EXHIBIT (h)(1)
▇▇▇▇▇ ▇▇▇▇▇ Short Duration Diversified Income Fund
(a Massachusetts business trust)
Common Shares of Beneficial Interest
($0.01 Par Value)
FORM OF PURCHASE AGREEMENT
February [ ], 2005
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
[other co-managers]
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇ ▇▇▇▇▇ Short Duration Diversified Income Fund, a Massachusetts
business trust (the "Fund"), and the Fund's investment adviser, ▇▇▇▇▇ ▇▇▇▇▇
Management, a Massachusetts business trust (the "Investment Adviser"), confirm
their agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), and [other co-managers] and each of the other
Underwriters named in Schedule A hereto (collectively, the "Underwriters," which
term shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇ and [ ] are acting as representatives
(in such capacity, the "Representatives"), with respect to the issue and sale by
the Fund and the purchase by the Underwriters, acting severally and not jointly,
of the respective number of common shares of beneficial interest, $0.01 par
value, of the Fund ("Common Shares") set forth in said Schedule A, and with
respect to the grant by the Fund to the Underwriters, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or any
part of [ ] additional Common Shares to cover overallotments, if any. The
aforesaid [ ] Common Shares (the "Initial Securities") to be purchased by the
Underwriters and all or any part of the [ ] Common Shares subject to the option
described in Section 2(b) hereof (the "Option Securities") are hereinafter
called, collectively, the "Securities."
The Fund understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-114596 and No.
811-21563) covering the registration of the Securities under the Securities Act
of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses, and a notification on Form N-8A of registration of
the Fund as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations of the Commission under
the 1933 Act and the 1940 Act (the "Rules and Regulations"). Promptly after
execution and delivery of this Agreement, the Fund will either (i) prepare and
file a prospectus in accordance with the provisions of Rule 430A ("Rule 430A")
of the Rules and Regulations and paragraph (c) or (h) of Rule 497 ("Rule 497")
of the Rules and Regulations or (ii) if the Fund has elected to rely upon Rule
434 ("Rule 434") of the Rules and Regulations, prepare and file a term
sheet (a "Term Sheet") in accordance with the provisions of Rule 434 and Rule
497. The information included in any such prospectus or in any such Term Sheet,
as the case may be, that was omitted from such registration statement at the
time it became effective but that is deemed to be part of such registration
statement at the time it became effective, if applicable, (a) pursuant to
paragraph (b) of Rule 430A is referred to as "Rule 430A Information" or (b)
pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434 Information."
Each prospectus used before such registration statement became effective, and
any prospectus that omitted, as applicable, the Rule 430A Information or the
Rule 434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, including in each case any statement
of additional information incorporated therein by reference, is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto and schedules thereto at the time it became effective and including the
Rule 430A Information and the Rule 434 Information, as applicable, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the Rules and Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final
prospectus in the form first furnished to the Underwriters for use in connection
with the offering of the Securities, including the statement of additional
information incorporated therein by reference, is herein called the
"Prospectus." If Rule 434 is relied on, the term "Prospectus" shall refer to the
preliminary prospectus dated January [ ], 2005 together with the Term Sheet and
all references in this Agreement to the date of the Prospectus shall mean the
date of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Fund and the Investment
Adviser. The Fund and the Investment Adviser jointly and severally represent and
warrant to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agree with each Underwriter, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act, or order of
suspension or revocation of registration pursuant to Section 8(e) of
the 1940 Act, and no proceedings for any such purpose have been
instituted or are pending or, to the knowledge of the Fund or the
Investment Adviser, are contemplated by the Commission, and any request
on the part of the Commission for additional information has been
complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any Option Securities
are purchased, at the Date of Delivery), the Registration Statement,
the Rule 462(b) Registration Statement, the notification of Form N-8A
and any amendments and supplements thereto complied and will comply in
all material respects with the requirements of the 1933 Act, the 1940
Act and the Rules and Regulations and did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or
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necessary to make the statements therein not misleading. Neither the
Prospectus nor any amendments or supplements thereto, at the time the
Prospectus or any such amendment or supplement was issued and at the
Closing Time (and, if any Option Securities are purchased, at the Date
of Delivery), included or will include an untrue statement of a
material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434
is used, the Fund will comply with the requirements of Rule 434 and the
Prospectus shall not be "materially different", as such term is used in
Rule 434, from the prospectus included in the Registration Statement at
the time it became effective.
Each preliminary prospectus and the prospectus filed as part
of the effective Registration Statement or as part of any amendment
thereto, or filed pursuant to Rule 497 under the 1933 Act, complied
when so filed in all material respects with the Rules and Regulations
and each preliminary prospectus and the Prospectus delivered to the
Underwriters for use in connection with this offering was identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
If a Rule 462(b) Registration Statement is required in
connection with the offering and sale of the Securities, the Fund has
complied or will comply with the requirements of Rule 111 under the
1933 Act Regulations relating to the payment of filing fees thereof.
(ii) Independent Registered Public Accounting Firm. The
independent registered public accounting firm who certified the
statement of assets and liabilities included in the Registration
Statement are independent public accountants as required by the 1933
Act and the Rules and Regulations.
(iii) Financial Statements. The statement of assets and
liabilities included in the Registration Statement and the Prospectus,
together with the related notes, presents fairly the financial position
of the Fund at the date indicated; said statement has been prepared in
conformity with generally accepted accounting principles ("GAAP").
(iv) Expense Summary. The information set forth in the
Prospectus in the Fee Table has been prepared in accordance with the
requirements of Form N-2 and to the extent estimated or projected, such
estimates or projections are reasonably believed to be attainable and
reasonably based.
(v) No Material Adverse Change. Since the respective dates as
of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Fund,
whether or not arising in the ordinary course of business (a "Material
Adverse Effect"), (B) there have been no transactions entered into by
the Fund, other than those in the ordinary course of business, which
are material with respect to the Fund, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Fund
on any class of its capital shares.
(vi) Good Standing of the Fund. The Fund has been duly
organized and is validly existing as a business trust under the laws of
the State of Massachusetts and has power and authority to own, lease
and operate its properties and to conduct its business as described in
the Prospectus and to enter into and perform its obligations under this
Agreement; and the Fund is duly qualified as a foreign business trust
to transact business and is in good standing in each other jurisdiction
in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.
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(vii) No Subsidiaries. The Fund has no subsidiaries.
(viii) Investment Company Status. The Fund is duly registered
with the Commission under the 1940 Act as a closed-end, diversified
management investment company, and no order of suspension or revocation
of such registration has been issued or proceedings therefor initiated
or threatened by the Commission.
(ix) Officers and Trustees. No person is serving or acting as
an officer, trustee or investment adviser of the Fund except in
accordance with the provisions of the 1940 Act and the Rules and
Regulations and the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and the rules and regulations of the Commission
promulgated under the Advisers Act (the "Advisers Act Rules and
Regulations"). Except as disclosed in the Registration Statement and
the Prospectus (or any amendment or supplement to either of them), no
trustee of the Fund is (A) an "interested person" (as defined in the
▇▇▇▇ ▇▇▇) of the Fund or (B) an "affiliated person" (as defined in the
▇▇▇▇ ▇▇▇) of any Underwriter.
(x) Capitalization. The authorized, issued and outstanding
shares of beneficial interest of the Fund is as set forth in the
Prospectus. All issued and outstanding common shares of beneficial
interest of the Fund have been duly authorized and validly issued and
are fully paid and non-assessable (except as described in the
Registration Statement) and have been offered and sold or exchanged by
the Fund in compliance with all applicable laws (including, without
limitation, federal and state securities laws); none of the outstanding
common shares of beneficial interest of the Fund was issued in
violation of the preemptive or other similar rights of any
securityholder of the Fund.
(xi) Authorization and Description of Securities. The
Securities to be purchased by the Underwriters from the Fund have been
duly authorized for issuance and sale to the Underwriters pursuant to
this Agreement and, when issued and delivered by the Fund pursuant to
this Agreement against payment of the consideration set forth herein,
will be validly issued and fully paid and non-assessable (except as
described in the Registration Statement). The Common Shares conform to
all statements relating thereto contained in the Prospectus and such
description conforms to the rights set forth in the instruments
defining the same, to the extent such rights are set forth; no holder
of the Securities will be subject to personal liability by reason of
being such a holder; and the issuance of the Securities is not subject
to the preemptive or other similar rights of any securityholder of the
Fund.
(xii) Absence of Defaults and Conflicts. The Fund is not in
violation of its agreement and declaration of trust or by-laws, each as
amended from time to time, or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which
it is a party or by which it may be bound, or to which any of the
property or assets of the Fund is subject (collectively, "Agreements
and Instruments") except for such violations or defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement, the Investment Advisory Agreement, the
Administration Agreement, the Custodian Agreement, the Transfer Agency
and Service Agreement and [other applicable material agreements]
referred to in the Registration Statement (as used herein, the
"Advisory Agreement," the "Administration Agreement," the "Custodian
Agreement" and the "Transfer Agency Agreement," respectively) and the
consummation of the transactions contemplated herein and in the
Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities
as described in the Prospectus under the caption "Use of Proceeds") and
compliance by the Fund with its obligations hereunder have been duly
authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or
both, conflict with or
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constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Fund pursuant
to, the Agreements and Instruments (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not result in
a Material Adverse Effect), nor will such action result in any
violation of the provisions of the agreement and declaration of trust
or by-laws of the Fund, each as amended from time to time, or any
applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Fund or any of its assets,
properties or operations. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Fund.
(xiii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Fund, threatened, against or affecting the Fund,
which is required to be disclosed in the Registration Statement (other
than as disclosed therein), or which might reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be
expected to materially and adversely affect the properties or assets of
the Fund or the consummation of the transactions contemplated in this
Agreement or the performance by the Fund of its obligations hereunder.
The aggregate of all pending legal or governmental proceedings to which
the Fund is a party or of which any of its property or assets is the
subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business, could
not reasonably be expected to result in a Material Adverse Effect.
(xiv) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits thereto by the
1933 Act, the 1940 Act or by the Rules and Regulations which have not
been so described and filed as required.
(xv) Possession of Intellectual Property. The Fund owns or
possesses, or can acquire on reasonable terms, adequate patents, patent
rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks, trade names or other intellectual property (collectively,
"Intellectual Property") necessary to carry on the business now
operated by the Fund, and the Fund has not received any notice or is
not otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any
facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Fund therein, and
which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, singly or in
the aggregate, would result in a Material Adverse Effect.
(xvi) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Fund of its
obligations hereunder, in connection with the offering, issuance or
sale of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement, except such as have been
already obtained or as may be required under the 1933 Act, the 1940
Act, the Securities Exchange Act of 1934, as amended (the "1934 Act"),
the rules of the New York Stock Exchange (the "NYSE") or state
securities laws.
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(xvii) Possession of Licenses and Permits. The Fund possesses
such permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies
necessary to operate its properties and to conduct the business as
contemplated in the Prospectus, except where the absence of such
possession would not result in a Material Adverse Effect; the Fund is
in compliance with the terms and conditions of all such Governmental
Licenses; all of the Governmental Licenses are valid and in full force
and effect, except when the invalidity of such Governmental Licenses or
the failure of such Governmental Licenses to be in full force and
effect would not have a Material Adverse Effect; and the Fund has not
received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(xviii) Advertisements. Any advertising, sales literature or
other promotional material (including "prospectus wrappers," "broker
kits," "road show slides" and "road show scripts") authorized in
writing by or prepared by the Fund or the Investment Adviser used in
connection with the public offering of the Securities (collectively,
"sales material") does 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 not misleading. Moreover, all
sales material complied and will comply in all material respects with
the applicable requirements of the 1933 Act, the 1940 Act and the Rules
and Regulations and the rules and interpretations of the National
Association of Securities Dealers, Inc. ("NASD"). (xix) Subchapter M.
The Fund intends to direct the investment of the proceeds of the
offering described in the Registration Statement in such a manner as to
comply with the requirements of Subchapter M of the Internal Revenue
Code of 1986, as amended ("Subchapter M of the Code" and the "Code,"
respectively), and intends to qualify as a regulated investment company
under Subchapter M of the Code.
(xx) Distribution of Offering Materials. The Fund has not
distributed and, prior to the later to occur of (A) the Closing Time
and (B) completion of the distribution of the Common Shares, will not
distribute any offering material in connection with the offering and
sale of the Common Shares other than the Registration Statement, a
preliminary prospectus, the Prospectus or the sales materials.
(xxi) Accounting Controls. The Fund maintains a system of
internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorization and with the applicable
requirements of the 1940 Act, the Rules and Regulations and the Code;
(B) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets and to maintain
compliance with the books and records requirements under the 1940 Act
and the Rules and Regulations; (C) access to assets is permitted only
in accordance with the management's general or specific authorization;
and (D) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xxii) Absence of Undisclosed Payments. To the Fund's
knowledge, neither the Fund nor any employee or agent of the Fund has
made any payment of funds of the Fund or received or retained any
funds, which payment, receipt or retention of funds is of a character
required to be disclosed in the Prospectus.
(xxiii) Material Agreements. This Agreement, the Advisory
Agreement referred to in the Registration Statement, the Administration
Agreement, the Custodian Agreement and the
6
Transfer Agency Agreement have each been duly authorized by all
requisite action on the part of the Fund, executed and delivered by the
Fund, as of the dates noted therein and each complies with all
applicable provisions of the 1940 Act. Assuming due authorization,
execution and delivery by the other parties thereto, each such
Agreement constitutes a valid and binding agreement of the Fund,
enforceable in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing and except as rights to indemnify or contribute
thereunder may be limited by federal or state laws.
(xxiv) Registration Rights. There are no persons with
registration rights or other similar rights to have any securities of
the Fund registered pursuant to the Registration Statement or otherwise
registered by the Fund under the 1933 Act.
(xxv) NYSE Listing. The Securities have been duly authorized
for listing, upon notice of issuance, on the NYSE and the Fund's
registration statement on Form 8-A under the 1934 Act has become
effective.
(b) Representations and Warranties by the Investment Adviser. The
Investment Adviser represents and warrants to each Underwriter, and in the case
of paragraph (iii) also represents to the Fund, as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b) hereof as follows:
(i) Good Standing of the Investment Adviser. The Investment
Adviser has been duly organized and is validly existing and in good
standing as a business trust under the laws of the State of
Massachusetts, with full power and authority to own, lease and operate
its properties and to conduct its business as described in the
Prospectus and is duly qualified as a foreign business trust to
transact business and is in good standing in each other jurisdiction in
which such qualification is required.
(ii) Investment Adviser Status. The Investment Adviser is duly
registered and in good standing with the Commission as an investment
adviser under the Advisers Act, and is not prohibited by the Advisers
Act or the 1940 Act, or the rules and regulations under such acts, from
acting under the Advisory Agreement for the Fund as contemplated by the
Prospectus.
(iii) Description of the Investment Adviser. The description
of the Investment Adviser in the Registration Statement and the
Prospectus (and 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 is true and correct and does not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
(iv) Capitalization. The Investment Adviser has the financial
resources available to it necessary for the performance of its services
and obligations as contemplated in the Prospectus, this Agreement and
under the Advisory Agreement, the Additional Compensation Agreement
between the Investment Adviser and ▇▇▇▇▇▇▇ ▇▇▇▇▇ dated February [ ],
2005 (the "Additional Compensation Agreement") and [include other
additional compensation agreements].
(v) Authorization of Agreements; Absence of Defaults and
Conflicts. This Agreement, the Advisory Agreement and the Additional
Compensation Agreement[s] have each been duly authorized, executed and
delivered by the Investment Adviser, and, assuming due authorization,
execution and delivery by the other parties thereto, the Advisory
Agreement and
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the Additional Compensation Agreement[s] constitute valid and binding
obligations of the Investment Adviser, each enforceable in accordance
with its terms, except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and general
equitable principles (whether considered in a proceeding in equity or
at law); and neither the execution and delivery of this Agreement, the
Advisory Agreement or the Additional Compensation Agreement[s] nor the
performance by the Investment Adviser of its obligations hereunder or
thereunder will conflict with, or result in a breach of any of the
terms and provisions of, or constitute, with or without the giving of
notice or lapse of time or both, a default under, any agreement or
instrument to which the Investment Adviser is a party or by which it is
bound, the declaration of trust, by-laws or other organizational
documents of the Investment Adviser, or to the Investment Adviser's
knowledge, by any law, order, decree, rule or regulation applicable to
it of any jurisdiction, court, federal or state regulatory body,
administrative agency or other governmental body, stock exchange or
securities association having jurisdiction over the Investment Adviser
or its properties or operations; and no consent, approval,
authorization or order of any court or governmental authority or agency
is required for the consummation by the Investment Adviser of the
transactions contemplated by this Agreement, the Advisory Agreement or
the Additional Compensation Agreement[s], except as have been obtained
or may be required under the 1933 Act, the 1940 Act, the 1934 Act, NYSE
or state securities laws.
(vi) No Material Adverse Change. Since the respective dates as
of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred
any event which should reasonably be expected to have a material
adverse effect on the ability of the Investment Adviser to perform its
obligations under this Agreement, the Advisory Agreement or the
Administration Agreement.
(vii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Investment Adviser, threatened against or
affecting either the Investment Adviser or any parent or subsidiary of
the Investment Adviser or any partners, trustees, officers or employees
of the foregoing, whether or not arising in the ordinary course of
business, which might reasonably be expected to result in any material
adverse change in the condition, financial or otherwise, or earnings,
business affairs or business prospects of the Investment Adviser,
materially and adversely affect the properties or assets of the
Investment Adviser or materially impair or adversely affect the ability
of the Investment Adviser to function as an investment adviser or
perform its obligations under the Advisory Agreement or the Additional
Compensation Agreement[s], or which is required to be disclosed in the
Registration Statement and the Prospectus (and has not been so
disclosed).
(viii) Absence of Violation or Default. The Investment Adviser
is not in violation of its organizational documents or in default under
any agreement, indenture or instrument, where such violation or default
would reasonably be expected to have a Material Adverse Effect on the
ability of the Investment Adviser to function as an investment adviser
or perform its obligations under the Advisory Agreement.
(c) Officer's Certificates. Any certificate signed by any officer of
the Fund or the Investment Adviser delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Fund or the Investment Adviser, as the case may be, to each Underwriter as
to the matters covered thereby.
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SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Fund agrees to sell to each Underwriter, severally and not jointly,
and each Underwriter, severally and not jointly, agrees to purchase from the
Fund, at the price per share set forth in Schedule B, the number of Initial
Securities set forth in Schedule A opposite the name of such Underwriter, plus
any additional number of Initial Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Fund hereby grants an option to the Underwriters, severally and
not jointly, to purchase up to an additional [ ] Common Shares in the aggregate
at the price per share set forth in Schedule B, less an amount per share equal
to any dividends or distributions declared by the Fund and payable on the
Initial Securities but not payable on the Option Securities. The option hereby
granted will expire 45 days after the date hereof and may be exercised in whole
or in part from time to time only for the purpose of covering overallotments
which may be made in connection with the offering and distribution of the
Initial Securities upon written notice by the Representatives to the Fund
setting forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Securities. Any such time and date of delivery (a "Date
of Delivery") shall be determined by the Representatives, but shall not be
earlier than the third day after the date on which the option is being exercised
nor later than seven full business days after the exercise of said option, nor
in any event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as ▇▇▇▇▇▇▇ ▇▇▇▇▇ in its discretion shall make to eliminate any sales
or purchases of a fractional number of Option Securities plus any additional
number of Option Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as shall be agreed upon by the
Representatives and the Fund, at 10:00 A.M. (Eastern time) on the third (fourth,
if the pricing occurs after 4:30 P.M. (Eastern time) on any given day) business
day after the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business days after such date
as shall be agreed upon by the Representatives and the Fund (such time and date
of payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Fund, on each Date of Delivery as specified in the notice from the
Representatives to the Fund.
Payment shall be made to the Fund by wire transfer of immediately
available funds to a bank account designated by the Fund, against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option
9
Securities, if any, to be purchased by any Underwriter whose funds have not been
received by the Closing Time or the relevant Date of Delivery, as the case may
be, but such payment shall not relieve such Underwriter from its obligations
hereunder.
(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representatives may request in writing at least
one full business day before the Closing Time or the relevant Date of Delivery,
as the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in the City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants.
(a) The Fund and the Investment Adviser, jointly and severally,
covenant with each Underwriter as follows:
(i) Compliance with Securities Regulations and Commission
Requests. The Fund, subject to Section 3(a)(ii), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify
the Representatives immediately, and confirm the notice in writing, (i)
when any post-effective amendment to the Registration Statement shall
become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments
from the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement
to the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing
or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale
in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Fund will promptly effect the
filings necessary pursuant to Rule 497 and will take such steps as it
deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 497 was received for filing by the
Commission and, in the event that it was not, it will promptly file
such prospectus. The Fund will make every reasonable effort to prevent
the issuance of any stop order, or order of suspension or revocation of
registration pursuant to Section 8(e) of the 1940 Act, and, if any such
stop order or order of suspension or revocation of registration is
issued, to obtain the lifting thereof at the earliest possible moment.
(ii) Filing of Amendments. The Fund will give the
Representatives notice of its intention to file or prepare any
amendment to the Registration Statement (including any filing under
Rule 462(b)), any Term Sheet or any amendment, supplement or revision
to either the prospectus included in the Registration Statement at the
time it became effective or to the Prospectus, will furnish the
Representatives with copies of any such documents a reasonable amount
of time prior to such proposed filing or use, as the case may be, and
will not file or use any such document to which the Representatives or
counsel for the Underwriters shall reasonably object.
(iii) Delivery of Registration Statements. The Fund has
furnished or will deliver to the Representatives and counsel for the
Underwriters, without charge, signed copies of the Registration
Statement as originally filed and of each amendment thereto (including
exhibits filed therewith or incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will
also deliver to the Representatives, without charge, a conformed copy
of the Registration Statement as originally filed and of each amendment
thereto (without exhibits) for each of the Underwriters. The copies of
the Registration Statement and each amendment thereto
10
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇,
except to the extent permitted by Regulation S-T.
(iv) Delivery of Prospectuses. The Fund has delivered to each
Underwriter, without charge, as many copies of each preliminary
prospectus as such Underwriter reasonably requested, and the Fund
hereby consents to the use of such copies for purposes permitted by the
1933 Act. The Fund will furnish to each Underwriter, without charge,
during the period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, such number of copies of the Prospectus
(as amended or supplemented) as such Underwriter may reasonably
request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇,
except to the extent permitted by Regulation S-T.
(v) Continued Compliance with Securities Laws. If at any time
when a prospectus is required by the 1933 Act to be delivered in
connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the
opinion of counsel for the Underwriters or for the Fund, to amend the
Registration Statement or amend or supplement the Prospectus in order
that the Prospectus will not include any untrue statements of a
material fact or omit to state a material fact necessary in order to
make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or
if it shall be necessary, in the opinion of such counsel, at any such
time to amend the Registration Statement or amend or supplement the
Prospectus in order to comply with the requirements of the 1933 Act or
the Rules and Regulations, the Fund will promptly prepare and file with
the Commission, subject to Section 3(a)(ii), such amendment or
supplement as may be necessary to correct such statement or omission or
to make the Registration Statement or the Prospectus comply with such
requirements, and the Fund will furnish to the Underwriters such number
of copies of such amendment or supplement as the Underwriters may
reasonably request.
(vi) Blue Sky Qualifications. The Fund will use its best
efforts, in cooperation with the Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions of the United States as the
Representatives may designate and to maintain such qualifications in
effect for a period of not less than one year from the later of the
effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Fund shall not be
obligated to file any general consent to service of process or to
qualify as a foreign business trust or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. In each jurisdiction in which the
Securities have been so qualified, the Fund will file such statements
and reports as may be required by the laws of such jurisdiction to
continue such qualification in effect for a period of not less than one
year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(vii) Rule 158. The Fund will make generally available to its
securityholders as soon as practicable an earnings statement, if
applicable, for the purposes of, and to provide the benefits
contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(viii) Use of Proceeds. The Fund will use the net proceeds
received by it from the sale of the Securities substantially in the
manner specified in the Prospectus under "Use of Proceeds."
(ix) Listing. The Fund will use its reasonable best efforts to
cause the Securities to be duly authorized for listing by the NYSE,
prior to the date the Securities are issued.
11
(x) Restriction on Sale of Securities. During a period of 180
days from the date of the Prospectus, the Fund will not, without the
prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (A) directly or indirectly,
offer, pledge, sell, contract to sell, sell any option, rights or
warrant to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or dispose
of Common Shares or any securities convertible into or exercisable or
exchangeable for Common Shares or file any registration statement under
the 1933 Act with respect to any of the foregoing or (B) enter into any
swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of
ownership of the Common Shares, whether any such swap or transaction
described in clause (A) or (B) above is to be settled by delivery of
Common Shares or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (1) the Securities to be sold
hereunder or (2) Common Shares issued or, for avoidance of doubt,
purchased in the open market pursuant to any dividend reinvestment
plan.
(xi) Reporting Requirements. The Fund, during the period when
the Prospectus is required to be delivered under the 1933 Act or the
1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1940 Act and the 1934 Act within the time
periods required by the 1940 Act and the Rules and Regulations and the
1934 Act and the rules and regulations of the Commission thereunder,
respectively.
(xii) Subchapter M. The Fund will use its best efforts to
comply with the requirements of Subchapter M of the Code to qualify as
a regulated investment company under the Code.
(xiii) No Manipulation of Market for Securities. The Fund will
not take, directly or indirectly, any action designed to cause or to
result in, or that might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Fund
to facilitate the sale or resale of the Securities in violation of
federal or state securities laws, until the Closing Date, or the Date
of Delivery, if any, (a) sell, bid for or purchase the Securities or
pay any person any compensation for soliciting purchases of the
Securities or (b) pay or agree to pay to any person any compensation
for soliciting another to purchase any other securities of the Fund.
(xiv) Rule 462(b) Registration Statement. If the Fund elects
to rely upon Rule 462(b), the Fund shall file a Rule 462(b)
Registration Statement with the Commission in compliance with Rule
462(b) by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement, and the Fund shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or
give irrevocable instructions for the payment of such fee pursuant to
Rule 111(b) under the 1933 Act.
SECTION 4. Payment of Expenses.
(a) Expenses. The Fund will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters, (iv) the fees and
disbursements of the Fund's counsel, the independent registered public
accounting firm and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(a)(vi)
hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation of the Blue Sky survey and any supplement thereto, (vi) the printing
and delivery to the Underwriters of copies of each preliminary
12
prospectus, Prospectus and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue Sky
Survey and any supplement thereto, (viii) the fees and expenses of any transfer
agent or registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the NASD of the terms of the sale of the Securities, (x) the
fees and expenses incurred in connection with the listing of the Securities on
the NYSE and (xi) the printing of any sales material. Also, the Fund shall pay
the Underwriters $.00667 per common share as partial reimbursement of expenses
incurred in connection with the offering. The amount paid by the Fund as this
partial reimbursement to the Underwriters will not exceed .03335% of the total
price to the public of the common stock sold in this offering. The Fund's
Investment Adviser has agreed to pay the Fund's offering costs (other than sales
load) that exceed $.04 per common share and to pay all of the Fund's
organizational costs.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section 9(a)
hereof, the Fund and the Investment Adviser, jointly and severally, agree that
they shall reimburse the Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations.
The obligations of the several Underwriters hereunder are subject to
the accuracy of the representations and warranties of the Fund and the
Investment Adviser contained in Section 1 hereof or in certificates of any
officer of the Fund or the Investment Adviser delivered pursuant to the
provisions hereof, to the performance by the Fund and the Investment Adviser of
their respective covenants and other obligations hereunder, and to the following
further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective or will have become effective by 5:30 p.m., New York City time on the
date hereof, and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act, no notice
or order pursuant to Section 8(e) of the 1940 Act shall have been issued, and no
proceedings with respect to either shall have been initiated or, to the
knowledge of counsel to the Underwriters and counsel to the Fund, threatened by
the Commission, and any request on the part of the Commission for additional
information shall have been complied with or waived to the reasonable
satisfaction of counsel to the Underwriters. A prospectus containing the Rule
430A Information shall have been filed with the Commission in accordance with
Rule 497 (or a post-effective amendment providing such information shall have
been filed and declared effective in accordance with the requirements of Rule
430A or a certificate must have been filed in accordance with Rule 497(j)) or,
if the Fund has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 497.
(b) Opinion of Counsel for Fund and the Investment Adviser. At Closing
Time, the Representatives shall have received the favorable opinion, dated as of
Closing Time, of counsel for the Fund and the Investment Adviser, together with
signed or reproduced copies of such letter for each of the other Underwriters
substantially to the effect set forth in Exhibit A hereto or in such other forms
and substance reasonably satisfactory to counsel to the Underwriters.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇▇▇ Chance US LLP, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in clauses (A) (i), (ii), (vi), (vii)
(solely as to preemptive or other similar rights arising by operation of law or
under the charter or by-laws of the Fund), (viii) through (x), inclusive, (xii),
(xiv) (solely as to the information in the Prospectus under "Description of
Capital Structure") and the last paragraph of Exhibit A hereto. In giving such
opinion such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York and the
13
federal law of the United States, upon the opinions of counsel satisfactory to
the Representatives. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Fund and certificates of public officials.
(d) Officers' Certificates. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Fund, whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of a duly authorized officer
of the Fund and of the chief financial or chief accounting officer of the Fund
and of the President or a Vice President or Managing Director of the Investment
Adviser, dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in Sections
1(a) and (b) hereof, as applicable, are true and correct with the same force and
effect as though expressly made at and as of Closing Time, (iii) each of the
Fund and the Investment Adviser, respectively, has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied pursuant
to this Agreement at or prior to Closing Time, (iv) with respect to the
Investment Adviser only, there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Investment Adviser, whether or not arising in the
ordinary course of business and (v) with respect to the Fund only, no stop order
suspending the effectiveness of the Registration Statement, or order of
suspension or revocation of registration pursuant to Section 8(e) of the 1940
Act, has been issued and no proceedings for any such purpose have been
instituted or are pending or are contemplated by the Commission.
(e) Independent Registered Public Accounting Firm's Comfort Letter. At
the time of the execution of this Agreement, the Representatives shall have
received from Deloitte & Touche LLP a letter dated such date, in form and
substance satisfactory to the Representatives, together with signed or
reproduced copies of such letter for each of the other Underwriters containing
statements and information of the type ordinarily included in independent
registered public accounting firm's "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from Deloitte & Touche LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(g) Approval of Listing. At Closing Time, the Securities shall have
been approved for listing on the NYSE, subject only to official notice of
issuance.
(h) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(i) Execution of Additional Compensation Agreement[s]. At Closing Time,
▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have received the Additional Compensation Agreement, dated
as of the Closing Date, as executed by the Investment Adviser. [Include other
Additional Compensation Agreements where applicable.]
(j) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Fund contained herein and the statements in any certificates furnished by
the Fund hereunder shall be true and correct as of each Date of Delivery and, at
the relevant Date of Delivery, the Representatives shall have received:
(i) Officers' Certificates. Certificates, dated such Date of
Delivery, of a duly authorized officer of the Fund
14
and of the chief financial or chief accounting officer of the Fund and
of the President or a Vice President or Managing Director of the
Investment Adviser confirming that the information contained in the
certificate delivered by each of them at the Closing Time pursuant to
Section 5(d) hereof remains true and correct as of such Date of
Delivery.
(ii) Opinion of Counsel for the Fund and the Investment
Adviser. The favorable opinion of counsel for the Fund and the
Investment Adviser, in form and substance satisfactory to counsel for
the Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(b) hereof.
(iii) Opinion of Counsel for the Underwriters. The favorable
opinion of ▇▇▇▇▇▇▇▇ Chance US LLP, counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as
the opinion required by Section 5(c) hereof.
(iv) Bring-down Comfort Letter. A letter from Deloitte &
Touche LLP, in form and substance satisfactory to the Representatives
and dated such Date of Delivery, substantially in the same form and
substance as the letter furnished to the Representatives pursuant to
Section 5(f) hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more than five
days prior to such Date of Delivery.
(k) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Fund and the Investment Adviser in connection with the organization
and registration of the Fund under the 1940 Act and the issuance and sale of the
Securities as herein contemplated shall be satisfactory in form and substance to
the Representatives and counsel for the Underwriters.
(l) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Fund at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7, 8 and 13
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Fund and the Investment
Adviser, jointly and severally, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectus (or any amendment or
15
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 6(e) below) any such settlement is effected
with the written consent of the Fund; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇
▇▇▇▇▇), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund or the
Investment Adviser by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in
the Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(b) Indemnification of the Fund, Investment Adviser, Trustees and
Officers. Each Underwriter severally agrees to indemnify and hold harmless the
Fund and the Investment Adviser, their respective trustees and shareholders,
each of the Fund's officers who signed the Registration Statement, and each
person, if any, who controls the Fund or the Investment Adviser within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any
and all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendment thereto), including the
Rule 430A Information and the Rule 434 Information, if applicable, or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Fund or the Investment Adviser by such Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇
expressly for use in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, or such
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) Indemnification for Marketing Materials. In addition to the
foregoing indemnification, the Fund and the Investment Adviser also, jointly and
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 6(a),
as limited by the proviso set forth therein, with respect to any sales material.
(d) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have
16
otherwise than on account of this indemnity agreement. In the case of parties
indemnified pursuant to Section 6(a) above, counsel to the indemnified parties
shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in the case of parties indemnified
pursuant to Section 6(b) above, counsel to the indemnified parties shall be
selected by the Fund and the Investment Adviser. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(e) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) (through, if applicable, the provisions of Section 6(b))
effected without its written consent if (i) such settlement is entered into more
than 60 days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
SECTION 7. Contribution.
If the indemnification provided for in Section 6 hereof is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then, in lieu of indemnifying such indemnified party, each indemnifying
party shall contribute to the aggregate amount of such losses, liabilities,
claims, damages and expenses incurred by such indemnified party, as incurred,
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Fund or the Investment Adviser on the one hand and the
Underwriters on the other hand from the offering of the Securities pursuant to
this Agreement or (ii) if the allocation provided by clause (i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Fund and the Investment Adviser on the one hand and of the Underwriters on
the other hand in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Fund and the Investment Adviser
on the one hand and the Underwriters on the other hand in connection with the
offering of the Securities pursuant to this Agreement shall be deemed to be in
the same respective proportions as the total net proceeds from the offering of
the Securities pursuant to this Agreement (before deducting expenses) received
by the Fund and the total underwriting discount received by the Underwriters
(whether from the Fund or otherwise), in each case as set forth on the cover of
the Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the Securities as
set forth on such cover.
17
The relative fault of the Fund and the Investment Adviser on the one
hand and the Underwriters on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Fund or the Investment Adviser or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Fund, the Investment Adviser and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director and shareholder of the Fund and each director of the Investment
Adviser, respectively, each officer of the Fund who signed the Registration
Statement, and each person, if any, who controls the Fund or the Investment
Adviser, within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Fund and the
Investment Adviser, respectively. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the number of
Initial Securities set forth opposite their respective names in Schedule A
hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery.
All representations, warranties and covenants contained in this
Agreement or in certificates of officers of the Fund or the Investment Adviser
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Fund or the Investment Adviser,
and shall survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Fund, at any time at or prior to Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund or the Investment
Adviser, whether or not arising in the ordinary course of business, or (ii) if
there has occurred any material adverse change in the financial markets in the
United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or
18
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Representatives,
impracticable or inadvisable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in the Common Shares of the
Fund has been suspended or materially limited by the Commission or the NYSE, or
if trading generally on the American Stock Exchange or the NYSE or in the Nasdaq
National Market has been suspended or materially limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the
Commission, the NASD or any other governmental authority, or a material
disruption has occurred in commercial banking or securities settlement or
clearance services in the United States, or (iv) if a banking moratorium has
been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7, 8 and 13 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at Closing Time or a Date
of Delivery to purchase the Securities which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), the Representatives
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to any
Date of Delivery which occurs after the Closing Time, the obligation of the
Underwriters to purchase and of the Fund to sell the Option Securities to be
purchased and sold on such Date of Delivery shall terminate without liability on
the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Fund to sell the relevant Option Securities, as
the case may be, either the Representatives or the Fund shall have the right to
postpone Closing Time or the relevant Date of Delivery, as the case may be, for
a period not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
As used herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10.
SECTION 11. Tax Disclosure.
Notwithstanding any other provision of this Agreement, from the
commencement of discussions with respect to the transactions contemplated
hereby, the Fund and the Investment Adviser (and each employee, representative
or other agent of the Fund) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure (as such terms are
used in Sections 6011, 6111 and 6112 of the U.S. Code and the Treasury
Regulations promulgated thereunder) of the transactions
19
contemplated by this Agreement and all materials of any kind (including opinions
or other tax analyses) that are provided relating to such tax treatment and tax
structure.
SECTION 12. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representatives, ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, attention of Equity Capital Markets; and notices to the Fund or the
Investment Adviser shall be directed, as appropriate, to the office of ▇▇▇▇▇
▇▇▇▇▇ Management, The ▇▇▇▇▇ ▇▇▇▇▇ Building, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ Marius, Esq.
SECTION 13. Parties.
This Agreement shall each inure to the benefit of and be binding upon
the Underwriters, the Fund, the Investment Adviser and their respective partners
and successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Fund, the Investment Adviser and their respective successors
and the controlling persons and officers, trustees, shareholders and directors
referred to in Sections 6 and 7 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
Underwriters, the Fund, the Investment Adviser and their respective partners and
successors, and said controlling persons and officers, shareholders and trustees
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED IN SAID STATE. UNLESS OTHERWISE EXPLICITLY PROVIDED, SPECIFIED TIMES
OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. DISCLAIMER OF LIABILITY OF TRUSTEES AND BENEFICIARIES.
A copy of the Agreement and Declaration of Trust of each of the Fund
and the Investment Adviser is on file with the Secretary of State of The
Commonwealth of Massachusetts, and notice hereby is given that this Purchase
Agreement is executed on behalf of the Fund and the Investment Adviser,
respectively, by an officer or trustee of the Fund or the Investment Adviser, as
the case may be, in his or her capacity as an officer or trustee of the Fund or
the Investment Adviser, as the case may be, and not individually and that the
obligations under or arising out of this Purchase Agreement are not binding upon
any of the trustees, officers or shareholders individually but are binding only
upon the assets and properties of the Fund or the Investment Adviser, as the
case may be.
SECTION 16. Effect of Headings.
The Article and Section headings herein are for convenience only and
shall not affect the construction hereof.
[signatures on following page]
20
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriters, the Fund and the Investment Adviser in accordance with its
terms.
Very truly yours,
▇▇▇▇▇ ▇▇▇▇▇ Short Duration Diversified Income
Fund
By: _________________________________________
Name:
Title:
▇▇▇▇▇ ▇▇▇▇▇ Management
By: _________________________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
[other co-managers]
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: _________________________________
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
21
SCHEDULE A
Number of
Name of Underwriter Initial Securities
------------------- ------------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated.............
[other underwriters]
Total...........................
Sch A-1
SCHEDULE B
▇▇▇▇▇ ▇▇▇▇▇ Short Duration Diversified Income Fund
Common Shares of Beneficial Interest
($0.01 Par Value)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $[20.00].
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $[19.10], being an amount equal to the initial
public offering price set forth above less $[.90] per share; provided that the
purchase price per share for any Option Securities purchased upon the exercise
of the overallotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Fund
and payable on the Initial Securities but not payable on the Option Securities.
Sch B-1
Exhibit A
FORM OF OPINION OF FUND'S AND INVESTMENT ADVISER'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(A) With respect to the Fund:
(i) The Fund has been duly organized and is validly existing
as a business trust in good standing under the laws of the State of
Massachusetts.
(ii) The Fund has power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the
Purchase Agreement.
(iii) The Fund is duly qualified as a foreign business trust
to transact business and is in good standing in each other jurisdiction
in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.
(iv) To the best of our knowledge, the Fund does not have any
subsidiaries.
(v) The authorized, issued and outstanding shares of
beneficial interest of the Fund are as set forth in the Prospectus
under the caption "Description of Capital Structure" (except for
subsequent issuances, if any, pursuant to the Purchase Agreement); all
issued and outstanding shares of beneficial interest of the Fund have
been duly authorized and validly issued and are fully paid and
non-assessable and have been offered and sold or exchanged by the Fund
in compliance with all applicable laws (including, without limitation,
federal and state securities laws); the Common Shares conform as to
legal matters to all statements relating thereto contained in the
Prospectus and such description conforms to the rights set forth in the
instruments defining the same; and none of the outstanding shares of
beneficial interest of the Fund was issued in violation of the
preemptive or other similar rights of any securityholder of the Fund.
(vi) The Securities to be purchased by the Underwriters from
the Fund have been duly authorized for issuance and sale to the
Underwriters pursuant to the Purchase Agreement and, when issued and
delivered by the Fund pursuant to the Purchase Agreement against
payment of the consideration set forth in the Purchase Agreement, will
be validly issued and fully paid and non-assessable and no holder of
the Securities is or will be subject to personal liability by reason of
being such a holder.
(vii) The issuance of the Securities is not subject to
preemptive or other similar rights of any securityholder of the Fund.
(viii) The Purchase Agreement has been duly authorized,
executed and delivered by the Fund.
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared 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 the best of our knowledge, no stop order
suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the 1933 Act, and,
to the best of our knowledge, no order of suspension or revocation of
registration
A-1
pursuant to Section 8(e) of the 1940 Act has been issued, and no
proceedings for any such purpose have been instituted or are pending or
threatened by the Commission.
(x) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the Prospectus and each amendment or
supplement to the Registration Statement and Prospectus as of their
respective effective or issue dates (other than the financial
statements and supporting schedules included therein or omitted
therefrom, as to which we need express no opinion), and the
notification on Form N-8A complied as to form in all material respects
with the requirements of the 1933 Act, the 1940 Act and the Rules and
Regulations.
(xi) If Rule 434 has been relied upon, the Prospectus was not
"materially different," as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time it became
effective.
(xii) The form of certificate used to evidence the Common
Shares complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the declaration of
trust and by-laws of the Fund and the requirements of the NYSE.
(xiii) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to
which the Fund is a party, or to which the property of the Fund is
subject, before or brought by any court or governmental agency or body,
domestic or foreign, which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets of the Fund or
the consummation of the transactions contemplated in the Purchase
Agreement or the performance by the Fund of its obligations thereunder.
(xiv) The information in the Prospectus under "Description of
Capital Structure" and "Federal Income Tax Matters" and in the
Registration Statement under Item 29 (Indemnification), to the extent
that it constitutes matters of law, summaries of legal matters, the
Fund's declaration of trust and by-laws or legal proceedings, or legal
conclusions, has been reviewed by us and is correct in all material
respects.
(xv) Each of the Advisory Agreement, the Administration
Agreement, the Custodian Agreement, the Transfer Agency Agreement, the
Purchase Agreement and the Additional Compensation Agreement[s] [and
other material agreements] comply in all material respects with all
applicable provisions of the 1940 Act, the Advisers Act, the Rules and
Regulations and the Advisers Act Rules and Regulations.
(xvi) The Fund is duly registered with the Commission under
the 1940 Act as a closed-end, diversified management investment
company; and, to the best of our knowledge, no order of suspension or
revocation of such registration has been issued or proceedings therefor
initiated or threatened by the Commission.
(xvii) To the best of our knowledge, no person is serving as
an officer, director or investment adviser of the Fund except in
accordance with the 1940 Act and the Rules and Regulations and the
Investment Advisers Act and the Advisers Act Rules and Regulations.
Except as disclosed in the Registration Statement and Prospectus (or
any amendment or supplement to either of them), to the best of our
knowledge, 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 an Underwriter.
(xviii) There are no statutes or regulations that are required
to be described in the Prospectus that are not described as required.
A-2
(xix) All descriptions in the Registration Statement of
contracts and other documents to which the Fund is a party are accurate
in all material respects. To the best of our knowledge, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits thereto other
than those described or referred to therein or filed or incorporated by
reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.
(xx) To the best of our knowledge, the Fund is not in
violation of its declaration of trust or by-laws and no default by the
Fund exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration
Statement or the Prospectus or filed or incorporated by reference as an
exhibit to the Registration Statement.
(xxi) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency (other than under the 1933 Act, the
1934 Act, the 1940 Act and the Rules and Regulations, which have been
obtained, or as may be required under the securities or blue sky laws
of the various states, as to which we need express no opinion) is
necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement or for the offering,
issuance or sale of the Securities or the consummation of the
transactions contemplated by this Agreement.
(xxii) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the
Purchase Agreement and in the Registration Statement (including the
issuance and sale of the Securities and the use of the proceeds from
the sale of the Securities as described in the Prospectus under the
caption "Use of Proceeds") and compliance by the Fund with its
obligations under the Purchase Agreement do not and will not, whether
with or without the giving of notice or lapse of time or both, conflict
with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(xii) of the Purchase Agreement) under or result
in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Fund pursuant to any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any
other agreement or instrument, known to us, to which the Fund is a
party or by which it or any of them may be bound, or to which any of
the property or assets of the Fund is subject, nor will such action
result in any violation of the provisions of the charter or by-laws of
the Fund, or any applicable law, statute, rule, regulation, judgment,
order, writ or decree, known to us, of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Fund or any of its properties, assets or operations.
(xxiii) The Purchase Agreement, the Advisory Agreement, the
Administration Agreement, the Custodian Agreement and the Transfer
Agency Agreement [and other material agreements] have each been duly
authorized by all requisite action on the part of the Fund, executed
and delivered by the Fund, as of the dates noted therein. Assuming due
authorization, execution and delivery by the other parties thereto with
respect to the Administration Agreement, the Custodian Agreement and
the Transfer Agency Agreement, each of the Advisory Agreement, the
Administration Agreement, the Custodian Agreement and the Transfer
Agency Agreement constitutes a valid and binding agreement of the Fund,
enforceable in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing.
A-3
(B) With respect to the Investment Adviser:
(i) The Investment Adviser has been duly organized and is
validly existing as a business trust in good standing under the laws of
the State of Massachusetts.
(ii) The Investment Adviser has power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its
obligations under the Purchase Agreement.
(iii) The Investment Adviser is duly qualified as a foreign
business trust to transact business and is in good standing in each
other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not result in a
Material Adverse Effect.
(iv) The Investment Adviser is duly registered with the
Commission as an investment adviser under the Advisers Act and is not
prohibited by the Advisers Act, the Advisers Act Rules and Regulations,
the 1940 Act or the Rules and Regulations from acting under the
Advisory Agreement for the Fund as contemplated by the Prospectus.
(v) The Purchase Agreement, the Advisory Agreement, the
Administration Agreement and the Additional Compensation Agreement[s]
and [other material agreements] have been duly authorized, executed and
delivered by the Investment Adviser, and the Advisory Agreement, the
Administration Agreement and the Additional Compensation Agreement[s]
each constitute a valid and binding obligation of the Investment
Adviser, enforceable in accordance with their terms, except as affected
by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and general equitable principles (whether considered
in a proceeding in equity or at law).
(vi) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to
which the Investment Adviser is a party, or to which the property of
the Investment Adviser is subject, before or brought by any court or
governmental agency or body, domestic or foreign, which might
reasonably be expected to result in any material adverse change in the
condition, financial or otherwise, in the earnings, business affairs or
business prospects of the Investment Adviser, materially and adversely
affect the properties or assets of the Investment Adviser or materially
impair or adversely affect the ability of the Investment Adviser to
function as an investment adviser or perform its obligations under the
Advisory Agreement, the Administration Agreement and the Additional
Compensation Agreement[s] or which is required to be disclosed in the
Registration Statement or the Prospectus.
(vii) To the best of our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto other than
those described or referred to therein or filed or incorporated by
reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.
(viii) To the best of our knowledge, the Investment Adviser is
not in violation of its declaration of trust, by-laws or other
organizational documents and no default by the Investment Adviser
exists in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument
that is described or referred to in the Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.
A-4
(ix) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign (other than under
the 1933 Act, the 1940 Act and the Rules and Regulations, which have
been obtained, or as may be required under the securities or blue sky
laws of the various states, as to which we need express no opinion) is
necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement.
(x) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the
Purchase Agreement and in the Registration Statement and compliance by
the Investment Adviser with its obligations under the Purchase
Agreement do not and will not, whether with or without the giving of
notice or lapse of time or both, conflict with or constitute a breach
of, or default or Repayment Event (as defined in Section 1(a)(xii) of
the Purchase Agreement) under or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Investment Adviser pursuant to any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or any other agreement
or instrument, known to us, to which the Investment Adviser is a party
or by which it or any of them may be bound, or to which any of the
property or assets of the Investment Adviser is subject (except for
such conflicts, breaches or defaults or liens, charges or encumbrances
that would not have a Material Adverse Effect), nor will such action
result in any violation of the provisions of the charter or by-laws of
the Investment Adviser, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Investment Adviser or any of its
properties, assets or operations.
In addition, we have participated in the preparation of the
Registration Statement and the Prospectus and participated in discussions with
certain officers, trustees and employees of the Fund, representatives of [ ],
the independent registered public accounting firm who examined the statement of
assets and liabilities of the Fund included or incorporated by reference in the
Registration Statement and the Prospectus, and you and your representatives and
we have reviewed certain Fund records and documents. While we have not
independently verified and are not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the information
contained in the Registration Statement and the Prospectus, except to the extent
necessary to enable us to give the opinions with respect to the Fund in
paragraphs (A)(v), (xiv) and (xix), on the basis of such participation and
review, nothing has come to our attention that would lead us to believe that the
Registration Statement (except for financial statements, supporting schedules
and other financial data included therein or omitted therefrom, supporting
schedules or other financial data, as to which we do not express any belief), at
the time such Registration Statement 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 (except for financial statements, supporting schedules and
other financial data included therein or omitted therefrom, supporting schedules
or other financial data, as to which we do not express any belief), at the time
the Prospectus was issued, or at the Closing Time, included or includes an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
A-5
January 14, 2005
PFPC Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: President
Re: ▇▇▇▇▇ ▇▇▇▇▇ Short Duration Diversified Income Fund
Dear Sirs:
Please be advised that, pursuant to Trustee action taken on January 14, 2005,
your firm was appointed transfer and dividend disbursing agent for ▇▇▇▇▇ ▇▇▇▇▇
Short Duration Diversified Income Fund. Accordingly, pursuant to Sections 10(e)
and 12(a) of that certain Amended and Restated Transfer Agency and Services
Agreement dated as of June 16, 2003, by and between PFPC Inc. and each of the
various ▇▇▇▇▇ ▇▇▇▇▇ Funds listed on Exhibit 1 thereto (the "Agreement"), you are
hereby notified that ▇▇▇▇▇ ▇▇▇▇▇ Short Duration Diversified Income Fund has been
added as a party to the Agreement and that Exhibit 1 and Schedule B to the
Agreement (as attached hereto) are hereby restated in their entirety.
▇▇▇▇▇ ▇▇▇▇▇ Short Duration Diversified Income Fund
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
President
Accepted and Acknowledged:
PFPC Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Authorized Officer
EXHIBIT 1
LIST OF FUNDS
RESTATED JANUARY 14, 2005
▇▇▇▇▇ ▇▇▇▇▇ Municipal Income Trust
▇▇▇▇▇ ▇▇▇▇▇ California Municipal Income Trust
▇▇▇▇▇ ▇▇▇▇▇ Florida Municipal Income Trust
▇▇▇▇▇ ▇▇▇▇▇ Massachusetts Municipal Income Trust
▇▇▇▇▇ ▇▇▇▇▇ Michigan Municipal Income Trust
▇▇▇▇▇ ▇▇▇▇▇ New Jersey Municipal Income Trust
▇▇▇▇▇ ▇▇▇▇▇ New York Municipal Income Trust
▇▇▇▇▇ ▇▇▇▇▇ Ohio Municipal Income Trust
▇▇▇▇▇ ▇▇▇▇▇ Pennsylvania Municipal Income Trust
▇▇▇▇▇ ▇▇▇▇▇ Insured Municipal Bond Fund
▇▇▇▇▇ ▇▇▇▇▇ Insured California Municipal Bond Fund
▇▇▇▇▇ ▇▇▇▇▇ Insured New York Municipal Bond Fund
▇▇▇▇▇ ▇▇▇▇▇ Insured Municipal Bond Fund II
▇▇▇▇▇ ▇▇▇▇▇ Insured California Municipal Bond Fund II
▇▇▇▇▇ ▇▇▇▇▇ Insured Florida Municipal Bond Fund
▇▇▇▇▇ ▇▇▇▇▇ Insured Massachusetts Municipal Bond Fund
▇▇▇▇▇ ▇▇▇▇▇ Insured Michigan Municipal Bond Fund
▇▇▇▇▇ ▇▇▇▇▇ Insured New Jersey Municipal Bond Fund
▇▇▇▇▇ ▇▇▇▇▇ Insured New York Municipal Bond Fund II
▇▇▇▇▇ ▇▇▇▇▇ Insured Ohio Municipal Bond Fund
▇▇▇▇▇ ▇▇▇▇▇ Pennsylvania Municipal Bond Fund
▇▇▇▇▇ ▇▇▇▇▇ Limited Duration Income Fund
▇▇▇▇▇ ▇▇▇▇▇ Tax-Advantaged Dividend Income Fund
▇▇▇▇▇ ▇▇▇▇▇ Senior Floating-Rate Trust
▇▇▇▇▇ ▇▇▇▇▇ Tax-Advantaged Global Dividend Income Fund
▇▇▇▇▇ ▇▇▇▇▇ Tax-Advantaged Global Dividend Opportunities Fund
▇▇▇▇▇ ▇▇▇▇▇ Floating-Rate Income Trust
▇▇▇▇▇ ▇▇▇▇▇ Enhanced Equity Income Fund
▇▇▇▇▇ ▇▇▇▇▇ Enhanced Equity Income Fund II
▇▇▇▇▇ ▇▇▇▇▇ Short Duration Diversified Income Fund
SCHEDULE B
RESTATED JANUARY 14, 2005
FEE SCHEDULE
1. Initial Public Offering Fees
IPO Project Administration Fee: $3,000 per Fund
IPO Project Administration Fee covers:
Issuance of up to 1,000 certificates - Issuance of
certificates in excess of 1,000 to be billed at $2.00 per
certificate
Administration coordination with IPO client, underwriter and
legal representatives
Attendance at closing (out of pocket expenses associated with
such attendance will be billed as incurred)
Set-up, testing and implementation of electronic settlement
and delivery of shares through The Depository Trust Company
2. Over-allotment Fee: $1,000 per Fund
Applies in the event that the underwriters elect to exercise
an over-allotment option which requires a second closing
3. Standard Service Fee:
(a) The following standard service fees shall apply with respect
to the shares offered by: ▇▇▇▇▇ ▇▇▇▇▇ Insured Municipal Bond
Fund;
▇▇▇▇▇ ▇▇▇▇▇ Insured California Municipal Bond Fund;
▇▇▇▇▇ ▇▇▇▇▇ Insured New York Municipal Bond Fund;
▇▇▇▇▇ ▇▇▇▇▇ Limited Duration Income Fund;
▇▇▇▇▇ ▇▇▇▇▇ Tax-Advantaged Dividend Income Fund;
▇▇▇▇▇ ▇▇▇▇▇ Senior Floating-Rate Trust;
▇▇▇▇▇ ▇▇▇▇▇ Tax-Advantaged Global Dividend Income Fund;
▇▇▇▇▇ ▇▇▇▇▇ Tax-Advantaged Global Dividend Opportunities
Fund;
▇▇▇▇▇ ▇▇▇▇▇ Floating-Rate Income Trust;
▇▇▇▇▇ ▇▇▇▇▇ Enhanced Equity Income Fund; and
▇▇▇▇▇ ▇▇▇▇▇ Enhanced Equity Income Fund II
▇▇▇▇▇ ▇▇▇▇▇ Short Duration Diversified Income Fund
Annual Service Fee: $15.00 Per Account
Monthly Minimum Fee: $5,000.00
(b) The following standard service fees shall apply with respect
to the shares offered by: ▇▇▇▇▇ ▇▇▇▇▇ Municipal Income Trust;
▇▇▇▇▇ ▇▇▇▇▇ California Municipal Income Trust;
▇▇▇▇▇ ▇▇▇▇▇ Florida Municipal Income Trust;
▇▇▇▇▇ ▇▇▇▇▇ Massachusetts Municipal Income Trust;
▇▇▇▇▇ ▇▇▇▇▇ Michigan Municipal Income Trust;
▇▇▇▇▇ ▇▇▇▇▇ New Jersey Municipal Income Trust;
▇▇▇▇▇ ▇▇▇▇▇ New York Municipal Income Trust;
▇▇▇▇▇ ▇▇▇▇▇ Ohio Municipal Income Trust; and
▇▇▇▇▇ ▇▇▇▇▇ Pennsylvania Municipal Income Trust.
Each Fund shall pay 9 basis points annually on the average
daily net assets, paid monthly, in arrears, with respect to
the shares offered by the Fund.
(c) The following standard service fees shall apply with respect
to the shares offered by: ▇▇▇▇▇ ▇▇▇▇▇ Insured Municipal Bond
Fund II;
▇▇▇▇▇ ▇▇▇▇▇ Insured California Municipal Bond Fund II;
▇▇▇▇▇ ▇▇▇▇▇ Insured Florida Municipal Bond Fund;
▇▇▇▇▇ ▇▇▇▇▇ Insured Massachusetts Municipal Bond Fund;
▇▇▇▇▇ ▇▇▇▇▇ Insured Michigan Municipal Bond Fund;
▇▇▇▇▇ ▇▇▇▇▇ Insured New Jersey Municipal Bond Fund;
▇▇▇▇▇ ▇▇▇▇▇ Insured New York Municipal Bond Fund II;
▇▇▇▇▇ ▇▇▇▇▇ Insured Ohio Municipal Bond Fund; and
▇▇▇▇▇ ▇▇▇▇▇ Insured Pennsylvania Municipal Bond Fund.
Each Fund shall pay 7.5 basis points annually on the average daily net
assets, paid monthly, in arrears, with respect to the shares offered by
the Fund.
After the one year anniversary of the effective date of this Agreement, PFPC may
adjust the above fees once per calendar year, upon thirty (30) days prior
written notice in an amount not to exceed the cumulative percentage increase in
the Consumer Price Index for All Urban Consumers (CPI-U) U.S. City Average, All
items (unadjusted) - (1982-84=100), published by the U.S. Department of Labor
since the last such adjustment in the Fund's monthly fees (or the Effective Date
absent a prior such adjustment).