29,000,000 SHARES
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ REAL ESTATE SECURITIES
INCOME FUND INC.
COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
October 28, 2003
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
Advest, Inc.
BB&T Capital Markets, a division of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLC
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated
J.J.B. ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Incorporated
McDonald Investments Inc., a KeyCorp Company
▇▇▇▇▇▇▇▇▇▇▇ & Co. Inc.
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated
SunTrust Capital Markets, Inc.
▇▇▇▇▇ Fargo Securities, LLC
As Representatives of the Several Underwriters
c/o ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Real Estate Securities Income Fund Inc.,
a Maryland corporation (the "Fund"), ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Management Inc., a New
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York corporation (the "Adviser"), and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC, 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 29,000,000
shares of common stock, $0.0001 par value per share (the "Firm Shares"), of the
Fund to the several Underwriters. The Fund also proposes to sell upon the terms
and conditions contained in Section 2 hereof, up to 4,350,000 additional shares
of common stock (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 management agreement with the
Adviser dated October 28, 2003 (the "Management Agreement"), an administration
agreement with the Adviser dated October 28, 2003 (the "Administration
Agreement"), a Custodian Contract with State Street Bank and Trust Company dated
October 28, 2003 (the "Custodian Contract"), and a Transfer Agency Agreement
with The Bank of New York dated October 28, 2003 (the "Transfer Agency
Agreement"). In addition, the Fund has adopted a dividend reinvestment plan (the
"Dividend Reinvestment Plan"), pursuant to which holders of Shares shall have
their dividends automatically reinvested in additional shares of common stock of
the Fund unless they elect to receive such dividends in cash. Collectively, the
Management Agreement, Administration Agreement, Custodian Contract and Transfer
Agency Agreement are herein referred to as the "Fund Agreements." The Adviser
has entered into a Sub-Advisory Agreement with the Sub-Adviser dated October 28,
2003 (the "Sub-Advisory Agreement"), a Corporate Finance Services and Consulting
Agreement with ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. dated October 31, 2003 (the "Corporate
Finance Services and Consulting Agreement") and an Additional Compensation
Agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated and ▇▇▇▇▇▇
Brothers Inc.
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dated October 31, 2003 (the "Additional Compensation Agreement"). Collectively
the Management Agreement, Administration Agreement, Sub-Advisory Agreement, the
Corporate Finance Services and Consulting Agreement and the Additional
Compensation Agreement are herein referred to as the "Adviser Agreements." This
Underwriting Agreement is herein referred to as the "Agreement."
1. REGISTRATION STATEMENT AND PROSPECTUS. The Fund has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended (the
"1933 Act"), 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. 333-108412
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. 811-21421 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
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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
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purchase price of $14.325 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 Price per Share, pursuant to an option (the "over-allotment option"),
Additional Shares. The over-allotment option may be exercised, in whole or in
part, once by the Managing Representative (as defined below) on behalf of the
Underwriters, (or twice as mutually agreed by the Fund and the Managing
Representative) at any time prior to 9:00 A.M., New York City time, on or before
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
American Stock Exchange (the "AMEX") is open for trading). 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 in whole or in
part 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 as to which the option is being exercised
(subject to such adjustments as you may determine to avoid fractional shares),
which bears the same proportion to the aggregate 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
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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) Payment of the purchase price for the Firm Shares shall be made
to the Fund by Federal Funds wire transfer, against delivery of the
certificates, if any, (or, if no certificates, against notification of
electronic delivery) for the Firm Shares to the Representatives through
the facilities of the Depository Trust Company ("DTC") for the respective
accounts of the Underwriters. Delivery to the Underwriters of and payment
to the Fund for the 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 October 31, 2003 (the "Closing Date"). The place of
closing for the Firm Shares and the Closing Date may be varied by
agreement between the Fund and ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc., as the managing
representative (the "Managing Representative") of the Underwriters.
(b) 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 in the same manner and
at the same office as for the Firm Shares 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 seven 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.
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(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 (or such other time as the parties agree), (i) with respect
to the Firm Shares, on the first 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, if any, 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, if any, 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 in the manner described above.
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
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or certification pursuant to Rule 497(c) or (j), as the case may be, of
the 1933 Act Rules and Regulations as promptly as practicable, but no
later than the fifth business day following the date of the later of the
effective date of the Registration Statement or the commencement of the
public offering of the Shares after the effective date of the Registration
Statement. The Fund will advise you promptly and, if requested by you,
will confirm such advice in writing (i) when the Registration Statement or
such post-effective amendment has become effective, (ii) when the
Prospectus has been timely filed pursuant to Rule 497(c) or Rule 497(h) of
the 1933 Act Rules and Regulations or (iii) when the certification
permitted pursuant to Rule 497(j) of the 1933 Act Rules and Regulations
has been timely filed, whichever is applicable.
(b) The Fund, and (in the case of (iii)(B) below with respect to
communications received by the Adviser or the Sub-Adviser) the Adviser or
the Sub-Adviser, will advise you promptly and, if requested by you, will
confirm such advice in writing: (i) of any request made by the Commission
for amendment of or a supplement to the Registration Statement, the
Prospectus or any Prepricing Prospectus (or any amendment or supplement to
any of the foregoing) or for additional information, (ii) of the issuance
by the Commission, any state securities commission, any national
securities exchange, any arbitrator, any court or any other governmental,
regulatory, self-regulatory or administrative agency or any official of
any order suspending the effectiveness of the Registration Statement,
prohibiting or suspending the use of the Prospectus, 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
attorney of the Fund of any other material communication from the
Commission, or (B) the Fund, the Adviser, the Sub-Adviser, any affiliate
of the Fund, the Adviser or the Sub-Adviser or attorney of the Fund, the
Adviser or the Sub-Adviser of any other material communication from the
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Commission, any state securities commission, any national securities
exchange, any arbitrator, any court or any other governmental, regulatory,
self-regulatory or administrative agency or any official relating, in the
case of either clause (A) or (B), to the Fund (if such communication
relating to the Fund is received by such person within three years after
the date of this Agreement), the Registration Statement, the 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 or the
Adviser Agreements and (iv) within the period of time referred to in
paragraph (f) below, of any material, adverse change in the condition
(financial or other), business, business prospects, properties, net assets
or results of operations of the Fund (other than as a result of changes in
market conditions generally or the market for real estate securities
generally) or any event, which has or would reasonably be expected to have
a material adverse effect on the ability of the Adviser or the Sub-Adviser
to perform their respective obligations under this Agreement, the Advisory
Agreement or the Sub-Advisory Agreement, as the case may be, or of the
happening of any event (but as to each of the Fund, the Adviser and the
Sub-Adviser, an event known to that respective entity), which makes any
statement of a material fact made in the Registration Statement, the
Prospectus, 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
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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 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, one signed copy 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, but without
exhibits, as you may reasonably request.
(d) Within five years from the date hereof, the Fund will not (i)
file any amendment (except any post-effective amendment required by Rule
8b-16 of the 1940 Act, which is filed with the Commission after the later
of (x) one year from the date of this Agreement or (y) the date on which
the distribution of the Shares is completed) to the registration statement
or the Registration Statement or make any amendment or supplement to the
Prospectus, any Prepricing Prospectus or any Sales Material (or any
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amendment or supplement to any of the foregoing) of which you shall not
previously have been advised or (with respect to amendments filed within
two years from the date hereof) to which you shall reasonably object
within two business days after being so advised or (ii) so long as, in the
opinion of counsel for the Underwriters, a Prospectus is required to be
delivered in connection with sales of Shares by any Underwriter or dealer,
file any information, documents or reports pursuant to the 1933 Act, the
1940 Act or the Securities Exchange Act of 1934, as amended (the "1934
Act"), without delivering a copy of such information, documents or reports
to you, as 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
reasonably possible and thereafter from time to time, for such period as
in the opinion of counsel for the Underwriters a prospectus is required by
the 1933 Act to be delivered in connection with sales of Shares by any
Underwriter or dealer, the Fund will expeditiously deliver to each
Underwriter and each dealer, without charge, as many copies of the
Prospectus (and of any amendment or supplement thereto) as you may
reasonably request. The Fund consents to the use of the Prospectus (and of
any amendments or supplements thereto) in accordance with the provisions
of the 1933 Act and with the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the several Underwriters
and by all dealers to whom Shares may be sold, both in connection with the
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
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event shall occur that in the judgment of the Fund or in the opinion of
counsel for the Underwriters is required to be set forth in the
Registration Statement or the Prospectus (as then amended or supplemented)
or should be set forth therein in order to make the statements therein (in
the case of the Prospectus, in light of the circumstances under which they
were made) not misleading or if it is necessary to supplement or amend the
Registration Statement or the Prospectus to comply with the 1933 Act, the
1940 Act, the Rules and Regulations or any other applicable law, rule or
regulation, the Fund will forthwith notify you of such event, prepare and,
subject to the provisions of paragraph (d) above, promptly file with the
Commission an appropriate amendment or supplement thereto and will furnish
as promptly as reasonably possible to the Underwriters and dealers,
without charge, such number of copies thereof as they may reasonably
request; provided, however, that if such amendment or supplement is
required solely as a result of a material misstatement in or material
omission from the information furnished in writing by or on behalf of an
Underwriter to the Fund, the Adviser or the Sub-Adviser expressly for use
in the Registration Statement or the Prospectus (such information, as
described in Section 9(h) of this Agreement, being referred to herein as
the "Underwriter Information"), then the Fund shall deliver such amendment
or supplement at cost.
(g) The Fund will cooperate with you and with counsel for the
Underwriters in connection with any registration or qualification of the
Shares for offering and sale by the several Underwriters and by dealers as
may be required under the applicable securities or Blue Sky laws of such
jurisdictions as you may designate and will file such consents to service
of process or other documents necessary or appropriate in order to effect
such registration or qualification; PROVIDED, HOWEVER, that the foregoing
shall not apply to the extent that the Shares are "covered securities"
that are exempt from state regulation of securities offerings pursuant to
Section 18 of the 1933 Act.
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(h) As soon as practicable, but in no event later than the last day
of the 18th full calendar month following the calendar quarter in which
the effective date of the Registration Statement falls, the Fund will make
generally available to its security holders an earnings statement, which
need not be audited, which earnings statement shall satisfy the provisions
of Section 11(a) of the 1933 Act and Rule 158 of the 1933 Act Rules and
Regulations.
(i) The Fund will comply with the undertaking set forth in sub-item
6 of Item 33 of Part C of the Registration Statement.
(j) During the period of three years hereafter, the Fund will
furnish or will have furnished to you as soon as available, a copy of each
report of the Fund mailed to shareholders or filed with the Commission
(other than reports on Form N-SAR or Form N-CSR) or furnished to the AMEX.
(k) If this Agreement shall terminate or be terminated after
execution pursuant to any provisions hereof (other than pursuant to the
second paragraph of Section 11 hereof or by notice given by you
terminating this Agreement pursuant to Section 12 hereof) or if this
Agreement shall be terminated by the Underwriters because of any
inability, failure or refusal on the part of the Fund, the Adviser or the
Sub-Adviser to comply with any material terms in this Agreement or because
any of the conditions in Section 10 of this Agreement required to be
complied with or fulfilled by them are not satisfied, then the Fund, the
Adviser and the Sub-Adviser, jointly and severally, agree to reimburse the
Representatives for all out-of-pocket expenses not to exceed the amounts
set forth in Section 13 of this Agreement (including reasonable fees and
expenses of counsel for the Underwriters) incurred by you in connection
herewith.
(l) The Fund will direct the investment of the net proceeds of the
offering of the Shares (i) in accordance with the description set forth in
the Prospectus and (ii) in such a manner as to comply with the investment
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objectives, policies and restrictions of the Fund as described in the
Prospectus.
(m) The Fund will file the requisite copies of the Prospectus with
the Commission in a timely fashion pursuant to Rule 497(c) or Rule 497(h)
of the 1933 Act Rules and Regulations, whichever is applicable or, if
applicable, will file in a timely fashion the certification permitted by
Rule 497(j) of the 1933 Act Rules and Regulations and will advise you of
the time and manner of such filing.
(n) The Fund will use its best efforts to have the Shares listed,
subject to notice of issuance, on the AMEX concurrently with the
effectiveness of the Registration Statement and to comply with the rules
or regulations of such exchange.
(o) Except as provided in this Agreement or pursuant to any dividend
reinvestment plan of the Fund, the Fund will not sell, contract to sell or
otherwise dispose of, any common stock of the Fund or any securities
convertible into or exercisable or exchangeable for common stock of the
Fund or grant any options or warrants to purchase common stock of the
Fund, for a period of 180 days after the date of the Prospectus, without
the prior written consent of the Representatives.
(p) 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 in violation of federal securities laws.
(q) 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.
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6. REPRESENTATIONS AND WARRANTIES OF THE FUND, THE ADVISER AND THE
SUB-ADVISER. The Fund, the Adviser and the Sub-Adviser, jointly and severally,
represent and warrant to each Underwriter that:
(a) Each Prepricing Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement
thereto or filed pursuant to Rule 497 of the 1933 Act Rules and
Regulations, complied when so filed in all material respects with the
provisions of the 1933 Act, the 1940 Act and the Rules and Regulations
(except that this representation and warranty does not apply to statements
in or omissions from the Prepricing Prospectus (and any amendment or
supplement thereto) made in reliance upon and in conformity with the
Underwriter Information) and the Commission has not issued any order
preventing or suspending the use of the Prepricing Prospectus.
(b) The registration statement, in the form in which it was
originally filed, in the form in which it became or becomes effective and
also in such form as it may be when any post-effective amendment thereto
shall become effective, the Prospectus and any amendment or supplement
thereto when filed with the Commission under Rule 497 of the 1933 Act
Rules and Regulations and 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
15
the Underwriter Information.
(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 in all material
respects to the description thereof in the Registration Statement or the
Prospectus (or any amendment or supplement to either of them). Except for
the Shares and the 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 material
respects to the description thereof in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them).
(d) The Fund has been duly formed and is validly existing in good
standing as a corporation under the laws of the State of Maryland, with
full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement to either of
them) and is duly registered and qualified to conduct business and is in
good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or to qualify does
not or would not have a material, adverse effect on the condition
(financial or other), business, business prospects, properties, net assets
or results of operations of (a "Material Adverse Effect") the Fund. The
Fund has no subsidiaries.
(e) There are no legal or governmental proceedings pending or, to
the knowledge of the Fund, threatened, against the Fund, or to which the
Fund or any of its properties is subject, that are required to be
described in the Registration Statement or the Prospectus (and any
16
amendment or supplement to either of them) but are not described therein
and there are no agreements, contracts, indentures, leases or other
instruments that are required to be described in the Registration
Statement or the Prospectus (or any amendment or supplement to either of
them) or to be filed as an exhibit to the Registration Statement that are
not described therein or filed as an exhibit thereto as required by the
1933 Act, the 1940 Act or the Rules and Regulations.
(f) The Fund is not (i) in violation of its Articles of
Incorporation ("Articles"), by-laws or other organizational documents,
(ii) in violation of any law, ordinance, administrative or governmental
rule or regulation applicable to the Fund or of any decree of the
Commission, any state securities commission, any national securities
exchange, any arbitrator, any court or any other governmental, regulatory,
self-regulatory or administrative agency or any other agency or any body
or official having jurisdiction over the Fund or (iii) in breach or
default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any agreement, indenture, lease or other instrument to
which the Fund is a party or by which it or any of its properties may be
bound, except, in the case of (ii) and (iii) above, for violations,
breaches or defaults that do not or would not have, either individually or
in the aggregate, a Material Adverse Effect on the Fund.
(g) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or any of the Fund Agreements by
the Fund, nor the consummation by the Fund of the transactions
contemplated hereby or thereby (i) requires any consent, approval,
authorization or order of or registration or filing with the Commission,
any state securities commission, any national securities exchange, any
arbitrator, any court, regulatory body, administrative agency or other
governmental body, agency or official having jurisdiction over the Fund
(except (A) such as have been obtained or made prior to the date of this
Agreement, (B) for compliance with the securities or Blue Sky laws of
17
various jurisdictions, which have been or will be effected in accordance
with this Agreement and (C) 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
(B) violates or will violate any statute, law, regulation or filing or
judgment, injunction, order or decree applicable to the Fund or any of its
properties or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Fund pursuant to
the terms of any agreement or instrument to which it is a party or by
which it may be bound or to which any of the property or assets of the
Fund is subject except, in the case of (ii) above, for conflicts,
breaches, defaults, violations or encumbrances that do not or would not
have, either individually or in the aggregate, a Material Adverse Effect
on the Fund. As of the date hereof, the Fund is not subject to any order
of any court or of any arbitrator, governmental authority or
administrative agency that has or would have, either individually or in
the aggregate, a Material Adverse Effect on the Fund.
(h) Since the date as of which information is given in the
Registration Statement and the Prospectus (and any amendment or supplement
to either of them), except as otherwise stated therein, (i) there has been
no change that has or would have a Material Adverse Effect on the Fund
(other than those in the ordinary course of business as described in the
Prospectus); (ii) there have been no transactions entered into by the Fund
other than those in the ordinary course of its business or as described in
the Prospectus (and any amendment or supplement thereto); 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.
18
(i) Ernst & Young LLP, who have audited the Statement of Assets and
Liabilities included in, and whose report appears in, the Registration
Statement and the Prospectus (and any amendment or supplement to either of
them), are independent public accountants with respect to the Fund as
required by the 1933 Act, the 1940 Act and the Rules and Regulations.
(j) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement
or the Prospectus (or any amendment or supplement to either of them)
present fairly the financial position of the Fund on the basis stated in
the Registration Statement at the respective dates or for the respective
periods to which they apply; such statements and related schedules and
notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved except as
disclosed therein; and the other financial and statistical information and
data included in the Registration Statement or the Prospectus (or any
amendment or supplement thereto) are accurately derived from such
financial statements and the books and records of the Fund.
(k) The Fund, subject to the Registration Statement having been
declared effective and the filing of the Prospectus under Rule 497 under
the 1933 Act Rules and Regulations, has taken all action required to be
taken by it under the 1933 Act, the 1940 Act and the Rules and Regulations
to make the public offering and consummate the sale of the Shares as
contemplated by this Agreement.
(l) The execution and delivery of and the performance by the Fund of
its obligations under this Agreement and the Fund Agreements have been
duly and validly authorized by the Fund and this Agreement and each of the
Fund Agreements have been duly executed and delivered by the Fund and
(assuming due and valid authorization, execution and delivery by the other
parties hereto and thereto) this Agreement and each Fund Agreement
constitutes the valid and legally binding agreement of the Fund,
enforceable against the Fund in accordance with its terms, except as
19
rights to indemnity and contribution hereunder may be limited by federal
or state securities laws and subject to the qualification that the
enforceability of the Fund's obligations hereunder and thereunder may be
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights
generally and by general equitable principles (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(m) Except as disclosed in or contemplated by the Registration
Statement or the Prospectus (or any amendment or supplement to either of
them), subsequent to the respective dates as of which such information is
given in the Registration Statement and the Prospectus (and any amendment
or supplement to either of them), the Fund has not incurred any debt,
liability or obligation, direct or contingent, and there has not been any
change in the capital stock or capitalization of the Fund.
(n) The Fund has not distributed and, prior to the later to occur of
(i) the Closing Date and (ii) completion of the distribution of the
Shares, will not distribute to the public any offering material in
connection with the offering and sale of the Shares other than the
Registration Statement, the Prepricing Prospectus included in
Pre-Effective Amendment No. 1 to the registration statement (the "Red
▇▇▇▇▇▇▇ Preliminary Prospectus"), the Prospectus and the Sales Material
(or any other material, if any, permitted by the 1933 Act, the 1940 Act or
the Rules and Regulations).
(o) (i) The Fund has such licenses, permits, and authorizations of
governmental or regulatory authorities ("permits") as are necessary to own
its property and to conduct its business in the manner described in the
Prospectus (and any amendment or supplement thereto); (ii) the Fund has
fulfilled and performed all its obligations with respect to such permits
and no event has occurred, which allows or, after notice or lapse of time,
would allow, revocation or termination thereof or results in any other
20
impairment of the rights of the Fund under any such permit, subject in
each case to such qualification as may be set forth in the Prospectus (and
any amendment or supplement thereto); and, (iii) except as described in
the Prospectus (and any amendment or supplement thereto), none of such
permits contains any restriction that is materially burdensome to the
Fund; except where the failure to obtain or perform its obligations with
respect to such permits, or the restrictions set forth in such permits, as
set forth in clauses (i), (ii) and (iii), either individually or in the
aggregate, does or would not have a Material Adverse Effect on the Fund.
(p) The Fund will maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with the Board of Directors' general or specific
authorization and with the investment policies and restrictions of the
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, licensee of,
or otherwise require it to have the right to use, any patents, patent
licenses, trademarks, service marks or trade names (collectively,
"Intellectual Property"), which it does not own, possess, license or
otherwise have the right to use, except where the failure to own, possess,
license or otherwise have the right to use such Intellectual Property,
21
individually or in the aggregate, does or would not have a Material
Adverse Effect on the Fund.
(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, to the
Fund's knowledge, 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 the Rules and
Regulations as a closed-end, non-diversified management investment company
and the 1940 Act Notification has been duly filed with the Commission and,
at the time of filing thereof and at all times through the date hereof the
1940 Act Notification conformed in all material respects with all
applicable provisions of the 1940 Act and the Rules and Regulations; no
order of suspension or revocation of such registration under the 1940 Act
and the Rules and Regulations has been issued or proceedings therefor
initiated or, to the knowledge of the Fund, threatened by the Commission.
The provisions of the Articles, and the investment policies and
restrictions described in each of the Registration Statement and the
Prospectus, comply in all material respects with the requirements of the
1940 Act and the Rules and Regulations.
(t) All advertising, sales literature, "prospecting letters,"
"prospectus wrappers," envelopes, prospectuses omitted from the
Registration Statement pursuant to the 1933 Act Rules and Regulations or
other promotional material prepared or authorized in writing by the Fund
or the Adviser for use or distribution to the public for use in connection
with the offering and sale of the Shares (including the client brochure
and the broker flyer each filed with the NASD) (collectively, "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 no Sales Material contained or
22
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 (except that this representation and warranty
does not apply to statements in or omissions from the Sales Material made
in reliance upon and in conformity with the Underwriter Information).
(u) 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) None of the promotional material for use by brokers in
connection with the marketing of the Shares (including any "broker kits,"
"road show slides," "road show scripts," "broker post-cards" and "broker
reference cards" authorized in writing by or prepared by the Fund or the
Adviser for use in connection with the offering and sale of the Shares
(collectively, "Broker 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 (except that this representation and
warranty does not apply to statements in or omissions from the Broker
23
Material made in reliance upon and in conformity with the Underwriter
Information) and no Broker Material was or has been made available by the
Fund, the Adviser or the Sub-Adviser by means of an Internet web site or
similar electronic means.
(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 or the
Prospectus (or any amendment or supplement to either of them), to the
Fund's knowledge, after due inquiry, no director of the Fund is an
"interested person" (as defined in the ▇▇▇▇ ▇▇▇) of the Fund or an
"affiliated person" (as defined in the ▇▇▇▇ ▇▇▇) of any Underwriter listed
in Schedule I hereto.
(aa) The Shares have been approved for listing on the AMEX, subject
to official notice of issuance, 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 New York, 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 does or would not
have a Material Adverse Effect on the Adviser.
(b) The Adviser is duly registered with the Commission as an
24
investment adviser under the Advisers Act and is not prohibited by the
Advisers Act, the 1940 Act, the Advisers Act Rules and Regulations or the
1940 Act Rules and Regulations from acting under the Management Agreement
for the Fund as contemplated by the Registration Statement or the
Prospectus (or any amendment or supplement to either of them). There does
not exist any proceeding, which, if determined adversely with respect to
the Adviser, does or would have a material and adverse effect on the
registration of the Adviser with the Commission.
(c) There are no legal or governmental proceedings pending or, to
the knowledge of the Adviser, threatened against the Adviser that are
required to be described in the Registration Statement or the Prospectus
(or any amendment or supplement to either of them) but are not described
as required or that, if determined adversely with respect to the Adviser,
does or would have a Material Adverse Effect on the Adviser or does or
would have a material and adverse effect on the ability of the Adviser to
perform its obligations under this Agreement or any of the Adviser
Agreements.
(d) Neither the execution, delivery or performance of this Agreement
or any of the Adviser Agreements, nor the consummation by the Adviser of
the transactions contemplated hereby or thereby (i) requires the Adviser
to obtain any consent, approval, authorization or other order of, or
registration or filing with, the Commission, any state securities
commission, any national securities exchange, any arbitrator, any court,
regulatory body, administrative agency or other governmental body, agency
or official having jurisdiction over the Adviser or conflicts or will
conflict with or constitutes or will constitute a breach of or a default
under, the certificate of incorporation or bylaws, or other organizational
documents of the Adviser or (ii) conflicts or will conflict with or
constitutes or will constitute a breach of or a default under, any
agreement, indenture, lease or other instrument to which the Adviser is a
party or by which the Adviser or any of its properties may be bound, or
violates or will violate any statute, law, regulation or judgment,
injunction, order or decree applicable to the Adviser or any of its
25
properties or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Adviser pursuant
to the terms of any agreement or instrument to which it is a party or by
which it may be bound or to which any of the property or assets of the
Adviser is subject, except in any case under clause (i) or (ii) as does or
would not have a Material Adverse Effect on the Adviser or does or would
have a material and adverse effect on the ability of the Adviser to
perform its obligations under this Agreement or any of the Adviser
Agreements. The Adviser is not subject to any order of any court or of any
arbitrator, regulatory body, administrative agency or other governmental
body, agency or official that would have a Material Adverse Effect on the
Adviser or does or would have a material and adverse effect on the ability
of the Adviser to perform its obligations under this Agreement or any of
the Adviser Agreements.
(e) The Adviser has full power and authority to enter into this
Agreement and each of the Adviser Agreements; the execution and delivery
of and the performance by the Adviser of its obligations under this
Agreement and the Adviser Agreements have been duly and validly authorized
by the Adviser; and this Agreement and each of the Adviser Agreements have
been duly executed and delivered by the Adviser and (assuming due and
valid authorization, execution and delivery by the other parties hereto
and thereto) this Agreement and each Adviser Agreement constitutes the
valid and legally binding agreement of the Adviser, enforceable against
the Adviser in accordance with its terms, except as rights to indemnity
and contribution hereunder may be limited by federal or state securities
laws and subject to the qualification that the enforceability of the
Adviser's obligations hereunder and thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium
and other laws relating to or affecting creditors' rights generally and by
general equitable principles (regardless of whether enforcement is sought
in a proceeding in equity or at law).
26
(f) The Adviser has the financial resources necessary for the
performance of its services and obligations as contemplated in the
Registration Statement and the Prospectus (or any amendment or supplement
to either of them) or under this Agreement or any of the Adviser
Agreements.
(g) The description of the Adviser in the Registration Statement and
the Prospectus (or any amendment or supplement to either of them) complied
and comply in all material respects with the provisions of the 1933 Act,
the 1940 Act, the Advisers Act, the Rules and Regulations and the Advisers
Act Rules and Regulations; and such description and the statements
attributable to the Adviser in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them) did not and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
(h) Since the date as of which information is given in the
Registration Statement or the Prospectus (or any amendment or supplement
to either of them), except as otherwise stated therein, there has been no
material adverse change in the condition (financial or other), business,
properties, net assets or results of operations or business prospects of
the Adviser, whether or not arising from the ordinary course of business
that does or would have a Material Adverse Effect on the Adviser or does
or would have a material and adverse effect on the ability of the Adviser
to perform its obligations under this Agreement or any of the Adviser
Agreements.
(i) (i) The Adviser has such permits as are necessary to own its
property and to conduct its business in the manner described in the
Prospectus (and any amendment or supplement thereto); (ii) the Adviser has
fulfilled and performed all its obligations with respect to such permits
and no event has occurred, which allows or, after notice or lapse of time,
would allow, revocation or termination thereof or results in any other
27
impairment of the rights of the Adviser under any such permit, subject in
each case to such qualification as may be set forth in the Prospectus (and
any amendment or supplement thereto); and, (iii) except as described in
the Prospectus (and any amendment or supplement thereto), none of such
permits contains any restriction that is materially burdensome to the
Adviser; except where the failure to obtain or perform its obligations
with respect to such permits, or the restrictions set forth in such
permits, as set forth in clauses (i), (ii) and (iii), either individually
or in the aggregate, does or would have a Material Adverse Effect on the
Adviser or does or would have a material and adverse effect on the ability
of the Adviser to perform its obligations under this Agreement or any of
the Adviser Agreements.
(j) Each of the Adviser Agreements complies in all material respects
with the applicable provisions of the 1940 Act, the 1940 Act Rules and
Regulations, the Advisers Act and the Advisers Act Rules and Regulations.
(k) Except as stated in this Agreement and in the Prospectus (and
any amendment or supplement thereto), the Adviser 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, to
the Adviser's knowledge, no such action has been, or will 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
28
supplement to either of them) and is duly registered and qualified to
conduct business and is in good standing in each jurisdiction or place
where the nature of its properties or conduct of its business requires
such registration or qualification, except where the failure so to
register or to qualify does or would not have a Material Adverse Effect on
the Sub-Adviser.
(b) The Sub-Adviser is duly registered with the Commission as an
investment adviser under the Advisers Act and is not prohibited by the
Advisers Act, the 1940 Act, the Advisers Act Rules and Regulations or the
1940 Act Rules and Regulations from acting under this Agreement or the
Sub-Advisory Agreement for the Fund as contemplated by the Registration
Statement or the Prospectus (or any amendment or supplement to either of
them). There does not exist any proceeding, which, if determined adversely
with respect to the Sub-Adviser, does or would have a material and adverse
effect on the registration of the Sub-Adviser with the Commission.
(c) There are no legal or governmental proceedings pending or, to
the knowledge of the Sub-Adviser, threatened against the Sub-Adviser that
are required to be described in the Registration Statement or the
Prospectus (or any amendment or supplement to either of them) but are not
described as required or that, if determined adversely with respect to the
Sub-Adviser, does or would have a Material Adverse Effect on the
Sub-Adviser or does or would have a material and adverse effect on the
ability of the Sub-Adviser to perform its obligations under this Agreement
or the Sub-Advisory Agreement.
(d) Neither the execution, delivery or performance of this Agreement
or the Sub-Advisory Agreement, nor the consummation by the Sub-Adviser of
the transactions contemplated hereby or thereby (i) requires the
Sub-Adviser to obtain any consent, approval, authorization or other order
of, or registration or filing with, the Commission, any state securities
commission, any national securities exchange, any arbitrator, any court,
regulatory body, administrative agency or other governmental body, agency
29
or official having jurisdiction over the Sub-Adviser or conflicts or will
conflict with or constitutes or will constitute a breach of or a default
under, the certificate of incorporation or bylaws, or other organizational
documents of the Sub-Adviser or (ii) conflicts or will conflict with or
constitutes or will constitute a breach of or a default under, any
agreement, indenture, lease or other instrument to which the Sub-Adviser
is a party or by which the Sub-Adviser or any of its properties may be
bound, or violates or will violate any statute, law, regulation or
judgment, injunction, order or decree applicable to the Sub-Adviser or any
of its properties or will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Sub-Adviser
pursuant to the terms of any agreement or instrument to which it is a
party or by which it may be bound or to which any of the property or
assets of the Sub-Adviser is subject, except in any case under clause (i)
or (ii) as would not have a Material Adverse Effect on the Sub-Adviser or
on the ability of the Sub-Adviser to perform its obligations under this
Agreement or the Sub-Advisory Agreement. The Sub-Adviser is not subject to
any order of any court or of any arbitrator, regulatory body,
administrative agency or other governmental body, agency or official that
does or would have a Material Adverse Effect on the Sub-Adviser or does or
would have a material and adverse effect on the ability of the Sub-Adviser
to perform its obligations under this Agreement or the Sub-Advisory
Agreement.
(e) The Sub-Adviser has full power and authority to enter into this
Agreement and the Sub-Advisory Agreement; the execution and delivery of
and the performance by the Sub-Adviser of its obligations under this
Agreement and the Sub-Advisory Agreement have been duly and validly
authorized by the Sub-Adviser; and this Agreement and the Sub-Advisory
Agreement have been duly executed and delivered by the Sub-Adviser and
(assuming due and valid authorization, execution and delivery by the other
parties hereto and thereto) this Agreement and the Sub-Advisory Agreement
constitutes the valid and legally binding agreement of the Sub-Adviser,
enforceable against the Sub-Adviser in accordance with its terms, except
30
as rights to indemnity and contribution hereunder may be limited by
federal or state securities laws and subject to the qualification that the
enforceability of the Sub-Adviser's obligations hereunder and thereunder
may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and by general equitable principles
(regardless of whether enforcement is sought in a proceeding in equity or
at law).
(f) The Sub-Adviser has the financial resources necessary for the
performance of its services and obligations as contemplated in the
Registration Statement and the Prospectus (or any amendment or supplement
to either of them) or under this Agreement and the Sub-Advisory Agreement.
(g) The description of the Sub-Adviser in the Registration Statement
and the Prospectus (or any amendment or supplement to either of them)
complied and comply in all material respects with the provisions of the
1933 Act, the 1940 Act, the Advisers Act, the Rules and Regulations and
the Advisers Act Rules and Regulations; and such description and the
statements attributable to the Sub-Adviser in the Registration Statement
and the Prospectus (or any amendment or supplement to either of them) did
not and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
(h) Since the date as of which information is given in the
Registration Statement or the Prospectus (or any amendment or supplement
to either of them), except as otherwise stated therein, there has been no
material adverse change in the condition (financial or other), business,
properties, net assets or results of operations or business prospects of
the Sub-Adviser, whether or not arising from the ordinary course of
business that does or would have a Material Adverse Effect on the
Sub-Adviser or does or would have a material and adverse effect on the
31
ability of the Sub-Adviser to perform its obligations under this Agreement
or the Sub-Advisory Agreement.
(i) (i) The Sub-Adviser has such permits as are necessary to own its
property and to conduct its business in the manner described in the
Prospectus (and any amendment or supplement thereto); (ii) the Sub-Adviser
has fulfilled and performed all its obligations with respect to such
permits and no event has occurred, which allows or, after notice or lapse
of time, would allow, revocation or termination thereof or results in any
other impairment of the rights of the Sub-Adviser under any such permit,
subject in each case to such qualification as may be set forth in the
Prospectus (and any amendment or supplement thereto); and, (iii) except as
described in the Prospectus (and any amendment or supplement thereto),
none of such permits contains any restriction that is materially
burdensome to the Sub-Adviser; except where the failure to obtain or
perform its obligations with respect to such permits, or the restrictions
set forth in such permits, as set forth in clauses (i), (ii) and (iii),
either individually or in the aggregate, does or would have a Material
Adverse Effect on the Sub-Adviser or does or would have a material and
adverse effect on the ability of the Sub-Adviser to perform its
obligations under this Agreement or the Sub-Advisory Agreement.
(j) The Sub-Advisory Agreement complies in all material respects
with the applicable provisions of the 1940 Act, the 1940 Act Rules and
Regulations, the Advisers Act and the Advisers Act Rules and Regulations.
(k) Except as stated in this Agreement and in the Prospectus (and
any amendment or supplement thereto), the Sub-Adviser 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
32
laws and, to the Sub-Adviser's knowledge, no such action has been, or will
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 (or any
amendment or supplement to any of the foregoing) or arising out of or
based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein (in the case of a prospectus, in light of the circumstances under
which they were made) not misleading, (except insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon
any untrue statement or omission or alleged untrue statement or omission,
which has been made therein or omitted therefrom in reliance upon and in
conformity with the Underwriter Information); provided, however, that the
foregoing indemnification contained in this paragraph (a) with respect to
the Red ▇▇▇▇▇▇▇ Preliminary Prospectus (or any amendment or supplement
thereto) shall not inure to the benefit of any Underwriter (or to the
benefit of any person controlling such Underwriter) on account of any such
loss, claim, damage, liability or expense arising from the sale of the
Shares by such Underwriter to any person if it is shown that a copy of any
such amendment or supplement to the Red ▇▇▇▇▇▇▇ Preliminary Prospectus or
of the Prospectus (which term as used in this proviso shall not include
any statement of additional information unless specifically requested by
such person) was not delivered or sent to such person within the time
required by the 1933 Act and the 1933 Act Rules and Regulations and the
33
untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in the Red ▇▇▇▇▇▇▇ Preliminary
Prospectus was corrected in the supplement or amendment to the Red ▇▇▇▇▇▇▇
Preliminary Prospectus or in the Prospectus, provided that the Fund has
delivered such supplements or amendments or the Prospectus to the several
Underwriters in requisite quantity on a timely basis to permit proper
delivery or sending. 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,
34
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 and Section 17(i) of the 1940 Act, all such fees and expenses
shall be reimbursed promptly as they are incurred. The Fund, the Adviser
and the Sub-Adviser shall not be liable for any settlement of any such
action, suit or proceeding effected without the written consent of the
Fund, the Adviser or the Sub-Adviser (whether or not the fund, the Adviser
or the Sub-Adviser are actual or potential parties to such action, suit or
proceeding), but if settled with such written consent or if there be a
final judgment for the plaintiff in any such action, suit or proceeding,
the Fund, the Adviser and the Sub-Adviser agree to indemnify and hold
harmless any Underwriter, to the extent provided in the preceding
paragraph and any such controlling person from and against any loss,
liability, damage or expense by reason by such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Fund, the Adviser and the Sub-Adviser, their
directors, members or managers, any officers of the Fund who sign the
Registration Statement and any person who controls the Fund, the Adviser
or the Sub-Adviser within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, to the same extent as the foregoing indemnity
from the Fund, the Adviser and the Sub-Adviser to each Underwriter, but
only with respect to the Underwriter Information relating to such
Underwriter. If any action, suit or proceeding shall be brought against
35
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
36
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
37
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 and
Section 17(i) of the 1940 Act, be paid by the indemnifying party to the
indemnified party as such losses, claims, damages, liabilities or expenses
are incurred. The indemnity and contribution agreements contained in this
Section 9 and the representations and warranties of each of the Fund, the
Adviser and the Sub-Adviser set forth in this Agreement shall remain
operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Fund, the Adviser, the Sub-Adviser or
their directors, managers, members, officers or any person controlling the
Fund, the Adviser or the Sub-Adviser, (ii) acceptance of any Shares and
payment therefor hereunder and (iii) any termination of this Agreement. A
38
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.
(h) The Fund, the Adviser and the Sub-Adviser each acknowledge, and
the Underwriters severally confirm, that the statements in the Prospectus
with respect to (1) the "Price to Public" of the Shares as set forth on
the cover page of the Prospectus,(2) the dollar amount of the selling
concessions and reallowances of selling concessions in the fourth
paragraph under the caption "Underwriting" in the Prospectus, (3)
imposition of a penalty bid in the eleventh paragraph under the caption
"Underwriting" in the Prospectus. (4) stabilization in the twelfth
paragraph under the caption "Underwriting" in the Prospectus and (5)
payment of fees to Representatives that meet certain minimum sales
thresholds in the fourteenth paragraph under the caption "Underwriting" in
the Prospectus constitute the only Underwriter Information. The
Underwriters severally confirm that these statements are correct in all
material respects and were so furnished by or on behalf of the
Underwriters severally for use in the Prospectus.
(i) The indemnification provisions of this Section 9 that are
applicable to the Fund are subject to any applicable limitations and
provisions of Section 17(i) of the 1940 Act.
10. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase the Shares hereunder are subject to the accuracy of
and compliance with the representations, warranties and agreements of and by
each of the Fund, the Adviser and the Sub-Adviser contained herein on and as of
the date on which the Registration Statement becomes or became effective, the
date of the Prospectus (and of any amendment or supplement thereto) and the
Closing Date and, with respect to any Additional Shares, any Option Closing Date
(each, a "Condition Compliance Date" and collectively, the "Condition Compliance
Dates"); to the accuracy and completeness of all statements made by the Fund,
the Adviser, the Sub-Adviser or any of their respective officers in any
certificate delivered to the Representatives or their counsel pursuant to this
Agreement on any Condition Compliance Date, and to the following conditions
(each of which shall be satisfied as of each of the Condition Compliance Dates):
(a) If, at the time this Agreement is executed and delivered, it is
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
39
shall have become effective not later than 5:30 p.m., New York City time,
on the date hereof or at such later date and time as shall be consented to
in writing by you and all filings, if any, required by Rules 497 and 430A
under the 1933 Act and the 1933 Act Rules and Regulations shall have been
timely made; no order pursuant to Section 8(e) of the 1940 Act shall have
been issued and no proceeding for that purpose shall have been instituted
or, to the knowledge of the Fund, the Adviser or any Underwriter,
threatened by the Commission and any request of the Commission for
additional information (to be included in the Registration Statement or
the Prospectus or otherwise) shall have been complied with to your
satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change or any development involving a
prospective change that does or would have a Material Adverse Effect on
the Fund, the Adviser or the Sub-Adviser (in each case not contemplated by
the Prospectus) or (ii) any event or development relating to or involving
the Fund, the Adviser or the Sub-Adviser, which makes any statement made
in the Prospectus untrue or which, in the opinion of the Fund and its
counsel or the Underwriters and their counsel, requires the making of any
addition to or change in the Prospectus in order to state a material fact
required by the 1933 Act, the 1940 Act or the Rules and Regulations or any
other law to be stated therein or necessary in order to make the
statements therein not misleading, if amending or supplementing the
Prospectus to reflect such event or development would, in your opinion,
make it impracticable or inadvisable to continue with the offering of the
Shares.
(c) That you shall have received on the Closing Date an opinion of
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Fund, dated the Closing Date
and addressed to you, as the 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
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel for the Adviser, dated the Closing Date
40
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
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel for the Sub-Adviser, dated the Closing
Date and addressed to you, as the Representatives of the several
Underwriters, in substantially the form attached hereto as Exhibit C.
(f) That you shall have received on the Closing Date (i) an opinion
of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), and (ii) a letter from
Cleary, Gottleib, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, each 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.
(g) 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 Ernst & Young LLP, independent auditors,
substantially in the forms attached hereto as Exhibit D. You also must
receive on each Closing Date a signed letter from such accountants, dated
as of such Closing Date, confirming on the basis of a review in accordance
with the procedures set forth in their letter that nothing has come to
their attention during the period from a date not more than five business
days before the date of this Underwriting Agreement, specified in the
letter, to a date not more than five business days before such Closing
Date, that would require any change in their letter referred to in the
foregoing sentence.
(h) (i) No stop order suspending the effectiveness of the
Registration Statement or prohibiting or suspending the use of the
Prospectus (or any amendment or supplement to any of the foregoing) or any
Prepricing Prospectus or any Sales Material shall have been issued and no
proceedings for such purpose or for the purpose of commencing an
41
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) business, business
prospects, properties, net assets or results of operations of the Fund,
the Adviser or the Sub-Adviser, (iv) none of the Fund, the Adviser or the
Sub-Adviser shall have sustained any material loss or interference with
their businesses from any court or from legislative or other governmental
action, order or decree or from any other occurrence not described in the
Registration Statement or the Prospectus (or any amendment or supplement
to either of them), and (v) all of the representations and warranties of
each of the Fund, the Adviser or the Sub-Adviser contained in this
Agreement shall be true and correct on and as of the date hereof and as of
the respective Condition Compliance Date as if made on and as of such
Condition Compliance Date.
(i) That none of the Fund, the Adviser, or the Sub-Adviser shall
have failed at or prior to the respective Condition Compliance Date to
have performed or complied with any of the agreements herein contained and
42
required to be performed or complied with by them at or prior to the such
Condition Compliance Date.
(j) That you shall have received on the Closing Date a certificate,
dated such date, of each of the chief executive officer and chief
financial officer of the Fund, and of the President (or a Vice President)
and Treasurer (or an Assistant Treasurer) of each of the Adviser and the
Sub-Adviser certifying that (i) the signers have carefully examined the
Registration Statement, the Prospectus (and any amendments or supplements
to either of them) and this Agreement, (ii) the representations and
warranties of the Fund (with respect to the certificates from such Fund
officers), the representations and warranties of the Adviser (with respect
to the certificates from such officers of the Adviser), and the
representations and warranties of the Sub-Adviser (with respect to the
certificates from such officers of the Sub-Adviser) in this Agreement are
true and correct on and as of the date of the certificate as if made on
such date, (iii) since the date of the Prospectus (and any amendment or
supplement thereto) there has not been any change that does or would have
a Material Adverse Effect on the Fund (with respect to the certificates
from such Fund officers) or the Adviser (with respect to the certificates
from such officers of the Adviser) or the Sub-Adviser (with respect to the
certificates from such officers of the Sub-Adviser), (iv) to the knowledge
of such officers after reasonable investigation, no order suspending the
effectiveness of the Registration Statement or prohibiting the sale of any
of the Shares or having a Material Adverse Effect on the Fund (with
respect to the certificates from such Fund officers) or the Adviser (with
respect to the certificates from such officers of the Adviser) or the
Sub-Adviser (with respect to the certificates from such officers of the
Sub-Adviser) has been issued and no proceedings for any such purpose are
pending before or, to the knowledge of such officers, threatened by the
Commission or any court or other regulatory body, any state securities
commission, any national securities exchange, any arbitrator, any court or
any other governmental, regulatory, self-regulatory or administrative
43
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 requires it to perform by
such Closing Date and (vi) with respect to the certificate from such
officers of the Fund, there has not been any change in the capital stock
of the Fund nor any increase in the debt of the Fund from that set forth
in the Prospectus (or any amendment or supplement thereto) and the Fund
has not sustained any material liabilities or obligations, direct or
contingent, other than those reflected in the Prospectus (or any amendment
or supplement thereto).
(k) That the Fund, the Adviser and the Sub-Adviser shall have
furnished to you such further certificates and documents as you shall
reasonably request.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and your counsel acting in good faith.
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 Sections 10 (c), (d), (e), (f), (g) and (k) and this paragraph
44
shall be dated the Option Closing Date in question and the opinions called for
by Sections 10 (c), (d), (e), (f) and (g) 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
45
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
at any time at or 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 any securities of the Fund has been suspended or
materially limited by the Commission or the AMEX or such other national
securities exchange upon which the Fund's securities trade or trading in
securities generally on the New York Stock Exchange, AMEX, Nasdaq National
Market or the Nasdaq Stock Market shall have been suspended or limited or
minimum or maximum prices shall have been established or required by such
exchanges, the Commission, NASD or other governmental authority, (ii) additional
governmental restrictions not in force on the date of this Agreement have been
imposed upon trading in securities generally or a general moratorium on
commercial banking activities shall have been declared by Federal or any state's
authorities or (iii) there has occurred any outbreak or material escalation of
hostilities or other international or domestic calamity, crisis or change or
development in political, financial, economic, legal or regulatory conditions or
46
markets, the effect of which is such as to make it, in your judgment,
impracticable or inadvisable to commence or continue the offering of the Shares
at the offering price to the public set 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 to the Underwriters (including postage, air freight charges and charges
for counting and packaging) of such copies of the Registration Statement, the
Prospectus, each Prepricing Prospectus, any Sales Material (and all amendments
or supplements to any of them, except as provided in Section 5(f) of this
Agreement) as may be reasonably requested for use in connection with the
offering and sale of the Shares, (c) the preparation, printing, authentication,
issuance and delivery of certificates (if any) for the Shares, including any
stamp taxes and transfer agent and registrar fees payable in connection with the
original issuance and sale of such Shares, (d) the registrations or
qualifications of the Shares for offer and sale thereof, if any, as are required
under the securities or Blue Sky laws of the several states as provided in
Section 5(g) hereof (including the reasonable fees, expenses and disbursements
of counsel for the Underwriters relating to the preparation, printing or
reproduction and delivery of the preliminary and supplemental Blue Sky Memoranda
and such registration and qualification), (e) the fees and expenses of the
Fund's independent accountants, counsel for the Fund and of the transfer agent,
(f) the printing (or reproduction) and delivery of this Agreement, any dealer
agreements, the preliminary and supplemental Blue Sky Memoranda (if any) and all
47
other company-authorized agreements or other documents printed (or reproduced)
and delivered in connection with the offering of the Shares, (g) the filing fees
and the fees and expenses of counsel for the Underwriters in connection with any
filings required to be made with the National Association of Securities Dealers,
Inc. (the "NASD") and incurred with respect to the review of the offering of the
Shares and the use of any Sales Materials by the NASD, which fees and expenses
of counsel, together with the fees, expenses and disbursements of counsel set
forth in paragraph (d) of this Section 13 above, shall not exceed $15,000,
exclusive of NASD and state filing fees, (h) the transportation, lodging,
graphics and other expenses of the Fund and its officers related to the
preparation for and participation by the Fund and its officers in the roadshow,
(i) the listing of the Shares on the AMEX and (j) an amount equal to the greater
of (1) $50,000 and (2) $0.005 per Share 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(k) hereof.
14. MISCELLANEOUS. Except as otherwise provided in Sections 5, 11 and 12
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (a) if to the Fund, the Adviser or the
Sub-Adviser, c/o Neuberger ▇▇▇▇▇▇ LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇; Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq., with a copy to ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention Art
Delibert (b) if to you, as Representatives of the Underwriters, at the office of
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, with a copy to Skadden, Arps, Slate,
48
▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Fund, the Adviser, the Sub-Adviser, their directors, officers,
managers, members and the other controlling persons referred to in Section 9
hereof and their respective successors and assigns, to the extent provided
herein and no other person shall acquire or have any right under or by virtue of
this Agreement. Neither the term "successor" nor the term "successors and
assigns" as used in this Agreement shall include a purchaser from any
Underwriter of any of the Shares in his status as such purchaser.
15. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
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.
49
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,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ REAL ESTATE
SECURITIES INCOME FUND INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ MANAGEMENT INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
50
Confirmed as of the date
first above written on
behalf of themselves and
the other several Under-
writers named in Schedule
I hereto.
AS REPRESENTATIVE OF THE SEVERAL UNDERWRITERS
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
51
SCHEDULE I
Underwriter Number of Shares
----------- ----------------
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. 8,500,000
▇▇▇▇▇▇ Brothers Inc. 1,525,000
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated 8,500,000
Advest, Inc. 500,000
BB&T Capital Markets, a division of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc. 500,000
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLC 500,000
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated 500,000
J.J.B. ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Inc. 500,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC 750,000
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Incorporated 900,000
McDonald Investments Inc., a KeyCorp Company 500,000
▇▇▇▇▇▇▇▇▇▇▇ & Co. Inc. 900,000
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. 900,000
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incoporated 500,000
SunTrust Capital Markets, Inc. 500,000
▇▇▇▇▇ Fargo Securities, LLC 900,000
Deutsche Bank Securities Inc. 250,000
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. 250,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated 125,000
▇.▇. ▇▇▇▇▇▇▇▇ & Co. 125,000
First Southwest Company 125,000
Huntleigh Securities Corporation 125,000
▇▇▇▇▇▇▇▇, Lemon & Co. Incorporated 125,000
Ladenburg ▇▇▇▇▇▇▇▇ & Co. Inc. 125,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc. 125,000
Quick & ▇▇▇▇▇▇, Inc., A FleetBoston Financial Company 125,000
▇▇▇▇ ▇▇▇▇ & Co. 125,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 125,000
Southwest Securities, Inc. 125,000
TD Waterhouse Investor Services, Inc. 125,000
Wedbush ▇▇▇▇▇▇ Securities Inc. 125,000
Total 29,000,000
52
EXHIBIT A
FORM OF ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ OPINION
1. The Fund is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Maryland and is
qualified to do business as a foreign corporation in the State of
New York, which such counsel has been advised by an officer of the
Fund is the only state in which the Fund maintains an office for the
conduct of its business.
2. The Fund has the corporate power and authority to: (i) own its
properties and conduct its business as described in the Registration
Statement and the Prospectus; and (ii) execute, deliver, and perform
its obligations under the Underwriting Agreement and the Fund
Agreements.
3. To such counsel's knowledge, the Fund does not have any
subsidiaries.
4. The shares of common stock of the Fund, par value $0.0001 per share
(the "Common Shares"), conform in all material respects as to all
statements as to legal matters relating thereto contained in the
Prospectus. No person is entitled to any preemptive or other similar
rights with respect to the Common Shares.
5. The number of authorized Common Shares is as set forth in the
Prospectus under the caption "Description of Shares -- Common
Shares." All Common Shares that to such counsel's knowledge have
been issued and are outstanding prior to the issuance of the Firm
Shares: (i) have been duly authorized, validly issued and are fully
paid and non-assessable; and (ii) have been offered and sold by the
Fund in compliance with applicable law.
6. The Shares have been duly authorized for issuance and sale to the
Underwriters pursuant to the Underwriting Agreement and, when issued
and delivered by the Fund pursuant to the Underwriting Agreement
against payment of the consideration set forth in the Underwriting
53
Agreement, will be validly issued and fully paid and non-assessable.
7. The Registration Statement, including any Rule 462(b) Registration
Statement, has become effective under the 1933 Act, any required
filing of the Prospectus pursuant to Rule 497(c) or Rule 497(h) has
been made in the manner and within the time period required by Rule
497, and to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or of any Rule 462(b)
Registration Statement has been issued, or proceedings therefor
threatened by the Commission, under the 1933 Act.
8. The Fund is duly registered with the Commission under the 1940 Act
as a closed-end non-diversified management investment company.
9. Other than with respect to financial statements and related notes
and schedules and any other financial, accounting and statistical
information that is included or incorporated by reference in, or
omitted from, the following documents, as to which such counsel need
express no opinion; (i) the Registration Statement, including any
Rule 462(b) Registration Statement and any Rule 430A Information,
the Prospectus and any amendment or supplement thereto through the
date hereof complied as to form in all material respects with the
requirements of the 1933 Act, the 1940 Act and the Rules and
Regulations thereunder; and (ii) the Fund's notification of
registration on Form N-8A complied as to form in all material
respects with the requirements of the 1940 Act and the Rules and
Regulations thereunder.
10. Insofar as the statements in the Prospectus under the captions
"Description of Shares - Common Shares," "Tax Matters - General;
Taxation of the Fund" and "Tax Matters - Taxation of the Fund's
Shareholders" and in the Registration Statement under Item 29
(Indemnification) constitute summaries of legal matters, provisions
of the Fund's articles of incorporation or by-laws or legal
proceedings or legal conclusions referred to therein, those
statements fairly present the information called for with respect to
54
those legal matters, documents, proceedings or conclusions.
11. To such counsel's knowledge, there is no action, suit, proceeding,
inquiry or investigation by or before any court or governmental
agency that is pending against the Fund or to which any of its
properties are subject or that is threatened against the Fund, which
may reasonably be expected to result in a Material Adverse Effect or
to materially and adversely affect the properties or assets of the
Fund, the consummation by the Fund of the transactions contemplated
in the Underwriting Agreement or the performance by the Fund of its
obligations thereunder.
12. The terms of the Underwriting Agreement and each of the Fund
Agreements do not violate in any material respect any applicable
provision of 1940 Act, the Rules and Regulations thereunder, the
Advisers Act or the Advisers Act Rules and Regulations.
13. Neither the execution and delivery by the Fund of, and the
performance by the Fund of its obligations under, the Underwriting
Agreement or the Fund Agreements, nor the issuance and sale of the
Shares to the Underwriters and the use by the Fund of the proceeds
thereof as provided by the Underwriting Agreement and as described
in the Prospectus under the caption "Use of Proceeds": (i) violate
the Fund's articles of incorporation or bylaws; (ii) violate, breach
or constitute a default or event of default under the terms of any
agreement or instrument that is filed as an exhibit to the
Registration Statement and to which the Fund is a party or by which
its property may be bound, except for violations, breaches or
defaults that would not have a Material Adverse Effect; (iii)
violate the laws of the United States, the States of Maryland and
New York and The Commonwealth of Massachusetts that are, in such
counsel's experience, applicable to the transactions of the types
covered by the Underwriting Agreement and the Fund Agreements (the
"Covered Laws"); (iv) violates the terms of any order of any court,
governmental instrumentality, securities exchange or association or
arbitrator specifically naming the Fund and known to such counsel or
55
(v) to such counsel's knowledge, require the Fund to obtain any
consent or approval by, or make any filing with, any court, or any
regulatory body, administrative or other governmental body, agency
or official under any statute, rule, or regulation of the State of
Maryland or of the United States, other than consents, approvals and
filings previously obtained or made and in full force and effect.
14. The execution and delivery of, and performance of the Fund's
obligations under, the Underwriting Agreement and each of the Fund
Agreements have been duly authorized by all necessary action of the
Fund, and the Fund has duly executed and delivered the Underwriting
Agreement and each of the Fund Agreements.
15. Each of the Fund Agreements constitutes the legal, valid and binding
obligation of the Fund, enforceable against it in accordance with
its terms, except as the enforceability thereof may be limited by
the effect of bankruptcy, insolvency, fraudulent transfer,
reorganization, receivership, moratorium, and other, similar laws
affecting the rights and remedies of creditors generally and by
general principles of equity (whether applied by a court of law or
equity), and except as rights to indemnity thereunder may be limited
by federal or state securities laws.
Such counsel shall also state that they have been informed that the Shares
have been approved for listing on the American Stock Exchange, subject to
official notice of issuance, and the Fund's Registration Statement on Form 8-A
under the 1934 Act is effective.
In addition, such counsel shall state that they are not opining as to
factual matters, and the character of determinations involved in the
registration process is such that such counsel are not passing upon and do not
assume any responsibility for the accuracy, completeness or fairness of the
information included in the Registration Statement and the Prospectus or in any
amendment or supplement thereto. Such counsel may assume the correctness and
completeness of the information included therein, and such counsel need have
made no independent investigation or verification of that information. However,
such counsel shall state that they have participated in the preparation of the
56
Registration Statement and the Prospectus and in discussions with certain
officers and directors of the Fund, certain officers and employees of the
Advisers and your representatives, and such counsel shall have reviewed certain
Fund records and documents relative to the Fund, the Adviser and the
Sub-Adviser. Based on that participation and review, such counsel shall advise
you that nothing has come to such counsel's attention that causes such counsel
to believe that the Registration Statement, including any Rule 462(b)
Registration Statement and any Rule 430A Information, at the time it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus or any amendment or
supplement thereto, at the time that the Prospectus was issued or at the Closing
Date, included an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. This paragraph
does not address, and such counsel need express no opinion with respect to, the
financial statements and related notes and schedules, and other financial,
accounting, and statistical information, included in, incorporated by reference
in, or omitted from the Registration Statement, the Prospectus, or any amendment
or supplement to either of them. Such counsel need also express no opinion with
respect to any matter relating to compliance with financial covenants or
financial requirements.
57
EXHIBIT B
FORM OF ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ADVISER OPINION
i. The Adviser is validly existing as a corporation under the laws of
the State of New York with full corporate power and authority to own or lease
all of the assets owned or leased by it and to conduct its business as described
in the Registration Statement and Prospectus and to enter into and perform its
obligations under the Underwriting Agreement and the Adviser Agreements.
ii. The Adviser is duly registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act or the Investment Company
Act from acting as investment adviser for the Fund under the Advisory Agreement
as contemplated by the Registration Statement and the Prospectus.
iii. The Underwriting Agreement and each Adviser Agreement has been duly
and validly authorized, executed and delivered by the Adviser; each of the
Management Agreement, the Administration Agreement and the Sub-Advisory
Agreement complies in all material respects with all provisions of the
Investment Company Act and the Advisers Act; and assuming due authorization,
execution and delivery by each of the other parties thereto, each of the
Management Agreement, the Administration Agreement and the Sub-Advisory
Agreement constitutes a legal, valid and binding obligation of the Adviser,
enforceable against the Adviser in accordance with its terms, (1) subject, as to
enforcement, to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and to general equitable principles (regardless of whether enforcement
is sought in a proceeding in equity or at law) and (2) except as rights to
indemnity thereunder may be limited by public policy or federal or state
securities laws (except that counsel may state that it expresses no opinion as
to the reasonableness or fairness of compensation payable under the Management
Agreement or the Sub-Advisory Agreement).
iv. Neither (A) the execution and delivery by the Adviser of the
Underwriting Agreement or of any Adviser Agreement nor (B) the consummation by
the Adviser of the transactions contemplated by, or the performance of its
obligations under, the Underwriting Agreement or any Adviser Agreement conflicts
or will conflict with, or results or will result in a breach of, (i) the charter
58
or by-laws of the Adviser, (ii) any agreement or instrument listed on an Annex
to such opinion (which the Adviser, in an officer's certificate accompanying
such opinion or otherwise delivered to the Underwriters on the Closing Date,
shall have identified as the only material agreements or instruments to which
the Adviser is a party or by which the Adviser is bound) or (iii) any applicable
United States federal or New York law, rule or regulation (other than state
securities or "blue sky" laws, as to which such counsel need express no
opinion), or order of any New York or United States federal court, governmental
instrumentality, securities exchange or association or arbitrator, (or any other
orders of any court, governmental instrumentality, securities exchange or
association or arbitrator, whether foreign or domestic, in any other
jurisdiction, as set forth on an Annex to such opinion (which the Adviser, in an
officer's certificate accompanying such opinion or otherwise delivered to the
Underwriters on the Closing Date, shall have identified as the only orders that
are material to the Adviser) in each case specifically naming the Adviser and
(in the case of New York or United States federal orders) known to such counsel,
except in the case of each of clauses (ii) and (iii) for such conflicts or
breaches, which do not, either alone or in the aggregate, have a material
adverse effect on the Adviser's ability to perform its obligations under the
Underwriting Agreement or the Adviser Agreements.
v. To such counsel's knowledge, no consent, approval, authorization or
order of any New York or United States federal court, governmental agency or
body or securities exchange or association is required for the consummation of
the transactions contemplated in, or the performance by the Adviser of its
obligations under, the Underwriting Agreement, the Management Agreement, the
Administration Agreement or the Sub-Advisory Agreement, except (i) such as have
been obtained under the United States federal securities laws and (ii) may be
required by the American Stock Exchange or under state securities or "blue sky"
laws, in connection with the purchase and distribution of the Shares by the
Underwriters pursuant to the Underwriting Agreement.
vi. To such counsel's knowledge, there is no legal or governmental
proceeding pending or threatened against the Adviser that is either (i) required
to be described in the Registration Statement or Prospectus that is not
described therein or (ii) which would, under Section 9 of the Investment Company
59
Act, make the Adviser ineligible to act as the Fund's investment adviser.
60
EXHIBIT C
FORM OF ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ SUB-ADVISER OPINION
i. The Sub-Adviser is validly existing as a limited liability company
under the laws of the State of Delaware with full power and authority to own or
lease all of the assets owned or leased by it and to conduct its business as
described in the Registration Statement and Prospectus and to enter into and
perform its obligations under the Underwriting Agreement and Sub-Advisory
Agreement.
ii. The Sub-Adviser is duly registered as an investment adviser under
the Advisers Act and is not prohibited by the Advisers Act or the Investment
Company Act from acting as investment adviser for the Fund under the
Sub-Advisory Agreement as contemplated by the Registration Statement and the
Prospectus.
iii. Each of the Underwriting Agreement and the Sub-Advisory Agreement
has been duly and validly authorized, executed and delivered by the Sub-Adviser;
the Sub-Advisory Agreement complies in all material respects with all provisions
of the Investment Company Act and the Advisers Act; and assuming due
authorization, execution and delivery by each of the other parties thereto, the
Sub-Advisory Agreement constitutes a legal, valid and binding obligation of the
Sub-Adviser, enforceable against the Sub-Adviser in accordance with its terms,
(1) subject, as to enforcement, to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws affecting creditors'
rights generally and to general equitable principles (regardless of whether
enforcement is sought in a proceeding in equity or at law) and (2) except as
rights to indemnity thereunder may be limited by public policy or federal or
state securities laws (except that counsel my state that it expresses no opinion
as to the reasonableness or fairness of compensation payable under the
Sub-Advisory Agreement).
iv. Neither (A) the execution and delivery by the Sub-Adviser of the
Underwriting Agreement or the Sub-Advisory Agreement nor (B) the consummation by
the Sub-Adviser of the transactions contemplated by, or the performance of its
obligations under, the Underwriting Agreement or the Sub-Advisory Agreement
conflicts or will conflict with, or results or will result in a breach of, (i)
the organizational documents of the Sub-Adviser, (ii) any agreement or
61
instrument listed on an Annex to such opinion (which the Sub-Adviser, in an
officer's certificate accompanying such opinion or otherwise delivered to the
Underwriters on the Closing Date, shall have identified as the only material
agreements or instruments to which the Adviser is a party or by which the
Sub-Adviser is bound) or (iii) any applicable United States federal or Delaware
law, rule or regulation (other than state securities or "blue sky" laws, as to
which such counsel need express no opinion), or order of any Delaware or United
States federal court, governmental instrumentality, securities exchange or
association or arbitrator, (or any other orders of any court, governmental
instrumentality, securities exchange or association or arbitrator, whether
foreign or domestic, in any other jurisdiction, as set forth on an Annex to such
opinion (which the Sub-Adviser, in an officer's certificate accompanying such
opinion or otherwise delivered to the Underwriters on the Closing Date, shall
have identified as the only orders that are material to the Sub-Adviser) in each
case specifically naming the Sub-Adviser and (in the case of Delaware or United
States federal orders) known to such counsel, except in the case of each of
clauses (ii) and (iii) for such conflicts or breaches, which do not, either
alone or in the aggregate, have a material adverse effect on the Sub-Adviser's
ability to perform its obligations under the Underwriting Agreement or the
Sub-Advisory Agreement.
v. To such counsel's knowledge, no consent, approval, authorization or
order of any New York or United States federal court, governmental agency or
body or securities exchange or association is required for the consummation of
the transactions contemplated in, or the performance by the Sub-Adviser of its
obligations under, the Underwriting Agreement or the Sub-Advisory Agreement,
except (i) such as have been obtained under the United States federal securities
laws and (ii) may be required by the American Stock Exchange or under state
securities or "blue sky" laws, in connection with the purchase and distribution
of the Shares by the Underwriters pursuant to the Underwriting Agreement.
vi. To such counsel's knowledge, there is no legal or governmental
proceeding pending or threatened against the Sub-Adviser that is either (i)
required to be described in the Registration Statement or Prospectus that is not
62
described therein or (ii) which would, under Section 9 of the Investment Company
Act, make the Sub-Adviser ineligible to act as the Fund's investment adviser.
63
EXHIBIT D
FORM OF ERNST & YOUNG LLP COMFORT LETTER
[ ], 2003
The Board of Directors of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Real Estate Securities Income Fund Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
as Managing Representative of the Underwriters
Ladies and Gentlemen:
We have audited the statement of assets and liabilities of ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Real Estate Securities Income Fund Inc. (the "Fund") as of [ ], 2003 (the
"financial statement") included in Pre-effective Amendment No. [ ] to the
Registration Statement on Form N-2 filed by the Fund under the Securities Act of
1933 (the " 1933 Act") (File No. 333-108412) and under the Investment Company
Act of 1940 (the "1940 Act," collectively, the 1933 Act and the 1940 Act, the
"Acts") (File No. 811-21421); such statement and our report with respect to such
statement are included in the Registration Statement.
In connection with the Registration Statement:
1. We are independent auditors with respect to the Fund within
the meaning of the Acts and the applicable rules and regulations adopted
thereunder by the Securities and Exchange Commission (the "SEC").
2. In our opinion, the financial statement audited by us and
included in the Registration Statement complies as to form in all respects
with the applicable accounting requirements of the Acts and the related
rules and regulations thereunder adopted by the SEC.
3. For purposes of this letter we have read the minutes of all
meetings of the Shareholders, the Board of Directors and all Committees of
the Board of Directors of the Fund as set forth in the minute books at the
64
offices of the Fund, officials of the Fund having advised us that the
minutes of all such meetings through [ ], 2003, were set forth therein.
4. Fund officials have advised us that no financial statements as
of any date subsequent to [ ], 2003, are available. We have made inquiries
of certain officials of the Fund who have responsibility for financial and
accounting matters regarding whether there was any change at [ ], 2003, in
the capital shares or net assets of the Fund as compared with amounts
shown in the [ ], 2003, statement of assets and liabilities included in
the Registration Statement, except for changes that the Registration
Statement discloses have occurred or may occur. On the basis of our
inquiries and our reading of the minutes as described in Paragraph 3,
nothing came to our attention that caused us to believe that there were
any such changes.
5. In addition to the procedures referred to in clauses 3 and 4
about, we have performed other specified procedures, not constituting and
audit, with respect to certain amounts, percentages, numerical data and
financial information appearing in the Registration Statement, which have
previously been specified by the Managing Representative and which shall
be specified in this letter, and have compared such items with, and have
found such items to be in agreement with, the accounting and financial
records of the Fund.
The foregoing procedures do not constitute an audit made in accordance
with generally accepted auditing standards. Accordingly, we make no
representations as to the sufficiency of the foregoing procedures for your
purposes.
This letter is solely for the information of the addressees and to assist
the underwriters in conducting and documenting their investigation of the
affairs of the Fund in connection with the offering of the securities covered by
the Registration Statement, and is not to be used, circulated, quoted or
otherwise referred to within or without the underwriting group for any other
purpose, including but not limited to the registration, purchase or sale of
securities, nor is it to be filed with or referred to in whole or in part in the
Registration Statement or any other document, except that reference may be made
65
to it in the underwriting agreement or in any list of closing documents
pertaining to the offering of the securities covered by the Registration
Statement.
66