▇▇▇▇▇ & Steers REIT and Utility Income Fund, Inc.
(a Maryland corporation)
Taxable Auction Market Preferred Shares ("AMPS")
3,360 Shares [_]% AMPS, Series M7
3,360 Shares [_]% AMPS, Series T7
3,360 Shares [_]% AMPS, Series W7
3,360 Shares [_]% AMPS, Series TH7
3,360 Shares [_]% AMPS, Series F7
3,000 Shares [_]% AMPS, Series T28
3,000 Shares [_]% AMPS, Series F28
Liquidation Preference $25,000 per share
FORM OF PURCHASE AGREEMENT
March [_], 2004
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
UBS Securities LLC
Wachovia Capital Markets, LLC
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
▇▇▇▇▇ & Steers REIT and Utility Income Fund, Inc., a Maryland corporation
(the "Fund"), proposes, upon the terms and conditions set forth herein, to issue
and sell an aggregate of 3,360 shares of its Taxable Auction Market Preferred
Shares, Series M7, 3,360 shares of its Taxable Auction Market Preferred Shares,
Series T7, 3,360 shares of its Taxable Auction Market Preferred Shares, Series
W7, 3,360 shares of its Taxable Auction Market Preferred Shares, Series TH7,
3,360 shares of its Taxable Auction Market Preferred Shares, Series F7, 3,000
shares of its Taxable Auction Market Preferred Shares, Series T28 and 3,000
shares of its Taxable Auction Market Preferred Shares, Series F28, each with a
liquidation preference of $25,000 per share (the "AMPS"). The AMPS will be
authorized by, and subject to the terms and conditions of, the Articles of
Incorporation of the Fund, as amended through [______], 2004 (the "Charter"), in
the form filed as an exhibit to the Registration Statement referred to in the
second following paragraph of this Agreement, as the same may be amended from
time to time. The Fund and the Fund's investment manager, ▇▇▇▇▇ & Steers Capital
Management, Inc., a New York corporation ("CSCM" or the "Investment Manager")
each confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other Underwriters
named in Schedule A hereto (collectively, the "Underwriters", which term shall
also include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇ is acting as representative (in such capacity,
the "Representative"), with respect to the issue and sale by the Fund and the
purchase by the Underwriters, acting severally and not jointly, of the
respective number of AMPS set forth in said Schedule A.
The Fund understands that the Underwriters propose to make a public
offering of the AMPS as soon as the Representative deems advisable after this
Agreement has been executed and delivered.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-111834 and No.
811-21437) covering the registration of the AMPS under the Securities Act of
1933, as amended (the "1933 Act"), including the related preliminary prospectus
or prospectuses, and a notification on Form N-8A of registration (the "1940 Act
Notification") of the Fund as an investment company under the Investment Company
Act of 1940, as amended (the "1940 Act"), and the rules and regulations of the
Commission under the 1933 Act and the 1940 Act (the "Rules and Regulations").
Promptly after execution and delivery of this Agreement, the Fund will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the Rules and Regulations and paragraph (c) or (h) of Rule 497
("Rule 497") of the Rules and Regulations or (ii) if the Fund has elected to
rely upon Rule 434 ("Rule 434") of the Rules and Regulations, prepare and file a
term sheet (a "Term Sheet") in accordance with the provisions of Rule 434 and
Rule 497. The information included in any such prospectus or in any such Term
Sheet, as the case may be, that was omitted from such registration statement at
the time it became effective but that is deemed to be part of such registration
statement at the time it became effective, if applicable, (a) pursuant to
paragraph (b) of Rule 430A is referred to as "Rule 430A Information" or (b)
pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434 Information."
Each prospectus used before such registration statement became effective, and
any prospectus that omitted, as applicable, the Rule 430A Information or the
Rule 434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, including in each case any Statement
of Additional Information incorporated therein by reference, is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto and schedules thereto at the time it became effective and including the
Rule 430A Information and the Rule 434 Information, as applicable, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the Rules and Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final
prospectus in the form first furnished to the Underwriters for use in connection
with the offering of the AMPS, including the Statement of Additional Information
incorporated therein by reference, is herein called the "Prospectus." If Rule
434 is relied on, the term "Prospectus" shall refer to the preliminary
prospectus dated March [_], 2004 together with the Term Sheet and all references
in this Agreement to the date of the Prospectus shall mean the date of the Term
Sheet. For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the Prospectus or any Term Sheet or any
amendment or supplement to any of the foregoing shall be deemed to include the
copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all reference in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934, as amended (the "1934
Act"), which is incorporated by reference in the Registration Statement, such
preliminary prospectus or the Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Fund and the Investment Manager.
The Fund and the Investment Manager jointly and severally represent and warrant
to each Underwriter as of the date hereof, as of the Closing Time referred to in
Section 2(c) hereof and agree with each Underwriter, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
2
Statement has been issued under the 1933 Act, or order of suspension or
revocation of registration pursuant to Section 8(e) of the 1940 Act, and no
proceedings for any such purpose have been instituted or are pending or, to
the knowledge of the Fund or the Investment Manager, are contemplated by
the Commission, and any request on the part of the Commission for
additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time, the Registration Statement, the Rule
462(b) Registration Statement, the notification of Form N-8A and any
amendments and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act, the 1940 Act and the Rules
and Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. Neither
the Prospectus nor any amendments or supplements thereto, at the time the
Prospectus or any such amendment or supplement was issued and at the
Closing Time, included or will include an untrue statement of a material
fact or omitted or will omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading (except that this representation and
warranty does not apply to statements in or omissions from the Registration
Statements or the Prospectus made in reliance upon and in conformity with
information relating to the Underwriters furnished to the Fund by or on
behalf of the Underwriters expressly for use therein). If Rule 434 is used,
the Fund will comply with the requirements of Rule 434 and the Prospectus
shall not be "materially different", as such term is used in Rule 434, from
the prospectus included in the Registration Statement at the time it became
effective.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 497 under the 1933 Act, complied when so
filed in all material respects with the Rules and Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters for
use in connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇,
except to the extent permitted by Regulation S-T.
If a Rule 462(b) Registration Statement is required in connection with
the offering and sale of the AMPS, the Fund has complied or will comply
with the requirements of Rule 111 under the 1933 Act Regulations relating
to the payment of filing fees thereof.
(ii) Independent Accountants. The accountants who certified the
statement of assets and liabilities included in the Registration Statement
have represented to the Fund that they are independent public accountants
as required by the 1933 Act and the Rules and Regulations.
(iii) Financial Statements. The statement of assets and liabilities
included in the Registration Statement and the Prospectus, together with
the related notes, presents fairly the financial position of the Fund at
the date indicated; said statement has been prepared in conformity with
generally accepted accounting principles ("GAAP").
(iv) No Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects (other than as a result of
a change in the financial markets generally) of the Fund, whether or not
arising in the ordinary course of business (a "Material Adverse Effect"),
(B) there have been no transactions entered into by the Fund, other than
those in the ordinary course of business, which are material with respect
to the Fund, and (C)
3
there has been no dividend or distribution of any kind declared, paid or
made by the Fund on any class of its capital stock.
(v) Good Standing of the Fund. The Fund has been duly organized and is
validly existing as a corporation in good standing under the laws of the
State of Maryland and has the corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement; and the Fund is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse
Effect.
(vi) No Subsidiaries. The Fund has no subsidiaries.
(vii) Investment Company Status. The Fund is duly registered with the
Commission under the 1940 Act as a closed-end non-diversified management
investment company, and to the Fund's knowledge, no order of suspension or
revocation of such registration has been issued or proceedings therefor
initiated or threatened by the Commission.
(viii) Officers and Directors. No person is serving or acting as an
officer, director or investment manager of the Fund except in accordance
with the provisions of the 1940 Act and the Rules and Regulations and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and the
rules and regulations of the Commission promulgated under the Advisers Act
(the "Advisers Act Rules and Regulations"). Except as disclosed in the
Registration Statement and the Prospectus (or any amendment or supplement
to either of them), no director of the Fund is an "interested person" (as
defined in the 1940 Act) of the Fund or an "affiliated person" (as defined
in the 1940 Act) of any Underwriter listed in Schedule A hereto.
(ix) Capitalization. The authorized, issued and outstanding shares of
common stock of the Fund is as set forth in the Prospectus as of the date
thereof under the caption "Description of Common Shares." All issued and
outstanding common shares of the Fund have been duly authorized and validly
issued and are fully paid and non-assessable, and have been offered and
sold or exchanged by the Fund in compliance with all applicable laws
(including, without limitation, federal and state securities laws); none of
the outstanding shares of common shares of the Fund was issued in violation
of the preemptive or other similar rights of any securityholder of the
Fund.
(x) Authorization and Description of AMPS. The AMPS to be purchased by
the Underwriters from the Fund have been duly authorized for issuance and
sale to the Underwriters pursuant to this Agreement and, when issued and
delivered by the Fund pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid and
non-assessable. The AMPS conform to all statements relating thereto
contained in the Prospectus and such description conforms to the rights of
holders of AMPS set forth in the Charter and other documents defining the
same; no holder of the AMPS will be subject to personal liability by reason
of being such a holder; and the issuance of the AMPS is not subject to the
preemptive or other similar rights of any securityholder of the Fund.
(xi) Absence of Defaults and Conflicts. The Fund is not in violation
of its Charter or by-laws, or in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which it is a party or by
which it may be bound, or to which any of the property or assets of the
Fund is subject (collectively, "Agreements and Instruments") except for
such violations or defaults that would not result in a Material Adverse
4
Effect; and the execution, delivery and performance of this Agreement, the
Administration Agreement, the Sub-Administration Agreement, the Investment
Management Agreement, the Custodian Agreement, the Transfer Agent and
Service Agreement and the Auction Agency Agreement referred to in the
Registration Statement (as used herein, the "Administration Agreement," the
"Sub-Administration Agreement," the "Management Agreement," the "Custodian
Agreement," "Transfer Agency Agreement" and the "Auction Agency Agreement,"
respectively) and the consummation of the transactions contemplated herein
and in the Registration Statement (including the issuance and sale of the
AMPS and the use of the proceeds from the sale of the AMPS as described in
the Prospectus under the caption "Use of Proceeds") and compliance by the
Fund with its obligations hereunder have been duly authorized by all
necessary corporate action and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Fund pursuant to, the
Agreements and Instruments (except for such conflicts, breaches or defaults
or liens, charges or encumbrances that would not result in a Material
Adverse Effect), nor will such action result in any violation of the
provisions of the Charter or by-laws of the Fund or any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Fund or any of its assets, properties or
operations. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Fund.
(xii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Fund or the Investment Manager, threatened, against or affecting the
Fund, which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which might reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be expected
to materially and adversely affect the properties or assets of the Fund or
the consummation of the transactions contemplated in this Agreement or the
performance by the Fund of its obligations hereunder. The aggregate of all
pending legal or governmental proceedings to which the Fund is a party or
of which any of its property or assets is the subject which are not
described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Effect.
(xiii) Accuracy of Exhibits. There are no contracts or documents which
are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto by the 1933 Act, the 1940 Act
or by the Rules and Regulations which have not been so described and filed
as required.
(xiv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Fund of its obligations
hereunder, in connection with the offering, issuance or sale of the AMPS
hereunder or the consummation of the transactions contemplated by this
Agreement, except such as have been already obtained or as may be required
under the 1933 Act, the 1940 Act, the 1934 Act, or state securities laws.
(xv) Possession of Licenses and Permits. The Fund possesses such
permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by
5
the appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to operate its properties and to conduct the business as
contemplated in the Prospectus; the Fund is in compliance with the terms
and conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force and
effect, except when the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect would
not have a Material Adverse Effect; and the Fund has not received any
notice of proceedings relating to the revocation or modification of any
such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xvi) Advertisements. Any advertising, sales literature or other
promotional material (including "prospectus wrappers," "broker kits," "road
show slides" and "road show scripts") authorized in writing by or prepared
by the Fund or the Investment Manager used in connection with the public
offering of the AMPS (collectively, "sales material") does not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. Moreover, all sales material complied and will comply in
all material respects with the applicable requirements of the 1933 Act, the
1940 Act, the Rules and Regulations and the rules and interpretations of
the National Association of Securities Dealers, Inc. ("NASD").
(xvii) Subchapter M. The Fund intends to direct the investment of the
proceeds of the offering described in the Registration Statement in such a
manner as to comply with the requirements of Subchapter M of the Internal
Revenue Code of 1986, as amended ("Subchapter M of the Code" and the
"Code," respectively), and intends to qualify as a regulated investment
company under Subchapter M of the Code.
(xviii) Distribution of Offering Materials. The Fund has not
distributed and, prior to the later to occur of (A) the Closing Time and
(B) completion of the distribution of the AMPS, will not distribute any
offering material in connection with the offering and sale of the AMPS
other than the Registration Statement, a preliminary prospectus, the
Prospectus or other materials, if any, permitted by the 1933 Act or the
1940 Act or the Rules and Regulations.
(xix) Accounting Controls. The Fund maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or
specific authorization and with the applicable requirements of the 1940
Act, the Rules and Regulations and the Code; (B) transactions are recorded
as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain
accountability for assets and to maintain compliance with the books and
records requirements under the 1940 Act and the Rules and Regulations; (C)
access to assets is permitted only in accordance with the management's
general or specific authorization; and (D) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xx) Absence of Undisclosed Payments. To the Fund's knowledge, neither
the Fund nor any employee or agent of the Fund has made any payment of
funds of the Fund or received or retained any funds, which payment, receipt
or retention of funds is of a character required to be disclosed in the
Prospectus.
(xxi) Material Agreements. This Agreement, the Administration
Agreement, the Sub-Administration Agreement, the Management Agreement, the
Custodian Agreement, the Transfer Agency Agreement and the Auction Agency
Agreement have each been duly authorized by all requisite action on the
part of the Fund, executed and delivered by the Fund, as of the dates noted
6
therein, and each complies with all applicable provisions of the 1940 Act.
Assuming due authorization, execution and delivery by the other parties
thereto with respect to the Sub-Administration Agreement, the Custodian
Agreement, the Transfer Agency Agreement and the Auction Agency Agreement,
each of the Administration Agreement, the Sub-Administration Agreement, the
Management Agreement, the Custodian Agreement, the Transfer Agency
Agreement and the Auction Agency Agreement constitutes a valid and binding
agreement of the Fund, enforceable in accordance with its terms, except as
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law).
(xxii) Registration Rights. There are no persons with registration
rights or other similar rights to have any securities registered pursuant
to the Registration Statement or otherwise registered by the Fund under the
1933 Act.
(xxiii) NYSE Listing. The Fund's shares of common stock are duly
listed on the New York Stock Exchange ("NYSE").
(xxiv) Ratings. The AMPS have been, or prior to the Closing Date will
be, assigned a rating of "Aaa" by ▇▇▇▇▇'▇ Investors Service, Inc.
("Moody's") and "AAA" by Standard & Poor's Rating Services ("S&P").
(xxv) Leverage. The Fund has no liability for borrowed money,
including under any reverse repurchase agreement.
(b) Representations and Warranties by the Investment Manager. The
Investment Manager represents and warrants to each Underwriter as of the date
hereof, as of the Closing Time referred to in Section 2(c) hereof as follows:
(i) Good Standing of the Investment Manager. The Investment Manager
has been duly organized and is validly existing and in good standing as a
corporation 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 Prospectus and is duly qualified as a
foreign corporation to transact business and is in good standing in each
other jurisdiction in which such qualification is required 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 of the Investment Manager
to perform its obligations under this Agreement and the Management
Agreement.
(ii) Investment Manager Status. The Investment Manager is duly
registered and in good standing with the Commission as an investment
adviser under the Advisers Act, and is not prohibited by the Advisers Act
or the 1940 Act, or the rules and regulations under such acts, from acting
under the Management Agreement for the Fund as contemplated by the
Prospectus.
(iii) Description of Investment Manager. The description of the
Investment Manager in the Registration Statement and the Prospectus (and
any amendment or supplement to either of them) complied and comply in all
material respects with the provisions of the 1933 Act, the 1940 Act, the
Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations and is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
7
(iv) Capitalization. The Investment Manager has the financial
resources available to it necessary for the performance of its services and
obligations as contemplated in the Prospectus, this Agreement and under the
Management Agreement.
(v) Authorization of Agreements; Absence of Defaults and Conflicts.
This Agreement and the Management Agreement have each been duly authorized,
executed and delivered by the Investment Manager, and the Management
Agreement constitutes a valid and binding obligation of the Investment
Manager, enforceable in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights generally
and general equitable principles (whether considered in a proceeding in
equity or at law); and neither the execution and delivery of this Agreement
or the Management Agreement nor the performance by the Investment Manager
of its obligations hereunder or thereunder will conflict with, or result in
a breach of any of the terms and provisions of, or constitute, with or
without the giving of notice or lapse of time or both, a default under, any
agreement or instrument to which the Investment Manager is a party or by
which it is bound, the certificate of incorporation, the by-laws or other
organizational documents of the Investment Manager, or to the Investment
Manager's knowledge, by any law, order, decree, rule or regulation
applicable to it of any jurisdiction, court, federal or state regulatory
body, administrative agency or other governmental body, stock exchange or
securities association having jurisdiction over the Investment Manager or
its respective properties or operations; and no consent, approval,
authorization or order of any court or governmental authority or agency is
required for the consummation by the Investment Manager of the transactions
contemplated by this Agreement or the Management Agreement, except as have
been obtained or may be required under the 1933 Act, the 1940 Act, the 1934
Act or state securities laws.
(vi) No Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred any
event which should reasonably be expected to have a material adverse effect
on the ability of the Investment Manager to perform its obligations under
this Agreement and the Management Agreement.
(vii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Investment Manager, threatened against or affecting the Investment
Manager or any "affiliated person" of the Investment Manager (as such term
is defined in the 1940 Act) or any partners, directors, officers or
employees of the foregoing, whether or not arising in the ordinary course
of business, which might reasonably be expected to result in any material
adverse change in the condition, financial or otherwise, or earnings,
business affairs or business prospects of the Investment Manager,
materially and adversely affect the properties or assets of the Investment
Manager or materially impair or adversely affect the ability of the
Investment Manager to function as an investment manager or perform its
obligations under the Management Agreement, or which is required to be
disclosed in the Registration Statement and the Prospectus.
(viii) Absence of Violation or Default. The Investment Manager is not
in violation of its certificate of incorporation, by-laws or other
organizational documents or in default under any agreement, indenture or
instrument except for such violations or defaults that would not result in
a material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Investment
Manager or the Fund.
(c) Officer's Certificates. Any certificate signed by any officer of the
Fund or the Investment Manager delivered to the Representative or to counsel for
the Underwriters shall be deemed a
8
representation and warranty by the Fund or the Investment Manager, as the case
may be, to each Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) AMPS. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Fund
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Fund, at the
price per share set forth in Schedule B, the number of AMPS set forth in
Schedule A opposite the name of such Underwriter, plus any additional number of
AMPS which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b) Commission. The Fund agrees to pay to the Underwriters a commission set
forth in Schedule B as compensation to the Underwriters for their commitments
under this Agreement.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the AMPS shall be made at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other
place as shall be agreed upon by the Representative and the Fund, at 10:00 A.M.
(Eastern time) on the business day after the date hereof (unless postponed in
accordance with the provisions of Section 10), or such other time not later than
ten business days after such date as shall be agreed upon by the Representative
and the Fund (such time and date of payment and delivery being herein called
"Closing Time").
Payment shall be made to the Fund by wire transfer of immediately available
funds to a bank account designated by the Fund, against delivery to the
Representative for the respective accounts of the Underwriters of certificates
for the AMPS to be purchased by them. It is understood that each Underwriter has
authorized the Representative, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the AMPS which it has agreed to
purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the AMPS to be purchased by any Underwriter whose funds have not been
received by the Closing Time but such payment shall not relieve such Underwriter
from its obligations hereunder.
(d) Denominations; Registration. Certificates for the AMPS shall be in such
denominations and registered in such names as the Representative may request in
writing at least one full business day before the Closing Time. The certificates
for the AMPS will be made available for examination and packaging by the
Representative in the City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time.
SECTION 3. Covenants.
(a) The Fund and the Investment Manager, jointly and severally, covenant
with each Underwriter as follows:
(i) Compliance with Securities Regulations and Commission Requests.
The Fund, subject to Section 3(a)(ii), will comply with the requirements of
Rule 430A or Rule 434, as applicable, and will notify the Representatives
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of
any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of
any order preventing or suspending the use of any preliminary prospectus,
or of the suspension of the qualification of the
9
AMPS for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Fund will
promptly effect the filings necessary pursuant to Rule 497 and will take
such steps as it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 497 was received for filing by
the Commission and, in the event that it was not, it will promptly file
such prospectus. The Fund will make every reasonable effort to prevent the
issuance of any stop order, or order of suspension or revocation of
registration pursuant to Section 8(e) of the 1940 Act, and, if any such
stop order or order of suspension or revocation of registration is issued,
to obtain the lifting thereof at the earliest possible moment.
(ii) Filing of Amendments. The Fund will give the Representative
notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or
to the Prospectus, will furnish the Representative with copies of any such
documents a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Representative or counsel for the Underwriters shall object.
(iii) Delivery of Registration Statements. The Fund has furnished or
will deliver to the Representative and counsel for the Underwriters,
without charge, signed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the Representative,
without charge, a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) for each
of the Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(iv) Delivery of Prospectuses. The Fund has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Fund hereby consents to
the use of such copies for purposes permitted by the 1933 Act prior to the
date of the Prospectus. The Fund will furnish to each Underwriter, without
charge, during the period when in the opinion of counsel for the
Underwriter the Prospectus is required under the 1933 Act to be delivered
in connection with sales by any Underwriter or dealer or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(v) Continued Compliance with Securities Laws. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with
sales of the AMPS, any event shall occur or condition shall exist as a
result of which it is necessary, in the opinion of counsel for the
Underwriters or for the Fund, to amend the Registration Statement or amend
or supplement the Prospectus in order that the Prospectus will not include
any untrue statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at
any such time to amend the Registration Statement or amend or supplement
the Prospectus in order to comply with the requirements of the 1933 Act or
the Rules and Regulations, the Fund will promptly prepare and file with the
Commission, subject to Section 3(a)(ii), such amendment or supplement as
may be necessary to correct such
10
statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Fund will furnish to the
Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(vi) Blue Sky Qualifications. The Fund will use its best efforts, in
cooperation with the Underwriters, to qualify the AMPS for offering and
sale under the applicable securities laws of such states and other
jurisdictions of the United States as the Representative may designate and
to maintain such qualifications in effect for a period of not less than one
year from the later of the effective date of the Registration Statement and
any Rule 462(b) Registration Statement; provided, however, that the Fund
shall not be obligated to file any general consent to service of process or
to qualify as a foreign corporation or as a dealer in AMPS in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject. In each jurisdiction in which the AMPS have been
so qualified, the Fund will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the effective date of
the Registration Statement and any Rule 462(b) Registration Statement.
(vii) Rule 158. The Fund will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(viii) Use of Proceeds. The Fund will use the net proceeds received by
it from the sale of the AMPS in the manner specified in the Prospectus
under "Use of Proceeds."
(ix) Reporting Requirements. The Fund, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant
to the 1940 Act and the 1934 Act within the time periods required by the
1940 Act and the Rules and Regulations and the 1934 Act and the rules and
regulations of the Commission thereunder, respectively.
(x) Subchapter M. The Fund will comply with the requirements of
Subchapter M of the Code to qualify as a regulated investment company under
the Code.
(xi) No Manipulation of Market for AMPS. The Fund will not (a) take,
directly or indirectly, any action designed to cause or to result in, or
that might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Fund to facilitate the
sale or resale of the AMPS, and (b) until the Closing Date, or the Date of
Delivery, if any, (i) sell, bid for or purchase the AMPS or pay any person
any compensation for soliciting purchases of the AMPS or (ii) pay or agree
to pay to any person any compensation for soliciting another to purchase
any other Shares of the Fund.
(xii) Rule 462(b) Registration Statement. If the Fund elects to rely
upon Rule 462(b), the Fund shall file a Rule 462(b) Registration Statement
with the Commission in compliance with Rule 462(b) by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement, and the Fund shall at
the time of filing either pay to the Commission the filing fee for the Rule
462(b) Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the 1933 Act.
(xiii) Accountant's Certificate. The Fund will furnish to the
Underwriters, on the date on which delivery is made to the Rating Agencies,
the Accountant's Certificate (as defined in the Charter) corresponding to
the Certificate of Dividend Coverage and Certificate of Eligible Asset
Coverage (as defined in the Charter) for the first Valuation Date (as
defined in the Charter) following the Closing Time.
11
(b) Except as provided in this Agreement, the Fund will not sell, contract
to sell or otherwise dispose of any of its preferred shares of beneficial
interest of the same series as the AMPS or any securities convertible into or
exercisable or exchangeable for its preferred shares of beneficial interest of
the same series as the AMPS, or grant any options or warrants to purchase its
preferred shares of beneficial interest of the same series as the AMPS, for a
period of 180 days after the date of the Prospectus, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION 4. Payment of Expenses.
(a) Expenses. The Fund will pay all expenses incident to the performance of
its obligations under this Agreement, including (i) the preparation, printing
and filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery to the Underwriters of this Agreement, any
Agreement among Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the AMPS,
(iii) the preparation, issuance and delivery of the certificates for the AMPS to
the Underwriters, including any stock or other transfer taxes and any stamp or
other duties payable upon the sale, issuance or delivery of the AMPS to the
Underwriters, (iv) the fees and disbursements of the Fund's counsel, accountants
and other advisors, (v) the qualification of the AMPS under securities laws in
accordance with the provisions of Section 3(a)(vi) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, Prospectus and any
amendments or supplements thereto, (vii) the preparation, printing and delivery
to the Underwriters of copies of the Blue Sky Survey and any supplement thereto,
(viii) the fees and expenses of any transfer agent or registrar for the AMPS,
(ix) the fees and expenses incurred in connection with the rating of the AMPS
and (x) the printing of any sales material.
(b) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section 9(a)
hereof, the Fund and the Investment Manager, jointly and severally, agree that
they shall reimburse the Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations.
The obligations of the several Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Fund and the Investment
Manager contained in Section 1 hereof or in certificates of any officer of the
Fund or the Investment Manager delivered pursuant to the provisions hereof, to
the performance by the Fund and the Investment Manager of their respective
covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act, no notice or order pursuant
to Section 8(e) of the 1940 Act shall have been issued, and no proceedings with
respect to either shall have been initiated or threatened by the Commission, and
any request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
Underwriters. A prospectus containing the Rule 430A Information shall have been
filed with the Commission in accordance with Rule 497 (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the Fund has
elected to rely upon Rule 434, a Term Sheet shall have been filed with the
Commission in accordance with Rule 497.
12
(b) Opinion of Counsel for Fund and the Investment Manager. At Closing
Time, the Representative shall have received the favorable opinions, dated as of
Closing Time, of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Fund, and of
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., internal counsel for the Investment Manager, in form
and substance satisfactory to counsel for the Underwriters, together with signed
or reproduced copies of such letters for each of the other Underwriters
substantially to the effect set forth in Exhibit A hereto and to such further
effect as counsel to the Underwriters may reasonably request. Insofar as the
opinions expressed above relate to or are dependant upon matters governed by
Maryland law, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP will be permitted to rely on the
opinion of ▇▇▇▇▇▇▇ LLP.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of Clifford Chance US LLP, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in clauses (A) (1), (3) through (7),
inclusive and (11) (solely as to the information in the Prospectus under
"Description of AMPS") of Exhibit A hereto. In giving such opinion such counsel
may rely, as to all matters governed by the laws of jurisdictions other than the
law of the State of New York and the federal law of the United States, upon the
opinions of counsel satisfactory to the Representative. Such counsel may also
state that, insofar as such opinion involves factual matters, they have relied,
to the extent they deem proper, upon certificates of officers of the Fund and
certificates of public officials.
(d) Officers' Certificates. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Fund, whether or not arising in the ordinary course of business, and the
Representative shall have received a certificate of a duly authorized officer of
the Fund and of the chief financial or chief accounting officer of the Fund and
of the President or a Vice President or Managing Director of the Investment
Manager, dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in Sections
1(a) and (b) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) each of the Fund and the
Investment Manager, respectively, has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to Closing
Time, (iv) with respect to the Investment Manager only, there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Investment Manager,
whether or not arising in the ordinary course of business and (v) to the
knowledge of such officers, no stop order suspending the effectiveness of the
Registration Statement, or order of suspension or revocation of registration
pursuant to Section 8(e) of the 1940 Act, has been issued and no proceedings for
any such purpose have been instituted or are pending or are contemplated by the
Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from PricewaterhouseCoopers
LLP a letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information to the
effect that:
(i) They are independent certified public accountants with respect to
the Fund within the meaning of the 1933 Act and 1940 Act, and the
applicable rules and regulations thereunder adopted by the Commission;
(ii) In their opinion, the financial statements of the Fund audited by
them and included in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the 1933
Act and 1940 Act and the related rules and regulations adopted by the
Commission;
13
(iii) On the basis of procedures (but not an audit in accordance with
generally accepting auditing standards) consisting of:
a. Reading the minutes of meetings of the Board of Directors of the
Fund as set forth in the minute books through a specified date
not more than three business days prior to the date of delivery
of such letter;
b. Making inquiries of certain officials of the Fund who have
responsibility for financial and accounting matters regarding
changes in the capital stock, net assets or long term liabilities
of the Fund as compared with the amounts shown in the latest
balance sheet included in the Registration Statement or for the
period from the date of the latest income statement included in
the Registration Statement to a specified date not more than
three business days prior to the delivery of such letter.
(iv) The letter shall also state that the information set forth under
the captions "Prospectus Summary - The Fund", "Prospectus Summary - Asset
Maintenance", "Financial Highlights", "The Fund", "Capitalization
(Unaudited)" and "Description of AMPS - Rating Agency Guidelines" which is
expressed in dollars (or percentages derived from such dollar amounts) and
has been obtained from accounting records which are subject to controls
over financial reporting or which has been derived directly from such
accounting records by analysis or computation, is in agreement with such
records or computations made therefrom, and such other procedures as the
Representative may request and PricewaterhouseCoopers LLP are willing to
perform and report upon.
(f) Bring-down Comfort Letter. At Closing Time, the Representative shall
have received from PricewaterhouseCoopers LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(g) Rating. The Fund shall have delivered and you shall have received
evidence satisfactory to you that the AMPS are rated 'Aaa' by ▇▇▇▇▇'▇ and 'AAA'
by S&P as of the Closing Date, and there shall not have been given any notice of
any intended or potential downgrading, or of any review for a potential
downgrading, in the rating accorded to the AMPS or any other securities issued
by the Fund, by ▇▇▇▇▇'▇ or by S&P.
(h) Asset Coverage. As of the Closing Date and assuming the receipt of the
net proceeds from the sale of the AMPS, the 1940 Act Preferred Shares Asset
Coverage and the Preferred Shares Basic Maintenance Amount (each as defined in
the Charter) each will be met.
(i) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the AMPS as herein contemplated, or in order to evidence
the accuracy of any of the representations or warranties, or the fulfillment of
any of the conditions, herein contained; and all proceedings taken by the Fund
and the Investment Manager in connection with the organization and registration
of the Fund under the 1940 Act and the issuance and sale of the AMPS as herein
contemplated shall be satisfactory in form and substance to the Representative
and counsel for the Underwriters.
(j) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representative by notice to the Fund at any
time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7, 8 and 13 shall survive any such termination and
remain in full force and effect.
14
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Fund and the Investment Manager,
jointly and severally, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(e) below) any such settlement is effected with the written consent of the
Fund; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund or the
Investment Manager by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in
the Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); provided,
however, that the indemnification contained in this paragraph (a) with respect
to any preliminary prospectus shall not inure to the benefit of any Underwriter
(or to the benefit of any person controlling such Underwriter) on account of any
such loss, claim, damage, liability or expense arising from the sale of the AMPS
by such Underwriter to any person if the Fund sustains the burden of proof that
a copy of the Prospectus has not been delivered or sent by the Underwriters as
required to such person within the time required by the 1933 Act and the Rules
and Regulations, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such preliminary
prospectus was corrected in such Prospectus.
(b) Indemnification of Fund, Investment Manager, Directors and Officers.
Each Underwriter severally agrees to indemnify and hold harmless the Fund and
the Investment Manager, their respective directors, each of the Fund's officers
who signed the Registration Statement, and each person, if any, who controls the
Fund or the Investment Manager within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue
15
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the Fund
or the Investment Manager by such Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly
for use in the Registration Statement (or any amendment thereto) or such
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) Indemnification for Marketing Materials. In addition to the foregoing
indemnification, the Fund and the Investment Manager also, jointly and
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 6(a),
as limited by the proviso set forth therein, with respect to any sales material.
(d) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Fund and the Investment Manager. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(e) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. Contribution.
If the indemnification provided for in Section 6 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of
16
such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Fund and the Investment Manager on
the one hand and the Underwriters on the other hand from the offering of the
AMPS pursuant to this Agreement or (ii) if the allocation provided by clause (i)
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Fund and the Investment Manager on the one hand and of
the Underwriters on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Fund and the Investment Manager on
the one hand and the Underwriters on the other hand in connection with the
offering of the AMPS pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
AMPS pursuant to this Agreement (before deducting expenses) received by the Fund
and the total underwriting discount received by the Underwriters (whether from
the Fund or otherwise), in each case as set forth on the cover of the
Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the AMPS as set
forth on such cover.
The relative fault of the Fund and the Investment Manager on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Fund or the Investment Manager or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Fund, the Investment Manager and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the AMPS underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Fund and each director of the Investment Manager,
respectively, each officer of the Fund who signed the Registration Statement,
and each person, if any, who controls the Fund or the Investment Manager, within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Fund and the Investment Manager,
respectively. The Underwriters' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the number of Shares set forth
opposite their respective names in Schedule A hereto and not joint.
17
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement
or in certificates of officers of the Fund or the Investment Manager submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or controlling
person, or by or on behalf of the Fund or the Investment Manager, and shall
survive delivery of the AMPS to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representative may terminate this Agreement,
by notice to the Fund, at any time at or prior to Closing Time (i) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Fund or the Investment Manager, whether or
not arising in the ordinary course of business, or (ii) if there has occurred
any material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Representative, impracticable or inadvisable to market the AMPS
or to enforce contracts for the sale of the AMPS, or (iii) if trading in the
shares of common stock of the Fund has been suspended or materially limited by
the Commission or the NYSE, or if trading generally on the American Stock
Exchange or the NYSE or in the Nasdaq National Market has been suspended or
materially limited, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the NASD or any other governmental
authority, or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States, or (iv) if a
banking moratorium has been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7, 8 and 13 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at Closing Time or a Date of
Delivery to purchase the AMPS which it or they are obligated to purchase under
this Agreement (the "Defaulted AMPS"), the Representative shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted AMPS in such amounts as may be agreed upon and
upon the terms herein set forth; if, however, the Representative shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted AMPS does not exceed 10% of the number of
AMPS to be purchased on such date, each of the non-defaulting Underwriters shall
be obligated, severally and not jointly, to purchase the full amount thereof in
the proportions that their respective underwriting obligations hereunder bear to
the underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted AMPS exceeds 10% of the number of AMPS to be
purchased on such date, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
18
In the event of any such default which does not result in a termination of
this Agreement, either the Representative or the Fund shall have the right to
postpone Closing Time for a period not exceeding seven days in order to effect
any required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10.
SECTION 11. Tax Disclosure.
Notwithstanding any other provision of this Agreement, from the
commencement of discussions with respect to the transactions contemplated
hereby, the Fund and the Investment Manager (and each employee, representative
or other agent of the Fund) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure (as such terms are
used in Sections 6011, 6111 and 6112 of the U.S. Code and the Treasury
Regulations promulgated thereunder) of the transactions contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided relating to such tax treatment and tax structure.
SECTION 12. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representative, c/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., 4 World Financial Center, New York, New
York 10080, attention of Equity Capital Markets; and notices to the Fund or the
Investment Manager shall be directed, as appropriate, to the office of ▇▇▇▇▇ &
Steers Capital Management, Inc. at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
SECTION 13. Parties.
This Agreement shall each inure to the benefit of and be binding upon the
Underwriters, the Fund, the Investment Manager and their respective partners and
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Fund, the Investment Manager and their respective successors
and the controlling persons and officers and directors referred to in Sections 6
and 7 and their heirs and legal Representative, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters, the Fund, the
Investment Manager and their respective partners and successors, and said
controlling persons and officers, directors and their heirs and legal
Representative, and for the benefit of no other person, firm or corporation. No
purchaser of Shares from any Underwriter shall be deemed to be a successor by
reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SAID STATE. UNLESS OTHERWISE EXPLICITLY PROVIDED, SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings.
The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.
19
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a binding agreement among the
Underwriters, the Fund and the Investment Manager in accordance with its terms.
Very truly yours,
▇▇▇▇▇ & Steers REIT and Utility Income
Fund, Inc.
By:
------------------------------------
Name:
Title:
▇▇▇▇▇ & Steers Capital Management, Inc.
By:
------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By:
-------------------------------------
Name:
Authorized Signatory
For itself and as Representative of the
other Underwriters named in Schedule A
hereto.
20
SCHEDULE A
Number of Number of Number of Number of Number of Number of Number of
Shares - Shares - Shares - Shares - Shares - Shares - Shares -
Series M7 Series T7 Series W7 Series TH7 Series F7 Series Series
Name of Underwriter AMPS AMPS AMPS AMPS AMPS T28 AMPS F28 AMPS
------------------------------------- --------- --------- --------- ---------- --------- --------- ---------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
Wachovia Capital Markets, LLC
UBS Securities LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
Total.............................
Sch A-1
SCHEDULE B
▇▇▇▇▇ & STEERS REIT AND UTILITY INCOME FUND, INC.
3,360 Shares [_]% AMPS, Series M7
3,360 Shares [_]% AMPS, Series T7
3,360 Shares [_]% AMPS, Series W7
3,360 Shares [_]% AMPS, Series TH7
3,360 Shares [_]% AMPS, Series F7
3,000 Shares [_]% AMPS, Series T28
3,000 Shares [_]% AMPS, Series F28
Liquidation Preference $25,000 per share
1. The initial public offering price per share for the AMPS, determined as
provided in said Section 2, shall be $25,000.
2. The purchase price per share for the AMPS to be paid by the several
Underwriters shall be $24,750, such discount from the initial public offering
price representing the commission to be paid to the Underwriters for their
commitment hereunder of $250.
3. The initial dividend rate on the AMPS, Series M7 shall be [_]% per
annum.
The initial dividend rate on the AMPS, Series T7 shall be [_]% per
annum.
The initial dividend rate on the AMPS, Series W7 shall be [_]% per
annum.
The initial dividend rate on the AMPS, Series TH7 shall be [_]% per
annum.
The initial dividend rate on the AMPS, Series F7 shall be [_]% per
annum.
The initial dividend rate on the AMPS, Series T28 shall be [_]% per
annum.
The initial dividend rate on the AMPS, Series F28 shall be [_]% per
annum.
Sch B-1
Exhibit A
FORM OF OPINION OF FUND'S AND INVESTMENT MANAGER'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
With respect to the Fund:
1. The Fund (A) has been duly incorporated and is validly existing and in
good standing as a corporation under the laws of the State of Maryland
with full corporate power and authority to conduct its business as
described in the Registration Statement and the Prospectus and to
enter into and perform its obligations under the Purchase Agreement,
and (B) is duly registered and qualified to conduct its business and
is in good standing in the State of New York (which is the only
jurisdiction identified by management of the Fund to us in which the
Fund owns or leases property or operates or conducts its business);
2. The statements made in the Prospectus under the captions "Description
of Common Shares", insofar as they purport to constitute summaries of
the terms of the Fund's capital stock, constitute accurate summaries
of the terms of the Fund's capital stock in all material respects;
3. All outstanding shares of capital stock of the Fund have been duly
authorized and validly issued by the Fund, and are fully paid and
nonassessable;
4. The Shares have been duly authorized and, when issued and delivered to
the Underwriters against payment therefor in accordance with the terms
of the Purchase Agreement, will be validly issued by the Fund, fully
paid and nonassessable. There are no preemptive rights under federal
or New York law or under the Maryland General Corporation Law to
subscribe for or purchase shares of the Fund's capital stock. There
are no preemptive or other rights to subscribe for or to purchase, nor
any restriction upon the issuance, voting or, transfer of, any shares
of the Fund's capital stock pursuant to the Fund's Charter or Bylaws
except for certain transfer restrictions with respect to the Shares
and certain restrictions on the future issuance of shares of capital
stock as set forth in the Articles Supplementary;
5. The form of the certificates for the Shares conforms to the
requirements of the Maryland General Corporation Law;
6. The Registration Statement and all post-effective amendments, if any,
have become effective under the 1933 Act and, to our knowledge, no
stop order suspending the effectiveness of the Registration Statement
or order pursuant to Section 8(e) of the 1940 Act has been issued and
no proceedings for that purpose are pending before or threatened by
the Commission; and any required filing of the Prospectus pursuant to
Rule 497 of the 1933 Act Rules and Regulations has been made in
accordance with Rule 497;
7. (A) The Purchase Agreement and each of the Advisory Agreement dated as
of January 27, 2004 between the Fund and the Investment Manager (the
"Advisory Agreement"), the Administration Agreement dated as of
January 27, 2004 between the Fund and the Investment Manager (the
"Administration Agreement"), the Master Custodian Agreement effective
with respect to Fund as of January 27, 2004 between the Fund and State
Street Bank and Trust Company (the "Custodian Agreement"), the
agreement dated as of January 27, 2004 and effective with respect to
Fund as of January 27, 2004 between the Fund and State Street Bank and
Trust Company (the "Sub-Administration Agreement"), and the Auction
Agency Agreement, dated as of March [_],
A-1
between the Fund and The Bank of New York (the "Auction Agency
Agreement"; collectively with the Advisory Agreement, Administration
Agreement, Custodian Agreement and Sub-Administration Agreement, the
"Fund Agreements") have been duly authorized, executed and delivered
by the Fund and (B) the Advisory Agreement, assuming that the Advisory
Agreement is the valid and legally binding obligation of the other
parties thereto, is a valid and legally binding agreement of the Fund,
enforceable against the Fund in accordance with its terms, subject to
(i) the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, (ii) to general equitable
principles (whether considered in a proceeding in equity or at law)
and (iii) an implied covenant of good faith and fair dealing, and
except as the enforceability thereof may be limited by considerations
of public policy;
8. The issue and sale of the Shares by the Fund and the compliance by the
Fund with the provisions of the Purchase Agreement and the Fund
Agreements will not breach or result in a default under or result in
the creation or imposition of any lien, charge, or encumbrance upon
any property or assets of the Fund pursuant to any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument filed or incorporated by reference as an exhibit to the
Registration Statement, nor will such action violate the Charter,
Articles Supplementary or Bylaws of the Fund or any federal or New
York statute or any rule or regulation thereunder or the Maryland
General Corporation Law or order known to us issued pursuant to any
federal or New York statute or the Maryland General Corporation Law by
any New York or Maryland court or governmental agency or body having
jurisdiction over the Fund or any of its properties;
9. No consent, approval, authorization, order, registration, filing or
qualification of or with any federal or New York governmental agency
or body or any Maryland governmental agency or body acting pursuant to
the Maryland General Corporation Law or, to our knowledge, any federal
or New York court or any Maryland court acting pursuant to the
Maryland General Corporation Law is required for the issue and sale of
the Shares by the Fund and the compliance by the Fund with all of the
provisions of the Purchase Agreement and the Fund Agreements, except
for the registration with the Commission under the 1940 Act of the
Fund as an investment company which has occurred and the registration
of the Shares under the 1933 Act and under the 1940 Act pursuant to
the Registration Statement, which has been filed and has become
effective, and such consents, approvals, authorizations,
registrations, filings or qualifications as have been made or as may
be required under state securities or Blue Sky laws in connection with
the purchase and distribution of the Shares by the Underwriters;
10. To our knowledge, (A) other than as described or contemplated in the
Registration Statement or Prospectus, there are no legal or
governmental proceedings pending or threatened against the Fund, or to
which the Fund or any of its properties is subject, and (B) there are
no agreements, contracts, indentures, leases or other instruments that
are required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
that are not described or filed as required, as the case may be;
11. The statements made in the Prospectus under the captions "Management
of the Fund", "Description of Common Shares", "Description of AMPS",
"The Auction" and in the Registration Statement under Item 29
(Indemnification), insofar as they purport to constitute summaries of
the terms of the Maryland General Corporation Law or any federal
statutes, rules and regulations thereunder or contracts and other
documents, constitute accurate summaries of the terms of such
statutes, rules and regulations or contracts and other documents in
all material respects;
A-2
12. The statements made in the Prospectus and Statement of Additional
Information under the captions "U.S. Federal Taxation," insofar as
they purport to constitute summaries of matters of United States
federal tax law and regulations or legal conclusions with respect
thereto, constitute accurate summaries of the matters described
therein in all material respects;
13. Each of the Fund Agreements complies as to form with all applicable
provisions of the 1940 Act, the Investment Advisers Act of 1940, as
amended (the "Advisers Act") and the rules and regulations under the
1940 Act and the Advisers Act;
14. The Fund has been duly registered with the Commission under the 1940
Act and the rules and regulations under the 1940 Act (the "1940 Act
Rules and Regulations") as a closed-end, non-diversified management
investment company and, to our knowledge, no order of suspension or
revocation of such registration under the 1940 Act and the 1940 Act
Rules and Regulations has been issued or proceedings therefor
initiated or threatened by the Commission; the provisions of the
Charter, Articles Supplementary and Bylaws do not violate the
provisions of the 1940 Act or the 1940 Act Rules and Regulations; and
the provisions of the Charter, Articles Supplementary and the Bylaws
and the investment policies and restrictions described in the
Registration Statement and the Prospectus under the captions
"Investment Objectives and Policies" and "Risk Factors" and
"Investment Restrictions" (in the Prospectus and the Statement of
Additional Information incorporated by reference therein) comply in
all material respects with the requirements of the 1940 Act and the
applicable 1940 Act Rules and Regulations; and
15. Except as described in the Prospectus, there are no outstanding
options, warrants or other rights calling for the issuance of, and we
do not know of any commitment, plan or arrangement to issue (other
than in connection with the reinvestment of dividends) any shares of
capital stock of the Fund or any security convertible into or
exchangeable or exercisable for shares of capital stock of the Fund or
to otherwise register such securities for sale.
Insofar as the opinions expressed herein relate to or are dependent
upon matters governed by the laws of the State of Maryland, we have relied upon
the opinion of ▇▇▇▇▇▇▇ LLP.
We have not independently verified the accuracy, completeness or
fairness of the statements made or included in the Registration Statement or the
Prospectus and take no responsibility therefor, except as and to the extent set
forth in paragraphs 2, 11 and 12 above. In the course of the preparation by the
Fund of the Registration Statement and the Prospectus, we participated in
conferences with certain officers and employees of the Fund and the Investment
Manager, with representatives of PricewaterhouseCoopers LLP and with counsel to
the Investment Manager. Based upon our examination of the Registration Statement
and the Prospectus, our investigations made in connection with the preparation
of the Registration Statement and the Prospectus and our participation in the
conferences referred to above, (i) we are of the opinion that the Registration
Statement, as of its effective date, and the Prospectus, as of its date complied
as to form in all material respects with the requirements of the 1933 Act and
the 1940 Act and the applicable rules and regulations of the Commission
thereunder, except that in each case we express no opinion with respect to the
financial statements or other financial data contained or incorporated by
reference in the Registration Statement or the Prospectus, and (ii) we have no
reason to believe that the Registration Statement, at the time the Registration
Statement became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading or that the Prospectus as of
March [_], 2004 contained, or as of the date hereof contains, any untrue
statement of a material fact, or as of March [_], 2004 omitted, or as of the
date hereof omits, to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not
A-3
misleading, except that in each case we express no belief with respect to the
financial statements or other financial data contained or incorporated by
reference in the Registration Statement or the Prospectus.
With respect to the Investment Manager:
1. The Investment Manager (A) has been duly incorporated and is validly
existing as a corporation under the laws of the State of New York with
full corporate power and authority to conduct its business as
described in the Registration Statement and the Prospectus and (B) is
duly registered and qualified to conduct its business and is in good
standing in the State of New York (which is the only jurisdiction in
which the Investment Manager owns or leases property or operates or
conducts its business).
2. The Investment Manager is duly registered with the Commission as an
investment adviser under the Investment Advisers Act of 1940, as
amended (the "Advisers Act") and is not prohibited by the Advisers
Act, the rules and regulations under the Advisers Act (the "Advisers
Act Rules and Regulations"), the 1940 Act or the rules and regulations
under the 1940 Act from acting under the Advisory Agreement dated as
of January 27, 2004 between the Fund and the Investment Manager (the
"Advisory Agreement"), for the Fund as contemplated by the Prospectus;
and to my knowledge, no order of suspension or revocation of such
registration under the Advisers Act and the Advisers Act Rules and
Regulations has been issued and no proceedings for that purpose are
pending before or threatened by the Commission;
3. Each of the Purchase Agreement and the Advisory Agreement has been
duly authorized, executed and delivered by the Investment Manager and,
the Advisory Agreement, assuming that the Advisory Agreement is the
valid and legally binding agreement of the other parties thereto, is a
valid and legally binding agreement of the Investment Manager,
enforceable against the Investment Manager in accordance with its
terms subject to (i) the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, (ii) by general equitable
principles (whether considered in a proceeding in equity or at law)
and (iii) an implied covenant of good faith and fair dealing, and
except as the enforceability thereof may by limited by considerations
of public policy;
4. Neither the execution, delivery or performance of the Purchase
Agreement or the Advisory Agreement by the Investment Manager or
compliance by the Investment Manager with the provisions of the
Purchase Agreement or the Advisory Agreement nor consummation by the
Investment Manager of the transactions contemplated hereby and thereby
will breach or result in a default under any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the
Investment Manager is a party or by which its properties are bound
except where breach or default would not reasonably be expected to
have a material adverse effect on the ability of the Investment
Manager to perform its obligations under the Purchase Agreement and
the Advisory Agreement, nor will such action violate the charter or
by-laws of the Investment Manager or any federal or New York statute
or any rules or regulations thereunder or order known to me issued
pursuant to any federal or New York statute by any court or
governmental agency or body having jurisdiction over the Investment
Manager or any of its properties;
5. No consent, approval, authorization, order, registration, filing or
qualification of or with any federal or New York governmental agency
or body or, to my knowledge, any federal or New York court is required
on the part of the Investment Manager for the execution, delivery and
performance by the Investment Manager of the Purchase Agreement and
the Advisory
A-4
Agreement, except such consents, approvals, authorizations, orders,
registrations, filings or qualifications as have been obtained or made
prior to the date hereof;
6. To my knowledge, there are no legal or governmental proceedings
pending or threatened against the Investment Manager, or to which the
Investment Manager or any of its properties is subject, which are
required to be described in the Registration Statement or Prospectus
that are not described as required or which may reasonably be expected
to involve a prospective material adverse change in the ability of the
Investment Manager to perform its obligations under the Purchase
Agreement and the Advisory Agreement.
I have not independently verified the accuracy, completeness or
fairness of the statements made or included in the Registration Statement or the
Prospectus and take no responsibility therefor. In the course of the preparation
by the Fund of the Registration Statement and the Prospectus, I participated in
conferences with certain officers and employees of the Fund and the Investment
Manager, with representatives of PricewaterhouseCoopers LLP and with counsel to
the Fund. Based upon my examination of the Registration Statement and the
Prospectus, my investigations made in connection with the preparation of the
Registration Statement and the Prospectus and my participation in the
conferences referred to above, I have no reason to believe that the Registration
Statement, at the time the Registration Statement became effective, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein not
misleading or that the Prospectus contains any untrue statement of material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except I express no belief with respect to the financial statements
or other financial data contained or incorporated by reference in the
Registration Statement or the Prospectus.
A-5
