any Underwriter or
Underwriters shall fail or refuse to purchase Shares and the aggregate number of
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares and arrangements satisfactory to you and the Fund for
the purchase of such Shares by one or more non-defaulting Underwriters or other
party or parties approved by you and the Fund are not made within 36 hours after
such default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Fund. In any such case which does not result
in termination of this Agreement, either you or the Fund shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and the
Prospectus or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect to any such default of any such Underwriter under this
Agreement. The term "Underwriter" as used in this Agreement includes, for all
purposes of this Agreement, any party not listed in Schedule I hereto who, with
your approval and the approval of the Fund, purchases Shares which a defaulting
Underwriter agreed, but failed or refused, to purchase.
Any notice under this Section 11 may be made by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
12. Termination of Agreement.
------------------------
This Agreement shall be subject to termination in your absolute
discretion, without liability on the part of any Underwriter to the Fund or the
Adviser by notice to the Fund or the Adviser if prior to the Closing Date or any
Option Closing Date (if different from the Closing Date and then only as to the
Additional Shares), as the case may be, (i) trading in securities generally on
the New York Stock Exchange, American Stock Exchange, Nasdaq National Market,
Nasdaq SmallCap Market or the Nasdaq Stock Market shall have been suspended or
limited or minimum prices shall have been established (ii) additional
governmental restrictions not in force on the date of this Agreement have been
imposed upon trading in securities generally or a general moratorium on
commercial banking activities shall have been declared by Federal or any state's
authorities or (iii) any outbreak or material escalation of hostilities or other
international or domestic calamity, crisis or change in political, financial,
economic, legal or regulatory conditions, occurs, the effect of which is such as
to make it, in your judgment, impracticable or inadvisable to commence or
continue the offering of the Shares at the offering price to the public set
forth on the cover page of the Prospectus or to enforce contracts for the resale
of the Shares by the Underwriters. Notice of such termination may be given to
the Fund, the Adviser or the Sub-Adviser by telegram, telecopy or telephone but
shall be subsequently confirmed by letter.
13. Expenses. The Fund agrees to pay the following costs and expenses and all
other costs and expenses incident to the performance by the Fund of its
obligations hereunder: (a) the preparation, printing or reproduction, filing
(including, without limitation, the filing or registration fees prescribed by
the 1933 Act, the 1934 Act, the 1940 Act and the Rules and Regulations) and
distribution of the Registration Statement (including exhibits thereto), the
Prospectus, each Prepricing Prospectus and the 1940 Act Notification and all
amendments or supplements to any of them, (b) the printing (or reproduction) and
delivery (including postage, air freight charges and charges for counting and
packaging) of such copies of the Registration Statement, the Prospectus, each
Prepricing Prospectus, any sales material (and all amendments or supplements to
any of them) as may be reasonably requested for use in connection with the
offering and sale of the Shares, (c) the preparation, printing, authentication,
issuance and delivery of certificates (if any) for the Shares, including any
stamp taxes and transfer agent and registrar fees payable in connection with the
original issuance and sale of such Shares, (d) the registrations or
qualifications of the Shares for offer and sale under the securities or Blue Sky
laws of the several states as provided in Section 5(g) hereof (including the
reasonable fees, expenses and disbursements of counsel for the Underwriters
relating to the preparation, printing or reproduction and delivery of the
preliminary and supplemental Blue Sky Memoranda and such registration and
qualification), (e) the fees and expenses of the Fund's independent accountants,
counsel for the Fund and of the transfer agent, (f) the expenses of delivery to
the Underwriters and dealers (including postage, air freight and the cost of
counting and packaging) of copies of the Prospectus, the Prepricing Prospectus,
any sales material and all amendments or supplements to the Prospectus as may be
requested for use in connection with the offering and sale of the Shares, (g)
the printing (or reproduction) and delivery of this Agreement, any dealer
agreements, the preliminary and supplemental Blue Sky Memoranda and all other
company-authorized agreements or other documents printed (or reproduced) and
delivered in connection with the offering of the Shares, (h) the filing fees and
the fees and expenses of counsel for the Underwriters in connection with any
filings required to be made with the NASD and incurred with respect to the
review of the offering of the Shares by the NASD, which fees and expenses of
counsel, together with the fees, expenses and disbursements of counsel set forth
in Section 13(d) above, shall not exceed $25,000, exclusive of NASD and state
filing fees, (i) the transportation, lodging, graphics and other expenses
related to the Fund's preparation for and participation in the roadshow, (j) the
listing of the Shares on the NYSE and (k) an amount not to exceed $125,000
payable on the Closing Date to the Representatives in partial reimbursement of
their expenses (but not including reimbursement for the cost of one tombstone
advertisement in a newspaper that is one-quarter of a newspaper page or less in
size) in connection with the offering.
Notwithstanding the foregoing, in the event that the sale of the Shares
is not consummated pursuant to Section 2 hereof, the Adviser or the Sub-Adviser
will pay the costs and expenses of the Fund set forth above in this Section
13(a) through (i), and reimbursements of Underwriter expenses in connection with
the offering shall be made in accordance with Section 5(l) hereof.
14. Information Furnished by the Underwriters. The statements set forth in the
[ ] paragraph constitute the only information relating to any Underwriter
furnished to the Fund in writing by or on behalf of the Underwriters
through you as such information is referred to herein, expressly for use in
the Prospectus.
15. Miscellaneous. Except as otherwise provided in Sections 5, 11 and 12
hereof, notice given pursuant to any provision of this Agreement shall be
in writing and shall be delivered (a) if to the [Fund, the Adviser or the
Sub-Adviser, c/o Hyperion Capital Management, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇; Attention: President, and, in the case of the
Fund, with a copy to ▇▇▇▇▇▇▇▇ & Worcester LLP, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and, in the case of the Adviser
or the Sub-Adviser, with a copy to ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, (b) if to you, as Representatives of the Underwriters, at the
office of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇, with a copy to Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Fund, the Adviser, the Sub-Adviser, their directors,
officers, managers, members and the other controlling persons referred to in
Section 9 hereof and their respective successors and assigns, to the extent
provided herein and no other person shall acquire or have any right under or by
virtue of this Agreement. Neither the term "successor" or the term "successors
and assigns" as used in this Agreement shall include a purchaser from any
Underwriter of any of the Shares in his status as such purchaser.
16. Applicable Law; Counterparts. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
Please confirm that the foregoing correctly sets forth the agreement
among the Fund, the Adviser, the Sub-Adviser and the several Underwriters.
Very truly yours,
THE HYPERION STRATEGIC MORTGAGE INCOME FUND, INC.
By:_____________
Title:
HYPERION CAPITAL MANAGEMENT, INC.
By:_____________
Title:
LEND LEASE HYPERION CAPITAL ADVISERS, L.L.C.
By:_____________
Title:
Confirmed as of the date first above written on behalf of themselves and the
other several Under- writers named in Schedule I hereto.
AS REPRESENTATIVES OF THE SEVERAL UNDERWRITERS
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
By: _________________________________
Title: Director
By: ▇. ▇. ▇▇▇▇▇▇▇ & SONS, INC.
By: _________________________________
Title: Director
SCHEDULE I
Number
Name of Underwriter of Shares
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. . . . . . . . . . .
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc .. . . . . . . . . . . . . .
Advest, Inc. . . . . . . . . . . . . . . . . . . . .
H&R Block FinancialAdvisors, Inc. . . . . . . . . . .
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc. . . . . . . . . . . . . .
▇▇▇▇▇▇▇▇▇▇ & Co. Inc. . . . . . . . . . . . . . . . .
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Incorporated. . . . . . . . . . .
J.J.B. ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Inc. . . . . . . . . . .
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC. . . . . . . . . . .. . .
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Incorporated. . . . . . . . .
McDonald Investments Inc. . . . . . . . . . . . . . .
▇▇▇▇, ▇▇▇▇ & Co. Including the Gruntal Division. . .
SWS Securities. . . . . . . . . . . . . . . . . . . .
Wedbush ▇▇▇▇▇▇ Securities. . . . . . . . . . . . . .