Exhibit (h)(1)
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MUNIHOLDINGS FUND, INC.
(a Maryland corporation)
$15,000,000
Auction Market Preferred Stock
600 Shares, Series C
(Liquidation Preference $25,000 Per Share)
PURCHASE AGREEMENT
Dated: [___], 2005
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TABLE OF CONTENTS
Page
SECTION 1. Representations and Warranties...................................................................3
(a) Representations and Warranties by the Fund and the Investment Adviser................................3
(b) Additional Representations of the Investment Adviser.................................................9
(c) Officers' Certificates..............................................................................10
SECTION 2. Sale and Delivery to the Underwriter; Closing...................................................11
(a) Purchase Price......................................................................................11
(b) Payment.............................................................................................11
(c) Denominations; Registration.........................................................................11
SECTION 3. Covenants of the Fund...........................................................................11
(a) Compliance with Securities Regulations and Commission Requests......................................11
(b) Filing of Amendments................................................................................12
(c) Delivery of Registration Statements.................................................................12
(d) Delivery of Prospectus..............................................................................12
(e) Continued Compliance with Securities Laws...........................................................12
(f) Blue Sky Qualifications.............................................................................13
(g) Rule 158............................................................................................13
(h) Use of Proceeds.....................................................................................13
(i) Subchapter M........................................................................................13
(j) Restrictions on Sale of Shares......................................................................13
(k) Reporting Requirements..............................................................................14
(l) Rule 462(b) Registration Statement..................................................................14
(m) No Manipulation of Market for the Shares.............................................................14
SECTION 4. Covenants of the Underwriter....................................................................14
SECTION 5. Payment of Expenses.............................................................................15
(a) Expenses............................................................................................15
(b) Termination of Agreement............................................................................15
SECTION 6. Conditions of Underwriter's Obligations.........................................................15
(a) Effectiveness of Registration Statement.............................................................15
(b) Opinion of Counsel for the Fund and the Underwriter.................................................15
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Table of Contents
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(continued)
Page
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(c) Opinion of Senior Attorney of the Investment Adviser................................................15
(d) Officers' Certificates..............................................................................15
(e) Accountant's Comfort Letter.........................................................................16
(f) Bring-down Comfort Letter...........................................................................16
(g) Ratings Letters.....................................................................................16
(h) Asset Coverage.......................................................................................16
(i) Additional Documents................................................................................16
(j) Termination of Agreement............................................................................17
SECTION 7. Indemnification.................................................................................17
(a) Indemnification of the Underwriter..................................................................17
(b) Indemnification of Fund, Investment Adviser, General Partner,
and Directors and Officers...............................................................................18
(c) Actions against Parties, Notification...............................................................18
(d) Settlement without Consent if Failure to Reimburse..................................................19
SECTION 8. Contribution....................................................................................19
SECTION 9. Representations, Warranties and Agreements to Survive Delivery..................................20
SECTION 10. Termination of Agreement.......................................................................20
(a) Termination; General................................................................................20
(b) Liabilities.........................................................................................21
SECTION 11. Notices........................................................................................21
SECTION 12. Parties........................................................................................21
SECTION 13. Governing Law and Time.........................................................................21
SECTION 14. No Fiduciary Relationship......................................................................22
SECTION 15. Effect of Headings.............................................................................22
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EXHIBITS
Exhibit A - Form of Opinion of Fund's Counsel
Exhibit B - Form of Opinion of Senior Attorney of the Investment Adviser
Exhibit C - Form of Accountant's Comfort Letter
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MUNIHOLDINGS FUND, INC.
(a Maryland corporation)
$15,000,000
Auction Market Preferred Stock
600 Shares, Series C
(Liquidation Preference $25,000 Per Share)
PURCHASE AGREEMENT
[___], 2005
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
MuniHoldings Fund, Inc., a Maryland corporation (the "Fund"), and
Fund Asset Management, L.P., a Delaware limited partnership (the "Investment
Adviser"), each confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated (the "Underwriter" or "▇▇▇▇▇▇▇
▇▇▇▇▇"), with respect to the issue and sale by the Fund and the purchase by
the Underwriter of 600 shares of Auction Market Preferred Stock, Series C
("Series C AMPS"), with a par value of $.10 per share and a liquidation
preference of $25,000 per share plus an amount equal to accumulated but unpaid
dividends thereon (whether or not earned or declared), of the Fund (the
"Shares").
The Fund understands that the Underwriter proposes to make a public
offering of the Shares as soon as the Underwriter deems advisable after this
Agreement has been executed and delivered.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a notification on Form N-8A of registration of the Fund as an
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and a registration statement on Form N-2 (Nos.
333-[ ], 811-08081), including the related preliminary prospectus and
preliminary statement of additional information, for the registration of the
Shares under the Securities Act of 1933, as amended (the "1933 Act"), the
Investment Company Act, and the rules and regulations of the Commission under
the 1933 Act and the Investment Company Act (together, the "Rules and
Regulations"), and has filed such amendments to such registration statement on
Form N-2, if any, and such amended preliminary prospectuses and preliminary
statements of additional information as may have been required to
the date hereof. Promptly after execution and delivery of this Agreement, the
Fund will either (i) prepare and file a prospectus and statement of additional
information in accordance with the provisions of paragraph (c) of Rule 497
("Rule 497(c)") of the rules and regulations of the Commission under the 1933
Act (the "1933 Act Regulations") or a certificate in accordance with the
provisions of paragraph (j) of Rule 497 ("Rule 497(j)") of the 1933 Act
Regulations, (ii) prepare and file a prospectus and statement of additional
information in accordance with the provisions of Rule 430A ("Rule 430A") of
the 1933 Act Regulations and paragraph (h) of Rule 497 ("Rule 497(h)") of the
1933 Act Regulations, or (iii) if the Fund has elected to rely upon Rule 434
("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 497(h).
The information included in any such prospectus and statement of additional
information or in any such Term Sheet, as the case may be, that was omitted
from such registration statement at the time it became effective but that is
deemed to be part of such registration statement at the time it became
effective (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to
as "Rule 434 Information." Each prospectus and statement of additional
information used before such registration statement became effective, and any
prospectus and statement of additional information that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus/statement." Such
registration statement, including the exhibits thereto and schedules thereto,
if any, at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final
prospectus and final statement of additional information in the form first
furnished to the Underwriter for use in connection with the offering of the
Shares is herein called the "Prospectus." If Rule 434 is relied on, the term
"Prospectus" shall refer to the preliminary prospectus/statement dated [ ],
2005, together with the applicable Term Sheet and all references in this
Agreement to the date of such Prospectus shall mean the date of the applicable
Term Sheet. For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus/statement, the Prospectus, or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed
to include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
All references in this Agreement to financial statements and
schedules and other information which is "contained," "included" or "stated"
in the Registration Statement, any preliminary prospectus/statement, or the
Prospectus (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information
which is incorporated by reference in the Registration Statement, any
preliminary prospectus or the Prospectus as the case may be; and all
references in this Agreement to amendments or supplements to the Registration
Statement, any preliminary prospectus or the Prospectus shall be deemed to
mean and include the filing of any document under the Securities Exchange Act
of 1934, as amended (the "1934 Act"), which is incorporated by reference in
the Registration Statement, such preliminary prospectus/statement, or the
Prospectus, as the case may be.
2
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Fund and the Investment
Adviser. The Fund and the Investment Adviser each severally represents and
warrants to the Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof and as of the Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with the Underwriter, as
follows:
(i) Compliance with Registration Requirements. The Fund
meets the requirements for use of Form N-2 under the 1933 Act. Each
of the Registration Statement and any Rule 462(b) Registration
Statement has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement has been issued under the 1933 Act
and no proceedings for that purpose have been instituted or are
pending or, to the knowledge of the Fund or the Investment Adviser,
are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with. If
required, the Fund has received any orders exempting the Fund from
any provisions of the Investment Company Act.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments
thereto became effective and at the Closing Time the Registration
Statement, the Rule 462(b) Registration Statement and any amendments
or supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act, the Investment
Company Act and the Rules and Regulations and did not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. Neither the Prospectus, nor any
amendments or supplements thereto, at the time the Prospectus or any
amendments or supplements thereto were issued and at the Closing Time
included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. The representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or the Prospectus made in
reliance upon and in conformity with information furnished to the
Fund in writing by the Underwriter expressly for use in the
Registration Statement or in the Prospectus. If Rule 434 is used, the
Fund will comply with the requirements of Rule 434 and the Prospectus
shall not be "materially different," as such term is used in Rule
434, from the prospectus included in the Registration Statement at
the time it became effective.
Each preliminary prospectus/statement and the prospectus and
statement of additional information filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 497(c) or Rule 497(h) under the 1933 Act,
complied when so filed in all material respects with the Rules and
Regulations and each preliminary prospectus/statement and the
Prospectus delivered to the Underwriter for use in connection with
this offering was identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the
extent permitted by Regulation S-T.
3
If a Rule 462(b) Registration Statement is required in
connection with the offering and sale of the Shares, the Fund has
complied or will comply with the requirements of Rule 111, under the
1933 Act Regulations relating to the payment of filing fees thereof.
(ii) Independent Registered Public Accounting Firm. The
accountants who certified the financial statements and supporting
schedules, if any, included or incorporated by reference in the
Registration Statement are from an independent registered public
accounting firm as required by the 1933 Act and the Rules and
Regulations.
(iii) Financial Statements. The financial statements,
included or incorporated by reference in the Registration Statement
and Prospectus, together with the related schedules and notes,
present fairly the financial position of the Fund at the date
indicated and said statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the period involved. The supporting
schedules, if any, included or incorporated by reference in the
Registration Statement present fairly, in accordance with GAAP, the
information required to be stated therein. The information in the
Prospectus under the headings "Financial Highlights,"
"Capitalization," "Portfolio Composition" and "Description of Capital
Stock" has been fairly presented.
(iv) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and in the Prospectus, except as otherwise stated therein,
(A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Fund, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there
have been no transactions entered into by the Fund, other than those
in the ordinary course of business, which are material with respect
to the Fund and (C) except for regular monthly dividends on the
outstanding shares of common stock, par value $.10 per share (the
"Common Stock"), of the Fund and periodic distributions on the
outstanding shares of Auction Market Preferred Stock, with a
liquidation preference of $25,000 per share (the "Outstanding AMPS"),
of the Fund pursuant to the terms of the Outstanding AMPS, and
special year end distributions on the Common Stock and Outstanding
AMPS related to the Fund's qualification as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as
amended ("Subchapter M of the Code"), there has been no dividend or
distribution of any kind declared, paid or made by the Fund on any
class of its capital stock.
(v) Good Standing of the Fund. The Fund has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Maryland and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under this Agreement; and the Fund is duly qualified
as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
4
(vi) Subsidiaries. The Fund has no subsidiaries.
(vii) Officers and Directors. No person is serving or acting
as an officer, director or investment adviser of the Fund except in
accordance with the provisions of the Investment Company Act and the
Rules and Regulations and the Investment Advisers Act of 1940, as
amended (the "Advisers Act"), and the rules and regulations of the
Commission promulgated under the Advisers Act (the "Advisers Act
Rules and Regulations"). Except as disclosed in the Registration
Statement and the Prospectus (or any amendment or supplement to
either of them), no director of the Fund is an "interested person"
(as defined in the Investment Company Act) of the Fund or an
"affiliated person" (as defined in the Investment Company Act) of the
Underwriter.
(viii) Capitalization. The authorized, issued and
outstanding capital stock of the Fund is as set forth in the
Prospectus under the caption "Description of Capital Stock." All
issued and outstanding shares of Common Stock and Outstanding AMPS
have been duly authorized and validly issued and are fully paid and
non-assessable, except as provided for in the Fund's charter, and
have been offered and sold or exchanged by the Fund in compliance
with all applicable laws (including without limitation, federal and
state securities laws); none of the outstanding shares of Common
Stock or Outstanding AMPS of the Fund was issued in violation of the
preemptive or other similar rights of any securityholder of the Fund.
(ix) Investment Company Act. The Fund is registered with the
Commission under the Investment Company Act as a closed-end,
non-diversified, management investment company, and no order of
suspension or revocation of such registration has been issued or
proceedings therefor initiated, to the knowledge of the Fund and the
Investment Adviser, or threatened by the Commission.
(x) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Fund.
(xi) Authorization and Description of Shares. The Shares to
be purchased by the Underwriter from the Fund have been duly
authorized for issuance and sale to the Underwriter pursuant to this
Agreement, and, when issued and delivered by the Fund pursuant to
this Agreement against payment of the consideration set forth in this
Agreement will be validly issued, fully paid and non-assessable; the
Shares conform to all statements relating thereto contained in the
Prospectus and such description conforms to the rights set forth in
the instruments defining the same; no holder of the Shares will be
subject to personal liability by reason of being such a holder; and
the issuance of the Shares is not subject to the preemptive or other
similar rights of any securityholder of the Fund.
(xii) Absence of Defaults and Conflicts. The Fund is not in
violation of its charter or by-laws or in default in the performance
or observance of any obligation, agreement, covenant or condition
contained in any material contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Fund is a party or by which it or its
properties may be bound, or
5
to which any of the property or assets of the Fund is subject
(collectively, "Agreements and Instruments"), except for such
defaults that would not result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement, the Investment
Advisory Agreement, the Custody Agreement, the Auction Agent
Agreement and the Letter of Representations referred to in the
Registration Statement (as used herein, the "Advisory Agreement", the
"Custody Agreement," the "Auction Agreement" and the "Letter of
Representations," respectively) and the consummation of the
transactions contemplated in this Agreement and in the Registration
Statement (including the issuance and sale of the Shares and the use
of the proceeds from the sale of the Shares as described in the
Prospectus under the caption "Use of Proceeds") and compliance by the
Fund with its obligations under this Agreement have been duly
authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or a default or
Repayment Event (as defined below) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or
assets of the Fund pursuant to the Agreements and Instruments (except
for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the
charter or the by-laws of the Fund, or any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Fund or any of its assets, properties or
operations. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment
of all or a portion of such indebtedness by the Fund.
(xiii) Authorization of Agreements. Each of this Agreement,
the Advisory Agreement and the Custody Agreement has been duly
authorized, executed and delivered by the Fund, and each complies
with all applicable provisions of the Investment Company Act. Each of
the Auction Agreement and the Letter of Representations has been duly
authorized for execution and delivery by the Fund and, when executed
and delivered by the Fund, will constitute a valid and binding
obligation of the Fund, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization
or other laws relating to or affecting creditors' rights and to
general equitable principles.
(xiv) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court
or governmental agency or body, domestic or foreign, now pending, or,
to the knowledge of the Fund or the Investment Adviser, threatened
against or affecting the Fund, which is required to be disclosed in
the Registration Statement (other than as disclosed therein), or
which might reasonably be expected to result in a Material Adverse
Effect, or which might reasonably be expected to materially and
adversely affect the properties or assets of the Fund or the
consummation of the transactions contemplated in this Agreement or
the performance by the Fund of its obligations hereunder; the
aggregate of all pending legal or governmental proceedings to which
the Fund is a party or of which any of its respective property or
assets is the subject which are not described in the Registration
Statement, including ordinary routine
6
litigation incidental to the business, could not reasonably be
expected to result in a Material Adverse Effect.
(xv) Subchapter M Compliance. The Fund intends to, and will,
direct the investment of the proceeds of the offering described in
the Registration Statement in such a manner as to comply with the
requirements of Subchapter M of the Code, and the Fund qualifies and
intends to continue to qualify as a regulated investment company
under Subchapter M of the Code.
(xvi) Distribution of Offering Materials. The Fund has not
distributed and, prior to the later to occur of (A) the Closing Time
and (B) completion of the distribution of the Shares, will not
distribute any offering material in connection with the offering and
sale of the Shares other than the Registration Statement, a
preliminary prospectus, the Prospectus or other materials, if any,
permitted by the 1933 Act or the Investment Company Act or the Rules
and Regulations.
(xvii) Accounting Controls. The Fund maintains a system of
internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorization and with the
applicable requirements of the Investment Company Act, the Rules and
Regulations and the Code; (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets and to maintain compliance with the books
and records requirements under the Investment Company Act and the
Rules and Regulations; (C) access to assets is permitted only in
accordance with the management's general or specific authorization;
and (D) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(xviii) Absence of Undisclosed Payments. To the Fund's
knowledge, neither the Fund nor any employee or agent of the Fund has
made any payment of funds of the Fund or received or retained any
funds, which payment, receipt or retention of funds is of a character
required to be disclosed in the Prospectus.
(xix) Material Agreements. This Agreement, the Advisory
Agreement, the Custody Agreement and the Auction Agent Agreement have
each been duly authorized by all requisite action on the part of the
Fund and executed and delivered by the Fund, as of the dates noted
therein, and each complies with all applicable provisions of the
Investment Company Act in all material respects. Assuming due
authorization, execution and delivery by the other parties thereto
with respect to the Advisory Agreement, the Custody Agreement and the
Auction Agent Agreement, each of the Advisory Agreement, the Custody
Agreement and the Auction Agent Agreement constitutes a valid and
binding agreement of the Fund, enforceable in accordance with its
terms, except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing and
except as rights to indemnification or contribution thereunder may be
limited by federal or state laws.
7
(xx) Registration Rights. There are no persons with
registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise
registered by the Fund under the 1933 Act.
(xxi) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits thereto by the
1933 Act, the Investment Company Act or the Rules and Regulations
which have not been so described and filed as required.
(xxii) Possession of Intellectual Property. The Fund owns or
possesses, has the right to use or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by the Fund, and the
Fund has not received any notice or is not otherwise aware of any
infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances
which would render any Intellectual Property invalid or inadequate to
protect the interest of the Fund therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate,
would result in a Material Adverse Effect.
(xxiii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Fund of
its obligations hereunder, in connection with the offering, issuance
or sale of the Shares under this Agreement or the consummation of the
transactions contemplated by this Agreement, except such as have been
already obtained or as may be required under the 1933 Act, the 1934
Act or the Investment Company Act or the Rules and Regulations and
foreign or state securities laws or under the rules of the NASD
(formerly, the National Association of Securities Dealers, Inc.).
(xxiv) Possession of Licenses and Permits. The Fund
possesses such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by it; the Fund
is in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would
not, singly or in the aggregate, have a Material Adverse Effect; all
of the Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect
would not have a Material Adverse Effect; and the Fund has not
received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
8
(xxv) NYSE Listing. The Fund's shares of Common Stock are
duly listed on the New York Stock Exchange ("NYSE").
(xxvi) Ratings. The Shares have been, or prior to the
Closing Date will be, assigned a rating of Aaa by ▇▇▇▇▇'▇ Investors
Service, Inc. ("Moody's") and AAA by Standard & Poor's ("S&P").
(xxvii) Leverage. The Fund has no liability for borrowed
money, including under any reverse repurchase agreement.
(b) Additional Representations of the Investment Adviser. The
Investment Adviser represents and warrants to the Underwriter as of the date
hereof and as of the Representation Date as follows:
(i) Organization and Authority of Investment Adviser. The
Investment Adviser has been duly organized as a limited partnership
under the laws of the State of Delaware, with power and authority to
conduct its business as described in the Registration Statement and
the Prospectus.
(ii) Investment Advisers Act. The Investment Adviser is duly
registered as an investment adviser under the Investment Advisers Act
of 1940, as amended (the "Investment Advisers Act"), and is not
prohibited by the Investment Advisers Act or the Investment Company
Act, or the rules and regulations under such acts, from acting under
the Advisory Agreement for the Fund as contemplated by the
Registration Statement and the Prospectus.
(iii) Description of Investment Adviser. The description of
the Investment Adviser in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them)
complied and complies in all material respects with the provisions of
the 1933 Act, the Investment Company Act, the Advisers Act, the Rules
and Regulations and the Advisers Act Rules and Regulations and is
true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
(iv) Capitalization. The Investment Adviser has the
financial resources available to it necessary for the performance of
its services and obligations as contemplated in the Registration
Statement, the Prospectus, this Agreement and under the Advisory
Agreement.
(v) Authorization of Agreements. This Agreement has been
duly authorized, executed and delivered by the Investment Adviser;
the Advisory Agreement has been duly authorized, executed and
delivered by the Investment Adviser, and constitutes a valid and
binding obligation of the Investment Adviser, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization or other laws relating to or affecting
creditors' rights and to general equitable principles; and neither
the execution and delivery of this Agreement or the Advisory
Agreement, nor the performance by the Investment Adviser of its
obligations hereunder or thereunder will
9
conflict with, or result in a breach of any of the terms and
provisions of, or constitute, with or without the giving of notice or
the lapse of time or both, a default under, any agreement or
instrument to which the Investment Adviser is a party or by which it
is bound, the certificate of formation, the operating agreement, or
other organizational documents of the Investment Adviser, or the
Investment Adviser's knowledge by any law, order, decree, rule or
regulation applicable to it of any jurisdiction, court, federal or
state regulatory body, administrative agency or other governmental
body, stock exchange or securities association having jurisdiction
over the Investment Adviser or its respective properties or
operations; and no consent, approval, authorization or order of any
court or governmental authority or agency is required for the
consummation by the Investment Adviser of the transactions
contemplated by this Agreement and the Advisory Agreement, except as
have been obtained or may be required under the 1933 Act, the
Investment Company Act, the 1934 Act or state securities laws.
(vi) No Material Adverse Change. Since the respective dates
as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, there has not
occurred any event which should reasonably be expected to have a
material adverse effect on the ability of the Investment Adviser to
perform its respective obligations under this Agreement and the
Advisory Agreement.
(vii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court
or governmental agency or body, domestic or foreign, now pending, or,
to the knowledge of the Investment Adviser, threatened against or
affecting the Investment Adviser or any "affiliated person" of the
Investment Adviser (as such term is defined in the Investment Company
Act) or any partners, trustees, officers or employees of the
foregoing, whether or not arising in the ordinary course of business,
which might reasonably be expected to result in any material adverse
change in the condition, financial or otherwise, or earnings,
business affairs or business prospects of the Investment Adviser,
materially and adversely affect the properties or assets of the
Investment Adviser or materially impair or adversely affect the
ability of the Investment Adviser to function as an investment
adviser or perform its obligations under the Advisory Agreement, or
which is required to be disclosed in the Registration Statement and
the Prospectus.
(viii) Absence of Violation or Default. The Investment
Adviser is not in violation of its certificate of formation, its
operating agreement or other organizational documents or in default
under any agreement, indenture or instrument, where such violation or
default would reasonably be expected to have a Material Adverse
Effect on the Investment Adviser's ability to function as an
investment adviser or perform its obligations under the Advisory
Agreement.
(c) Officers' Certificates. Any certificate signed by any officer of
the Fund or any officer of the Investment Adviser delivered to the Underwriter
or to counsel for the Fund and the Underwriter shall be deemed a
representation and warranty by the Fund or the Investment Adviser, as the case
may be, to the Underwriter as to the matters covered thereby.
10
SECTION 2. Sale and Delivery to the Underwriter; Closing.
(a) Purchase Price. On the basis of the representations and
warranties herein contained, and subject to the terms and conditions herein
set forth, the Fund agrees to sell to the Underwriter and the Underwriter
agrees to purchase from the Fund the Shares at the price per share set forth
in Schedule A.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Shares shall be made at the offices of Sidley ▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such
other place as shall be agreed upon by the Underwriter and the Fund, at 9:00
A.M. (Eastern time) on the second (third, if the pricing occurs after 4:30
P.M. (Eastern time) on any given day) business day following the date hereof,
or such other time not later than ten business days after such date as shall
be agreed upon by the Underwriter and the Fund (such time and date of payment
and delivery herein being referred to as "Closing Time").
Payment shall be made to the Fund by wire transfer of immediately
available funds to a bank account designated by the Fund, against delivery to
the Underwriter of certificates for the Shares to be purchased by it.
(c) Denominations; Registration. The Shares shall be represented by
certificates registered in the name of Cede & Co., as nominee for The
Depository Trust Company. The certificates for the Shares will be made
available for examination by the Underwriter not later than 10:00 A.M. on the
last business day prior to Closing Time.
SECTION 3. Covenants of the Fund. The Fund covenants with the
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests.
The Fund, subject to Section 3(b), will comply with the requirements of Rule
430A or Rule 434, as applicable, and will notify the Underwriter immediately,
and confirm the notice in writing, (i) if any post-effective amendment to the
Registration Statement shall have become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus/statement, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes, and
(v) of the issuance by the Commission of an order of suspension or revocation
of the notification on Form N-8A of registration of the Fund as an investment
company under the Investment Company Act or the initiation of any proceeding
for that purpose. The Fund will make every reasonable effort to prevent the
issuance of any stop order described in subsection (iv) hereunder or any order
of suspension or revocation described in subsection (v) hereunder and, if any
such stop order or order of suspension or revocation is issued, to obtain the
lifting thereof at the earliest possible moment. The Fund will promptly effect
the filings necessary pursuant to Rule 497(c), Rule 497(j) or Rule 497(h) and
will take such steps as it
11
deems necessary to ascertain promptly whether the certificate transmitted for
filing under Rule 497(j) or the form of prospectus and statement of additional
information transmitted for filing under Rule 497(c) or Rule 497(h) was
received for filing by the Commission and, in the event that it was not, it
will promptly file such certificate or prospectus and statement of additional
information.
(b) Filing of Amendments. The Fund will give the Underwriter notice
of its intention to file or prepare any amendment to the Registration
Statement (including any post-effective amendment or filing under Rule
462(b)), any Term Sheet or any amendment, supplement or revision to either the
prospectus or statement of additional information included in the Registration
Statement at the time it became effective or to the Prospectus, whether
pursuant to the Investment Company Act, the 1933 Act, or otherwise, and will
furnish the Underwriter with copies of any such documents a reasonable amount
of time prior to such proposed filing or use, as the case may be, and will not
file or use any such document to which the Underwriter or counsel to the
Underwriter and the Fund shall object.
(c) Delivery of Registration Statements. The Fund has furnished or
will deliver to the Underwriter and counsel to the Underwriter and the Fund,
without charge, signed copies of the notification of registration on Form N-8A
and Registration Statement as originally filed and of each amendment thereto,
(including exhibits filed therewith, or incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will also
deliver to the Underwriter a conformed copy, without charge, of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for the Underwriter. The copies of the Registration
Statement and each amendment thereto furnished to the Underwriter will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
(d) Delivery of Prospectus. The Fund has delivered to the
Underwriter, without charge, as many copies of each preliminary
prospectus/statement as the Underwriter reasonably requested, and the Fund
hereby consents to the use of such copies for purposes permitted by the 1933
Act. The Fund will furnish to the Underwriter, without charge, during the
period when the Prospectus is required to be delivered under the 1933 Act,
such number of copies of the Prospectus (as amended or supplemented) as the
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriter will be identical to the
electronically transmitted copies thereof field with the Commission pursuant
to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Fund will comply
with the 1933 Act, the Investment Company Act and the Rules and Regulations so
as to permit the completion of the distribution of the Shares as contemplated
in this Agreement and in the Prospectus. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Shares, any event shall occur or condition shall exist as a result of which it
is necessary, in the opinion of counsel to the Underwriter and the Fund, to
amend the Registration Statement or amend or supplement any Prospectus in
order that the Prospectus will not include any untrue statements of material
fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in
the opinion of such counsel,
12
at any such time to amend the Registration Statement or amend or supplement
any Prospectus in order to comply with the requirements of the 1933 Act or the
1933 Act Regulations, the Fund will promptly prepare and file with the
Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the Fund will
furnish to the Underwriter such number of copies of such amendment or
supplement as the Underwriter may reasonably request.
(f) Blue Sky Qualifications. The Fund will use its best efforts, in
cooperation with the Underwriter, to qualify the Shares for offering and sale
under the applicable securities laws of such states and other jurisdictions as
the Underwriter may designate and to maintain such qualifications in effect
for a period of not less than one year from the later of the effective date of
the Registration Statement and any Rule 462(b) Registration Statement;
provided, however, that the Fund shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject. In each jurisdiction in which the Shares
have been so qualified, the Fund will file such statements and reports as may
be required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
(g) Rule 158. The Fund will timely file such reports pursuant to the
1933 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Fund will use the net proceeds received by
it from the sale of the Shares in the manner specified in the Prospectus under
"Use of Proceeds."
(i) Subchapter M. The Fund will use its best efforts to maintain its
qualification as a regulated investment company under Subchapter M of the
Code.
(j) Restrictions on Sale of Shares. During a period of 180 days from
the date of the Prospectus, the Fund will not, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i) directly or indirectly offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any senior security of the Fund, as defined
in Section 18 of the Investment Company Act, or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii)
enter into any swap or any other agreement or any transaction that transfers,
in whole or in part, directly or indirectly, the economic consequence of
ownership of senior securities, whether any such swap or transaction described
in clause (i) or (ii) above is to be settled by delivery of senior securities,
in cash or otherwise. The foregoing sentence shall not apply to (A) the Shares
to be sold hereunder or (B) transactions as contemplated in the Registration
Statement where the Fund has segregated cash, cash equivalents or liquid
securities at the Fund's custodian having a market value at all times at least
equal to the amount of such senior securities.
13
(k) Reporting Requirements. The Fund, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant to
the Investment Company Act and the 1934 Act within the time periods required
by the Investment Company Act and the Rules and Regulations and the 1934 Act
and the rules and regulations of the Commission thereunder, respectively.
(l) Rule 462(b) Registration Statement. If the Fund elects to rely
upon Rule 462(b), the Fund shall file a Rule 462(b) Registration Statement
with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement, and the Fund shall at the time of
filing either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the payment of
such fee pursuant to Rule 111(b) under the 1933 Act.
(m) No Manipulation of Market for the Shares. The Fund will not (a)
take, directly or indirectly, any action designed to cause or to result in, or
that might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Fund to facilitate the sale
or resale of the Shares, and (b) until the Closing Date (i) sell, bid for or
purchase the Shares or pay any person (other than the Underwriter) any
compensation for soliciting purchases of the Shares or (ii) pay or agree to
pay to any person any compensation for soliciting another to purchase any
other securities of the Fund (other than payments to broker-dealers in
connection with the auctions of the Outstanding AMPS).
SECTION 4. Covenants of the Underwriter. The Underwriter covenants
and agrees with the Fund that no later than the second business day succeeding
Closing Time, it will provide the Fund and the Auction Agent (as defined in
the Prospectus) with a listing of Existing Holders (as defined in the
Prospectus) of Shares, the number of shares held by each such Existing Holder
and the number of Shares it is holding as Underwriter as of the date of such
notice. SECTION 5. Payment of Expenses.
(a) Expenses. The Fund will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriter of
this Agreement and such other documents as may be required in connection with
the offering, purchase, sale, issuance or delivery of the Shares, (iii) the
preparation, issuance and delivery of the certificates for the Shares to the
Underwriter, including any stock or other transfer taxes and any stamp or
other duties payable upon the sale, issuance or delivery of the Shares to the
Underwriter, (iv) the fees and disbursements of the Fund's counsel,
accountants and other advisers, (v) the qualification of the Shares under the
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel to
the Underwriter and the Fund in connection therewith, (vi) the printing and
delivery to the Underwriter of copies of each preliminary
prospectus/statement, any Term Sheets and of the Prospectus and any amendments
or supplements thereto, (vii) the fees and expenses of any transfer agent or
registrar for the Shares, and (viii) the fees charged by rating agencies
rating the Shares.
14
(b) Termination of Agreement. If this Agreement is terminated by the
Underwriter in accordance with the provisions of Section 6 or Section 10(a)(i)
hereof, the Fund or the Investment Adviser shall reimburse, or arrange for an
affiliate to reimburse, the Underwriter for all of its out-of-pocket expenses,
including the reasonable fees and disbursements of counsel to the Fund and the
Underwriter.
SECTION 6. Conditions of Underwriter's Obligations. The obligations
of the Underwriter hereunder are subject to the accuracy of the
representations and warranties of the Fund and the Investment Adviser
contained in Section 1 hereof, or in the certificates of any officer of the
Fund and the Investment Adviser delivered pursuant to the provisions hereof,
to the performance by the Fund and the Investment Adviser of their respective
covenants and obligations hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement including any Rule 462(b) Registration Statement has become
effective and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission and any request
on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of counsel to the Underwriter and
the Fund. Either (i) a certificate has been filed with the Commission in
accordance with Rule 497(j) or a prospectus and statement of additional
information have been filed with the Commission in accordance with Rule
497(c), or (ii) a prospectus and statement of additional information
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 497(h) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with
the requirements of Rule 430A) or, if the Fund has elected to rely upon Rule
434, a Term Sheet shall have been filed with the Commission in accordance with
Rule 497(h).
(b) Opinion of Counsel for the Fund and the Underwriter. At Closing
Time, the Underwriter shall have received the favorable opinion, dated as of
Closing Time, of Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, counsel to the Fund and the
Underwriter, to the effect set forth in Exhibit A hereto.
(c) Opinion of Senior Attorney of the Investment Adviser. At Closing
Time, the Underwriter shall have received the favorable opinion, dated as of
Closing Time, of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., General Counsel of the Investment
Adviser, or another senior attorney of the Investment Adviser, in form and
substance satisfactory to counsel to the Underwriter, to the effect set forth
in Exhibit B hereto and to such further effect as counsel to the Underwriter
may reasonably request.
(d) Officers' Certificates. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Fund, whether or not arising in the ordinary course
of business, and the Underwriter shall have received (A) a certificate of the
President or a Vice President of the Fund, dated as of Closing Time, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct
with the same force and effect as though expressly made at and as of Closing
Time,
15
(iii) the Fund has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied at or prior to Closing Time, and (iv)
no stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or are
pending or, to the officer's knowledge, are contemplated by the Commission and
(B) a certificate of the President or a Vice President of the Investment
Adviser, dated as of Closing Time, to the effect that (i) there has been no
such material change, (ii) the representations and warranties in Sections 1(a)
and 1(b) hereof are true and correct with the same force and effect as though
expressly made at and as of Closing Time, (iii) the Investment Adviser has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time and (iv) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Investment Adviser,
whether or not arising in the ordinary course of business.
(e) Independent Registered Public Accounting Firm's Comfort Letter.
At the time of the execution of this Agreement, the Underwriter shall have
received from Ernst & Young LLP a letter, dated such date, in form and
substance satisfactory to the Underwriter containing statements and
information of the type ordinarily included in independent registered public
accounting firms' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus, to the effect set forth in Exhibit
C hereto and to such further effect as counsel to the Underwriter may
reasonably request.
(f) Bring-down Comfort Letter. At Closing Time, the Underwriter shall
have received from Ernst & Young LLP a letter, dated as of Closing Time, to
the effect that they reaffirm the statements made in the letter, furnished
pursuant to subsection (e) of this Section, except that the "specified date"
referred to shall be a date not more than three business days prior to Closing
Time.
(g) Ratings Letters. Subsequent to the execution and delivery of this
Agreement and prior to Closing Time, there shall not have occurred any
downgrading, nor shall any notice have been given of (i) any intended or
potential downgrading or (ii) any review or possible change that indicates
anything other than a stable outlook, in the rating accorded any securities of
or guaranteed by the Fund by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2) under
the 1933 Act; and prior to Closing Time, S&P and ▇▇▇▇▇'▇ shall have confirmed
by letter that the Shares have been rated AAA and Aaa, respectively, by such
agencies.
(h) Asset Coverage. As of the Closing Date and assuming the receipt
of the net proceeds from the sale of the Shares, the 1940 Act AMPS Asset
Coverage and the AMPS Basic Maintenance Amount (each as defined in the Fund's
articles supplementary creating the Shares) each will be met.
(i) Additional Documents. At Closing Time, counsel to the Fund and
the Underwriter shall have been furnished with such documents and opinions as
it may reasonably require for the purpose of enabling it to pass upon the
issuance and sale of the Shares as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Fund
16
in connection with the issuance and sale of the Shares as herein contemplated
shall be reasonably satisfactory in form and substance to the Underwriter and
counsel to the Fund and the Underwriter.
(j) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, may be terminated by the Underwriter by notice to the Fund at
any time at or prior to Closing Time and such termination shall be without
liability of any party to any other party except as provided in Section 5 and
except that Sections 1, 7, 8, 9 and 12 shall survive any such termination and
remain in full force and effect.
SECTION 7. Indemnification.
(a) Indemnification of the Underwriter. The Fund and the Investment
Adviser jointly and severally agree to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the 1933 Act or Section 25 of the 1934 Act and any
director, officer, employee or affiliate thereof as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary
prospectus/statement or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of
a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, provided that (subject to Section 7(d) below)
any such settlement is effected with the written consent of the
indemnifying party; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Underwriter) reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any
such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
17
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund by the
Underwriter expressly for use in the Registration Statement (or any amendment
thereto), including the Rule 430A Information and the Rule 434 Information, if
applicable, or any preliminary prospectus/statement or the Prospectus (or any
amendment or supplement thereto).
(b) Indemnification of Fund, Investment Adviser, General Partner, and
Directors and Officers. The Underwriter agrees to indemnify and hold harmless
the Fund, the Investment Adviser, the directors of the Fund, the general
partner of the Investment Adviser, each of the Fund's officers who signed the
Registration Statement, and each person, if any, who controls the Fund or the
Investment Adviser within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act, against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto) including the Rule 430A Information and the Rule
434 Information, if applicable, or in any preliminary prospectus/statement or
the Prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Fund by the
Underwriter expressly for use in the Registration Statement (or any amendment
thereto), or any preliminary prospectus/statement or the Prospectus (or any
amendment or supplement thereto).
(c) Actions against Parties, Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 7(a) above, counsel to the indemnified parties shall be selected by
the Underwriter, and, in the case of parties indemnified pursuant to Section
7(b) above, counsel to the indemnified parties shall be selected by the Fund
and the Investment Adviser. An indemnifying party may participate at its own
expense in the defense of any such action; provided, however, that counsel to
the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for the fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 7 or Section 8 hereof (whether
or not the indemnified parties are actual or potential parties thereto),
unless such settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out of such
litigation, investigation, proceeding or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
18
(d) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 7(a)(ii) effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 30 days
prior to such settlement being entered into and (iii) such indemnifying party
shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
SECTION 8. Contribution. If the indemnification provided for in
Section 7 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Fund and the Investment Adviser on the one hand and the Underwriter on the
other hand from the offering of the Shares pursuant to this Agreement or (ii)
if the allocation provided by clause (i) is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Fund and
the Investment Adviser on the one hand and of the Underwriter on the other
hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Fund and the Investment Adviser
on the one hand and the Underwriter on the other hand in connection with the
offering of the Shares pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Shares pursuant to this Agreement (before deducting expenses) received by the
Fund, and the total underwriting commission received by the Underwriter, in
each case as set forth on the cover of the Prospectus, or, if Rule 434 is
used, the corresponding location on the Term Sheet, bear to the aggregate
initial public offering price of the Shares as set forth on such cover.
The relative fault of the Fund and the Investment Adviser on the one
hand and the Underwriter on the other hand shall be determined by reference
to, among other things, whether any such untrue or alleged untrue statement of
a material fact or omission or alleged omission to state a material fact
relates to information supplied by the Fund and the Investment Adviser or by
the Underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Fund, the Investment Adviser and the Underwriter agree that it
would not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above
in this Section 8. The aggregate amount of losses, liabilities, claims,
damages and expenses incurred by an indemnified party and referred to above in
this Section 7 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
19
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue or alleged untrue statement or omission
or alleged omission.
Notwithstanding the provisions of this Section 8, the Underwriter
shall not be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages
which the Underwriter has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls the
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the Underwriter,
and each director of the Fund and the Investment Adviser, respectively, each
officer of the Fund who signed the Registration Statement and each person, if
any, who controls the Fund and the Investment Adviser within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, shall have the same
rights to contribution as the Fund and the Investment Adviser.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Fund or of the Investment
Adviser submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the
Underwriter or controlling person, or by or on behalf of the Fund or the
Investment Adviser and shall survive delivery of the Shares to the
Underwriter.
SECTION 10. Termination of Agreement.
(a) Termination; General. The Underwriter may terminate this
Agreement by notice to the Fund, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund or the Investment
Adviser, whether or not arising in the ordinary course of business, or (ii) if
there has occurred any material adverse change in the financial markets in the
United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which
is such as to make it, in the judgment of the Underwriter, impracticable or
inadvisable to market the Shares or to enforce contracts for the sale of the
Shares, or (iii) if trading in any securities of the Fund has been suspended
or materially limited by the Commission or the NYSE or such other national
securities exchange upon which the Fund's securities trade, or if trading
generally on the NYSE or the American Stock Exchange or in the Nasdaq National
Market System has been suspended or materially limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by any of said exchanges or by such system or
by order
20
of the Commission, the NASD or any other governmental authority, or a material
disruption has occurred in commercial banking or securities settlement or
clearance services in the United States or (iv) if a banking moratorium has
been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 5 hereof, and provided further that
Sections 1, 7, 8, 9 and 12 shall survive such termination and remain in full
force and effect.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriter shall be directed to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. Inc., ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated at ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Equity Capital Markets; notices to the Fund and the
Investment Adviser shall be directed to ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
SECTION 12. Parties. This Agreement shall inure to the benefit of and
be binding upon the Underwriter, the Fund, the Investment Adviser and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriter, the Fund, the Investment Adviser and their respective
successors and the controlling persons and officers, directors and general
partner referred to in Sections 7 and 8 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement
and all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriter, the Fund and the Investment Adviser and
their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Shares from the Underwriter
shall be deemed to be a successor merely by reason of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. No Fiduciary Relationship. The Fund acknowledges and
agrees that (i) the purchase and sale of the Shares pursuant to this
Agreement, including the determination of the public offering price of the
Shares and any related discounts and commissions, is an arm's-length
commercial transaction between the Fund on the one hand, and the Underwriter,
on the other hand, (ii) in connection with the offering contemplated hereby
and the process leading to such transaction the Underwriter is and has been
acting solely as a principal and is not the agent or fiduciary of the Fund, or
its stockholders, creditors, employees or any other party, (iii) the
Underwriter has not assumed nor will it assume an advisory or fiduciary
responsibility in favor of the Fund with respect to the offering
21
contemplated hereby or the process leading thereto (irrespective of whether
the Underwriter has advised or is currently advising the Fund on other
matters) and the Underwriter has no obligation to the Fund with respect to the
offering contemplated hereby except the obligations expressly set forth in
this Agreement, (iv) the Underwriter and its respective affiliates may be
engaged in a broad range of transactions that involve interests that differ
from those of the Fund, and (v) the Underwriter has not provided any legal,
accounting, regulatory or tax advice with respect to the offering contemplated
hereby and the Fund has consulted its own legal, accounting, regulatory and
tax advisors to the extent it deemed appropriate.
SECTION 15. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
22
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Fund a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriter and the Fund and the Investment Adviser in accordance
with its terms.
Very truly yours,
MUNIHOLDINGS FUND, INC.
By:___________________________________
Authorized Officer
FUND ASSET MANAGEMENT, L.P.
By: PRINCETON SERVICES, INC.,
General Partner
By:___________________________________
Authorized Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By:___________________________________
Authorized Signatory
23
SCHEDULE A
----------
MUNIHOLDINGS FUND, INC.
(a Maryland corporation)
$15,000,000
Auction Market Preferred Stock
600 Shares, Series C
(Liquidation Preference $25,000 per share)
1. The initial public offering price per share for the Shares,
determined as provided in Section 2 hereof shall be $25,000 plus accumulated
dividends, if any, from the date of original issue.
2. The purchase price per share for the Shares to be paid by the
Underwriter shall be $24,750 plus accumulated dividends, if any, from the date
of original issue, being an amount equal to the initial public offering price
set forth above less $250 per share.
3. The dividend rate for the Series C AMPS for the initial dividend
period ending [ ], 2005, shall be [ ]%.
24
Exhibit A
FORM OF OPINION OF FUND'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 6(b)
1. The Fund has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland.
2. The Fund has the corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectus and
to enter into and perform its obligations under the Purchase Agreement.
3. The Fund is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or to be in good
standing would not result in a material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Fund, whether or not arising in the ordinary course of
business (a "Material Adverse Effect").
4. The authorized, issued and outstanding capital stock of the Fund is as set
forth in the Prospectus under the caption "Description of Capital Stock." The
outstanding shares of Common Stock of the Fund and the Outstanding AMPS have
been duly authorized and validly issued and are fully paid and non-assessable.
5. The Shares to be purchased by the Underwriter from the Fund pursuant to the
Purchase Agreement have been duly authorized for issuance and sale to the
Underwriter and, when issued and delivered by the Fund to the Underwriter
pursuant to the Purchase Agreement against payment of the consideration set
forth in the Purchase Agreement, will be validly issued and fully paid and
non-assessable, and no holder of the Shares is or will be subject to personal
liability solely by reason of being such a holder.
6. The issuance of the Shares is not subject to the preemptive or other
similar rights of any securityholder of the Fund.
7. To the best of our knowledge, the Fund does not have any subsidiaries.
8. The Purchase Agreement has been duly authorized, executed and delivered by
the Fund and complies with all applicable provisions of the Investment Company
Act.
9. The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; any required filing
of the certificate pursuant to Rule 497(j) or the Prospectus pursuant to Rule
497(c) or Rule 497(h), as the case may be, has been made in the manner and
within the time period required by Rule 497(j), Rule 497(c) or Rule
A-1
497(h), as the case may be; and, to the best of our knowledge, no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no proceedings
for that purpose have been instituted or are pending or threatened by the
Commission.
10. The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information and the Rule 434 Information, as
applicable, the Prospectus, and each amendment or supplement to the
Registration Statement and the Prospectus, as of their respective effective or
issue dates, complied as to form in all material respects (other than the
financial statements and supporting schedules included or incorporated by
reference therein or omitted therefrom, as to which we express no opinion)
with the requirements of the 1933 Act, the Investment Company Act and the
rules and regulations of the Commission under the 1933 Act and the Investment
Company Act (the "Rules and Regulations").
11. The form of certificate(s) used to evidence the Shares complies in all
material respects with all applicable statutory requirements and with any
applicable requirements of the charter and by-laws of the Fund.
12. To the best of our knowledge, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the Fund is a
party, or to which the property of the Fund is subject, before or brought by
any court or governmental agency or body, domestic or foreign, which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the properties or
assets thereof or the consummation of the transactions contemplated in the
Purchase Agreement or the performance by the Fund of its obligations
thereunder, other than those disclosed in the Prospectus.
13. The information in the Prospectus under "Description of AMPS,"
"Description of Capital Stock," and "Taxes" and in the Registration Statement
under Item 30, to the extent that it constitutes matters of law, summaries of
legal matters, the Fund's charter and bylaws or legal proceedings, or legal
conclusions, has been reviewed by us and is correct in all material respects.
14. To the best of our knowledge, there are no statutes or regulations that
are required to be described in the Prospectus that are not described as
required.
15. All descriptions in the Prospectus of contracts and other documents to
which the Fund is a party are accurate in all material respects; to the best
of our knowledge, there are no franchises, contracts, indentures, mortgages,
loan agreements, notes, leases or other instruments of the Fund required to be
described or referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.
16. To the best of our knowledge, the Fund is not in violation of its charter
or by-laws and no default by the Fund exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan
A-2
agreement, note, lease or other agreement or instrument that is described or
referred to in the Registration Statement or the Prospectus or filed or
incorporated by reference as an exhibit to the Registration Statement.
17. No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority
or agency, domestic or foreign (other than under the 1933 Act, the 1934 Act,
the Investment Company Act, the Rules and Regulations, which have been
obtained, or as may be required under the securities or blue sky laws of the
various states, as to which we express no opinion) is necessary or required in
connection with the due authorization, execution and delivery by the Fund of
the Purchase Agreement, the Advisory Agreement, the Custody Agreement, the
Auction Agreement and the Letter of Representations or for the offering,
issuance, sale or delivery of the Shares.
18. The Advisory Agreement and the Custody Agreement have each been duly
authorized and approved by the Fund and comply as to form in all material
respects with all applicable provisions of the Investment Company Act, and
each has been duly executed and delivered by the Fund.
19. Each of the Auction Agreement and the Letter of Representations has been
duly authorized, executed and delivered by the Fund, and each constitutes a
valid and binding obligation of the Fund, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization
or other laws relating to or affecting creditors' rights and to general
equitable principles.
20. The Fund is registered with the Commission under the Investment Company
Act as a closed-end, non-diversified management investment company, and all
required action has been taken by the Fund under the 1933 Act, the Investment
Company Act and the Rules and Regulations to make the public offering and
consummate the sale of the Shares pursuant to the Purchase Agreement; the
provisions of the charter and the by-laws of the Fund comply as to form in all
material respects with the requirements of the Investment Company Act; and, to
the best of our knowledge and information, no order of suspension or
revocation of such registration under the Investment Company Act, pursuant to
Section 8(e) of the Investment Company Act, has been issued or proceedings
therefor initiated or threatened by the Commission.
21. The execution, delivery and performance of the Purchase Agreement and the
consummation of the transactions contemplated in the Purchase Agreement and in
the Registration Statement (including the issuance and sale of the Shares, and
the use of the proceeds from the sale of the Shares as described in the
Prospectus under the caption "Use of Proceeds") and compliance by the Fund
with its obligations under the Purchase Agreement do not and will not, whether
with or without the giving of notice or lapse of time or both, conflict with
or constitute a breach of, or default or Repayment Event (as defined in
Section 1(a)(xii) of the Purchase Agreement) under or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets
of the Fund pursuant to any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease or any other agreement or instrument, known
to us, to which the Fund is a party or by which it may be bound, or to which
any of the property or assets of the Fund is subject (except for such
conflicts, breaches or
A-3
defaults or liens, charges or encumbrances that would not have a Material
Adverse Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of the Fund, or any applicable law,
statute, rule, regulation, judgment, order, writ or decree, known to us, of
any government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Fund or any of its properties, assets or
operations.
22. The Investment Adviser has been duly organized as a limited partnership
under the laws of the State of Delaware, with power and authority to conduct
its business as described in the Registration Statement and in the Prospectus.
23. The Investment Adviser is duly registered as an investment adviser under
the Advisers Act, and is not prohibited by the Advisers Act or the Investment
Company Act, or the rules and regulations of the Commission under the Advisers
Act or the Investment Company Act, from acting under the Investment Advisory
Agreement for the Fund as contemplated by the Registration Statement and the
Prospectus.
24. The Purchase Agreement and the Advisory Agreement have been duly
authorized, executed and delivered by the Investment Adviser, and the Advisory
Agreement constitutes valid and binding obligation of the Investment Adviser,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization or other laws relating to or affecting
creditors' rights and to general equity principles.
We have endeavored to see that the Registration Statement and the
Prospectus comply with the 1933 Act and the Investment Company Act and the
Rules and Regulations relating to registration statements on Form N-2 and
related prospectuses, but we cannot, of course, make any representation to you
as to the accuracy or completeness of statements of fact contained in the
Registration Statement or in the Prospectus. Nothing, however, has come to our
attention that has caused us to believe that the Registration Statement or any
amendment thereto, including the Rule 430A Information and Rule 434
Information (if applicable), (except for financial statements and schedules
and other financial data included or incorporated by reference therein or
omitted therefrom, as to which we make no statement), at the time such
Registration Statement or any such amendment was declared effective, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or supplement thereto
(except for financial statements and schedules and other financial data
included or incorporated by reference therein or omitted therefrom, as to
which we make no statement), at the time the Prospectus was issued, at the
time any such amended or supplemented prospectus was issued or at the Closing
Time, included or includes an untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In rendering such opinion, such counsel may rely as to matters of
fact (but not as to legal conclusions), to the extent they deem proper, on
certificates and written statements of responsible officers of and accountants
for the Fund, the Investment Adviser and Princeton Services and of public
officials. Such opinion shall not state that it is to be governed or qualified
by, or that it is otherwise subject to, any treatise, written policy or other
document relating to
A-4
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
A-5
Exhibit B
FORM OF OPINION OF THE GENERAL COUNSEL OR SENIOR ATTORNEY
OF THE INVESTMENT ADVISER TO BE DELIVERED
PURSUANT TO SECTION 6(c)
To the best of my knowledge and information, neither the execution
and delivery of the Purchase Agreement or the Advisory Agreement nor the
performance by the Investment Adviser of its obligations hereunder or
thereunder will conflict with, or result in a breach of, any of the terms and
provisions of, or constitute, with or without the giving of notice or the
lapse of time or both, a default under, any agreement or instrument to which
the Investment Adviser is a party or by which the Investment Adviser is bound,
or any law, order, rule or regulation applicable to the Investment Adviser of
any jurisdiction, court, Federal or state regulatory body, administrative
agency or other governmental body, stock exchange or securities association
having jurisdiction over the Investment Adviser or its properties or
operations.
B-1
Exhibit C
FORM OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S
COMFORT LETTER PURSUANT TO SECTION 6(e)
(1) We are an independent registered public accounting firm with
respect to the Fund within the meaning of the 1933 Act, Investment Company Act
and the applicable rules and regulations thereunder adopted by the Commission
and the Public Company Accounting Oversight Board (United States);
(2) In our opinion the financial statements audited by us and
included or incorporated by reference in the Registration Statement and the
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act, the Investment Company Act and the
related rules and regulations adopted by the Commission;
Such independent registered public accounting firm shall also state
that they have performed specified procedures, not constituting an audit,
including a reading of the latest available interim financial statements of
the Fund, a reading of the minute books of the Fund, made inquiries of
officials of the Fund responsible for financial accounting matters and such
other inquiries and procedures as may be specified in such letter, and on the
basis of such inquiries and procedures nothing came to their attention that
caused them to believe that during the period from the date of the audited
financial statements included or incorporated by reference in the Registration
Statement to a specified date not more than three days prior to the date of
the Purchase Agreement, there was any change in the capital stock (other than
by reason of the issuance of shares of common stock in connection with the
Fund's dividend reinvestment plan, as specified in such letter) or decrease in
net assets of the Fund or any increase in the long-term debt of the Fund, as
compared with amounts shown on the audited financial statements included or
incorporated by reference in the Registration Statement, except for changes
which the Registration Statement discloses have occurred or may occur; and in
addition, they have performed other specified procedures, not constituting an
audit, with respect to certain amounts, percentages, numerical data, financial
information and financial statements appearing in the Registration Statement,
which previously have been specified by such independent registered public
accounting firm and which shall be specified in such letter, and have compared
certain of such items with, and have found such items to be in agreement with,
the accounting and financial records of the Fund.
C-1