__________ SHARES
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ INCOME OPPORTUNITY FUND INC.
COMMON STOCK
UNDERWRITING AGREEMENT
June __, 2003
Citigroup Global Markets Inc.
Advest, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated
[Insert additional underwriters]
As Representatives of the Several Underwriters
c/o Citigroup Global Markets Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Income Opportunity Fund Inc., a Maryland
corporation (the "Fund"), ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Management Inc., a New York
corporation (the "Investment Adviser") and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC, a Delaware
limited liability company (the "Subadviser" and, together with the Investment
Adviser, the "Advisers"), address you as Underwriters and as the representatives
(the "Representatives") of each of the other persons, firms and corporations, if
any, listed in Schedule I hereto (herein collectively called "Underwriters").
The Fund proposes, upon the terms and conditions set forth herein, to issue and
sell an aggregate of __________ shares (the "Firm Shares") of common stock,
$0.0001 par value per share (the "Common Shares") of the Fund, to the several
Underwriters. The Fund also proposes to sell to the Underwriters, upon the terms
and conditions set forth in Section 2 hereof, up to an additional __________
Common Shares (the "Additional Shares"). The Firm Shares and Additional Shares
are hereinafter collectively referred to as the "Shares". Unless otherwise
stated, the term "you" as used herein means Citigroup Global Markets Inc.,
individually on its own behalf and on behalf of the other Representatives.
The Fund and the Advisers wish to confirm as follows their agreements with
you and the other several Underwriters on whose behalf you are acting in
connection with the several purchases of the Shares by the Underwriters.
The Fund has entered into an Investment Management Agreement with the
Investment Adviser dated ___________, 2003, an Administration Agreement with the
Investment Adviser dated ________, 2003, a Custodian Contract with State Street
Bank and Trust Company dated ________, 2003, and a Transfer Agency Agreement
with The Bank of New York dated ________, 2003, and such agreements are herein
referred to as the "Management Agreement", the "Administration Agreement", the
"Custodian Agreement" and the "Transfer Agency Agreement", respectively. The
Investment Adviser has entered into an investment sub-advisory agreement with
the Subadviser dated ________, 2003, and such agreement is herein referred to as
the "Sub-Advisory Agreement". Collectively, the Management Agreement, the
Administration Agreement, the Custodian Agreement and the Transfer Agency
Agreement are herein referred to as the "Fund Agreements". This Underwriting
Agreement is herein referred to as the "Agreement". In addition, the Fund has
adopted a dividend reinvestment plan (the "Dividend Reinvestment Plan") pursuant
to which holders of Shares shall have their dividends automatically reinvested
in additional Shares of the Fund unless they elect to receive such dividends in
cash.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Fund has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended (the
"1933 Act"), the Investment Company Act of 1940, as amended (the "1940 Act"),
and the rules and regulations of the Commission under the 1933 Act (the "1933
Act Rules and Regulations") and the 1940 Act (the "1940 Act Rules and
Regulations" and, together with the 1933 Act Rules and Regulations, the "Rules
and Regulations") a registration statement on Form N-2 (File Nos. 333-104614 and
811-21334) under the 1933 Act and the 1940 Act and may, pursuant to the Rules
and Regulations, prepare and file an additional registration statement relating
to a portion of the Shares pursuant to Rule 462(b) of the 1933 Act Rules and
Regulations (a "462(b) Registration Statement") (collectively, the "registration
statement"), including a prospectus (including any statement of additional
information) relating to the Shares and a notification of registration of the
Fund as an investment company under the 1940 Act on Form N-8A (the "1940 Act
Notification"). The term "Registration Statement" as used in this Agreement
means the registration statement (including all financial schedules and
exhibits), as amended at the time it becomes effective under the 1933 Act or, if
the registration statement became effective under the 1933 Act prior to the
execution of this Agreement, as amended or supplemented, at the time it became
effective prior to the execution of this Agreement, and includes any information
deemed to be included by Rule 430A under the 1933 Act Rules and Regulations. If
it is contemplated, at the time this Agreement is executed, that a
post-effective amendment to the registration statement will be filed under the
1933 Act and must be declared effective before the offering of the Shares may
commence, the term "Registration Statement" as used in this Agreement means the
registration statement as amended by said post-effective amendment. For the
avoidance of doubt, if the Fund has filed a 462(b) Registration Statement, the
term "Registration Statement" as used in this Agreement shall include such
462(b) Registration Statement. The term "Prospectus" as used in this Agreement
means the prospectus (including the statement of additional information) in the
form included in the Registration Statement or, if the prospectus (including the
statement of additional information) included in the Registration Statement
omits information in reliance on Rule 430A and such information is included in a
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prospectus (including the statement of additional information) filed with the
Commission pursuant to Rule 497(h) under the 1933 Act Rules and Regulations, the
term "Prospectus" as used in this Agreement means the prospectus (including the
statement of additional information) in the form included in the Registration
Statement as supplemented by the addition of the information contained in the
prospectus (including the statement of additional information) filed with the
Commission pursuant to Rule 497(h). The term "Prepricing Prospectus" as used in
this Agreement means the prospectus (including the statement of additional
information) subject to completion in the form included in the registration
statement at the time of the initial filing of the registration statement with
the Commission and as such prospectus (including the statement of additional
information) shall have been amended from time to time prior to the date of the
Prospectus, together with any other prospectus (including any other statement of
additional information) relating to the Fund other than the Prospectus.
The Fund has furnished the Representatives with copies of such
Registration Statement, each amendment to such Registration Statement filed with
the Commission and each Prepricing Prospectus.
2. AGREEMENTS TO SELL AND PURCHASE. The Fund hereby agrees, subject to
all the terms and conditions set forth herein, to issue and to sell to each
Underwriter and, upon the basis of the representations, warranties and
agreements of the Fund and the Advisers herein contained and subject to all of
the other terms and conditions set forth herein, each Underwriter agrees,
severally and not jointly, to purchase from the Fund at a purchase price per
share of $______ per Share (the "purchase price per share"), the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto (or
such number of Firm Shares increased as set forth in Section 10 hereof).
The Fund also agrees, subject to all the terms and conditions set forth
herein, to issue and to sell to the Underwriters and, upon the basis of the
representations, warranties and agreements of the Fund and the Advisers herein
contained and subject to all of the other terms and conditions set forth herein,
the Underwriters shall have the right to purchase from the Fund, at the same
purchase price per share, pursuant to an option (the "over-allotment option")
which may be exercised at any time and from time to time prior to 9:00 P.M., New
York City time, on or before the 45th day after the date of the Prospectus (or
if such 45th day shall be a Saturday or a Sunday or a holiday, on the next
business day thereafter when the American Stock Exchange (the "AMEX") is open
for trading) up to an aggregate of __________ Additional Shares. Additional
Shares may be purchased solely for the purpose of covering over-allotments made
in connection with the offering of the Firm Shares. Upon any exercise of the
over-allotment option, upon the basis of the representations, warranties and
agreements of the Fund and the Advisers herein contained and subject to all of
the other terms and conditions set forth herein, each Underwriter agrees,
severally and not jointly, to purchase from the Fund the number of Additional
Shares (subject to such adjustments as you may determine to avoid fractional
shares) which bears the same proportion to the number of Additional Shares to be
purchased by the Underwriters as the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule I (or such number of Firm Shares
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increased as set forth in Section 10 hereof) bears to the aggregate number of
Firm Shares.
3. TERMS OF PUBLIC OFFERING. The Fund and the Advisers have been
advised by you that the Underwriters propose to make a public offering of their
respective portions of the Firm Shares as soon after the Registration Statement
and this Agreement have become effective as in your judgment is advisable and
initially to offer the Firm Shares upon the terms set forth in the Prospectus.
4. DELIVERY OF SHARES AND PAYMENTS THEREFOR.
(a) Delivery to the Underwriters of and payment to the Fund for the
Firm Shares and compensation of the Underwriters with respect thereto shall
be made at the office of Citigroup Global Markets Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or through the facilities of the
Depository Trust Company or another mutually agreeable facility, at 9:00
A.M., New York City time, on June 27, 2003 (the "Closing Date"). The place
of closing for the Firm Shares and the Closing Date may be varied by
agreement between you and the Fund.
(b) Delivery to the Underwriters of and payment to the Fund for any
Additional Shares to be purchased by the Underwriters and compensation of
the Underwriters with respect thereto shall be made at the aforementioned
office of Citigroup Global Markets Inc., or through the facilities of the
Depository Trust Company or another mutually agreeable facility, at such
time on such date (an "Option Closing Date"), which may be the same as the
Closing Date, but shall in no event be earlier than the Closing Date nor
earlier than two nor later than five business days after the giving of the
notice hereinafter referred to, as shall be specified in a written notice
from you on behalf of the Underwriters to the Fund of the Underwriters'
determination to purchase a number, specified in said notice, of Additional
Shares. The place of closing for any Additional Shares and the Option
Closing Date for such Additional Shares may be varied by agreement between
you and the Fund.
(c) Certificates for the Firm Shares, if any, and for any Additional
Shares shall be registered in such names and in such denominations as you
shall request prior to 1:00 P.M., New York City time, (i) in respect of the
Firm Shares, on the second business day preceding the Closing Date and (ii)
in respect of Additional Shares, on the day of the giving of the written
notice in respect of such Additional Shares. Such certificates, if the Fund
determines to issue any certificates, will be made available to you in New
York City for inspection and packaging not later than 9:00 A.M., New York
City time, on the business day next preceding the Closing Date or any
Option Closing Date, as the case may be. The certificates, if any,
evidencing the Firm Shares and any Additional Shares to be purchased
hereunder shall be delivered to you on the Closing Date or the Option
Closing Date, as the case may be, through the facilities of the Depository
Trust Company or another mutually agreeable facility, against payment of
the purchase price therefor in immediately available funds to the order of
the Fund.
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5. AGREEMENTS OF THE FUND AND THE ADVISERS. The Fund and the Advisers,
jointly and severally, agree with the several Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment
thereto to be declared effective under the 1933 Act before the offering of
the Firm Shares may commence, the Fund will use its reasonable best efforts
to cause the Registration Statement or such post-effective amendment to
become effective under the 1933 Act as soon as possible. If the
Registration Statement has become effective and the Prospectus contained
therein omits certain information at the time of effectiveness pursuant to
Rule 430A of the 1933 Act Rules and Regulations, the Fund will file a
Prospectus including such information pursuant to Rule 497(h) of the 1933
Act Rules and Regulations, as promptly as practicable, but no later than
the second business day following the earlier of the date of the
determination of the offering price of the Shares or the date the
Prospectus is first used after the effective date of the Registration
Statement. If the Registration Statement has become effective and the
Prospectus contained therein does not so omit such information, the Fund
will file a Prospectus pursuant to Rule 497 (c) or (j) of the 1933 Act
Rules and Regulations as promptly as practicable, but no later than the
fifth business day following the date of the later of the effective date of
the Registration Statement or the commencement of the public offering of
the Shares after the effective date of the Registration Statement. The Fund
will advise you promptly and, if requested by you, will confirm such advice
in writing (i) when the Registration Statement or such post-effective
amendment has become effective and (ii) when the Prospectus has been timely
filed pursuant to Rule 497(c) or Rule 497(h) of the 1933 Act Rules and
Regulations or the certification permitted pursuant to Rule 497(j) of the
1933 Act Rules and Regulations has been timely filed, whichever is
applicable.
(b) The Fund will advise you promptly and, if requested by you, will
confirm such advice in writing: (i) of any request made by the Commission
for amendment of or a supplement to the Registration Statement, any
Prepricing Prospectus or the Prospectus (or any amendment or supplement to
any of the foregoing) or for additional information, (ii) of the issuance
by the Commission, the NASD, Inc. (the "NASD") (to the extent received by
the Fund), any state securities commission, any national securities
exchange, any arbitrator, any court or any other governmental, regulatory,
self-regulatory or administrative agency or any official of any order
suspending the effectiveness of the Registration Statement, prohibiting or
suspending the use of the Prospectus, any Prepricing Prospectus or any
sales material (as hereinafter defined), of any notice pursuant to Section
8(e) of the 1940 Act, of the suspension of qualification of the Shares for
offering or sale in any jurisdiction, or the initiation or contemplated
initiation of any proceeding for any such purposes, (iii) of receipt by the
Fund, the Advisers, any of their officers or any attorney of the Fund or
the Advisers of any other material communication from the Commission, the
NASD, any state securities commission, any national securities exchange,
any arbitrator, any court or any other governmental, regulatory,
self-regulatory or administrative agency or any official relating to the
Registration Statement, the 1940 Act Notification, the Prospectus, any
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Prepricing Prospectus, any sales material (as hereinafter defined) (or any
amendment or supplement to any of the foregoing), this Agreement or any of
the Fund Agreements and (iv) within the period of time referred to in
paragraph (f) below, of any material, adverse change in the condition
(financial or other), business, business prospects, properties, net assets
or results of operations of the Fund (other than as a result of changes in
market conditions generally) or any event which has or would reasonably be
expected to have a material adverse effect on the ability of the Adviser or
the Sub-Adviser to perform their respective obligations under this
Agreement, the Additional Compensation Agreement dated June , 2003 among
the Investment Adviser -- and certain underwriters party thereto (the
"Additional Compensation Agreement") (in the case of the Investment
Adviser), the Management Agreement or the Sub-Advisory Agreement, as the
case may be, or of the happening of any event (but as to each of the Fund
or an Adviser, an event known to that respective entity) which makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any Prepricing Prospectus or any sales material (as hereinafter
defined) (or any amendment or supplement to any of the foregoing) untrue or
which requires the making of any additions to or changes in the
Registration Statement, the Prospectus, any Prepricing Prospectus or any
sales materials (as hereinafter defined) (or any amendment or supplement to
any of the foregoing) in order to state a material fact required by the
1933 Act, the 1940 Act or the Rules and Regulations to be stated therein or
necessary in order to make the statements therein (in the case of a
Prospectus or Prepricing Prospectus or any sales material, in light of the
circumstances under which they were made) not misleading or of the
necessity to amend or supplement the Registration Statement, the
Prospectus, any Prepricing Prospectus or any sales material (as hereinafter
defined) (or any amendment or supplement to any of the foregoing) to comply
with the 1933 Act, the 1940 Act, the Rules and Regulations or any other law
or order of any court or regulatory body. If at any time the Commission,
the NASD, any state securities commission, any national securities
exchange, any arbitrator, any court or any other governmental, regulatory,
self-regulatory or administrative agency or any official shall issue any
order suspending the effectiveness of the Registration Statement,
prohibiting or suspending the use of the Prospectus, any Prepricing
Prospectus or any sales material (as hereinafter defined) (or any amendment
or supplement to any of the foregoing) or suspending the qualification of
the Shares for offering or sale in any jurisdiction, the Fund will use its
reasonable best efforts to obtain the withdrawal of such order at the
earliest possible time, and you, on behalf of the Underwriters, shall
cooperate with the Fund to obtain such withdrawal.
(c) The Fund will furnish to you, without charge, one signed copy of
the registration statement and the 1940 Act Notification as originally
filed with the Commission and of each amendment thereto, including
financial statements and all exhibits thereto (except any post-effective
amendment required by Rule 8b-16 of the 1940 Act Rules and Regulations
which is filed with the Commission after the later of (x) one year from the
date of this Agreement and (y) the date on which the distribution of the
Shares is completed) and will also furnish to you, without charge, such
number of conformed copies of the registration statement as originally
filed and of each amendment thereto (except any post-effective amendment
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required by Rule 8b-16 of the 1940 Act Rules and Regulations which is filed
with the Commission after the later of (x) one year from the date of this
Agreement and (y) the date on which the distribution of the Shares is
completed), with or without exhibits, as you may reasonably request.
(d) Within five years from the date hereof, the Fund will not (i) file
any amendment (except any post-effective amendment required by Rule 8b-16
of the 1940 Act which is filed with the Commission after the later of (x)
one year from the date of this Agreement or (y) the date on which the
distribution of the Shares is completed) to the Registration Statement or
make any amendment or supplement to the Prospectus, any Prepricing
Prospectus or any sales material (as hereinafter defined) (or any amendment
or supplement to any of the foregoing) of which you shall not previously
have been advised or to which you shall reasonably object within a
reasonable time after being so advised or (ii) so long as, in the opinion
of counsel for the Underwriters, a Prospectus is required to be delivered
in connection with sales of Shares by any Underwriter or dealer, file any
information, documents or reports pursuant to the Securities Exchange Act
of 1934, as amended (the "1934 Act"), without delivering a copy of such
information, documents or reports to you, as Representatives of the
Underwriters, prior to or concurrently with such filing.
(e) Prior to the execution and delivery of this Agreement, the Fund
has delivered to you, without charge, in such quantities as you have
reasonably requested, copies of each form of any Prepricing Prospectus. The
Fund consents to the use, in accordance with the provisions of the 1933 Act
and with the securities or Blue Sky laws of the jurisdictions in which the
Shares are offered by the several Underwriters and by dealers, prior to the
date of the Prospectus, of each Prepricing Prospectus so furnished by the
Fund.
(f) As soon after the execution and delivery of this Agreement as
reasonably possible and thereafter from time to time, for such period as in
the opinion of counsel for the Underwriters a prospectus is required by the
1933 Act to be delivered in connection with sales of Shares by any
Underwriter or dealer, the Fund will expeditiously deliver to each
Underwriter and each dealer, without charge, as many copies of the
Prospectus (and of any amendment or supplement thereto) as you may
reasonably request. The Fund consents to the use of the Prospectus (and of
any amendments or supplements thereto) in accordance with the provisions of
the 1933 Act, with the securities or Blue Sky laws of the jurisdictions in
which the Shares are offered by the several Underwriters and by all dealers
to whom Shares may be sold and with other applicable laws and regulations,
both in connection with the offering or sale of the Shares and for such
period of time thereafter as the Prospectus is required by law to be
delivered in connection with sales of Shares by any Underwriter or dealer.
If during such period of time any event shall occur that in the judgment of
the Fund or in the reasonable opinion of counsel for the Underwriters is
required to be set forth in the Prospectus (as then amended or
supplemented) or should be set forth therein in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading or if it is necessary to supplement or amend the
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Prospectus to comply with the 1933 Act, the 1940 Act, the Rules and
Regulations or any other federal law, rule or regulation or any state
securities or Blue Sky disclosure laws, rules or regulations, the Fund will
forthwith prepare and, subject to the provisions of paragraph (d) above,
file with the Commission an appropriate amendment or supplement thereto and
will furnish as expeditiously as reasonably possible to the Underwriters
and dealers, without charge, such number of copies thereof as they shall
reasonably request ; PROVIDED, however, if such amendment or supplement is
required solely as a result of a material misstatement in or material
omission from the information furnished by or on behalf of an Underwriter
to the Fund or the Advisers expressly for use in the Registration Statement
or the Prospectus, then the Fund shall deliver such amendment or supplement
at cost. In the event that the Prospectus is to be amended or supplemented,
the Fund, if reasonably requested by you, will promptly issue a press
release announcing or disclosing any material matters to be covered by the
proposed amendment or supplement.
(g) The Fund will cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of the
Shares for offering and sale by the several Underwriters and by dealers as
may be required under the applicable securities or Blue Sky laws of such
jurisdictions as you may designate and will file such consents to service
of process or other documents necessary or appropriate in order to effect
such registration or qualification; provided, however, that the foregoing
shall not apply to the extent that the Shares are "covered securities" that
are exempt from state regulation of securities offerings pursuant to
Section 18 of the 1933 Act, and provided further that in no event shall the
Fund be obligated to qualify to do business in any jurisdiction where it is
not now so qualified or to take any action which would subject it to
service of process in suits, other than those arising out of the offering
or sale of the Shares, in any jurisdiction where it is not now so subject.
(h) The Fund will make generally available to its security holders an
earnings statement, which need not be audited, covering a twelve-month
period commencing after the effective date of the Registration Statement
and ending not later than 18 months thereafter, as soon as reasonably
practicable after the end of such period, which earnings statement shall
satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158 of the
1933 Act Rules and Regulations.
(i) The Fund will comply with the undertaking set forth in paragraph 6
of Item 33 of Part C of the Registration Statement.
(j) During the period of three years hereafter, the Fund will furnish
to you (i) as soon as available, a copy of each report of the Fund mailed
to shareholders or filed with the Commission or furnished to the AMEX
(other than reports on Form N-SAR or Form N-CSR), provided such report or
the information contained therein is publicly available and (ii) from time
to time such other information concerning the Fund as you may reasonably
request.
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(k) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (other than pursuant to the
second paragraph of Section 10 hereof or by notice given by you terminating
this Agreement pursuant to Section 10 or Section 11 hereof) or if this
Agreement shall be terminated by the Underwriters because of any failure or
refusal on the part of the Fund or the Advisers to comply with any material
terms in this Agreement or because any of the conditions of this Agreement
required to be complied with or fulfilled by them are not satisfied, the
Fund and the Advisers, jointly and severally, agree to reimburse the
Representatives for all reasonable out-of-pocket expenses (including
reasonable fees and expenses of counsel for the Underwriters) incurred by
you in connection herewith, but the Fund and the Advisers shall in no event
be liable for any internal cost of the Underwriters or any loss of
anticipated profits or speculative, consequential or similar damages for
such termination.
(l) The Fund will direct the investment of the net proceeds of the
offering of the Shares in such a manner as to comply with the investment
objectives, policies and restrictions of the Fund as described in the
Prospectus.
(m) The Fund will file the requisite copies of the Prospectus with the
Commission in a timely fashion pursuant to Rule 497(c) or Rule 497(h) of
the 1933 Act Rules and Regulations, whichever is applicable or, if
applicable, will file in a timely fashion the certification permitted by
Rule 497(j) of the 1933 Act Rules and Regulations and will advise you of
the time and manner of such filing.
(n) Except as provided in this Agreement or pursuant to any dividend
reinvestment plan of the Fund in effect on the date hereof, neither the
Fund nor the Advisers will sell, contract to sell or otherwise dispose of
or hedge, any Common Shares or any securities convertible into or
exercisable or exchangeable for Common Shares or grant any options or
warrants to purchase Common Shares, for a period of 180 days after the date
of the Prospectus, without the prior written consent of Citigroup Global
Markets Inc.
(o) Except as stated in this Agreement and in the Prospectus, neither
the Fund nor the Advisers have taken, nor will any of them take, directly
or indirectly, any action designed to or that might reasonably be expected
to cause or result in stabilization or manipulation of the price of the
Common Shares in violation of the federal securities laws to facilitate the
sale or resale of the Common Shares.
(p) The Fund will use its reasonable best efforts to have the Common
Shares listed, subject to notice of issuance, on the AMEX prior to or
concurrently with the effectiveness of the Registration Statement and to
comply with the rules and regulations of such exchange.
6. REPRESENTATIONS AND WARRANTIES OF THE FUND AND THE ADVISERS. The
Fund and the Advisers, jointly and severally, represent and warrant to each
Underwriter that:
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(a) Each Prepricing Prospectus complied when so filed in all material
respects with the provisions of the 1933 Act, the 1940 Act and the Rules
and Regulations (except that this representation and warranty does not
apply to statements in or omissions from the Prepricing Prospectus made in
reliance upon and in conformity with information relating to any
Underwriter furnished to the Fund by or on behalf of any Underwriter
through you expressly for use therein).
(b) The Registration Statement, in the form in which it became or
becomes effective and also in such form as it may be when any
post-effective amendment thereto shall become effective and the Prospectus
and any amendment or supplement thereto when filed with the Commission
under Rule 497 of the 1933 Act Rules and Regulations and the 1940 Act
Notification when originally filed with the Commission and any amendment or
supplement thereto when filed with the Commission complied or will comply
in all material respects with the provisions of the 1933 Act, the 1940 Act
and the Rules and Regulations and did not or will not at any such times
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein (in the case of a Prospectus or Prepricing Prospectus, in light of
the circumstances under which they were made) not misleading; except that
this representation and warranty does not apply to statements in or
omissions from the Registration Statement or the Prospectus (or any
amendment or supplement thereto) made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Fund in
writing by or on behalf of any Underwriter through you or your counsel
expressly for use therein.
(c) All the outstanding Common Shares of the Fund have been duly
authorized and validly issued, are fully paid and, except as described in
the Registration Statement, nonassessable and are free of any preemptive or
similar rights; the Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in accordance with
the terms hereof, will be validly issued, fully paid and, except as
described in the Registration Statement, nonassessable and free of any
preemptive or similar rights and the capital stock of the Fund conforms in
all material respects to the description thereof in the Registration
Statement and the Prospectus (and any amendment or supplement thereto).
(d) The Fund has been duly formed and is validly existing in good
standing as a corporation under the laws of the State of Maryland, with
full corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration Statement and
the Prospectus (and any amendment or supplement thereto) and is duly
registered and qualified to conduct business and is in good standing in
each jurisdiction or place where the nature of its properties or the
conduct of its business requires such registration or qualification, except
where the failure so to register or to qualify does not have a material,
adverse effect on the condition (financial or other), business, business
prospects, properties, net assets or results of operations (a "Material
Adverse Effect") of the Fund. The Fund has no subsidiaries.
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(e) There are no legal or governmental proceedings pending or, to the
knowledge of the Fund, threatened against the Fund or to which the Fund or
any of its properties is subject, that are required to be described in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) but are not described as required by the 1933 Act, the 1940 Act or
the Rules and Regulations and there are no agreements, contracts,
indentures, leases or other instruments that are required to be described
in the Registration Statement or the Prospectus (or any amendment or
supplement thereto) or to be filed as an exhibit to the Registration
Statement that are not described or filed therein as required by the 1933
Act, the 1940 Act or the Rules and Regulations.
(f) The Fund is not (i) in violation of its Articles of Incorporation
or By-Laws or (ii) in violation of any law, ordinance, administrative or
governmental rule or regulation applicable to the Fund, including, without
limitation, the applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and
the rules and regulations promulgated in connection therewith, or of any
material decree of the Commission, the NASD, any state securities
commission, any national securities exchange, any arbitrator, any court or
any other governmental, regulatory, self-regulatory or administrative
agency or any official having jurisdiction over the Fund or (iii) in breach
or default in any respect in the performance of any obligation, agreement
or condition contained in any bond, debenture, note or any other evidence
of indebtedness or in any agreement, indenture, lease or other instrument
to which the Fund is a party or by which it or any of its properties may be
bound , except, in the case of clauses (ii) and (iii) above, for
violations, breaches or defaults that do not or would not have, either
individually or in the aggregate, a Material Adverse Effect on the Fund.
(g) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement nor any of the Fund Agreements by
the Fund, nor the consummation by the Fund of the transactions contemplated
hereby or thereby (i) requires the Fund to obtain any consent, approval,
authorization or other order of or registration or filing which has not yet
been obtained or made with the Commission, the NASD, any national
securities exchange, any arbitrator, any court or any other governmental,
regulatory, self-regulatory or administrative agency or any official having
jurisdiction over the Fund (except such as may have been obtained or made
prior to this Agreement and except for compliance with the securities or
Blue Sky laws of various jurisdictions which have been or will be effected
in accordance with this Agreement and except for compliance with the filing
requirements of the NASD Division of Corporate Finance) or conflicts or
will conflict with or constitutes or will constitute a breach of the
Articles of Incorporation or By-Laws of the Fund or (ii) conflicts or will
conflict with or constitutes or will constitute a breach of or a default
under, any agreement, indenture, lease or other instrument to which the
Fund is a party or by which it or any of its properties may be bound or
violates or will violate any statute, law, regulation or filing or
judgment, injunction, order or decree applicable to the Fund or any of its
properties or will result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Fund pursuant to the
terms of any agreement or instrument to which it is a party or by which it
11
may be bound or to which any of the property or assets of the Fund is
subject, except, in the case of clause (ii) above, for conflicts, breaches,
defaults, violations or encumbrances that do not or would not have, either
individually or in the aggregate, a Material Adverse Effect on the Fund or
a material adverse effect on the Fund's ability to perform its obligations
under this Agreement or the Fund Agreements.
(h) Since the date as of which information is given in the
Registration Statement and the Prospectus (and any amendment or supplement
to either of them), except as otherwise stated therein, (i) there has been
no change, whether or not arising in the ordinary course of business that
has or would have a Material Adverse Effect on the Fund (other than as a
result of a change in the financial markets generally); (ii) there have
been no transactions entered into by the Fund which are material to the
Fund other than those in the ordinary course of its business as described
in the Prospectus (and any amendment or supplement thereto) or as
contemplated by this Agreement and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Fund on any class of
its common stock.
(i) The accountants, Ernst & Young LLP, who have audited or shall
audit at or prior to the Closing Date the Statement of Assets and
Liabilities included in the Registration Statement and the Prospectus (and
any amendment or supplement thereto), are an independent public accounting
firm as required by the 1933 Act, the 1940 Act and the Rules and
Regulations.
(j) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement
and the Prospectus (or any amendment or supplement to either of them)
present fairly the financial position of the Fund on the basis stated in
the Registration Statement and the Prospectus at the respective dates or
for the respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved except as disclosed therein; and the other financial and
statistical information and data included in the Registration Statement or
the Prospectus (or any amendment or supplement thereto) are accurately
derived from such financial statements and the books and records of the
Fund.
(k) The Fund, subject to the Registration Statement having been
declared effective and the filing of the Prospectus under Rule 497 under
the 1933 Act Rules and Regulations, has taken all action required to be
taken by it under the 1933 Act, the 1940 Act and the Rules and Regulations
to make the public offering and consummate the sale of the Shares as
contemplated by this Agreement.
(l) The execution and delivery of, and the performance by the Fund of
its obligations under, this Agreement and the Fund Agreements have been
12
duly and validly authorized by the Fund and this Agreement and the Fund
Agreements have been duly executed and delivered by the Fund and, assuming
due authorization, execution and delivery by the other parties hereto and
thereto, the Fund Agreements constitute the valid and legally binding
agreements of the Fund, enforceable against the Fund in accordance with
their terms, except as rights to indemnity and contribution hereunder may
be limited by federal or state securities laws and subject to the
qualification that the enforceability of the Fund's obligations hereunder
and thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and by general equitable principles
(regardless of whether enforcement is sought in a proceeding in equity or
at law).
(m) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), the
Fund has not incurred any liability or obligation, direct or contingent, or
entered into any transaction, not in the ordinary course of business, that
is material to the Fund and there has not been any change in the capital
stock or material increase in the short-term debt or long-term debt of the
Fund or any change or development which should reasonably be expected to
have a Material Adverse Effect on the Fund.
(n) The Fund has not distributed and, prior to the later to occur of
(i) the Closing Date and (ii) completion of the distribution of the Shares,
will not distribute to the public in either printed or electronic form any
offering material in connection with the offering and sale of the Shares
other than the Registration Statement, the Prepricing Prospectus included
in Pre-Effective Amendment No. 1 to the Registration Statement, the
Prospectus and the advertisements/sales literature filed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ with the NASD on May 20, 2003.
(o) (i) The Fund has such licenses, permits, and authorizations of
governmental or regulatory authorities ("permits") as are necessary to own
its property and to conduct its business in the manner described in the
Prospectus (and any amendment or supplement thereto); (ii) the Fund has
fulfilled and performed all its obligations with respect to such permits
and no event has occurred which allows or, after notice or lapse of time,
would allow, revocation or termination thereof or results in any other
impairment of the rights of the Fund under any such permit, subject in each
case to such qualification as may be set forth in the Prospectus (or any
amendment or supplement thereto); except, in the case of each of clauses
(i) and (ii), where the failure to obtain or perform its obligations with
respect to such permits, or the restrictions set forth in such permits,
either individually or in the aggregate, does not or would not have a
Material Adverse Effect on the Fund and (iii) except as described in the
Prospectus (or any amendment or supplement thereto), none of such permits
contains any restriction that would reasonably be expected to have a
Material Adverse Effect on the Fund.
(p) The Fund maintains and will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
13
specific authorization and with the investment policies and restrictions of
the Fund and the applicable requirements of the 1940 Act, the 1940 Act
Rules and Regulations and the Internal Revenue Code of 1986, as amended
(the "Code"); (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles, to calculate net asset value, to maintain
accountability for assets and to maintain material compliance with the
books and records requirements under the 1940 Act and the 1940 Act Rules
and Regulations; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the recorded
account for assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(q) 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 such funds is of
a character required to be disclosed in the Prospectus and that is not so
disclosed.
(r) The conduct by the Fund of its business (as described in the
Prospectus) does not require it to be the owner, possessor or licensee or
otherwise require it to have the right to use any patents, patent licenses,
trademarks, service marks or trade names (collectively, "Intellectual
Property"), which it does not own, possess, license or otherwise have the
right to use, except where the failure to own, possess, license or
otherwise have the right to use such Intellectual Property, individually or
in the aggregate, does not or would not be reasonably expected to have a
Material Adverse Effect on the Fund.
(s) Except as stated in this Agreement and in the Prospectus (and any
amendment or supplement thereto), the Fund has not taken and will not take,
directly or indirectly, any action designed to or which should reasonably
be expected to cause or result in or which will constitute stabilization or
manipulation of the price of the Common Shares in violation of federal
securities laws and the Fund is not aware of any such action taken or to be
taken by any affiliates of the Fund.
(t) The Fund is duly registered under the 1940 Act as a closed-end,
non-diversified management investment company and the 1940 Act Notification
has been duly filed with the Commission and, at the time of filing thereof
and at the time of filing any amendment or supplement thereto, conformed in
all material respects with all applicable provisions of the 1940 Act and
the 1940 Act Rules and Regulations. The Fund has not received any notice
from the Commission pursuant to Section 8(e) of the 1940 Act with respect
to the 1940 Act Notification or the Registration Statement (or any
amendment or supplement thereto).
(u) All advertising, sales literature or other promotional material
(including "prospectus wrappers," "broker kits," "road show slides" and
"road show scripts"), whether in printed or electronic form, authorized in
writing by or prepared by the Fund or the Advisers for use in connection
14
with the offering and sale of the Shares (collectively, "sales material")
complied and comply in all material respects with the applicable
requirements of the 1933 Act, the 1933 Act Rules and Regulations and the
rules and interpretations of the NASD. No sales material contained or
contains an untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading (except that this representation and warranty does not
apply to statements in or omissions from the sales material made in
reliance upon and in conformity with information relating to any
Underwriter furnished to the Fund by or on behalf of any Underwriter
through you expressly for use therein).
(v) This Agreement and each of the Fund Agreements complies in all
material respects with all applicable provisions of the 1940 Act, the 1940
Act Rules and Regulations, the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), and the rules and regulations adopted by the
Commission under the Advisers Act (the "Advisers Act Rules and
Regulations").
(w) No holder of any security of the Fund has any right to require
registration of Common Shares or any other security of the Fund because of
the filing of the registration statement or consummation of the
transactions contemplated by this Agreement.
(x) The Shares have been approved for listing, subject to official
notice of issuance, on the AMEX and the Fund's registration statement on
Form 8-A, under the 1934 Act, has become effective.
(y) The Fund intends to direct the investment of the proceeds of the
offering of the Shares in such a manner as to comply with the requirements
of Subchapter M of the Code.
(z) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), to the Fund's
knowledge after due inquiry, no director of the Fund is an "interested
person" (as defined in the ▇▇▇▇ ▇▇▇) of the Fund or an "affiliated person"
(as defined in the ▇▇▇▇ ▇▇▇) of any Underwriter listed in Schedule I
hereto.
7. REPRESENTATIONS AND WARRANTIES OF THE ADVISERS. Each of the
Investment Adviser and the Subadviser, jointly and severally, represents and
warrants to each Underwriter as follows:
(a) Such Adviser is a corporation or limited liability company duly
organized and validly existing in good standing under the laws of its
jurisdiction of incorporation, with full corporate or limited liability
company, as the case may be, power and authority to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement thereto) and
is duly registered and qualified to conduct business and is in good
standing in each jurisdiction or place where the nature of its properties
15
or conduct of its business requires such registration or qualification,
except where the failure so to register or to qualify would not have a
material, adverse effect on the condition (financial or other), business,
properties, net assets or results of operations of such Adviser (an
"Adviser Material Adverse Effect").
(b) Such Adviser is duly registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act, the 1940 Act, the
Advisers Act Rules and Regulations or the 1940 Act Rules and Regulations
from acting under the Fund Agreements to which it is a party for the Fund
or the Sub-Advisory Agreement to which it is a party as contemplated by the
Registration Statement and the Prospectus (or any amendment or supplement
thereto).
(c) Such Adviser has full power and authority to enter into this
Agreement, the Additional Compensation Agreement (in the case of the
Investment Adviser), the Fund Agreements to which it is a party and the
Sub-Advisory Agreement to which it is a party, the execution and delivery
of, and the performance by such Adviser of its obligations under, this
Agreement, the Additional Compensation Agreement (in the case of the
Investment Adviser), the Fund Agreements to which it is a party and the
Sub-Advisory Agreement to which it is a party have been duly and validly
authorized by such Adviser; and this Agreement, the Additional Compensation
Agreement (in the case of the Investment Adviser), the Fund Agreements to
which it is a party and the Sub-Advisory Agreement to which it is a party
have been duly executed and delivered by such Adviser and, assuming the due
authorization, execution and delivery by the other parties thereto, such
Additional Compensation Agreement (in the case of the Investment Adviser),
Fund Agreements and Sub-Advisory Agreement constitute the valid and legally
binding agreements of such Adviser, enforceable against such Adviser in
accordance with their terms, except as rights to indemnity and contribution
hereunder may be limited by federal or state securities laws and subject to
the qualification that the enforceability of such Adviser's obligations
hereunder and thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights generally and by general equitable
principles (regardless of whether enforcement is sought in a proceeding in
equity or at law).
(d) Such Adviser has the financial resources available to it necessary
for the performance of its services and obligations as contemplated in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto) and under this Agreement, the Additional Compensation Agreement
(in the case of the Investment Adviser) and the Fund Agreements to which it
is a party and the Sub-Advisory Agreement to which it is a party.
(e) The description of such Adviser and its business, and the
statements directly attributable to such Adviser, in the Registration
Statement and the Prospectus (and any amendment or supplement thereto)
complied and comply in all material respects with the provisions of the
1933 Act, the 1940 Act, the Advisers Act, the Rules and Regulations and the
16
Advisers Act Rules and Regulations and did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
(in the case of a Prospectus or Prepricing Prospectus, in light of the
circumstances under which they were made) not misleading.
(f) There are no legal or governmental proceedings pending or, to the
knowledge of such Adviser, threatened against such Adviser that are
required to be described in the Registration Statement or the Prospectus
(or any amendment or supplement thereto) but are not described as required
or that reasonably should be expected to result in an Adviser Material
Adverse Effect with respect to such Adviser or that reasonably should, if
determined adversely with respect to such Adviser, have a material, adverse
effect on the ability of such Adviser to fulfill its obligations hereunder
under the Additional Compensation Agreement (in the case of the Investment
Adviser) or under the Fund Agreements to which it is a party or under the
Sub-Advisory Agreement to which it is a party.
(g) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus (and any amendment or supplement
to either of them), except as otherwise stated therein, (i) there has been
no Adviser Material Adverse Effect with respect to such Adviser, whether or
not arising from the ordinary course of business and (ii) there have been
no transactions entered into by such Adviser which are material to such
Adviser other than those in the ordinary course of its business as
described in the Prospectus.
(h) Such Adviser has such licenses, permits and authorizations of
governmental or regulatory authorities ("permits") as are necessary to own
its property and to conduct its business in the manner described in the
Prospectus; such Adviser has fulfilled and performed all its obligations
with respect to such permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other impairment of the rights of such Adviser
under any such permit , subject in each case to such qualification as may
be set forth in the Prospectus (or any amendment or supplement thereto),
except where the failure to obtain or perform its obligations with respect
to such permits, or the restrictions set forth in such permits, either
individually or in the aggregate, does not or would not have an Adviser
Material Adverse Effect.
(i) This Agreement, the Additional Compensation Agreement (in the case
of the Investment Adviser), the Fund Agreements to which such Adviser is a
party and the Sub-Advisory Agreement to which it is a party comply in all
material respects with all applicable provisions of the 1940 Act, the 1940
Act Rules and Regulations, the Advisers Act and the Advisers Act Rules and
Regulations.
(j) Neither the execution, delivery or performance of this Agreement,
the Additional Compensation Agreement (in the case of the Investment
Adviser) or the Fund Agreements by such Adviser which is a party thereto or
the Sub-Advisory Agreement by such Adviser which is a party thereto, nor
17
the consummation by such Adviser of the transactions contemplated hereby or
thereby (i) requires such Adviser to obtain any consent, approval,
authorization or other order of or registration or filing with the
Commission, the NASD, any state securities commission, any national
securities exchange, any arbitrator, any court or any other governmental,
regulatory, self-regulatory or administrative agency or any official having
jurisdiction over such Adviser (except such as may have been obtained or
made prior to this Agreement and except for compliance with the securities
or Blue Sky laws of various jurisdictions which have been or will be
effected in accordance with this Agreement and except for compliance with
the filing requirements of the NASD Division of Corporate Finance) or
conflicts or will conflict with or constitutes or will constitute a breach
of or a default under, the Certificate of Incorporation or the Certificate
of Formation, as the case may be, By-Laws or the Limited Liability Company
Agreement, as the case may be or (ii) conflicts or will conflict with or
constitutes or will constitute a breach of or a default under, any
agreement, indenture, lease or other instrument to which such Adviser is a
party or by which it or any of its properties may be bound or materially
violates or will violate any statute, law, regulation or filing or
judgment, injunction, order or decree applicable to such Adviser or any of
its properties or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of such Adviser pursuant
to the terms of any agreement or instrument to which it is a party or by
which it may be bound or to which any of the property or assets of such
Adviser is subject, except, in the case of clause (ii) above, for
conflicts, breaches, defaults, violations or encumbrances that do not or
would not have, either individually or in the aggregate, an Adviser
Material Adverse Effect, or a material adverse effect on the Adviser's
ability to perform its obligations under this Agreement, the Additional
Compensation Agreement (in the case of the Investment Adviser) or the Fund
Agreements to which it is a party.
(k) Except as stated in this Agreement and in the Prospectus (and in
any amendment or supplement thereto), such Adviser has not taken and nor
will it take, directly or indirectly, any action designed to or which
should reasonably be expected to cause or result in or which will
constitute, stabilization or manipulation of the price of the Common Shares
in violation of federal securities laws and such Adviser is not aware of
any such action taken or to be taken by any affiliates of such Adviser.
(l) In the event that the Fund or such Adviser makes available any
promotional materials intended for use only by qualified broker-dealers and
registered representatives thereof by means of an Internet web site
administered by such party or similar electronic means, such Adviser will
install and maintain pre-qualification and password-protection or similar
procedures which are reasonably designed to restrict access to such
promotional materials by persons other than qualified broker-dealers and
registered representatives thereof.
18
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Fund and the Advisers, jointly and severally, agree to
indemnify and hold harmless each of you and each other Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act, from and against any and
all losses, claims, damages, liabilities and expenses, joint or several
(including reasonable costs of investigation) arising out of or based upon
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Prospectus or any Prepricing
Prospectus, any sales material (or any amendment or supplement to any of
the foregoing) or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a Prospectus or
Prepricing Prospectus, in light of the circumstances under which they were
made) not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue statement
or omission or alleged untrue statement or omission which has been made
therein or omitted therefrom in reliance upon and in conformity with the
information relating to such Underwriters furnished in writing to the Fund
by or on behalf of any Underwriter through you expressly for use in
connection therewith PROVIDED, however, that the foregoing indemnification
contained in this paragraph (a) with respect to the Prepricing Prospectus
(or any amendment or supplement thereto) shall not inure to the benefit of
any Underwriter (or to the benefit of any person controlling such
Underwriter) on account of any such loss, claim, damage, liability or
expense arising from the sale of the Shares by such Underwriter to any
person if it is shown that a copy of any such amendment or supplement to
the Prepricing Prospectus or the Prospectus (which term as used in this
proviso shall not include any statement of additional information unless
specifically requested by such person) was not delivered or sent to such
person within the time required by the 1933 Act and the 1933 Act Rules and
Regulations and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in the Prepricing
Prospectus was corrected in the supplement or amendment to the Prepricing
Prospectus or in the Prospectus, provided that the Fund has delivered such
supplements or amendments or the Prospectus to the several Underwriters in
requisite quantity on a timely basis to permit proper delivery or sending.
The foregoing indemnity agreement shall be in addition to any liability
which the Fund or the Advisers may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Fund or the Advisers, such Underwriter
or such controlling person shall promptly notify the Fund or the Advisers
and the Fund or the Advisers shall assume the defense thereof, including
the employment of counsel and the payment of all fees and expenses. Such
Underwriter or any such controlling person shall have the right to employ
separate counsel in any such action, suit or proceeding and to participate
in the defense thereof, but the fees and expenses of such counsel shall be
at the expense of such Underwriter or controlling person unless (i) the
Fund or the Advisers have agreed in writing to pay such fees and expenses,
(ii) the Fund and the Advisers have failed within a reasonable time to
assume the defense and employ counsel or (iii) the named parties to any
19
such action, suit or proceeding (including any impleaded parties) include
both such Underwriter or such controlling person and the Fund or the
Advisers and such Underwriter or such controlling person shall have been
advised by its counsel that representation of such indemnified party and
the Fund or the Advisers by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the Fund and the
Advisers shall not have the right to assume the defense of such action,
suit or proceeding on behalf of such Underwriter or such controlling
person). It is understood, however, that the Fund and the Advisers shall,
in connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances
be liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel if there is any action, suit or
proceeding in more than one jurisdiction) at any time for all such
Underwriters and controlling persons not having actual or potential
differing interests with you or among themselves, which firm shall be
designated in writing by Citigroup Global Markets Inc. and that, subject to
the requirements of 1940 Act Release No. 11330 and Section 17(i) of the
1940 Act, all such fees and expenses shall be reimbursed promptly as they
are incurred. The Fund and the Advisers shall not be liable for any
settlement of any such action, suit or proceeding effected without the
written consent of the Fund or the Advisers (whether or not the Fund or the
Advisers are actual or potential parties to such action, suit or
proceeding), but if settled with such written consent or if there be a
final judgment for the plaintiff in any such action, suit or proceeding,
the Fund and the Advisers agree to indemnify and hold harmless any
Underwriter, to the extent provided in the preceding paragraph, and any
such controlling person from and against any loss, liability, damage or
expense by reason by such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Fund and the Advisers, their directors, members or
managers, any officers of the Fund who sign the Registration Statement and
any person who controls the Fund or the Advisers within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, to the same
extent as the foregoing indemnity from the Fund and the Advisers to each
Underwriter, but only with respect to information relating to such
Underwriter furnished in writing by or on behalf of such Underwriter
through you or your counsel expressly for use in the Registration
Statement, the Prospectus or the Prepricing Prospectus (or any amendment or
supplement to any of the foregoing). If any action, suit or proceeding
shall be brought against the Fund or the Advisers, any of their directors,
members or managers, any such officer or any such controlling person, based
on the Registration Statement, the Prospectus or the Prepricing Prospectus
(or any amendment or supplement to any of the foregoing) and in respect of
which indemnity may be sought against any Underwriter pursuant to this
paragraph (c), such Underwriter shall have the rights and duties given to
the Fund by paragraph (b) above (except that if the Fund or the Advisers
shall have assumed the defense thereof such Underwriter shall not be
20
required to do so, but may employ separate counsel therein and participate
in the defense thereof, but the fees and expenses of such counsel shall be
at such Underwriter's expense) and the Fund and the Advisers, their
directors, any such officer and any such controlling person shall have the
rights and duties given to the Underwriters by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which
the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Fund and the Advisers on the one hand
(treated jointly for this purpose as one person) and the Underwriters on
the other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Fund and
the Advisers on the one hand (treated jointly for this purpose as one
person) and of the Underwriters on the other hand in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Fund and the Advisers
on the one hand (treated jointly for this purpose as one person) and the
Underwriters on the other hand shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses)
received by the Fund as set forth in the table on the cover page of the
Prospectus bear to the total underwriting discounts and commissions
received by the Underwriters with respect to the Firm Shares as set forth
in the table on the cover page of the Prospectus. The relative fault of the
Fund and the Advisers on the one hand (treated jointly for this purpose as
one person) and of the Underwriters on the other hand shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Fund and the Advisers
on the one hand (treated jointly for this purpose as one person) or by the
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission.
(e) The Fund, the Advisers and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages, liabilities and expenses referred to in
paragraph (d) above shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating any claim or defending
21
any such action, suit or proceeding. Notwithstanding the provisions of this
Section 8, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price of the Shares underwritten by
it and distributed to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 8 are
several in proportion to the respective number of Firm Shares set forth
opposite their names in Schedule I (or such numbers of Firm Shares
increased as set forth in Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability from claimants on
claims that are the subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall, subject to the requirements of Release No. 11330 and
Section 17(i) of the 1940 Act, be paid by the indemnifying party to the
indemnified party as such losses, claims, damages, liabilities or expenses
are incurred. The indemnity and contribution agreements contained in this
Section 8 and the representations and warranties of the Fund and the
Advisers set forth in this Agreement shall remain operative and in full
force and effect, regardless of (i) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter, the Fund, the
Advisers or their directors, members, managers or officers or any person
controlling the Fund or the Advisers, (ii) acceptance of any Shares and
payment therefor hereunder and (iii) any termination of this Agreement. A
successor to any Underwriter or to the Fund, the Advisers or their
directors or officers or any person controlling any Underwriter, the Fund
or the Advisers shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 8.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase any Shares hereunder are subject to the accuracy of
and compliance with the representations, warranties and agreements of and by the
Fund and the Advisers contained herein on and as of the date hereof, the date on
which the Registration Statement becomes or became effective, the date of the
Prospectus (and of any amendment or supplement thereto), the Closing Date and,
with respect to any Additional Shares, any Option Closing Date; to the accuracy
and completeness of all statements made by the Fund, the Advisers or any of
their officers in any certificate delivered to the Representatives or their
counsel pursuant to this Agreement and to the following conditions:
22
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may
commence, the Registration Statement or such post-effective amendment shall
have become effective not later than 5:30 p.m., New York City time, on the
date hereof or at such later date and time as shall be consented to in
writing by you and all filings, if any, required by Rules 497 and 430A
under the 1933 Act Rules and Regulations shall have been timely made; no
order suspending the effectiveness of the Registration Statement shall have
been issued and no proceeding for that purpose shall have been instituted
or, to the knowledge of the Fund, the Advisers or any Underwriter,
threatened by the Commission and any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to your
satisfaction.
(b) You shall have received on the Closing Date an opinion of
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Fund, dated the Closing Date
and addressed to you, as Representatives of the several Underwriters, in
substantially the form attached hereto as Exhibit A.
(c) You shall have received on the Closing Date an opinion of ▇▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel for the Investment Adviser, dated the Closing
Date and addressed to you, as Representatives of the several Underwriters,
to the effect that:
(i) The Investment Adviser is a corporation validly existing in
good standing under the laws of the State of New York with full
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration Statement
and the Prospectus (and any amendment or supplement thereto) and is
duly registered and qualified to conduct its business and is in good
standing in each state set forth on Annex A to such opinion, such
states being those in which the nature of its properties or the
conduct of its business requires such registration or qualification,
except where the failure so to register or to qualify does not have a
material, adverse effect on the condition (financial or other),
business, properties, net assets or results of operations of the
Investment Adviser (such counsel being entitled to rely in respect of
the opinion in this clause upon certificates of government officials
in the relevant jurisdictions regarding the Investment Adviser's due
registration, qualification and good standing, and in respect of
matters of fact upon certificates of the Investment Adviser);
(ii) The Investment Adviser is duly registered with the
Commission under the Advisers Act as an investment adviser and is not
prohibited by the Advisers Act, the 1940 Act or the Rules and
Regulations under such acts from acting as the investment adviser for
the Fund under the Management Agreement and the Administration
Agreement as contemplated by the Prospectus (and any amendment or
supplement thereto);
23
(iii) The Investment Adviser has corporate power and authority to
enter into this Agreement, the Additional Compensation Agreement, the
Management Agreement, the Administration Agreement and the
Sub-Advisory Agreement; this Agreement, the Management Agreement, the
Administration Agreement and the Sub-Advisory Agreement have been duly
authorized, executed and delivered by the Investment Adviser; and
(assuming the due authorization, execution and delivery by each of the
other parties thereto) each of the Management Agreement, the
Administration Agreement and the Sub-Advisory Agreement is a valid,
legal and binding agreement of the Investment Adviser, enforceable
against the Investment Adviser in accordance with its terms, as rights
to indemnity and contribution thereunder may be limited by public
policy or federal or state securities laws and subject to the
qualification that the enforceability of the Investment Adviser's
obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing (except
that counsel may state that it expresses no opinion as to the
reasonableness or fairness of compensation payable under the
Management Agreement and the Sub-Advisory Agreement).;
(iv) Each of the Management Agreement and the Sub-Advisory
Agreement complies in all material respects with all applicable
provisions of the Advisers Act, the 1940 Act and the Advisers Act
Rules and Regulations and the 1940 Act Rules and Regulations (except
that counsel may state that it expresses no opinion as to the
reasonableness or fairness of compensation payable under the
Management Agreement and the Sub-Advisory Agreement);
(v) Neither (A) the execution and delivery by the Investment
Adviser of this Agreement, the Additional Compensation Agreement, the
Management Agreement, the Administration Agreement or the Sub-Advisory
Agreement nor (B) the consummation by the Investment Adviser of the
transactions contemplated hereunder or thereunder constitutes or will
constitute a breach of or a default under (i) the Certificate of
Incorporation or By-Laws of the Investment Adviser or (ii) any
material agreement, indenture, lease or other instrument set forth on
Schedule A hereto furnished to such counsel by the Investment Adviser
and which the Investment Adviser has represented lists all agreements
and instruments to which the Investment Adviser is a party or by which
the Investment Adviser is bound or to which any of the property or
assets of the Investment Adviser is subject that are material to the
business or operations of the Investment Adviser or (iii) result in
any violation of any applicable United States federal or New York law,
rule, regulation (other than state securities or "blue sky" laws, as
to which such counsel need express no opinion) or order of any New
York or United States federal court, governmental instrumentality,
securities exchange or association or arbitrator and (in the case of
New York or United States federal orders) known to such counsel after
24
reasonable inquiry, except, in the case of each of clauses (ii) and
(iii), for such conflicts or breaches which do not, either
individually or in the aggregate, have a material adverse effect on
the Investment Adviser or the Investment Adviser's ability to perform
its obligations under this Agreement or the Fund Agreements to which
it is a party;
(vi) To the best knowledge of such counsel after reasonable
inquiry, other than as described or contemplated in the Prospectus
(and any amendment or supplement thereto), there are no actions, suits
or other legal or governmental proceedings pending or threatened
against the Investment Adviser or to which the Investment Adviser or
any of its property is subject which are required to be described in
the Registration Statement or Prospectus (or any amendment or
supplement thereto);
(vii) The Investment Adviser owns, possesses or has obtained and
currently maintains all material governmental licenses, permits,
consents, orders, approvals and other authorizations as are necessary
for the Investment Adviser to carry on its business as contemplated in
the Prospectus (and any amendment or supplement thereto); and
(viii) No material consent, approval, authorization or order of
any New York or United States federal court, regulatory body,
administrative or other governmental body, agency or official is
required on the part of the Investment Adviser for the performance of
this Agreement, the Management Agreement, the Administration Agreement
or the Sub-Advisory Agreement by the Investment Adviser or for the
consummation by the Investment Adviser of the transactions
contemplated hereby or thereby , except such as (i) have been obtained
under the United States federal securities laws and (ii) may be
required by the American Stock Exchange or under state securities or
"blue sky" laws, in each case, as to which such counsel need express
no opinion, in connection with the purchase and distribution of the
Shares by the Underwriters pursuant to this Agreement;
(ix) The description of the Investment Adviser and its business,
and the statements directly attributable to the Investment Adviser,
set forth in the Registration Statement or the Prospectus do 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 the case of the Prospectus, in light
of the circumstances under which they were made) not misleading.
In rendering such opinion, counsel may limit such opinion to matters
involving the application of the laws of the State of New York and the laws
of the United States and may rely upon an opinion or opinions, each dated
the Closing Date, of other counsel retained by the Investment Adviser as to
laws of any jurisdiction other than the United States and the State of New
York, provided that (X) each such local counsel is acceptable to the
Representatives, (Y) such reliance is expressly authorized by each opinion
25
so relied upon and a copy of each such opinion is delivered to the
Representatives and is, in form and substance, satisfactory to them and
their counsel and (Z) counsel shall state in their view that they believe
that they and the Underwriters are justified in relying thereon.
(d) You shall have received on the Closing Date an opinion of ▇▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel for the Subadviser, dated the Closing Date and
addressed to you, as Representatives of the several Underwriters, to the
effect that:
(i) The Subadviser is a limited liability company validly
existing in good standing under the laws of the State of Delaware with
full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto) and is duly registered and qualified to conduct
its business and is in good standing in each state set forth on Annex
A to such opinion, such states being those in which the nature of its
properties or the conduct of its business requires such registration
or qualification, except where the failure so to register or to
qualify does not have a material, adverse effect on the condition
(financial or other), business, properties, net assets or results of
operations of the Subadviser (such counsel being entitled to rely in
respect of the opinion in this clause upon certificates of government
officials in the relevant jurisdictions regarding the Subadviser's due
registration, qualification and good standing and in respect of
matters of fact upon certificates of the Subadviser;
(ii) The Subadviser is duly registered with the Commission under
the Advisers Act as an investment adviser and is not prohibited by the
Advisers Act, the 1940 Act or the rules and regulations promulgated by
the Commission under such acts from acting as the subadviser for the
Fund under the Sub-Advisory Agreement as contemplated by the
Prospectus (and any amendment or supplement thereto);
(iii) The Subadviser has corporate power and authority to enter
into this Agreement and the Sub-Advisory Agreement; this Agreement and
the Sub-Advisory Agreement have been duly authorized, executed and
delivered by the Subadviser; and (assuming the due authorization,
execution and delivery by each of the other parties thereto) each of
the Agreement and the Sub-Advisory Agreement is a valid, legal and
binding agreement of the Subadviser, enforceable against the
Subadviser in accordance with its terms, as rights to indemnity and
contribution thereunder may be limited by public policy or federal or
state securities laws and subject to the qualification that the
enforceability of the Subadviser's obligations thereunder may be
limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing (except that counsel
may state that it expresses no opinion as to the reasonableness or
fairness of compensation payable under the Sub-Advisory Agreement;
26
(iv) The Sub-Advisory Agreement complies in all material respects
with all applicable provisions of the Advisers Act, the 1940 Act and
the Advisers Act Rules and Regulations and the 1940 Act Rules and
Regulations (except that counsel may state that it expresses no
opinion as to the reasonableness or fairness of compensation payable
under the Sub-Advisory Agreement;
(v) Neither (A) the execution and delivery by the Subadviser of
this Agreement or the Sub-Advisory Agreement nor (B) the consummation
by the Subadviser of the transactions contemplated hereunder or
thereunder constitutes or will constitute a breach of or a default
under (i) the organizational documents of the Subadviser or (ii) any
material agreement, indenture, lease or other instrument set forth on
Schedule A hereto furnished to such counsel by the Subadviser and
which the Subadviser has represented lists all agreements and
instruments to which the Subadviser is a party or by which the
Subadviser is bound or to which any of the property or assets of the
Subadviser is subject that are material to the business or operations
of the Subadviser or (iii) result in any violation of any applicable
United States federal or New York law, rule, regulation (other than
state securities or "blue sky" laws, as to which such counsel need
express no opinion) or order of any New York or United States federal
court, governmental instrumentality, securities exchange or
association or arbitrator and (in the case of New York or United
States federal orders) known to such counsel after reasonable inquiry,
except, in the case of each of clauses (ii) and (iii), for such
conflicts or breaches which do not, either individually or in the
aggregate, have a material adverse effect on the Subadviser or the
Subadviser's ability to perform its obligations under this Agreement
or the Fund Agreements to which it is a party;
(vi) To the best knowledge of such counsel after reasonable
inquiry, other than as described or contemplated in the Prospectus
(and any amendment or supplement thereto), there are no actions, suits
or other legal or governmental proceedings pending or threatened
against the Subadviser or to which the Subadviser or any of its
property is subject that are required to be described in the
Registration Statement or Prospectus (or any amendment or supplement
thereto);
(vii) The Subadviser owns, possesses or has obtained and
currently maintains all material governmental licenses, permits,
consents, orders, approvals and other authorizations as are necessary
for the Subadviser to carry on its business as contemplated in the
Prospectus (and any amendment or supplement thereto); and
(viii) No material consent, approval, authorization or order of
any New York or United States federal court, regulatory body,
administrative or other governmental body, agency or official is
27
required on the part of the Subadviser for the performance of this
Agreement or the Sub-Advisory Agreement by the Subadviser or for the
consummation by the Subadviser of the transactions contemplated hereby
or thereby, except such as (i) have been obtained under the United
States federal securities laws and (ii) may be required by the
American Stock Exchange or under state securities or "blue sky" laws,
in each case, as to which such counsel need express no opinion, in
connection with the purchase and distribution of the Shares by the
Underwriters pursuant to this Agreement.
(ix) The description of the Subadviser and its business, and the
statements directly attributable to the Subadviser, set forth in the
Registration Statement or the Prospectus do 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 the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
In rendering such opinion, counsel may limit such opinion to matters
involving the application of the Delaware Limited Liability Company laws,
the State of New York and the laws of the United States and may rely upon
an opinion or opinions, each dated the Closing Date, of other counsel
retained by the Subadviser as to laws of any jurisdiction other than the
United States and the Delaware Limited Liability Company laws, provided
that (X) each such local counsel is acceptable to the Representatives, (Y)
such reliance is expressly authorized by each opinion so relied upon and a
copy of each such opinion is delivered to the Representatives and is, in
form and substance, satisfactory to them and their counsel and (Z) counsel
shall state in their view that they believe that they and the Underwriters
are justified in relying thereon.
(e) That you shall have received on the Closing Date, (i) an opinion
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, and (ii) a
letter from Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel for the
Underwriters, each dated the Closing Date and addressed to you, as
Representatives of the several Underwriters, with respect to such matters
as the Underwriters may require and the Fund, the Advisers and their
respective counsels shall have furnished to such counsel such documents as
they may request for the purpose of enabling them to pass upon such
matters.
(f) That you shall have received letters addressed to you, as
Representatives of the several Underwriters, and dated the date hereof and
the Closing Date from Ernst & Young LLP, independent certified public
accountants, substantially in the forms heretofore approved by you.
(g) (i) No order suspending the effectiveness of the Registration
Statement or prohibiting or suspending the use of the Prospectus (or any
amendment or supplement thereto) or any Prepricing Prospectus or any sales
material shall have been issued and no proceedings for such purpose or for
the purpose of commencing an enforcement action against the Fund, the
Advisers or, with respect to the transactions contemplated by the
28
Prospectus (or any amendment or supplement thereto) and this Agreement, any
Underwriter, may be pending before or, to the knowledge of the Fund, the
Advisers or any Underwriter or in the reasonable view of counsel to the
Underwriters, shall be threatened or contemplated by the Commission at or
prior to the Closing Date and that any request for additional information
on the part of the Commission (to be included in the Registration
Statement, the Prospectus or otherwise) be complied with to the
satisfaction of the Representatives, (ii) there shall not have been any
change in the capital stock of the Fund nor any material increase in debt
of the Fund from that set forth in the Prospectus (and any amendment or
supplement thereto) and the Fund shall not have sustained any material
liabilities or obligations, direct or contingent, other than those
reflected in the Prospectus (and any amendment or supplement thereto);
(iii) since the date of the Prospectus there shall not have been any
material, adverse change in the condition (financial or other), business,
business prospects, properties, net assets or results of operations of the
Fund or the Advisers; (iv) the Fund and the Advisers must not have
sustained any material loss or interference with its business from any
court or from legislative or other governmental action, order or decree or
from any other occurrence not described in the Registration Statement and
the Prospectus (and any amendment or supplement thereto); and (v) all of
the representations and warranties of the Fund and the Advisers contained
in this Agreement shall be true and correct on and as of the date hereof
and as of the Closing Date as if made on and as of the Closing Date.
(h) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change or any development involving a prospective
change that would have a Material Adverse Effect or Adviser Material
Adverse Effect on the Fund or the Advisers, respectively, not contemplated
by the Prospectus (and any amendment or supplement thereto (and other than
as a result of changes in market conditions generally), which in your
opinion, as Representatives of the several Underwriters, would materially,
adversely affect the market for the Shares or (ii) any event or development
relating to or involving the Fund, the Advisers or any officer or director
of the Fund or the Advisers which makes any statement of a material fact
made in the Prospectus (or any amendment or supplement thereto) untrue or
which, in the opinion of the Fund and its counsel or the Underwriters and
their counsel, requires the making of any addition to or change in the
Prospectus (or any amendment or supplement thereto) in order to state a
material fact required by the 1933 Act, the 1940 Act, the Rules and
Regulations or any other law to be stated therein or necessary in order to
make the statements therein (in the case of a prospectus, in light of the
circumstances under which they were made) not misleading, if amending or
supplementing the Prospectus (or any amendment or supplement thereto) to
reflect such event or development would, in your opinion, as
Representatives of the several Underwriters, materially, adversely affect
the market for the Shares.
(i) That neither the Fund nor the Advisers shall have failed at or
prior to the Closing Date to have performed or complied with any of the
agreements herein contained and required to be performed or complied with
by them at or prior to the Closing Date.
29
(j) That you shall have received on the Closing Date a certificate,
dated such date, of the president, any managing director or any vice
president and of the controller, treasurer or assistant treasurer of each
of the Fund, the Investment Adviser and the Subadviser certifying that (i)
the signers have carefully examined the Registration Statement, the
Prospectus (and any amendments or supplements thereto) and this Agreement,
(ii) the representations and warranties of the Fund (with respect to the
certificates from such Fund officers) and the representations of the
Advisers (with respect to the certificates from such officers of the
Advisers) in this Agreement are true and correct on and as of the date of
the certificate as if made on such date, (iii) since the date of the
Prospectus (and any amendment or supplement thereto) there has not been any
change that would have a Material Adverse Effect on the Fund (with respect
to the certificates from such Fund officers) or an Adviser Material Adverse
Effect on the Advisers (with respect to the certificates from such officers
of the Advisers), (iv) to the knowledge of such officers after reasonable
investigation, no order suspending the effectiveness of the Registration
Statement or prohibiting the sale of any of the Shares or having a Material
Adverse Effect on the Fund (with respect to the certificates from such Fund
officers) or an Adviser Material Adverse Effect on the Advisers (with
respect to the certificates from such officers of the Advisers) has been
issued and no proceedings for any such purpose are pending before or, to
the knowledge of such officers, threatened by the Commission or any court
or other regulatory body, the NASD, any state securities commission, any
national securities exchange, any arbitrator, any court or any other
governmental, regulatory, self-regulatory or administrative agency or any
official, (v) each of the Fund (with respect to certificates from such Fund
officers) and the Advisers (with respect to certificates from such officers
of the Advisers) has performed and complied with all agreements that this
Agreement requires it to perform by such Closing Date, (vi) neither the
Fund (with respect to the certificate from such officers of the Fund) nor
the Advisers (with respect to the certificate from such officers of the
Advisers) has sustained any material loss or interference with its business
from any court or from legislative or other governmental action, order or
decree or from any other occurrence not described in the Registration
Statement and the Prospectus and any amendment or supplement thereto and
(vii) with respect to the certificate from such officers of the Fund, there
has not been any change in the capital stock of the Fund nor any material
increase in the debt of the Fund from that set forth in the Prospectus (or
any amendment or supplement thereto) and the Fund has not sustained any
material liabilities or obligations, direct or contingent, other than those
reflected in the Prospectus (or any amendment or supplement thereto).
(k) That the Fund and the Advisers shall have furnished to you such
further certificates and documents as you shall reasonably request
(including certificates of officers of the Fund and the Advisers).
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in
form and substance to you and your counsel acting in good faith.
30
Any certificate or document signed by any officer of the Fund or the
Advisers and delivered to you, as Representatives of the Underwriters or
to Underwriters' counsel, shall be deemed a representation and warranty by
the Fund or the Advisers to each Underwriter as to the statements made
therein.
The several obligations of the Underwriters to purchase any
Additional Shares hereunder are subject to (i) the accuracy of and
compliance with the representations, warranties and agreements of and by
the Fund and the Advisers contained herein on and as of the Option Closing
Date, as though made on any Option Closing Date, (ii) satisfaction on and
as of any Option Closing Date of the conditions set forth in this Section
9 except that, if any Option Closing Date is other than the Closing Date,
the certificates, opinions and letters referred to in paragraphs (b), (c),
(d), (e), (f), (j), (k) and this paragraph shall be dated the Option
Closing Date in question and the opinions and letters called for by
paragraphs (b), (c), (d), (e) and (f) shall be revised to reflect the sale
of Additional Shares, (iii) the accuracy and completeness of all
statements made by the Fund, the Advisers or any of their officers in any
certificate delivered to the Representatives or their counsel pursuant to
this Agreement and (iv) the absence of circumstances on or prior to the
Option Closing Date which would permit termination of this Agreement
pursuant to Section 11 hereof if they existed on or prior to the Closing
Date.
10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the Registration Statement or a post-effective amendment thereto to be
declared effective before the offering of the Shares may commence, when oral
(confirmed promptly in writing) or written notification of the effectiveness of
the Registration Statement or such post-effective amendment has been released by
the Commission. Until such time as this Agreement shall have become effective,
it may be terminated by the Fund by notifying you or by you, as Representatives
of the several Underwriters, by notifying the Fund.
If any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they have agreed to purchase hereunder and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares, each non-defaulting Underwriter shall be obligated, severally, in
the proportion which the aggregate number of Shares set forth opposite its name
in Schedule I hereto bears to the aggregate number of Shares set forth opposite
the names of all non-defaulting Underwriters or in such other proportion as you
may specify in accordance with the ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Master Agreement Among
Underwriters, to purchase Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase. If any Underwriter or
Underwriters shall fail or refuse to purchase Shares and the aggregate number of
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares and arrangements satisfactory to you and the Fund for
the purchase of such Shares by one or more non-defaulting Underwriters or other
party or parties approved by you and the Fund are not made within 36 hours after
such default, this Agreement will terminate without liability on the part of any
31
non-defaulting Underwriter or the Fund. In any such case which does not result
in termination of this Agreement, either you or the Fund shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and the
Prospectus or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any such default of any such Underwriter under this
Agreement. The term "Underwriter" as used in this Agreement includes, for all
purposes of this Agreement, any party not listed in Schedule I hereto who, with
your approval and the approval of the Fund, purchases Shares which a defaulting
Underwriter agreed, but failed or refused, to purchase.
Any notice under this Section 10 may be made by telegram, facsimile or
telephone but shall be subsequently confirmed by letter.
11. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of the
Underwriters to the Fund or the Advisers, by notice given to the Fund or the
Advisers prior to delivery of and payment for the Firm Shares and any Additional
Shares, as the case may be, if at any time prior to such time (i) trading in the
Fund's Common Shares shall have been suspended by the Commission or the AMEX or
trading in securities generally on the New York Stock Exchange or AMEX shall
have been suspended or limited or minimum prices for trading in securities
generally shall have been established on either of such Exchanges, (ii) a
banking moratorium shall have been declared by either federal or New York state
authorities, or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or
other calamity or crisis the effect of which on financial markets in the United
States is such as to make it, in your sole judgment, impracticable or
inadvisable to proceed with the offering or delivery of the Shares as
contemplated by the Prospectus (exclusive of any supplement thereto). Notice of
such termination may be given to the Fund or the Advisers by telegram, facsimile
or telephone and shall be subsequently confirmed by letter.
12. EXPENSES. The Fund agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by the Fund of its
obligations hereunder: (i) the preparation, printing or reproduction, filing
(including, without limitation, the filing fees prescribed by the 1933 Act, the
1940 Act and the Rules and Regulations) and distribution of the Registration
Statement (including exhibits thereto), the Prospectus, each Prepricing
Prospectus and the 1940 Act Notification and all amendments or supplements to
any of them, (ii) the printing (or reproduction) and delivery, including, but
not limited to, the Underwriters and dealers, (including postage, air freight
charges and charges for counting and packaging) of such copies of the
Registration Statement, the Prospectus, each Prepricing Prospectus, any sales
material and all amendments or supplements to any of them, except as provided in
Section 5 of the Agreement, as may be reasonably requested for use in connection
with the offering and sale of the Shares, (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, if any,
including any stamp taxes and transfer agent and registrar fees payable in
connection with the original issuance and sale of such Shares, (iv) the
registrations or qualifications of the Shares for offer and sale thereof, if
any, as are required under the securities or Blue Sky laws of the several states
32
as provided in Section 5(g) hereof (including the reasonable fees, expenses and
disbursements of counsel for the Underwriters relating to the preparation,
printing or reproduction and delivery of the preliminary and supplemental Blue
Sky Memoranda and such registration and qualification), (v) the fees and
expenses of the Fund's independent accountants, counsel for the Fund and of the
transfer agent, (vi) the printing (or reproduction) and delivery of this
Agreement, any dealer agreements, the preliminary and supplemental Blue Sky
Memoranda (if any) and all other company-authorized agreements or other
documents printed (or reproduced) and delivered in connection with the offering
of the Shares, (vii) the filing fees and the fees and expenses of counsel for
the Underwriters in connection with any filings required to be made with the
NASD and incurred with respect to the review of the offering of the Shares by
the NASD, which fees and expenses of counsel, together with the fees, expenses
and disbursements of counsel set forth in paragraph (iv) of this Section 12
above, shall not exceed $15,000, exclusive of NASD and filing fees, (viii) the
registration of the Shares under the 1934 Act and the listing of the Shares on
the AMEX and (ix) $_______, for partial reimbursement of certain Underwriter
expenses (but not including reimbursement for the cost of one tombstone
advertisement in a newspaper that is one quarter of a newspaper page or less in
size); and (x) the transportation, lodging, graphics and other expenses of the
Fund, the Advisors and their officers and employees related to the preparation
for and participation by the Fund, the Advisors and their officers and employees
in the roadshow.
Notwithstanding the foregoing, in the event that the sale of the Firm
Shares is not consummated pursuant to Section 2 hereof, the Advisers will pay
the costs and expenses of the Fund set forth above in this Section 12 (i)
through (ix), and reimbursements of Underwriter expenses in connection with the
offering shall be made in accordance with Section 5(k) hereof.
13. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements set
forth in the last paragraph of the cover page regarding delivery of the Shares,
the names of the underwriters and numbers of Shares listed opposite such names
in the first paragraph under the caption "Underwriting" in the Prospectus, as
well as, under the same caption, the statements regarding the selling
concessions and reallowances of selling concessions in the third paragraph, the
last sentence of the third paragraph, the fourteenth paragraph and the
eighteenth paragraph constitute the only information relating to any Underwriter
furnished to the Fund in writing by or on behalf of the Underwriters through you
as such information is referred to herein, expressly for use in the Prospectus.
14. MISCELLANEOUS. Except as otherwise provided in Sections 5, 10 and
11 hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (a) if to the Fund or the Advisers, c/o Neuberger
▇▇▇▇▇▇, LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; Attention: ▇▇▇▇▇
▇▇▇▇▇▇▇, Esq., with a copy to ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇; Attention Art Delibert; or (b) if to you,
as Representatives of the Underwriters, at the office of Citigroup Global
Markets Inc. at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Manager, Investment Banking Division.
33
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Fund, the Advisers, their directors and officers and the other
controlling persons referred to in Section 8 hereof and their respective
successors and assigns to the extent provided herein and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the term
"successor" or the term "successors and assigns" as used in this Agreement shall
include a purchaser from any Underwriter of any of the Shares in his status as
such purchaser.
A copy of the Articles of Incorporation of the Fund is on file with the
Secretary of State of the State of Maryland. This Agreement has been executed on
behalf of the Fund by the chief executive officer of the Fund in such capacity
and not individually and the obligations of the Fund under this Agreement are
not binding upon such officer, any of the directors or the shareholders
individually but are binding only upon the assets and property of the Fund.
15. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
34
Please confirm that the foregoing correctly sets forth the agreement among
the Fund and the Advisers and the several Underwriters.
Very truly yours,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ INCOME OPPORTUNITY FUND INC.
By:
---------------------------
Name:
Title:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ MANAGEMENT INC.
By:
---------------------------
Name:
Title:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC
By:
---------------------------
Name:
Title:
35
Confirmed as of the date
first above written on
behalf of themselves and
the other several Underwriters
named in Schedule I hereto.
By: CITIGROUP GLOBAL MARKETS INC.
ADVEST, INC
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INCORPORATED
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & COMPANY, INCORPORATED
[Insert additional underwriters]
AS REPRESENTATIVES OF THE SEVERAL UNDERWRITERS
By: CITIGROUP GLOBAL MARKETS INC.
By:
-----------------------------------
Name:
Title:
36
SCHEDULE I
NUMBER OF
NAME OF UNDERWRITER COMMON SHARES
------------------- -------------
Citigroup Global Markets Inc.............................
Advest, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated
[Insert additional underwriters]
Total.............................................. ___________
EXHIBIT A
[TO BE INSERTED]
