Auction Rate Cumulative Preferred Shares
PILGRIM PRIME RATE TRUST
_________ Shares, Series M
_________ Shares, Series T
_________ Shares, Series W
_________ Shares, Series Th
_________ Shares, Series F
Liquidation Preference $25,000 Per Share
FORM OF UNDERWRITING AGREEMENT
________ __, 2000
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
PAINEWEBBER INCORPORATED
▇▇▇▇▇▇ BROTHERS INC.
GRUNTAL & CO., L.L.C.
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Pilgrim Prime Rate Trust, a Massachusetts business trust (the "Trust"),
proposes, upon the terms and conditions set forth herein, to issue and sell an
aggregate of ______ shares of its Auction Rate Cumulative Preferred Shares,
Series M, ______ shares of its Auction Rate Cumulative Preferred Shares, Series
T, ______ shares of its Auction Rate Cumulative Preferred Shares, Series W,
______ shares of its Auction Rate Cumulative Preferred Shares, Series Th and
______ shares of its Auction Rate Cumulative Preferred Shares, Series F, each
with a liquidation preference of $25,000 per share (the shares of Auction Rate
Cumulative Preferred Shares to be sold hereby are referred to herein,
collectively, as the "Shares"). The Shares will be authorized by, and subject to
the terms and conditions of, the Certificate of Designation for Preferred Shares
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of the Trust (the "Certificate") in the form filed as an exhibit to the
Registration Statement referred to in Section 1 of this agreement. The Trust and
its investment adviser, ING Pilgrim Investments, Inc. (the "Adviser"), wish to
confirm as follows their agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., PaineWebber
Incorporated, ▇▇▇▇▇▇ Brothers Inc. and Gruntal & Co., L.L.C. (the
"Underwriters"), in connection with the purchase of the Shares by the
Underwriters.
Collectively, the Amended and Restated Investment Management Agreement
dated as of _____, 2000 between the Trust and the Adviser ("the "Investment
Management Agreement"), the Custodian Agreement dated as of _____ between the
Trust and State Street Bank and Trust - Kansas City, the [Transfer Agency,
Registrar and Dividend Paying Agency Agreement] dated as of _____ between the
Trust and ______ and the Auction Agency Agreement dated as of _____, 2000
between the Trust and Bankers Trust Company are hereinafter referred to as the
"Trust Agreements." This Underwriting Agreement is hereinafter referred to as
the "Agreement."
1. REGISTRATION STATEMENT AND PROSPECTUS. The Trust has prepared in
conformity with the provisions of the Securities Act of 1933, as amended (the
"1933 Act"), the Investment Company Act of 1940, as amended (the "1940 Act"),
and the rules and regulations of the Securities and Exchange Commission (the
"Commission") promulgated under the 1933 Act (the "1933 Act Rules and
Regulations") and the 1940 Act (the "1940 Act Rules and Regulations" and,
together with the 1933 Act Rules and Regulations, the "Rules and Regulations") a
registration statement on Form N-2, as amended by _____________ (File Nos.
333-44918 and 811-05410), under the 1933 Act and the 1940 Act (the "registration
statement"), including a prospectus relating to the Shares, and has filed the
registration statement and prospectus in accordance with the 1933 Act and the
1940 Act. The Trust also has filed a notification of registration of the Trust
as an investment company under the 1940 Act on Form N-8A (the "1940 Act
Notification"). The term "Registration Statement" as used in this Agreement
means the registration statement (including all financial schedules and
exhibits), as amended at the time it becomes effective under the 1933 Act or, if
the registration statement became effective under the 1933 Act prior to the
execution of this Agreement, as amended or supplemented at the time it became
effective, prior to the execution of this Agreement. If it is contemplated, at
the time this Agreement is executed, that a post-effective amendment to the
registration statement will be filed under the 1933 Act and must be declared
effective before the offering of the Shares may commence, the term "Registration
Statement" as used in this Agreement means the registration statement as amended
by said post-effective amendment. If the Trust has filed an abbreviated
registration statement to register an additional amount of Shares pursuant to
Rule 462(b) under the 1933 Act (the "Rule 462 Registration Statement"), then any
reference herein to the term "Registration Statement" shall include such Rule
462 Registration Statement. The term "Prospectus" as used in this Agreement
means the prospectus and statement of additional information in the forms
included in the Registration Statement or, if the prospectus and statement of
additional information included in the Registration Statement omit information
in reliance on Rule 430A under the 1933 Act Rules and Regulations and such
information is included in a prospectus and statement of additional information
filed with the Commission pursuant to Rule 497(h) under the 1933 Act, the term
"Prospectus" as used in this Agreement means the prospectus and statement of
additional information in the forms included in the Registration Statement as
supplemented by the addition of the information contained in the prospectus
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filed with the Commission pursuant to Rule 497(h). The term "Prepricing
Prospectus" as used in this Agreement means the prospectus and statement of
additional information subject to completion in the forms included in the
registration statement at the time of filing of amendment no. ___ to the
registration statement with the Commission on ________ __, 2000, and as such
prospectus and statement of additional information shall have been amended from
time to time prior to the date of the Prospectus, together with any other
prospectus and statement of additional information relating to the Trust other
than the Prospectus approved in writing by or directly or indirectly prepared by
the Trust or the Adviser; it being understood that the definition of Prepricing
Prospectus above shall not include any Prepricing Prospectus prepared by the
Underwriters unless approved in writing by the Trust or Adviser. The terms
"Registration Statement," "Prospectus" and "Prepricing Prospectus" shall also
include any financial statements incorporated by reference therein.
The Trust has furnished ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. with copies of such
registration statement, each amendment to such registration statement filed with
the Commission and each Prepricing Prospectus, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. has
provided the same to the other Underwriters.
2. AGREEMENTS TO SELL AND PURCHASE. The Trust hereby agrees, subject to all
the terms and conditions set forth herein, to issue and sell to the Underwriters
and, upon the basis of the representations, warranties and agreements of the
Trust and the Adviser herein contained and subject to all the terms and
conditions set forth herein, the Underwriters agree to purchase from the Trust,
at a purchase price of $_______ per Share, the number of shares of each series
of Auction Rate Cumulative Preferred Shares set forth opposite the name of each
Underwriter in Schedule I hereto.
3. TERMS OF PUBLIC OFFERING. The Trust and the Adviser have been advised by
the Underwriters that they propose to make a public offering of the Shares as
soon after the Registration Statement and this Agreement have become effective
as in the Underwriters' judgment is advisable and initially to offer the Shares
upon the terms set forth in the Prospectus.
4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Delivery to the
Underwriters of and payment for the Shares shall be made at the office of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or through
the facilities of The Depository Trust Company or another mutually agreeable
facility, at 9:30 A.M., New York City time, on ________ __, 2000 (the "Closing
Date"). The place of closing for the Shares and the Closing Date may be varied
by agreement between you and the Trust.
Certificates for the Shares shall be registered in such names and in such
denominations as the Underwriters shall request prior to 9:30 A.M., New York
City time, on the second business day preceding the Closing Date. Such
certificates shall be made available to the Underwriters in New York City for
inspection not later than 9:30 A.M., New York City time, on the business day
next preceding the Closing Date. The certificates evidencing the Shares shall be
delivered to the Underwriters on the Closing Date, through the facilities of The
Depository Trust Company or another mutually agreeable facility, against payment
of the purchase price therefor in immediately available funds.
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5. AGREEMENTS OF THE TRUST AND THE ADVISER. The Trust and the Adviser,
jointly and severally, agree with the Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective under the 1933 Act before the offering of the Shares
may commence, the Trust will endeavor to cause the Registration Statement or
such post-effective amendment to become effective under the 1933 Act as soon as
possible and will advise the Underwriters promptly and, if requested by the
Underwriters, will confirm such advice in writing when the Registration
Statement or such post-effective amendment has become effective.
(b) The Trust will advise the Underwriters promptly and, if requested by
the Underwriters, will confirm such advice in writing: (i) of any request made
by the Commission for amendment of or a supplement to the Registration
Statement, any Prepricing Prospectus or the Prospectus (or any amendment or
supplement to any of the foregoing) or for additional information, (ii) of the
issuance by the Commission, the National Association of Securities Dealers, Inc.
(the "NASD"), any state securities commission, any national securities exchange,
any arbitrator, any court or any other governmental, regulatory, self-regulatory
or administrative agency or any official of any order suspending the
effectiveness of the Registration Statement, prohibiting or suspending the use
of the Prospectus or any Prepricing Prospectus, or any sales material (as
hereinafter defined), of any notice pursuant to Section 8(e) of the 1940 Act, of
the suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such purposes, (iii)
of receipt by the Trust, the Adviser, any affiliate of the Trust or the Adviser
or any representative or attorney of the Trust or the Adviser of any other
material communication from the Commission, the NASD, any state securities
commission, any national securities exchange, any arbitrator, any court or any
other governmental, regulatory, self-regulatory or administrative agency or any
official relating to the Trust (if such communication relating to the Trust is
received by such person within three years after the date of this Agreement),
the Registration Statement, the 1940 Act Notification, the Prospectus, any
Prepricing Prospectus, any sales material (as herein defined) (or any amendment
or supplement to any of the foregoing) or this Agreement or any of the Trust
Agreements and (iv) within the period of time referred to in paragraph (f)
below, of any material adverse change in the condition (financial or other),
business, prospects, properties, net assets or results of operations of the
Trust or the Adviser or of the happening of any other event which makes any
statement of a material fact made in the Registration Statement or the
Prospectus, or any Prepricing Prospectus or any sales materials (as herein
defined) (or any amendment or supplement to any of the foregoing) untrue or
which requires the making of any additions to or changes in the Registration
Statement or the Prospectus, or any Prepricing Prospectus or any sales materials
(as herein defined) (or any amendment or supplement to any of the foregoing) in
order to state a material fact required by the 1933 Act, the 1940 Act or the
Rules and Regulations to be stated therein or necessary in order to make the
statements therein (in the case of the Prospectus, in light of the circumstances
under which they were made), not misleading or of the necessity to amend or
supplement the Registration Statement, the Prospectus, or any Prepricing
Prospectus or any sales material (as herein defined) (or any amendment or
supplement to any of the foregoing) to comply with the 1933 Act, the 1940 Act,
the Rules and Regulations or any other law or order of any court or regulatory
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body. If at any time the Commission, the NASD, any state securities commission,
any national securities exchange, any arbitrator, any court or any other
governmental, regulatory, self-regulatory or administrative agency or any
official shall issue any order suspending the effectiveness of the Registration
Statement, prohibiting or suspending the use of the Prospectus or any sales
material (as herein defined) (or any amendment or supplement to any of the
foregoing) or suspending the qualification of the Shares for offering or sale in
any jurisdiction, the Trust will make every reasonable effort to obtain the
withdrawal of such order at the earliest possible time.
(c) The Trust will furnish to you, without charge, three signed copies of
the Registration Statement as originally filed with the Commission and of each
amendment thereto, including financial statements and all exhibits thereto, and
will also furnish to you, without charge, such number of conformed copies of the
Registration Statement as originally filed and of each amendment thereto, but
without exhibits, as you may reasonably request.
(d) The Trust will not (i) file any amendment to the Registration Statement
or make any amendment or supplement to the Prospectus, or any sales material (as
herein defined), of which you shall not previously have been advised or to which
you shall reasonably object after being so advised or (ii) so long as, in the
opinion of counsel for the Underwriters, a Prospectus is required by the 1933
Act to be delivered in connection with sales by the Underwriters or any dealer,
file any information, documents or reports pursuant to the Securities Exchange
Act of 1934, as amended (the "1934 Act"), without delivering a copy of such
information, documents or reports to you prior to or concurrently with such
filing.
(e) Prior to the execution and delivery of this Agreement, the Trust has
delivered to you, without charge, in such quantities as you have requested,
copies of each form of the Prepricing Prospectus. The Trust consents to the use,
in accordance with the provisions of the 1933 Act and with the state securities
or blue sky laws of the jurisdictions in which the Shares are offered by the
Underwriters and by dealers, prior to the date of the Prospectus, of each
Prepricing Prospectus so furnished by the Trust.
(f) As soon after the execution and delivery of this Agreement as possible
and thereafter from time to time for such period as in the opinion of counsel
for the Underwriters a prospectus is required by the 1933 Act to be delivered in
connection with sales by the Underwriters or any dealer, the Trust will
expeditiously deliver to the Underwriters and each dealer, without charge, as
many copies of the Prospectus (and of any amendment or supplement thereto) as
the Underwriters may reasonably request. The Trust consents to the use of the
Prospectus (and of any amendment or supplement thereto) in accordance with the
provisions of the 1933 Act and with the state securities or blue sky laws of the
jurisdictions in which the Shares are offered by the Underwriters and by all
dealers to whom Shares may be sold, both in connection with the offering and
sale of the Shares and for such period of time thereafter as the Prospectus is
required by the 1933 Act to be delivered in connection with sales by the
Underwriters or any dealer. If during such period of time any event shall occur
that in the judgment of the Trust or in the opinion of counsel for the
Underwriters is required to be set forth in the Registration Statement or the
Prospectus (as then amended or supplemented) or should be set forth therein in
order to make the statements therein (in the case of the Prospectus, in the
light of the circumstances under which they were made) not misleading, or if it
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is necessary to supplement or amend the Registration Statement or the Prospectus
to comply with the 1933 Act, the 1940 Act, the Rules and Regulations or any
other federal law, rule or regulation, or any state securities or blue sky
disclosure laws, rules or regulations, the Trust will forthwith prepare and,
subject to the provisions of paragraph (d) above, promptly file with the
Commission an appropriate supplement or amendment thereto, and will
expeditiously furnish to the Underwriters and dealers, without charge, a
reasonable number of copies thereof. In the event that the Trust and the
Underwriters agree that the Registration Statement or the Prospectus should be
amended or supplemented, the Trust, if requested by the Underwriters, will
promptly issue a press release announcing or disclosing the matters to be
covered by the proposed amendment or supplement.
(g) The Trust will make generally available to its security holders an
earnings statement, which need not be audited, covering a twelve-month period
ending not later than 15 months after the effective date of the Registration
Statement as soon as practicable after the end of such period, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule
158 of the 1933 Act Rules and Regulations.
(h) During the period of five years after the date of this Agreement, the
Trust will furnish to you (i) as soon as available, a copy of each report of the
Trust mailed to stockholders or filed with the Commission or furnished to the
New York Stock Exchange (the "NYSE") other than reports on Form N-SAR, and (ii)
from time to time such other information concerning the Trust as the
Underwriters may reasonably request.
(i) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than by notice given by
the Underwriters terminating this Agreement pursuant to Section 12 hereof) or if
this Agreement shall be terminated by the Underwriters because of any failure or
refusal on the part of the Trust or the Adviser to comply with the terms or
fulfill any of the conditions of this Agreement, the Trust and the Adviser,
jointly and severally, agree to reimburse the Underwriters for all out-of-pocket
expenses (including reasonable fees and expenses of counsel for the
Underwriters) incurred by the Underwriters in connection herewith.
(j) The Trust will apply the net proceeds from the sale of the Shares
substantially in accordance with the description set forth in the Prospectus and
in such a manner as to comply with the investment objectives, policies and
restrictions of the Trust as described in the Prospectus.
(k) The Trust will timely file the Prospectus with the Commission pursuant
to Rule 497(c) or Rule 497(h) of the 1933 Act Rules and Regulations, whichever
is applicable or, if applicable, will timely file the certification permitted by
Rule 497(j) of the 1933 Act Rules and Regulations and will advise the
Underwriters of the time and manner of such filing.
(l) Except as provided in this Agreement, the Trust will not sell, contract
to sell, or otherwise dispose of any senior securities (as defined in the 1940
Act) (other than senior securities sold in an underwriting lead-managed by
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.) of the Trust, or grant any options or warrants to
purchase senior securities of the Trust, for a period of 180 days after the date
of the Prospectus, without the prior written consent of the Underwriters.
7
(m) Except as stated in this Agreement and in the Prepricing Prospectus and
the Prospectus, neither the Trust nor the Adviser has taken, nor will it take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of any
securities issued by the Trust to facilitate the sale or resale of the Shares.
(n) The Trust will use commercially reasonable efforts to cause the Shares,
prior to the Closing Date, to be assigned a rating of `aaa' by ▇▇▇▇▇'▇ Investors
Service, Inc. ("Moody's") and `AAA' by Standard & Poor's, a division of
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. ("S&P" and, together with Moody's, the "Rating
Agencies").
(o) The Trust and the Adviser will use commercially reasonable efforts to
perform all of the agreements required of them and discharge all conditions to
closing as set forth in this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF THE TRUST AND THE ADVISER. The Trust
and the Adviser, jointly and severally, represent and warrant to the
Underwriters that:
(a) Each Prepricing Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement thereto,
or filed pursuant to Rule 497 of the 1933 Act Rules and Regulations, complied
when so filed in all material respects with the provisions of the 1933 Act, the
1940 Act and the Rules and Regulations. The Commission has not issued any order
preventing or suspending the use of any Prepricing Prospectus.
(b) The registration statement in the form in which it became or becomes
effective and also in such form as it may be when any post-effective amendment
thereto shall become effective and the Prospectus and any supplement or
amendment thereto when filed with the Commission under Rule 497 of the 1933 Act
Rules and Regulations and the 1940 Act Notification when originally filed with
the Commission and any amendment or supplement thereto when filed with the
Commission, complied or will comply in all material respects with the provisions
of the 1933 Act, the 1940 Act and the Rules and Regulations and did not or will
not at any such times contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading, except that this representation and
warranty does not apply to statements in or omissions from the registration
statement or the Prospectus made in reliance upon and in conformity with
information relating to the Underwriters furnished to the Trust in writing by or
on behalf of the Underwriters expressly for use therein.
(c) All the outstanding common shares of beneficial interest of the Trust
have been duly authorized and validly issued by the Trust, are fully paid and
nonassessable and are free of any preemptive or similar rights; the Shares have
been duly authorized and, when issued and delivered to the Underwriters against
payment therefor in accordance with the terms hereof, will be validly issued by
8
the Trust, fully paid and nonassessable and free of any preemptive or similar
rights and will conform to the description thereof in the Registration Statement
and the Prospectus (and any amendment or supplement to either of them); and the
capitalization of the Trust conforms to the description thereof in the
Registration Statement and the Prospectus (and any amendment or supplement to
either of them).
(d) The Trust is a business trust duly organized and validly existing under
the laws of the State of Massachusetts with full business trust power and
authority to own, lease and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus (and any amendment
or supplement to either of them), and is duly registered and qualified to
conduct its business and is in good standing in each jurisdiction or place where
the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not have a material adverse effect on the condition (financial or
other), business, prospects, properties, net assets or results of operations of
the Trust; and the Trust has no subsidiaries.
(e) There are no legal or governmental proceedings pending or, to the
knowledge of the Trust, threatened, against the Trust, or to which the Trust or
any of its properties is subject, that are required to be described in the
Registration Statement or the Prospectus (and any amendment or supplement to
either of them) but are not described as required, and there are no agreements,
contracts, indentures, leases or other instruments that are required to be
described in the Registration Statement or the Prospectus (and any amendment or
supplement to either of them) or to be filed as an exhibit to the Registration
Statement that are not described or filed as required by the 1933 Act, the 1940
Act or the Rules and Regulations.
(f) The Trust is not in violation of its Agreement and Declaration of Trust
(the "Declaration"), or bylaws (the "Bylaws"), or other organizational documents
or of any law, ordinance, administrative or governmental rule or regulation
applicable to the Trust or of any decree of the Commission, the NASD, any state
securities commission, any national securities exchange, any arbitrator, any
court or governmental agency, body or official having jurisdiction over the
Trust, or in default in any material respect in the performance of any
obligation, agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any material agreement, indenture, lease or
other instrument to which the Trust is a party or by which it or any of its
properties may be bound.
(g) Neither the issuance and sale of the Shares, the execution, delivery or
performance of this Agreement or any of the Trust Agreements by the Trust, nor
the consummation by the Trust of the transactions contemplated hereby or thereby
(A) requires the Trust to obtain any consent, approval, authorization or other
order of or registration or filing with, the Commission, the NASD, any state
securities commission, any national securities exchange, any arbitrator, any
court, regulatory body, administrative agency or other governmental body, agency
or official (except such as may have been obtained prior to the date hereof and
such as may be required for compliance with the state securities or blue sky
laws of various jurisdictions which have been or will be effected in accordance
with this Agreement) or conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the Declaration, the Bylaws or other
organizational documents of the Trust or (B) conflicts or will conflict with or
9
constitutes or will constitute a breach of, or a default under, any agreement,
indenture, lease or other instrument to which the Trust is a party or by which
it or any of its properties may be bound, or violates or will violate any
statute, law, regulation or judgment, injunction, order or decree applicable to
the Trust or any of its properties, or will result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Trust
pursuant to the terms of any agreement or instrument to which it is a party or
by which it may be bound or to which any of its property or assets is subject.
The Trust is not subject to any order of any court or of any arbitrator,
governmental authority or administrative agency.
(h) The accountants, KPMG LLP, who have certified or shall certify the
financial statements included or incorporated by reference in the Registration
Statement and the Prospectus (or any amendment or supplement to either of them)
have represented to the Trust that they are independent public accountants as
required by the 1933 Act, the 1940 Act and the Rules and Regulations.
(i) The financial statements, together with related schedules and notes,
included or incorporated by reference in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them), present fairly
the financial position, results of operations and changes in financial position
of the Trust on the basis stated or incorporated by reference in the
Registration Statement at the respective dates or for the respective periods to
which they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data included
in the Registration Statement and the Prospectus (and any amendment or
supplement to either of them) are accurately presented and prepared on a basis
consistent with such financial statements and the books and records of the
Trust.
(j) The execution and delivery of, and the performance by the Trust of its
obligations under, this Agreement and the Trust Agreements have been duly and
validly authorized by the Trust, and this Agreement and the Trust Agreements
have been duly executed and delivered by the Trust and constitute the valid and
legally binding agreements of the Trust, enforceable against the Trust in
accordance with their terms, except as rights to indemnity and contribution
hereunder and thereunder may be limited by federal or state securities laws or
principles of public policy and subject to the qualification that the
enforceability of the Trust's obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally and by general
equitable principles.
(k) Except as disclosed in the Registration Statement and the Prospectus
(or any amendment or supplement to either of them), subsequent to the respective
dates as of which such information is given in the Registration Statement and
the Prospectus (or any amendment or supplement to either of them), the Trust has
not incurred any liability or obligation, direct or contingent, or entered into
any transaction, not in the ordinary course of business, that is material to the
Trust, and there has not been any change in the capital stock, or material
increase in the short-term debt or long-term debt, of the Trust, or any material
adverse change, or any development involving or which may reasonably be expected
to involve, a prospective material adverse change, in the condition (financial
or other), business, prospects, properties, net assets or results of operations
of the Trust, whether or not arising in the ordinary course of business.
10
(l) The Trust has not distributed and, prior to the later to occur of (i)
the Closing Date and (ii) completion of the distribution of the Shares, will not
distribute any offering material in connection with the offering and sale of the
Shares other than the Registration Statement, the Prepricing Prospectus, the
Prospectus or other materials, if any, permitted by the 1933 Act, the 1940 Act
or the Rules and Regulations.
(m) The Trust has such permits, licenses, franchises and authorizations of
governmental or regulatory authorities ("permits") as are necessary to own its
properties and to conduct its business in the manner described in the Prospectus
(and any amendment or supplement thereto), subject to such qualifications as may
be set forth in the Prospectus; the Trust has fulfilled and performed all its
material obligations with respect to such permits and no event has occurred
which allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of the rights of
the Trust under any such permit, subject in each case to such qualification as
may be set forth in the Prospectus (and any amendment or supplement thereto);
and, except as described in the Prospectus (and any amendment or supplement
thereto), none of such permits contains any restriction that is materially
burdensome to the Trust.
(n) The Trust maintains a system of internal accounting controls sufficient
to provide reasonable assurances that (i) transactions in portfolio securities
are executed in accordance with management's general or specific authorization
and with the applicable requirements of the 1940 Act, the 1940 Act Rules and
Regulations and the Internal Revenue Code of 1986, as amended (the "Code"); (ii)
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 1940 Act Rules and Regulations;
(iii) access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(o) To the Trust's knowledge, neither the Trust nor any employee or agent
of the Trust has made any payment of funds of the Trust or received or retained
any funds, which payment, receipt or retention of funds is of a character
required to be disclosed in the Prospectus and that is not so disclosed.
(p) The Trust has filed all tax returns required to be filed, which returns
are complete and correct in all material respects, and the Trust is not in
material default in the payment of any taxes which were payable pursuant to said
returns or any assessments with respect thereto.
(q) No holder of any security of the Trust has any right to require
registration of common shares of beneficial interest or any other security of
the Trust because of the filing of the registration statement or consummation of
the transactions contemplated by this Agreement.
11
(r) The Trust, subject to the registration statement having been declared
effective and the filing of the Prospectus under Rule 497 under the 1933 Act
Rules and Regulations, has taken all required action under the 1933 Act, the
1940 Act and the Rules and Regulations to make the public offering and
consummate the sale of the Shares as contemplated by this Agreement.
(s) The conduct by the Trust of its business (as described in the
Prospectus) does not, to the knowledge of the Trust or the Adviser after
reasonable inquiry, require the Trust to be the owner, possessor or licensee of
any patents, patent licenses, trademarks, service marks or trade names which it
does not own, possess or license.
(t) The Trust is registered under the 1940 Act as a closed-end, diversified
management investment company and the 1940 Act Notification has been duly filed
with the Commission and, at the time of filing thereof and any amendment or
supplement thereto, conformed in all material respects with all applicable
provisions of the 1940 Act and the Rules and Regulations. The Trust is, and at
all times through the completion of the transactions contemplated hereby, will
be, in compliance in all material respects with the terms and conditions of the
1933 Act and the 1940 Act. No person is serving or acting as an officer, trustee
or investment adviser of the Trust except in accordance with the provisions of
the 1940 Act and the 1940 Act 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").
(u) Except as stated in this Agreement and in the Prospectus (and any
amendment or supplement thereto), the Trust has not taken, nor will it take,
directly or indirectly, any action designed to or which might reasonably be
expected to cause or result in stabilization or manipulation of the price of any
securities issued by the Trust to facilitate the sale or resale of the Shares,
and the Trust is not aware of any such action taken or to be taken by any
affiliates of the Trust.
(v) The Trust has filed in a timely manner each document or report required
to be filed by it pursuant to the 1934 Act and the rules and regulations of the
Commission promulgated thereunder (the "1934 Act Rules and Regulations"); each
such document or report at the time it was filed conformed to the requirements
of the 1934 Act and the 1934 Act Rules and Regulations; and none of such
documents or reports contained an untrue statement of any material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
(w) All 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 Trust or the Adviser
for use in connection with the offering and sale of the Shares (collectively,
"sales material") complied and comply in all material respects with the
applicable requirements of the 1933 Act, the 1940 Act, the Rules and Regulations
and the rules and interpretations of the NASD and no such sales material
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
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(x) Each of the Trust Agreements complies in all material respects with all
applicable provisions of the 1940 Act, the 1940 Act Rules and Regulations, the
Advisers Act and the Advisers Act Rules and Regulations, except as to rights of
indemnity and contribution hereunder.
(y) The Shares have been, or prior to the Closing Date will be, assigned a
rating of `aaa' by ▇▇▇▇▇'▇ and `AAA' by S&P.
(z) As required by Subchapter M of the Code, the Trust is currently in
compliance with the requirements to qualify as a regulated investment company
under the Code.
(aa) Except as disclosed in the Registration Statement and the Prospectus
(or any amendment or supplement to either of them), no trustee of the Trust is
an "interested person" (as defined in the 1940 Act) of the Trust or an
"affiliated person" (as defined in the 1940 Act) of any Underwriter listed in
Schedule I hereto.
7. REPRESENTATIONS AND WARRANTIES OF THE ADVISER. The Adviser represents
and warrants to the Underwriters as follows:
(a) The Adviser is a corporation duly incorporated and validly existing in
good standing under the laws of the State of Delaware, with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus (and any
amendment or supplement to either of them), and is duly registered and qualified
to conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or to
qualify does not have a material adverse effect on the condition (financial or
other), business, prospects, properties, net assets or results of operations of
the Adviser or on the ability of the Adviser to perform its obligations under
this Agreement and the Investment Management Agreement.
(b) The Adviser is duly registered with the Commission as an investment
adviser under the Advisers Act and is not prohibited by the Advisers Act, the
Advisers Act Rules and Regulations, the 1940 Act or the 1940 Act Rules and
Regulations from acting under the Investment Management Agreement for the Trust
as contemplated by the Prospectus (or any amendment or supplement thereto).
There does not exist any proceeding or any facts or circumstances the existence
of which could lead to any proceeding which might adversely affect the
registration of the Adviser with the Commission.
(c) There are no legal or governmental proceedings pending or, to the
knowledge of the Adviser, threatened against the Adviser, or to which the
Adviser or any of its properties is subject, that are required to be described
in the Registration Statement or the Prospectus (or any amendment or supplement
to either of them) but are not described as required or that may reasonably be
expected to involve a prospective material adverse change in the condition
13
(financial or other), business, prospects, properties, net assets or results of
operations of the Adviser or on the ability of the Adviser to perform its
obligations under this Agreement and the Investment Management Agreement.
(d) Neither the execution, delivery or performance of this Agreement or the
Investment Management Agreement by the Adviser, nor the consummation by the
Adviser of the transactions contemplated hereby or thereby (A) requires the
Adviser to obtain any consent, approval, authorization or other order of or
registration or filing with, the Commission, the NASD, any state securities
commission, any national securities exchange, any arbitrator, any court,
regulatory body, administrative agency or other governmental body, agency or
official or conflicts or will conflict with or constitutes or will constitute a
breach of or a default under, the certificate of incorporation or by-laws, or
other organizational documents, of the Adviser or (B) conflicts or will conflict
with or constitutes or will constitute a breach of or a default under, any
agreement, indenture, lease or other instrument to which the Adviser is a party
or by which it or any of its properties may be bound, or violates or will
violate any statute, law, regulation or filing or judgment, injunction, order or
decree applicable to the Adviser or any of its properties or will result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Adviser pursuant to the terms of any agreement or instrument to
which it is a party or by which it may be bound or to which any of the property
or assets of the Adviser is subject. The Adviser is not subject to any order of
any court or of any arbitrator, governmental authority or administrative agency.
(e) The execution and delivery of, and the performance by the Adviser of
its obligations under, this Agreement and the Investment Management Agreement
have been duly and validly authorized by the Adviser, and this Agreement and the
Investment Management Agreement have been duly executed and delivered by the
Adviser and each constitutes the valid and legally binding agreement of the
Adviser, enforceable against the Adviser in accordance with its terms except as
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws or principles of public policy and subject to the
qualification that the enforceability of the Trust's obligations thereunder may
be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights generally
and by general equitable principles.
(f) The Adviser has the financial resources available to it necessary for
the performance of its services and obligations as contemplated in the
Prospectus (or any amendment or supplement thereto) and under this Agreement and
the Investment Management Agreement.
(g) The description of the Adviser in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) complied and comply in all
material respects with the provisions of the 1933 Act, the 1940 Act, the
Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations and did not and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
14
(h) Except as disclosed in the Registration Statement and the Prospectus
(or any amendment or supplement to either of them), subsequent to the respective
dates as of which such information is given in the Registration Statement and
the Prospectus (or any amendment or supplement to either of them), the Adviser
has not incurred any liability or obligation, direct or contingent, or entered
into any transaction, not in the ordinary course of business, that is material
to the Adviser or the Trust and that is required to be disclosed in the
Registration Statement or the Prospectus and there has not been any material
adverse change, or any development involving or which may reasonably be expected
to involve, a prospective material adverse change, in the condition (financial
or other), business, prospects, properties, net assets or results of operations
of the Adviser, whether or not arising in the ordinary course of business, or
which, in each case, could have a material adverse effect on the ability of the
Adviser to perform its obligations under this Agreement and the Investment
Management Agreement.
(i) The Adviser has such permits, licenses, franchises and authorizations
of governmental or regulatory authorities ("permits") as are necessary to own
its properties and to conduct its business in the manner described in the
Prospectus (and any amendment or supplement thereto); the Adviser has fulfilled
and performed all its material obligations with respect to such permits and no
event has occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material impairment of
the rights of the Adviser under any such permit; and, except as described in the
Prospectus (and any amendment or supplement thereto), none of such permits
contains any restriction that is materially burdensome to the Adviser.
(j) Except as stated in this Agreement and in the Prospectus (and in any
amendment or supplement thereto), the Adviser has not taken, nor will it take,
directly or indirectly, any action designed to or which might reasonably be
expected to cause or result in, stabilization or manipulation of the price of
any securities issued by the Trust to facilitate the sale or resale of the
Shares, and the Adviser is not aware of any such action taken or to be taken by
any affiliates of the Adviser.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Trust and the Adviser, jointly and severally, agree to indemnify
and hold harmless each of the Underwriters and each person, if any, who controls
any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation), joint or
several, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Prepricing Prospectus or in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any untrue statement or omission or alleged untrue statement or omission which
has been made therein or omitted therefrom in reliance upon and in conformity
with the information relating to any Underwriter furnished in writing to the
Trust by or on behalf of any Underwriter through you expressly for use in
15
connection therewith; provided, however, that the indemnification contained in
this paragraph (a) with respect to any Prepricing Prospectus shall not inure to
the benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Shares by such Underwriter to any person if a copy
of the Prospectus shall not have been delivered or sent to such person within
the time required by the 1933 Act and the 1933 Act Rules and Regulations, and
the untrue statement or alleged untrue statement or omission or alleged omission
of a material fact contained in such Prepricing Prospectus was corrected in the
Prospectus, provided that the Trust has delivered the Prospectus to the several
Underwriters in requisite quantity on a timely basis to permit such delivery or
sending. The foregoing indemnity agreement shall be in addition to any liability
which the Trust or the Adviser may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Trust or the Adviser, such Underwriter or
such controlling person shall promptly notify the Trust or the Adviser, and the
Trust or the Adviser shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Underwriter or
such controlling person unless (i) the Trust or the Adviser has agreed in
writing to pay such fees and expenses, (ii) the Trust and the Adviser have
failed to assume the defense and employ counsel, or (iii) the named parties to
any such action, suit or proceeding (including any impleaded parties) include
both such Underwriter or such controlling person and the Trust or the Adviser
and such Underwriter or such controlling person shall have been advised by its
counsel that representation of such indemnified party and the Trust or the
Adviser by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the Trust and the Adviser shall not have the right to assume the
defense of such action, suit or proceeding on behalf of such Underwriter or such
controlling person). It is understood, however, that the Trust and the Adviser
shall, in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Underwriters and controlling persons not having actual or potential differing
interests with you or among themselves, which firm shall be designated in
writing by the Underwriters, and that all such fees and expenses shall be
reimbursed as they are incurred. The Trust and the Adviser shall not be liable
for any settlement of any such action, suit or proceeding effected without their
written consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, suit or proceeding, the
Trust and the Adviser agree to indemnify and hold harmless any Underwriter, to
the extent provided in the preceding paragraph, and any such controlling person
from and against any loss, claim, damage, liability or expense by reason of such
settlement or judgment.
(c) Each Underwriter agrees to indemnify and hold harmless the Trust and
the Adviser, their trustees, directors, any officers who sign the Registration
Statement, and any person who controls the Trust or the Adviser within the
16
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, to the same
extent as the foregoing indemnity from the Trust and the Adviser to each
Underwriter, but only with respect to information relating to such Underwriter
furnished in writing by or on behalf of such Underwriter expressly for use in
the Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Trust or the Adviser, any of their trustees or directors,
any such officer, or any such controlling person based on the Registration
Statement, the Prospectus or any Prepricing Prospectus, or any amendment or
supplement thereto, and in respect of which indemnity may be sought against any
Underwriter pursuant to this paragraph (c), such Underwriter shall have the
rights and duties given to the Trust and the Adviser by paragraph (b) above
(except that if the Trust or the Adviser shall have assumed the defense thereof
such Underwriter shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof, but the fees and expenses of
such counsel shall be at such Underwriter's expense), and the Trust and the
Adviser, their trustees or directors, any such officer, and any such controlling
person shall have the rights and duties given to the Underwriters by paragraph
(b) above. The foregoing indemnity agreement shall be in addition to any
liability which the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 8 is unavailable to
an indemnified party under paragraphs (a) or (c) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then an
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Trust and the
Adviser on the one hand (treated jointly for this purpose as one person) and the
Underwriters on the other hand from the offering of the Shares, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Trust and the
Adviser on the one hand (treated jointly for this purpose as one person) and the
Underwriters on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Trust and the Adviser on the one hand (treated jointly for this purpose as
one person) and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Trust bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault of the Trust and the
Adviser on the one hand (treated jointly for this purpose as one person) and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Trust and the Adviser on the one hand (treated jointly for this
purpose as one person) or by the Underwriters on the other hand and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(e) The Trust, the Adviser and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined by
a pro rata allocation or by any other method of allocation that does not take
17
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 8, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price of the Shares underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 8 are several
in proportion to the respective numbers of Shares set forth opposite their names
in Schedule I hereto (or such numbers of Shares increased as set forth in
Section 11 hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action,
suit or proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Trust and the Adviser set forth in this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Trust, the Adviser, their trustees, directors
or officers, or any person controlling the Trust or the Adviser, (ii) acceptance
of any Shares and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to any Underwriter or any person controlling any
Underwriter, or to the Trust, the Adviser, their trustees, directors or
officers, or any person controlling the Trust or the Adviser, shall be entitled
to the benefits of the indemnity, contribution, and reimbursement agreements
contained in this Section 8.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of the
Underwriters to purchase the Shares hereunder are subject to the following
conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
registration statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by the
Underwriters, and all filings, if any, required by Rules 497 and 430A under the
1933 Act and the 1933 Act Rules and Regulations shall have been timely made; no
18
stop order suspending the effectiveness of the Registration Statement or order
pursuant to Section 8(e) of the 1940 Act shall have been issued and no
proceeding for those purposes shall have been instituted or, to the knowledge of
the Trust, the Adviser or any Underwriter, threatened by the Commission, and any
request of the Commission for additional information (to be included in the
registration statement or the prospectus or otherwise) shall have been complied
with to the Underwriters' satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall not
have occurred (i) any change or any development involving a prospective change
in or affecting the condition (financial or other), business, prospects,
properties, net assets, or results of operations of the Trust or the Adviser not
contemplated by the Prospectus, which in the Underwriters' opinion would
materially, adversely affect the market for the Shares, or (ii) any event or
development relating to or involving the Trust or the Adviser or any officer,
trustee or director of the Trust or the Adviser which makes any statement made
in the Prospectus untrue or which, in the opinion of the Trust and its counsel
or the Underwriters and their counsel, requires the making of any addition to or
change in the Prospectus in order to state a material fact required by the 1933
Act, the 1940 Act or the Rules and Regulations or any other law to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, if amending or
supplementing the Prospectus to reflect such event or development would, in the
Underwriters' opinion, materially adversely affect the market for the Shares.
(c) The Trust shall have furnished to you a report showing compliance with
the asset coverage requirements of the 1940 Act and a Preferred Shares Basic
Maintenance Certificate (as defined in the Certificate), each dated the Closing
Date and in form and substance satisfactory to you. Each such report may use
portfolio holdings and valuations as of the close of business of any day not
more than six business days preceding the Closing Date, provided, however, that
the Trust represents in such report that its total net assets as of the Closing
Date have not declined by 5% or more from such valuation date.
(d) The Underwriters shall have received on the Closing Date an opinion of
Dechert, counsel for the Trust, dated the Closing Date and addressed to you, in
form and substance satisfactory to you and to the effect that:
(i) The Trust (A) is a business trust duly organized and validly
existing under the laws of the State of Massachusetts with full business
trust power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them), and (B) is
duly registered and qualified to conduct its business and is in good
standing in __________;
(ii) The Trust has no subsidiaries;
(iii) The authorized and outstanding capital stock of the Trust is as
set forth under the caption "Capitalization" in the Prospectus; and the
authorized capital stock of the Trust conforms in all material respects as
to legal matters to the description thereof contained in the Prospectus
under the caption "Description of Capital Structure";
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(iv) All the shares of beneficial interest of the Trust outstanding
prior to the issuance of the Shares have been duly authorized and validly
issued by the Trust, and are fully paid and nonassessable;
(v) The Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in accordance with
the terms hereof, will be validly issued by the Trust, fully paid and
nonassessable and free of any preemptive, or to the best knowledge of such
counsel after reasonable inquiry, similar rights that entitle or will
entitle any person to acquire any Shares upon the issuance thereof by the
Trust, and will conform to the description thereof contained in the
Prospectus under the caption "Description of Preferred Shares";
(vi) The form of certificates for the Shares conforms to the
requirements of Massachusetts law;
(vii) The Registration Statement and all post-effective amendments, if
any, have become effective under the 1933 Act and the 1933 Act Rules and
Regulations and, to the best knowledge of such counsel after reasonable
inquiry, no stop order suspending the effectiveness of the Registration
Statement or order pursuant to Section 8(e) of the 1940 Act has been issued
and no proceedings for that purpose are pending before or contemplated by
the Commission; and any required filing of the Prospectus pursuant to Rule
497 of the 1933 Act Rules and Regulations has been made in accordance with
Rule 497;
(viii) The Trust has business trust power and authority to enter into
this Agreement and each of the Trust Agreements and to issue, sell and
deliver the Shares to the Underwriters as provided herein, and this
Agreement and each of the Trust Agreements have been duly authorized,
executed and delivered by the Trust and each is a valid, legal and binding
agreement of the Trust, enforceable against the Trust in accordance with
its terms, except as enforcement of rights to indemnity and contribution
hereunder may be limited by Federal or state securities laws or principles
of public policy and subject to the qualification that the enforceability
of the Trust's obligations hereunder may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights generally and by general
equitable principles;
(ix) (A) The Trust is not in violation of the Declaration, including
the Certificate, or Bylaws, or other organizational documents, and (B)
based upon a certificate executed by officers of the Trust delivered to us,
is not in default in the performance of any material obligation, agreement
or condition contained in any bond, debenture, note or other evidence of
indebtedness, except as may be disclosed in the Prospectus;
20
(x) Neither the offer, sale or delivery of the Shares, the execution,
delivery or performance of this Agreement and in the Trust Agreements by
the Trust, compliance by the Trust with the provisions hereof or thereof
nor consummation by the Trust of the transactions contemplated hereby and
the Trust Agreements constitutes or will constitute a breach of, or a
default under, the Declaration, including the Certificate, or Bylaws, or
other organizational documents, of the Trust or any agreement, indenture,
lease or other instrument to which the Trust is a party or by which it or
any of its properties is bound that is an exhibit to the Registration
Statement, nor will any such action result in any violation of any existing
law, regulation, ruling (assuming compliance with all applicable state
securities or blue sky laws), judgment, injunction, order or decree known
to such counsel after reasonable inquiry, applicable to the Trust or any of
its properties;
(xi) No consent, approval, authorization or other order of, or
registration or filing with, the Commission, the NASD, any national
securities exchange, or, to counsel's knowledge, any state securities
commission, any arbitrator, any court, regulatory body, administrative
agency or other governmental body, agency, or official is required on the
part of the Trust (except such as may have been obtained prior to the date
hereof and such as may be required for compliance with the state securities
or blue sky laws of various jurisdictions) for the valid issuance and sale
of the Shares to the Underwriters as contemplated by this Agreement, the
execution, delivery and performance by the Trust of this Agreement and the
Trust Agreements or the consummation of the transactions contemplated
hereby and thereby;
(xii) The 1940 Act Notification, the Registration Statement, the
Prospectus and any supplements or amendments thereto (except for the
financial statements and the notes thereto and the schedules and other
financial and statistical data included therein, as to which such counsel
need not express any opinion) comply as to form in all material respects
with the requirements of the 1933 Act, the 1940 Act and the Rules and
Regulations;
(xiii) Based upon a certificate executed by officers of the Trust
delivered to us, (A) other than as described or contemplated in the
Registration Statement or Prospectus (or any amendment or supplement
thereto), there are no legal or governmental proceedings pending or
threatened against the Trust, or to which the Trust or any of its
properties is subject, which are required to be described in the
Registration Statement or Prospectus (or any amendment or supplement to
either of them) and (B) there are no agreements, contracts, indentures,
leases or other instruments that are required to be described in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) or to be filed as an exhibit to the Registration Statement that
are not described or filed as required, as the case may be;
21
(xiv) The statements in the Registration Statement and Prospectus,
insofar as they (A) are descriptions of contracts, agreements or other
legal documents, or (B) refer to statements of law or legal conclusions,
are accurate and present fairly the information required to be shown;
(xv) Each of the Trust Agreements complies in all material respects
with all applicable provisions of the 1933 Act, the 1940 Act, the Advisers
Act, the Rules and Regulations and the Advisers Act Rules and Regulations,
except as to rights of indemnity and contribution;
(xvi) The Trust is duly registered with the Commission under the 1940
Act and the 1940 Act Rules and Regulations as a closed-end, diversified
management investment company and, to such counsel's best knowledge after
reasonable inquiry, no order of suspension or revocation of such
registration under the 1940 Act and the 1940 Act Rules and Regulations has
been issued or proceedings therefor initiated or threatened by the
Commission; the provisions of the Declaration, including the Certificate,
and Bylaws comply as to form in all material respects with the applicable
provisions of the 1940 Act and the 1940 Act Rules and Regulations, the
provisions of the Declaration, including the Certificate, and Bylaws and
the investment policies and restrictions described in the Registration
Statement and the Prospectus under the captions "Investment Objective and
Policies", "Risk Factors", "Additional Information About Investments and
Investment Techniques" and "Investment Restrictions" (in the Prospectus and
the statement of additional information) comply in all material respects
with the requirements of the 1940 Act, and all action has been taken by the
Trust as is required of the Trust by the 1933 Act and the 1940 Act and the
Rules and Regulations in connection with the issuance and sale of the
Shares to make the public offering and consummate the sale of the Shares as
contemplated by this Agreement;
(xvii) Except as described in the Prospectus, there are no outstanding
options, warrants or other rights calling for the issuance of, and such
counsel does not know of any commitment, plan or arrangement to issue, any
shares of beneficial interest of the Trust or any security convertible into
or exchangeable or exercisable for shares of beneficial interest of the
Trust;
(xviii) Except as described in the Prospectus, such counsel does not
know of any holder of any security of the Trust or any other person who has
the right, contractual or otherwise, to cause the Trust to sell or
otherwise issue to them, or to permit them to underwrite the sale of, the
Shares or the right to have any securities of the Trust included in the
registration statement or the right, as a result of the filing of the
registration statement, to require registration under the 1933 Act of any
securities of the Trust;
(xix) If the Trust operates as described in the Prospectus, the Trust
will qualify as a regulated investment company under the Code; and
22
(xx) Such counsel shall also state that, while they have not
themselves checked the accuracy and completeness of or otherwise verified,
and are not passing upon and assume no responsibility for the accuracy or
completeness of, the statements contained in the Registration Statement or
the Prospectus, except to the limited extent stated in paragraphs (iii),
(xiv) and (xvi) above, in the course of their review and discussion of the
contents of the Registration Statement and Prospectus with certain officers
and employees of the Trust and its independent accountants, no facts have
come to their attention which cause them to believe that the Registration
Statement or any amendment or supplement thereto (except as to any
financial statements or other financial data included in the Registration
Statement or any such amendment or supplement, as to which they express no
belief), as of its effective date, 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 contained therein not
misleading or that the Prospectus or any amendment or supplement thereto
(except as to any financial statements or other financial data included in
the Prospectus or any such amendment or supplement, as to which they
express no belief), as of its issue date and as of the Closing Date,
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 contained therein, in the light of the circumstances under which
they were made, not misleading.
Such counsel may state in its opinion letter that "[O]ur opinion is
limited solely to those laws, rulings and regulations that are normally
applicable to transactions of the type contemplated by the Underwriting
Agreement by closed-end management investment companies registered under
the 1940 Act, and to Massachusetts law with respect to the matters covered
by paragraphs (i)(A), (iii), (iv), (v), (vi) and (viii). Moreover, the
opinions given under paragraphs (ix)(B) and (xiii) are based solely upon
the receipt of a certificate signed by officers of the Trust attesting to
the statements made therein."
(e) The Underwriters shall have received on the Closing Date an opinion of
▇▇▇▇▇ ▇▇▇▇ LLP, counsel for the Adviser, dated the Closing Date and addressed to
you, in form and substance satisfactory to you and to the effect that:
(i) The Adviser is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware with full
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them), and is duly
registered and qualified to conduct its business and is in good standing in
each jurisdiction or place where the nature of its properties or the
conduct of its business requires such registration or qualification, except
where the failure to so register or qualify does not have a material
adverse effect on the condition (financial or other), business, prospects,
properties, net assets or results of operations of the Adviser and its
subsidiaries, taken as a whole, or on the ability of the Adviser to perform
its obligations under this Agreement and the Investment Management
Agreement;
23
(ii) The Adviser is duly registered with the Commission as an
investment adviser under the Advisers Act and is not prohibited by the
Advisers Act, the Advisers Act Rules and Regulations, the 1940 Act or the
1940 Act Rules and Regulations from acting under the Investment Management
Agreement for the Trust as contemplated by the Prospectus (or any amendment
or supplement thereto); and, to such counsel's best knowledge after
reasonable inquiry, no order of suspension or revocation of such
registration under the Advisers Act and the Advisers Act Rules and
Regulations has been issued or proceedings therefor initiated or threatened
by the Commission;
(iii) The Adviser has corporate power and authority to enter into this
Agreement and the Investment Management Agreement, and this Agreement and
the Investment Management Agreement have been duly authorized, executed and
delivered by the Adviser and each is a valid, legal and binding agreement
of the Adviser, enforceable against the Adviser in accordance with its
terms except as enforcement of rights to indemnity and contribution
hereunder may be limited by Federal or state securities laws or principles
of public policy and subject to the qualification that the enforceability
of the Adviser's obligations hereunder may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium, and other
laws relating to or affecting creditors' rights generally and by general
equitable principles;
(iv) Neither the execution, delivery or performance of this Agreement
or the Investment Management Agreement by the Adviser, compliance by the
Adviser with the provisions hereof or thereof nor consummation by the
Adviser of the transactions contemplated hereby and the Investment
Management Agreement conflicts or will conflict with, or constitutes or
will constitute a breach of or default under, the articles of incorporation
or bylaws, or other organizational documents, of the Adviser or any
agreement, indenture, lease or other instrument to which the Adviser is a
party or by which it or any of its properties is bound that is known to
such counsel after reasonable inquiry, or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Adviser, nor will any such action result in any violation of any
existing law, regulation, ruling, judgment, injunction, order or decree
known to such counsel after reasonable inquiry, applicable to the Adviser
or any of its properties;
(v) No consent, approval, authorization or other order of, or
registration or filing with, the Commission, the NASD, any state securities
commission, any national securities exchange, any arbitrator, any court,
regulatory body, administrative agency or other governmental body, agency,
or official is required on the part of the Adviser for the execution,
delivery and performance by it of this Agreement and the Trust Agreements
to which it is a party or the consummation by it of the transactions
contemplated hereby and thereby;
24
(vi) To the best knowledge of such counsel after reasonable inquiry,
there are no legal or governmental proceedings pending or threatened
against the Adviser or to which the Adviser or any of its properties is
subject, which are required to be described in the Registration Statement
or the Prospectus (or any amendment or supplement to either of them) but
are not described as required or which may reasonably be expected to
involve a prospective material adverse change on the ability of the Adviser
to perform its obligations under this Agreement and the Investment
Management Agreement;
(vii) The obligations of the Adviser under this Agreement and the
Investment Management Agreement comply in all material respects with all
applicable provisions of the 1940 Act, the 1940 Act Rules and Regulations,
the Advisers Act and the Advisers Act Rules and Regulations;
(viii) The Adviser has full corporate power and authority, and all
necessary governmental authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental
regulatory officials and bodies (except where the failure so to have any
such authorizations, approvals, orders, licenses, certificates, franchises
or permits, individually or in the aggregate, would not have a material
adverse effect on the business, properties, operations or financial
condition of the Adviser and its subsidiaries, taken as a whole), to own
its properties and to conduct business as now being conducted, as described
in the Prospectus, and to perform its obligations under the Investment
Management Agreement; and
(ix) Such counsel shall also state that the description of the Adviser
contained in the Registration Statement (and any amendment or supplement
thereto), as of its effective date, 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 contained therein not
misleading or that the description of the Adviser contained in the
Prospectus or any amendment or supplement thereto, as of its issue date and
as of the Closing Date, 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 contained therein, in the light of the
circumstances under which they were made, not misleading.
(f) The Underwriters shall have received on the Closing Date an opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, dated the Closing Date
and addressed to you, with respect to such matters as you may reasonably
request. It is agreed that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ may rely on the opinions
of Dechert contained in Sections 9(d)(i)(A), 9(d)(v), 9(d)(viii) and
9(d)(xiv)(B) of this Agreement to the extent those opinions relate to or are
dependent upon matters governed by the laws of the Commonwealth of
Massachusetts.
25
(g) The Underwriters shall have received letters addressed to you, dated
the date hereof and the Closing Date, from KPMG LLP, independent certified
public accountants, substantially in the forms heretofore approved by you.
(h) (i) No order suspending the effectiveness of the registration statement
or the Registration Statement or prohibiting or suspending the use of the
Prospectus (or any amendment or supplement thereto) or any Prepricing Prospectus
or any sales material shall have been issued and no proceedings for such purpose
or for the purpose of commencing an enforcement action against the Trust, the
Adviser or, with respect to the transactions contemplated by the Prospectus (or
any amendment or supplement thereto) and this Agreement, the Underwriters, may
be pending before or, to the knowledge of the Trust, the Adviser or the
Underwriters or in the reasonable view of counsel to the Underwriters, shall be
threatened or contemplated by the Commission at or prior to the Closing Date and
that any request for additional information on the part of the Commission (to be
included in the Registration Statement, the Prospectus or otherwise) be complied
with to the satisfaction of the Underwriters; (ii) there shall not have been any
change in the capital stock of the Trust nor any material increase in the
short-term or long-term debt of the Trust (other than in the ordinary course of
business) from that set forth or contemplated in the Registration Statement or
the Prospectus (or any amendment or supplement thereto); (iii) there shall not
have been, subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus (or any amendment or supplement
thereto), except as may otherwise be stated in the Registration Statement and
Prospectus (or any amendment or supplement thereto), any material adverse change
in the condition (financial or other), business, prospects, properties, net
assets or results of operations of the Trust or the Adviser; (iv) the Trust
shall not have any liabilities or obligations, direct or contingent (whether or
not in the ordinary course of business), that are material to the Trust, other
than those reflected in the Registration Statement or the Prospectus (or any
amendment or supplement to either of them); and (v) all the representations and
warranties of the Trust and the Adviser contained in this Agreement shall be
true and correct on and as of the date hereof and on and as of the Closing Date
as if made on and as of the Closing Date, and the Underwriters shall have
received a certificate of the Trust and the Adviser, dated the Closing Date and
signed by the chief executive officer and the chief financial officer of each of
the Trust and the Adviser (or such other officers as are acceptable to the
Underwriters), to the effect set forth in this Section 9(h) and in Section 9(i)
hereof.
(i) That neither the Trust nor the Adviser shall have failed at or prior to
the Closing Date to have performed or complied in all material respects with any
of its agreements herein contained and required to be performed or complied with
by it hereunder at or prior to the Closing Date.
(j) The Trust shall have delivered and the Underwriters shall have received
evidence satisfactory to the Underwriters that each series of Shares are rated
`aaa' by ▇▇▇▇▇'▇ and `AAA' by S&P as of the Closing Date, and there shall not
have been given any notice of any intended or potential downgrading, or of any
review for a potential downgrading, in the rating accorded to the shares of each
series of the Shares by either Rating Agency.
26
(k) The Trust and the Adviser shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
reasonably requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to the Underwriters and the Underwriters' counsel.
Any certificate or document signed by any officer of the Trust or the
Adviser and delivered to the Underwriters, or to counsel for the Underwriters,
shall be deemed a representation and warranty by the Trust or the Adviser to the
Underwriters as to the statements made therein.
10. EXPENSES. The Trust agrees to pay the following costs and expenses and
all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction, and filing
with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the Prospectus and
each amendment or supplement to any of them (including, without limitation, the
filing fees prescribed by the 1933 Act, the 1940 Act and the Rules and
Regulations); (ii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of such
copies of the Registration Statement, each Prepricing Prospectus, the
Prospectus, any sales material and all amendments or supplements to any of them
as may be reasonably requested for use in connection with the offering and sale
of the Shares; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Shares, including any stamp taxes in connection
with the original issuance and sale of the Shares; (iv) the reproduction and
delivery of this Agreement, any dealer agreements, the preliminary blue sky
memorandum and all other agreements or documents reproduced and delivered in
connection with the offering of the Shares; (v) the reasonable fees, expenses
and disbursements of counsel for the Underwriters relating to the preparation,
reproduction, and delivery of the preliminary blue sky memorandum; (vi) fees
paid to the Rating Agencies; (vii) the transportation and other expenses
incurred by or on behalf of Trust representatives in connection with
presentations to prospective purchasers of the Shares; and (viii) the fees and
expenses of the Trust's accountants and the fees and expenses of counsel
(including local and special counsel) for the Trust and of the transfer agent.
11. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective: (i)
upon the execution and delivery hereof by the parties hereto; or (ii) if, at the
time this Agreement is executed and delivered, it is necessary for the
registration statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of the registration statement or such post-effective amendment
has been released by the Commission. Until such time as this Agreement shall
have become effective, it may be terminated by the Trust, by notifying the
Underwriters, or by the Underwriters, by notifying the Trust.
If any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they are obligated to purchase hereunder on the Closing Date,
and the aggregate number of Shares which such defaulting Underwriter or
Underwriters are obligated but fail or refuse to purchase is not more than
27
one-tenth of the aggregate number of Shares which the Underwriters are obligated
to purchase on the Closing Date, each non-defaulting Underwriter shall be
obligated, severally, in the proportion which the number of Shares set forth
opposite its name in Schedule I hereto bears to the aggregate number of Shares
set forth opposite the names of all non-defaulting Underwriters or in such other
proportion as you may specify, to purchase the Shares which such defaulting
Underwriter or Underwriters are obligated, but fail or refuse, to purchase. If
any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they are obligated to purchase on the Closing Date and the aggregate
number of Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Shares which the Underwriters are obligated
to purchase on the Closing Date and arrangements satisfactory to you and the
Trust for the purchase of such Shares by one or more non-defaulting Underwriters
or other party or parties approved by you and the Trust are not made within 36
hours after such default, this Agreement will terminate without liability on the
part of any non-defaulting Underwriter, the Trust or the Adviser. In any such
case which does not result in termination of this Agreement, either you or the
Trust shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or arrangements
may be effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any such
Underwriter under this Agreement. The term "Underwriter" as used in this
Agreement includes, for all purposes of this Agreement, any party not listed in
Schedule I hereto who, with your approval and the approval of the Trust,
purchases Shares which a defaulting Underwriter is obligated, but fails or
refuses, to purchase.
Any notice under this Section 11 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
12. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in the Underwriters' absolute discretion, without liability on the
part of any Underwriter to the Trust or the Adviser, by notice to the Trust or
the Adviser, if prior to the Closing Date (i) trading in the Shares or the
Trust's common shares of beneficial interest or securities generally on the NYSE
shall have been suspended or materially limited or minimum prices shall have
been established on the NYSE, (ii) a general moratorium on commercial banking
activities in New York shall have been declared by either federal or state
authorities, or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or
other international or domestic calamity, crisis or change in political,
financial or economic conditions, the effect of which on the financial markets
of the United States is to make it, in your judgment, impracticable or
inadvisable to commence or continue the offering of the Shares at the offering
price to the public set forth on the cover page of the Prospectus or to enforce
contracts for the resale of the Shares by the Underwriters. Notice of such
termination may be given to the Trust by telegram, telecopy or telephone and
shall be subsequently confirmed by letter.
28
13. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements set forth in
the [last paragraph on the cover page and the statements in the ________,
________ and _________ paragraphs under the caption "Underwriting"] in any
Prepricing Prospectus and in the Prospectus, constitute the only information
furnished by or on behalf of the Underwriters through you as such information is
referred to in Sections 6(b) and 8 hereof.
14. MISCELLANEOUS. Except as otherwise provided in Sections 5, 11 and 12
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Trust or the Adviser, at the office
of the Trust at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President; or (ii) if to the
Underwriters, to ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Trust, the Adviser, their trustees, directors and officers,
and the other controlling persons referred to in Section 8 hereof and their
respective successors and assigns, to the extent provided herein, and no other
person shall acquire or have any right under or by virtue of this Agreement.
Neither the term "successor" nor the term "successors and assigns" as used in
this Agreement shall include a purchaser from the Underwriters of any of the
Shares in his status as such purchaser.
Consistent with the Trust's Declaration, notice is hereby given and the
parties hereto acknowledge and agree that this Agreement is executed on behalf
of the trustees of the Trust as trustees and not individually and that
obligations of this Agreement are not binding upon any of the trustees or
shareholders of the Trust individually but are binding only against the assets
and property of the Trust.
15. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
This Agreement may be signed in various counterparts, which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
Please confirm that the foregoing correctly sets forth the agreement among
the Trust, the Adviser and the several Underwriters.
Very truly yours,
PILGRIM PRIME RATE TRUST
By:
-------------------------------------
ING PILGRIM INVESTMENTS, INC.
By:
-------------------------------------
Confirmed as of the date first above
mentioned on behalf of themselves
and the other several Underwriters
named in Schedule I hereto.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
PAINEWEBBER INCORPORATED
▇▇▇▇▇▇ BROTHERS INC.
GRUNTAL & CO., L.L.C.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By:
----------------------------------
SCHEDULE I
PILGRIM PRIME RATE TRUST
Number of
Shares of Each
of Series
Underwriter and Series
----------- ----------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. .....................................
----------
PaineWebber Incorporated ......................................
----------
▇▇▇▇▇▇ Brothers Inc. ..........................................
----------
▇▇▇▇▇▇▇ & Co., L.L.C. .........................................
----------
Total .........................................................
----------