Exhibit 99.h.
Western Asset/Claymore U.S. Treasury Inflation Protected Securities Fund
(a Massachusetts business trust)
8,200 Auction Market Preferred Shares ("AMPS") of Beneficial Interest
1,640 Shares AMPS, Series M
1,640 Shares AMPS, Series T
1,640 Shares AMPS, Series W
1,640 Shares AMPS, Series TH
1,640 Shares AMPS, Series F
Liquidation Preference $25,000 per share
FORM OF PURCHASE AGREEMENT
December [17], 2003
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
c/x Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx
Incorporated
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
Western Asset/Claymore U.S. Treasury Inflation Protected Securities Fund, a
Massachusetts business trust (the "Fund"), proposes, upon the terms and
conditions set forth herein, to issue and sell an aggregate of 1,640 shares of
its Auction Market Preferred Shares of Beneficial Interest, Series M, 1,640
shares of its Auction Market Preferred Shares of Beneficial Interest, Series T,
1,640 shares of its Auction Market Preferred Shares of Beneficial Interest,
Series W, 1,640 shares of its Auction Market Preferred Shares of Beneficial
Interest, Series TH and 1,640 shares of its Auction Market Preferred Shares of
Beneficial Interest, Series F, each with a liquidation preference of $25,000 per
share (collectively, the "AMPS"). The AMPS will be authorized by, and subject to
the terms and conditions of, the Second Amended and Restated Bylaws of the Fund,
dated as of December [17], 2003 (the "Bylaws") and the Agreement and Declaration
of Trust of the Fund, as amended and restated, dated as of August 21, 2003
(the "Declaration"), in substantially the forms filed as exhibits 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 adviser, Western Asset Management Company, a California corporation
("WAM" or the "Investment Advisor"), each confirms its agreement with Xxxxxxx
Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx
Xxxxx") and Xxxx Xxxxx Xxxx Xxxxxx, Incorporated (collectively, the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Xxxxxxx Xxxxx and Xxxx
Xxxxx Xxxx Xxxxxx, Incorporated are acting as representatives (in such capacity,
the "Representatives"), with respect to the issue and sale by the Fund and the
purchase by the Underwriters, acting severally and not jointly, of the
respective number of 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 Representatives deem advisable after this
Agreement has been executed and delivered.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-109707 and No.
811-21403) covering the registration of the AMPS under the Securities Act of
1933, as amended (the "1933 Act"), including the related preliminary prospectus
or prospectuses, which registration statement also constitutes an amendment to
the Fund's registration statement 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 December [11], 2003 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 ("XXXXX").
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
Advisor. The Fund and the Investment Advisor 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
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order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement has been issued under the 1933 Act, or
order of suspension or revocation of registration pursuant to Section 8(e)
of the 1940 Act, and no proceedings for any such purpose have been
instituted or are pending or, to the knowledge of the Fund or the
Investment Advisor, are contemplated by the Commission, and any request on
the part of the Commission for additional information has been complied
with in all material respects.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto (except
any post-effective amendments filed with the Commission after the later of
(x) one year from the date of this Agreement or (y) the date on which the
distribution of the AMPS is completed) became effective and at the Closing
Time, the Registration Statement, the Rule 462(b) Registration Statement
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. If Rule 434 is
used, the Fund will comply with the requirements of Rule 434 and the
Prospectus shall not be "materially different", as such term is used in
Rule 434, from the prospectus included in the Registration Statement at the
time it became effective.
Each preliminary prospectus and the prospectus filed as part of the
effective Registration Statement or as part of any amendment thereto, or
filed pursuant to Rule 497 under the 1933 Act, complied when so filed in
all material respects with the Rules and Regulations and each preliminary
prospectus and the Prospectus delivered to the Underwriters for use in
connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX,
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.
The foregoing representations in this Section 1(a)(i) do not apply
to statements or omissions relating to the Underwriters made in reliance on
and in conformity with information furnished in writing to the Fund by the
Underwriters or their agents expressly for use in the Registration
Statement, the 462(b) Registration Statement, Prospectus or preliminary
prospectus (or any amendment or supplement to any of the foregoing), or
with respect to representations of the Fund, the description of the
Investment Advisor (referred to in Section (1)(b)(iii) of this Agreement)
contained in the foregoing.
(ii) Independent Accountants. To the knowledge of the Fund,
based on representations from PricewaterhouseCoopers LLP, as of the date of
the report of the independent accountants contained in the Registration
Statement, the accountants who certified the statement of assets and
liabilities incorporated by reference into the Registration Statement are
independent public accountants as required by the 1933 Act and the Rules
and Regulations.
(iii) Financial Statements. The statement of assets and
liabilities included in the Registration Statement and the Prospectus,
together with the related notes, presents fairly the
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financial position of the Fund in all material respects at the date
indicated; said statement has been prepared in conformity with generally
accepted accounting principles ("GAAP").
(iv) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement and
the Prospectus, at the time they were or hereafter are filed with the
Commission, complied and (with respect to documents filed hereafter) will
comply in all material respects with the requirements of the 1933 Act and
the Rules and Regulations and, when read together with the other
information in the Prospectus, at the time the Registration Statement
became effective, at the time the Prospectus was issued and at the Closing
Time, 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.
(v) No Material Adverse Change. Since the respective dates as
of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund, whether or
not arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the Fund,
other than those in the ordinary course of business, which are material
with respect to the Fund, and (C) except for regular monthly dividends on
the Fund's outstanding common shares of beneficial interest, there has been
no dividend or distribution of any kind declared, paid or made by the Fund
on any class of its capital shares.
(vi) Good Standing of the Fund. The Fund has been duly
organized and is validly existing as an unincorporated voluntary
association in good standing under the laws of The Commonwealth of
Massachusetts and has power and authority to own and lease 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 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.
(vii) No Subsidiaries. The Fund has no subsidiaries.
(viii) Investment Company Status. The Fund is duly registered
with the Commission under the 1940 Act as a closed-end diversified
management investment company, and no order of suspension or revocation of
such registration has been issued or proceedings therefor initiated or, to
the knowledge of the Fund or the Investment Advisor, threatened by the
Commission.
(ix) Officers and Trustees. No person is serving or acting as
an officer, trustee or investment adviser of the Fund except in accordance
with the provisions of the 1940 Act and the Rules and Regulations and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and the
rules and regulations of the Commission promulgated under the Advisers Act
(the "Advisers Act Rules and Regulations"). Except as disclosed in the
Registration Statement and the Prospectus (or any amendment or supplement
to either of them), no trustee of the Fund is (A) an "interested person"
(as defined in the 1940 Act) of the Fund or (B) an "affiliated person" (as
defined in the 1940 Act) of any Underwriter. For purposes of this Section
1(a)(ix), the Fund and Investment Advisor shall be entitled to rely on
representations from such officers and trustees.
(x) Capitalization. The authorized, issued and outstanding
shares of beneficial interest of the Fund are as set forth in the
Prospectus as of the date thereof, except for shares issued in connection
with the Fund's dividend reinvestment plan. All issued and outstanding
common shares of beneficial interest of the Fund have been duly authorized
and validly issued
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and are fully paid and non-assessable (except as described in the
Registration Statement), and have been offered and sold or exchanged by the
Fund in compliance with all applicable laws (including, without limitation,
federal and state securities laws); none of the outstanding common shares
of beneficial interest of the Fund was issued in violation of the
preemptive or other similar rights of any securityholder of the Fund.
(xi) Authorization and Description of 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 (except as described in the Registration
Statement). In all material respects, the AMPS conform to all statements
relating thereto contained in the Prospectus and such description conforms
to the rights set forth in the instruments defining the same, to the extent
such rights are set forth; no holder of the AMPS will be subject to
personal liability by reason of being such a holder (except as described in
the Registration Statement), and the issuance of the AMPS is not subject to
the preemptive or other similar rights of any securityholder of the Fund.
(xii) Absence of Defaults and Conflicts. The Fund is not in
violation of the Declaration or the Bylaws, each as amended from time to
time, or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which it is a party or by which it may be bound,
or to which any of the property or assets of the Fund is subject
(collectively, "Agreements and Instruments") except for such violations or
defaults that would not result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement, the Management
Agreement, the Administrative Services Agreement, the Custodian
Agreement, the Auction Agency Agreement and the Financial Administration
Agreement referred to in the Registration Statement (as used herein,
the "Management Agreement," the "Administrative Services Agreement," the
"Custodian Agreement," the "Auction Agency Agreement" and the "Financial
Administration 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 (except for such violations
that will not result in a Material Adverse Effect) of the provisions of
the Declaration or the Bylaws of the Fund, each as amended from time to
time, or any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Fund or any of its
assets, properties or operations, other than State securities or "blue
sky" laws applicable in connection with the purchase and distribution of
the AMPS by the Underwriters pursuant to this Agreement. As used herein,
a "Repayment Event" means any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the
Fund.
(xiii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or
5
foreign, now pending, or, to the knowledge of the Fund, threatened, against
or affecting the Fund, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the
properties or assets of the Fund or the consummation of the transactions
contemplated in this Agreement or the performance by the Fund of its
obligations hereunder. The aggregate of all pending legal or governmental
proceedings to which the Fund is a party or of which any of its property or
assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material Adverse
Effect.
(xiv) Accuracy of Exhibits. There are no material contracts or
documents which are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits thereto by the 1933 Act, the
1940 Act or by the Rules and Regulations which have not been so described
and filed as required.
(xv) Possession of Intellectual Property. Except for the
trademark "AMPS(R)," the Fund owns or possesses, or can acquire on
reasonable terms, adequate patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
business now operated by the Fund, except for failures to own or possess
(or inability to acquire on reasonable terms) that, singly or in the
aggregate, would not result in a Material Adverse Effect, and the Fund has
not received any notice or is not otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Fund therein, which infringement or conflict (if the subject of any
unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect.
(xvi) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Fund of its obligations
hereunder, in connection with the offering, issuance or sale of the 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 Securities Exchange Act of 1934, as
amended (the "1934 Act"), the rules of the National Association of
Securities Dealers, Inc. ("NASD"), the rules of the New York Stock Exchange
(the "NYSE") or state securities laws.
(xvii) Possession of Licenses and Permits. Except for the
trademark "AMPS," the Fund possesses such permits, licenses, approvals,
consents and other authorizations (collectively, "Governmental Licenses")
issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to operate its properties and to conduct the
business as contemplated in the Prospectus, except where the absence of
such possession would not result in a Material Adverse Effect; the Fund is
in compliance with the terms and conditions of all such Governmental
Licenses, 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
6
of any such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xviii) Advertisements. Any advertising, sales literature or other
promotional material (including "prospectus wrappers", "broker kits," "road
show slides" and "road show scripts") authorized in writing by or prepared
by the Fund or the Investment Advisor 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,
in light of the circumstances in which they were made, not misleading.
Moreover, all sales material complied and will comply in all material
respects with the applicable requirements of the 1933 Act, the 1940 Act,
and the Rules and Regulations and the rules and interpretations of the
NASD.
(xix) Subchapter M. The Fund intends to direct the investment of
the proceeds of the offering described in the Registration Statement in
such a manner as to comply with the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended ("Subchapter M of the Code" and
the "Code," respectively), and intends to qualify as a regulated investment
company under Subchapter M of the Code.
(xx) Distribution of Offering Materials. The Fund has not
distributed and, prior to the later to occur of (A) the Closing Time and
(B) completion of the distribution of the 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 applicable law.
(xxi) Accounting Controls. The Fund maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (A) transactions are executed in accordance with management's general
or specific authorization and with the applicable requirements of the 1940
Act, the Rules and Regulations and the Code; (B) transactions are recorded
as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain
accountability for assets and to maintain compliance with the books and
records requirements under the 1940 Act and the Rules and Regulations; (C)
access to assets is permitted only in accordance with the management's
general or specific authorization; and (D) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxii) Absence of Undisclosed Payments. To the Fund's knowledge,
neither the Fund nor any employee or agent of the Fund has made any payment
of funds of the Fund or received or retained any funds, which payment,
receipt or retention of funds is of a character required to be disclosed in
the Prospectus and is not so disclosed.
(xxiii) Material Agreements. This Agreement, the Management
Agreement, the Administrative Services Agreement, the Custodian Agreement,
the Auction Agency Agreement and the Financial Administration Agreement
have each been duly authorized by all requisite action on the part of
the Fund, executed and delivered by the Fund, as of the dates noted
therein and each complies with all applicable provisions of the 1940 Act
in all material respects. Assuming due authorization, execution and
delivery by the other parties thereto, each such Agreement constitutes a
valid and binding agreement of the Fund, enforceable in accordance with
its terms, except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing and except as rights to indemnify
or contribute thereunder may be limited by federal or state laws.
7
(xxiv) Registration Rights. There are no persons with
registration rights or other similar rights to have any securities of the
Fund registered pursuant to the Registration Statement or otherwise
registered by the Fund under the 1933 Act.
(xxv) NYSE Listing. The Fund's common shares of beneficial
interest have been duly authorized for listing upon notice of issuance on
the NYSE.
(xxvi) Ratings. The AMPS have been, or prior to the Closing Time
will be, assigned a rating of "Aaa" by Xxxxx'x Investors Service, Inc.
("Xxxxx'x") and "AAA" by Fitch Ratings ("Fitch").
(b) Representations and Warranties by the Investment Advisor. The
Investment Advisor represents and warrants to each Underwriter, and in the case
of paragraph (iii) also represents to the Fund, as of the date hereof and as of
the Closing Time referred to in Section 2(c) hereof as follows:
(i) Good Standing of the Investment Advisor. The Investment
Advisor has been duly organized and is validly existing and in good
standing as a corporation under the laws of the State of California 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 to the extent that failure to be so qualified and in good
standing would not have a material adverse effect on the Investment
Advisor's ability to provide services to the Fund.
(ii) Investment Advisor Status. The Investment Advisor is duly
registered 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 the Investment Advisor. The description of
the Investment Advisor in the Registration Statement and the Prospectus
(and any amendment or supplement to either of them) complied and comply in
all material respects with the provisions of the 1933 Act, the 1940 Act,
the Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations and is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(iv) Capitalization. The Investment Advisor 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 Advisor, and, assuming
due authorization, execution and delivery by the other parties thereto, the
Management Agreement constitutes a valid and binding obligation of the
Investment Advisor, 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 an implied covenant of good faith and
fair dealing and except as rights to indemnity and contribution thereunder
may be limited by federal and state law; and neither the execution and
delivery of this Agreement or the Management Agreement nor the performance
by the Investment Advisor 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
8
agreement or instrument to which the Investment Advisor is a party or by
which it is bound, the organizational documents of the Investment Advisor,
or to the Investment Advisor's knowledge, 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
Advisor or its properties or operations, except where such conflict or
breach would not have a material adverse effect on the Investment Advisor's
ability to perform the services contemplated by such agreement; and no
consent, approval, authorization or order of any court or governmental
authority or agency is required for the consummation by the Investment
Advisor 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, NYSE or state securities laws.
(vi) No Material Adverse Change. Since the respective dates as
of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred any
event which should reasonably be expected to have a material adverse effect
on the ability of the Investment Advisor 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 Advisor, threatened against or affecting the
Investment Advisor or any parent or subsidiary of the Investment Advisor 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 Advisor, materially and adversely affect the properties
or assets of the Investment Advisor or materially impair or adversely
affect the ability of the Investment Advisor to function as an investment
adviser or perform its obligations under the Management Agreement, or which
is required to be disclosed in the Registration Statement and the
Prospectus (and has not been so disclosed).
(viii) Absence of Violation or Default. The Investment Advisor is
not in violation of its organizational documents or in default under any
agreement, indenture or instrument where such violation or default would
reasonably be expected to have a material adverse effect on the ability of
the Investment Advisor to perform its obligations under this Agreement and
the Management Agreement.
(c) Officer's Certificates. Any certificate signed by any officer of the
Fund or the Investment Advisor delivered to the Representatives or to counsel
for the Underwriters shall be deemed a representation and warranty by the Fund
or the Investment Advisor, 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.
9
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the AMPS shall be made at the offices of Clifford Chance US
LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or through the facilities of the
Depository Trust Company ("DTC") or at such other place as shall be agreed upon
by the Representatives and the Fund, at 10:00 A.M. (Eastern time) on the third
(fourth, if the pricing occurs after 4:30 p.m. (Eastern Time) on any given day)
business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Representatives and the Fund
(such time and date of payment and delivery being herein called "Closing Time").
Payment shall be made to the Fund by wire transfer of immediately available
funds to a bank account designated by the Fund, against delivery to the
Representatives for the respective accounts of the Underwriters of certificates
for the AMPS to be purchased by them. It is understood that each Underwriter has
authorized the Representatives, for their account, to accept delivery of,
receipt for, and make payment of the purchase price for, the AMPS which it has
agreed to purchase. Xxxxxxx Xxxxx, 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, each
representing one series of the Preferred Shares, shall be registered in the name
of Cede & Co., as nominee for the Depository Trust Company. The certificates for
the AMPS will be made available for examination and packaging by the
Representatives in the City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time.
SECTION 3. Covenants.
(a) The Fund and the Investment Advisor, jointly and severally, covenant
with each Underwriter, and, with respect to Section 3(c), the Underwriters,
severally and not jointly, covenant with the Fund and the Investment Advisor, as
follows:
(i) Compliance with Securities Regulations and Commission
Requests. For a period of one year from the date hereof, 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 AMPS for offering or sale in any jurisdiction, or
of the initiation or, to the knowledge of the Fund, 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. If at any time the Commission
shall issue any order suspending the effectiveness of the Registration
Statement, prohibiting or suspending the use of the Prospectus or any sales
material (or any amendment or supplement to any of the foregoing) or
suspending the
10
qualification of the AMPS for offering or sale in any jurisdiction, the
Fund will use its reasonable efforts to obtain the withdrawal of such order
at the earliest possible time. If at any time any state securities
commission, any national securities exchange, any arbitrator, any court or
any other governmental, regulatory, self-regulatory or administrative
agency or any official shall issue any order suspending the effectiveness
of the Registration Statement, prohibiting or suspending the use of the
Prospectus or any sales material (or any amendment or supplement to any of
the foregoing) or suspending the qualification of the AMPS for offering or
sale in any jurisdiction, the Fund will use its reasonable efforts to
obtain the withdrawal of such order at the earliest possible time.
(ii) Filing of Amendments. For a period of one year from the
date hereof, the Fund will give the Representatives notice of its intention
to file or prepare any amendment to the Registration Statement (including
any filing under Rule 462(b)), any Term Sheet or any amendment, supplement
or revision to either the prospectus included in the Registration Statement
at the time it became effective or to the Prospectus, will furnish the
Representatives with copies of any such documents a reasonable amount of
time prior to such proposed filing or use, as the case may be, and will not
file or use any such document to which the Representatives or counsel for
the Underwriters shall reasonably object.
(iii) Delivery of Registration Statements. The Fund has
furnished or will deliver to the Representatives, without charge, a signed
copy of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and a signed copy of all consents and certificates of
experts, and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of
each amendment thereto (without exhibits) for each of the Underwriters. The
copies of the Registration Statement and each amendment thereto furnished
to the Underwriters will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to XXXXX, except to the
extent permitted by Regulation S-T. No copy of a post-effective amendment
shall be required to be delivered after one year from the date hereof.
(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 applicable law. The Fund
will furnish to each Underwriter, without charge, during the period when in
the reasonable opinion of counsel for the Underwriters the Prospectus is
required to be delivered under the 1933 Act 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 XXXXX, 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 reasonable 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 reasonable
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
11
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the Fund
will furnish to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request; provided that, if
the supplement or amendment is required exclusively as a result of a
misstatement in or omission from the information provided to the Fund in
writing by the Underwriters expressly for use in the Prospectus, the Fund
may deliver such supplement or amendment to the Underwriters and dealers at
a reasonable charge not to exceed the actual cost thereof to the Fund.
(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 Representatives may
designate (if qualification is required under applicable law) and to
maintain such qualifications in effect for a period of not less than one
year from the later of the effective date of the Registration Statement and
any Rule 462(b) Registration Statement; provided, however, that the Fund
shall not be obligated to file any general consent to service of process or
to qualify as a foreign business trust or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject. In each jurisdiction in which the 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 make generally available to its
securityholders as soon as practicable an earnings statement, if
applicable, for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(viii) Use of Proceeds. The Fund will use the net proceeds
received by it from the sale of the AMPS substantially 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, 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 use its best efforts to comply
with the requirements of Subchapter M of the Code to qualify as a regulated
investment company under the Code.
(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 in violation of federal or state securities
laws, and (b) except as permitted by applicable law, until the Closing Time
(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
securities 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)
12
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 Confirmation (as defined in the Bylaws) required to be
delivered pursuant to paragraph 6(c) of Part I of Section 12.1 of the
Bylaws.
(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 Xxxxxxx Xxxxx, which consent may not be unreasonably
withheld.
(c) No later than the Closing Time, the Underwriters will provide, and
will cause any selling group member to whom they have sold AMPS to provide, to
Deutsche Bank Trust Company Americas, as auction agent for the AMPS (the
"Auction Agent"), a list of the record names of the persons to whom they have
sold AMPS, the number of AMPS sold to each person, and the number of AMPS they
are holding as of the Closing Time; provided that in lieu thereof, an
Underwriter may provide the Auction Agent with a list indicating itself as the
sole holder of all the AMPS sold by such Underwriter.
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 reasonable
costs of 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 by the Fund.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Fund and the Investment Advisor, 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
Advisor contained in Section 1 hereof or in certificates of any officer of the
Fund or the Investment Advisor delivered pursuant to the provisions
13
hereof, to the performance by the Fund and the Investment Advisor of their
respective covenants and other obligations hereunder, and to the following
further conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective or will
have become effective by 5:30 p.m., New York City time on the date hereof, and
at Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act, no notice or order pursuant
to Section 8(e) of the 1940 Act shall have been issued, and no proceedings with
respect to either shall have been initiated or, to the knowledge of counsel to
the Underwriters and counsel to the Fund, threatened by the Commission, and any
request on the part of the Commission for additional information shall have been
complied with or waived to the reasonable satisfaction of counsel to the
Underwriters. A prospectus containing the Rule 430A Information shall have been
filed with the Commission in accordance with Rule 497 (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A or a certificate must
have been filed in accordance with Rule 497(j)) or, if the Fund has elected to
rely upon Rule 434, a Term Sheet shall have been filed with the Commission in
accordance with Rule 497.
(b) Opinions of Counsel for Fund and the Investment Advisor. At Closing
Time, the Representatives shall have received the favorable opinions, dated as
of Closing Time, of counsel for the Fund and the Investment Advisor, 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 or in
such other forms and substance reasonably satisfactory to counsel to the
Underwriters. Such counsel may also state that, insofar as such opinions involve
factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Fund or the Investment Advisor and certificates
of public officials.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives 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) (i), (ii), (vi), (vii)
(solely as to preemptive or other similar rights arising by operation of law or
under the Declaration or the Bylaws), (viii) through (x), inclusive, (xii),
(xiv) (solely as to the information in the Prospectus under "Description of
Capital Structure") and the last paragraph of Exhibit A hereto. In giving such
opinion such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York and the federal law of
the United States, upon the opinions of counsel satisfactory to the
Representatives. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Fund and certificates of public officials.
(d) Officers' Certificates. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Fund, whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of a duly authorized officer
of the Fund and of the chief financial or chief accounting officer of the Fund
and of the President or a Vice President or Managing Director of the Investment
Advisor, dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in Sections
1(a) and (b) hereof, as applicable, are true and correct with the same force and
effect as though expressly made at and as of Closing Time, (iii) each of the
Fund and the Investment Advisor, respectively, has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied pursuant
to this Agreement at or prior to Closing Time, and (iv) with respect to the Fund
only, no stop order suspending the effectiveness of the Registration Statement,
or order of suspension or revocation of registration pursuant to Section 8(e) of
the 1940 Act, has been issued and no proceedings for any such purpose have been
instituted or are pending or, to the best of their knowledge, are contemplated
by the Commission.
14
(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 of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from 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 the Representatives shall
have received evidence satisfactory to the Representatives that the AMPS are
rated "Aaa" by Xxxxx'x and "AAA" by Fitch as of the Closing Time, 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
delivered to the Fund by Xxxxx'x or by Fitch.
(h) Asset Coverage. As of closing time 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 Bylaws) each will be met. For purposes of this Section 5(h), the Fund may
use portfolio holdings and valuations as of the close of business of any day not
more than six business days preceding the Closing Time.
(i) Additional Documents. At Closing Time, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
reasonably 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 Advisor 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 reasonably satisfactory in form and substance to the
Representatives 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 Representatives 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.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Fund and the Investment
Advisor, 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
15
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 reasonable fees and disbursements of counsel chosen by
Xxxxxxx Xxxxx), 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 Advisor by any Underwriter through Xxxxxxx Xxxxx 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,
further, that the indemnity agreement contained in this Section 6(a) shall not
inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) from whom the person asserting any such loss,
liability, claim, damage and expense purchased the AMPS which are the subject
thereof if the Prospectus (as amended or supplemented) corrected any such
alleged untrue statement or omission and if such Prospectus was delivered to
such Underwriter in a timely manner and if such Underwriter failed to send or
give a copy of the Prospectus (as so amended or supplemented) to such person at
or prior to the written confirmation of the sale of such AMPS to such person.
(b) Indemnification of the Fund, Investment Advisor, Trustees,
Directors, Shareholders and Officers. Each Underwriter severally agrees to
indemnify and hold harmless the Fund and the Investment Advisor, their
respective trustees, directors and shareholders, each of the Fund's officers who
signed the Registration Statement, and each person, if any, who controls the
Fund or the Investment Advisor within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Fund or the Investment Advisor by such
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, or such preliminary prospectus or the Prospectus (or
any amendment or supplement thereto).
(c) Indemnification for Marketing Materials. In addition to the
foregoing indemnification, the Fund and the Investment Advisor 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 provisos set forth therein, with respect to any sales
material.
16
(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 Xxxxxxx Xxxxx, 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 Advisor. 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 reasonable fees and expenses of counsel, such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 6(a)(ii) (through, if applicable, the provisions of
Section 6(b)) effected without its written consent if (i) such settlement is
entered into more than 60 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. Contribution.
If the indemnification provided for in Section 6 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then, in lieu of indemnifying such indemnified party, each indemnifying party
shall contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Fund or the Investment Advisor 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 Advisor 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 Advisor 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
17
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 Advisor 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 Advisor 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 Advisor 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 trustee and shareholder of the Fund and each director of the Investment
Advisor, respectively, each officer of the Fund who signed the Registration
Statement, and each person, if any, who controls the Fund or the Investment
Advisor, 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 Advisor, respectively. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the number of
AMPS set forth opposite their respective names in Schedule A hereto and not
joint.
Any indemnification or contribution by the Fund shall be subject to the
requirements and limitations of Section 17(i) of the 1940 Act.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery.
All representations, warranties and covenants contained in this Agreement
or in certificates of officers of the Fund or the Investment Advisor 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 Advisor, and shall
survive delivery of the AMPS to the Underwriters.
18
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Fund, at any time at or prior to Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund or the Investment
Advisor, 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 reasonable judgment of the Representatives,
impracticable or inadvisable to market the AMPS or to enforce contracts for the
sale of the AMPS, or (iii) if trading in the common shares of beneficial
interest 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 to purchase
the AMPS which it or they are obligated to purchase under this Agreement (the
"Defaulted AMPS"), the Representatives shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted AMPS in such amounts as may be agreed upon and upon the terms
herein set forth; if, however, the Representatives shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted 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.
In the event of any such default which does not result in a termination of
this Agreement, either the Representatives 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.
19
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 Advisor (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
Representatives, c/x Xxxxxxx Xxxxx & Co., 4 World Financial Center, New York,
New York 10080, attention of Equity Capital Markets; and notices to the Fund or
the Investment Advisor shall be directed, as appropriate, to the office of
Western Asset Management Company at 000 Xxxx Xxxxxxxx Xxxxxxxxx, Xxxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxxxxxx XXX.
SECTION 13. Parties.
This Agreement shall each inure to the benefit of and be binding upon the
Underwriters, the Fund, the Investment Advisor 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 Advisor and their respective successors
and the controlling persons and officers, trustees, shareholders and directors
referred to in Sections 6 and 7 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
Underwriters, the Fund, the Investment Advisor and their respective partners and
successors, and said controlling persons and officers, trustees, shareholders
and directors and their heirs and legal representatives, and for the benefit of
no other person, firm or corporation. No purchaser of AMPS 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 and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 16. Massachusetts Business Trust.
A copy of the Agreement and Declaration of Trust of the Fund is on file
with the Secretary of The Commonwealth of Massachusetts, and notice is hereby
given that this Agreement is executed on behalf of the Fund by an officer or
trustee of the Fund in his or her capacity as an officer or trustee of the Fund
and not individually and that the obligations of or arising out of this
instrument are not binding upon any of the trustees, officers or shareholders
individually but are binding only upon the assets and property of the Fund.
20
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a binding agreement among the
Underwriters, the Fund and the Investment Advisor in accordance with its terms.
Very truly yours,
WESTERN ASSET/CLAYMORE U.S.
TREASURY INFLATION PROTECTED
SECURITIES FUND
By:
---------------------------------
Name:
Title:
WESTERN ASSET MANAGEMENT COMPANY
By:
---------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, XXXXXX, XXXXXX & XXXXX
INCORPORATED
XXXX XXXXX XXXX XXXXXX, INCORPORATED
By: Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx
Incorporated
By:
----------------------------------
Authorized Signatory
For themselves and as
Representatives of the
other Underwriters named
in Schedule A hereto.
21
SCHEDULE A
Number of
Name of Underwriter AMPS
------------------------------------------- ----------------------------------------------------------------
SERIES M SERIES T SERIES W SERIES TH SERIES F
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated 1,312 1,312 1,312 1,312 1,312
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated 328 328 328 328 328
------------ ----------- ----------- ------------ ------------
Total 1,640 1,640 1,640 1,640 1,640
============ =========== =========== ============ ============
A-1
SCHEDULE B
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION PROTECTED SECURITIES FUND
8,200 Auction Market Preferred Shares ("AMPS") of Beneficial Interest
1,640 Shares AMPS, Series M
1,640 Shares AMPS, Series T
1,640 Shares AMPS, Series W
1,640 Shares AMPS, Series TH
1,640 Shares AMPS, Series F
Liquidation Preference $25,000 per share
1. The initial public offering price per share for the AMPS, determined as
provided in Section 2 hereto, shall be $25,000.
2. The purchase price per share for the AMPS to be paid by the several
Underwriters shall be $24,750.00.
3. The commission to be paid to the Underwriters for their commitment
hereunder shall be $250.00 per share.
4. The initial dividend rate on the AMPS shall be [___]% per annum for the
Series M, [___]% per annum for the Series T, [___]% per annum for the Series W,
[___]% per annum for the Series TH and [___]% per annum for the Series F.
B-1
Exhibit A
FORM OF OPINION OF FUND'S AND INVESTMENT ADVISOR'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(A) With respect to the Fund:
(i) The Fund has been duly organized and is validly existing as a
business trust in good standing under the laws of The Commonwealth of
Massachusetts.
(ii) The Fund has business trust power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Purchase
Agreement.
(iii) The Fund is duly qualified as a foreign business trust to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse
Effect.
(iv) To the best of our knowledge, the Fund does not have any
subsidiaries.
(v) The authorized, issued and outstanding shares of beneficial
interest of the Fund is as set forth in the Prospectus under the caption
"Description of Capital Structure" (except for subsequent issuances, if
any, pursuant to the Purchase Agreement); all issued and outstanding shares
of beneficial interest of the Fund have been duly authorized and validly
issued and are fully paid and non-assessable and have been offered and sold
or exchanged by the Fund in compliance with all applicable laws (including,
without limitation, federal and state securities laws); the AMPS conform as
to legal matters to all statements relating thereto contained in the
Prospectus and such description conforms to the rights set forth in the
instruments defining the same; and none of the outstanding shares of common
stock of the Fund was issued in violation of the preemptive or other
similar rights of any securityholder of the Fund.
(vi) The AMPS to be purchased by the Underwriters from the Fund
have been duly authorized for issuance and sale to the Underwriters
pursuant to the Purchase Agreement and, when issued and delivered by the
Fund pursuant to the Purchase Agreement against payment of the
consideration set forth in the Purchase Agreement, will be validly issued
and fully paid and non-assessable and no holder of the AMPS is or will be
subject to personal liability by reason of being such a holder.
(vii) The issuance of the AMPS is not subject to preemptive or other
similar rights of any securityholder of the Fund.
(viii) The Purchase Agreement has been duly authorized, executed and
delivered by the Fund.
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the Prospectus pursuant to Rule 497(c) or Rule 497(h)
has been made in the manner and within the time period required by Rule
497; and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act, and, to the best of our
knowledge, no order of suspension or revocation of registration
A-1
pursuant to Section 8(e) of the 1940 Act has been issued, and no
proceedings for any such purpose have been instituted or are pending or
threatened by the Commission.
(x) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the Prospectus and each amendment or supplement
to the Registration Statement and Prospectus as of their respective
effective or issue dates (other than the financial statements and
supporting schedules included therein or omitted therefrom, as to which we
need express no opinion), and the notification on Form N-8A complied as to
form in all material respects with the requirements of the 1933 Act, the
1940 Act and the Rules and Regulations.
(xi) If Rule 434 has been relied upon, the Prospectus was not
"materially different," as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time it became
effective.
(xii) The form of certificate used to evidence the AMPS complies in
all material respects with all applicable statutory requirements, with any
applicable requirements of the declaration of trust and by-laws of the Fund
and the requirements of the New York Stock Exchange.
(xiii) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to which
the Fund is a party, or to which the property of the Fund is subject,
before or brought by any court or governmental agency or body, domestic or
foreign, which might reasonably be expected to result in a Material Adverse
Effect, or which might reasonably be expected to materially and adversely
affect the properties or assets of the Fund or the consummation of the
transactions contemplated in the Purchase Agreement or the performance by
the Fund of its obligations thereunder.
(xiv) The information in the Prospectus under "Description of
Capital Structure," "Description of Shares" and "Tax Matters" and in the
Registration Statement under Item 29 (Indemnification), to the extent that
it constitutes matters of law, summaries of legal matters, the Fund's
declaration of trust and by-laws or legal proceedings, or legal
conclusions, has been reviewed by us and is correct in all material
respects.
(xv) Each of the Management Agreement, the Administrative Services
Agreement, the Custodian Agreement, the Purchase Agreement and the Auction
Agency Agreement comply in all material respects with all applicable
provisions of the 1940 Act, Advisers Act, the Rules and Regulations and the
Advisers Act Rules and Regulations.
(xvi) The Fund is duly registered with the Commission under the 1940
Act as a closed-end diversified management investment company; and, to the
best of our knowledge, no order of suspension or revocation of such
registration has been issued or proceedings therefor initiated or
threatened by the Commission.
(xvii) To the best of our knowledge, no person is serving as an
officer, trustee or investment adviser of the Fund except in accordance
with the 1940 Act and the Rules and Regulations and the Investment Advisers
Act and the Advisers Act Rules and Regulations. Except as disclosed in the
Registration Statement and Prospectus (or any amendment or supplement to
either of them), to the best of our knowledge, no trustee 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 an Underwriter.
(xviii) There are no statutes or regulations that are required to be
described in the Prospectus that are not described as required.
A-2
(xix) All descriptions in the Registration Statement of contracts
and other documents to which the Fund is a party are accurate in all
material respects. To the best of our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits
thereto, and the descriptions thereof or references thereto are correct in
all material respects.
(xx) To the best of our knowledge, the Fund is not in violation of
its declaration of trust or by-laws and no default by the Fund exists in
the due performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument that is described
or referred to in the Registration Statement or the Prospectus or filed or
incorporated by reference as an exhibit to the Registration Statement.
(xxi) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency (other than under the 1933 Act, the 1934 Act, the 1940
Act and the Rules and Regulations, which have been obtained, or as may be
required under the securities or blue sky laws of the various states, as to
which we need express no opinion) is necessary or required in connection
with the due authorization, execution and delivery of the Purchase
Agreement or for the offering, issuance or sale of the AMPS or the
consummation of the transactions contemplated by this Agreement.
(xxii) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the
Purchase Agreement and in the Registration Statement (including the
issuance and sale of the 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 under the
Purchase Agreement do not and will not, whether with or without the giving
of notice or lapse of time or both, conflict with or constitute a breach
of, or default or Repayment Event (as defined in Section 1(a)(xii) of the
Purchase Agreement) under or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Fund
pursuant to any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or any other agreement or instrument, known
to us, to which the Fund is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Fund is subject,
nor will such action result in any violation of the provisions of the
charter or by-laws of the Fund, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Fund or any of its properties, assets or
operations.
(xxiii) The Purchase Agreement, the Management Agreement, the
Administrative Services Agreement, the Custodian 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 therein. Assuming due authorization, execution and delivery by the
other parties thereto with respect to the Administrative Services
Agreement, the Custodian Agreement and the Auction Agency Agreement, each
of 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) and an implied covenant of good faith and
fair dealing.
A-3
(B) With respect to the Investment Advisor:
(i) The Investment Advisor has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
California.
(ii) The Investment Advisor has full corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under the Purchase Agreement.
(iii) The Investment Advisor 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 to so qualify would not result in a Material Adverse
Effect.
(iv) The Investment Advisor is duly registered with the Commission
as an investment adviser under the Advisers Act and is not prohibited by
the Advisers Act, the Advisers Act Rules and Regulations, the 1940 Act or
the Rules and Regulations from acting under the Management Agreement for
the Fund as contemplated by the Prospectus.
(v) The Purchase Agreement and the Management Agreement have been
duly authorized, executed and delivered by the Investment Advisor, and the
Management Agreement constitutes a valid and binding obligation of the
Investment Advisor, 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).
(vi) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to which
the Investment Advisor is a party, or to which the property of the
Investment Advisor is subject, before or brought by any court or
governmental agency or body, domestic or foreign, which might reasonably be
expected to result in any material adverse change in the condition,
financial or otherwise, in the earnings, business affairs or business
prospects of the Investment Advisor, materially and adversely affect the
properties or assets of the Investment Advisor or materially impair or
adversely affect the ability of the Investment Advisor to function as an
investment adviser or perform its obligations under the Management
Agreement, or which is required to be disclosed in the Registration
Statement or the Prospectus.
(vii) To the best of our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits
thereto, and the descriptions thereof or references thereto are correct in
all material respects.
(viii) To the best of our knowledge, the Investment Advisor is not in
violation of its certificate of incorporation, by-laws or other
organizational documents and no default by the Investment Advisor exists in
the due performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument that is described
or referred to in the Registration Statement or the Prospectus or filed or
incorporated by reference as an exhibit to the Registration Statement.
(ix) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign
A-4
(other than under the 1933 Act, the 1940 Act and the Rules and Regulations,
which have been obtained, or as may be required under the securities or
blue sky laws of the various states, as to which we need express no
opinion) is necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement.
(x) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the
Purchase Agreement and in the Registration Statement and compliance by the
Investment Advisor with its obligations under the Purchase Agreement do not
and will not, whether with or without the giving of notice or lapse of time
or both, conflict with or constitute a breach of, or default or Repayment
Event (as defined in Section 1(a)(xii) of the Purchase Agreement) under or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Investment Advisor pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or any other agreement or instrument, known to us, to which the
Investment Advisor is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Investment Advisor is
subject (except for such conflicts, breaches or defaults or liens, charges
or encumbrances that would not have a Material Adverse Effect), nor will
such action result in any violation of the provisions of the charter or
by-laws of the Investment Advisor, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Investment Advisor or any of its properties,
assets or operations.
In addition, we have participated in the preparation of the Registration
Statement and the Prospectus and participated in discussions with certain
officers, trustees and employees of the Fund, representatives of
PricewaterhouseCoopers LLP, the independent accountants who examined the
statement of assets and liabilities of the Fund included or incorporated by
reference in the Registration Statement and the Prospectus, and you and your
representatives and we have reviewed certain Fund records and documents. While
we have not independently verified and are not passing upon, and do not assume
any responsibility for, the accuracy, completeness or fairness of the
information contained in the Registration Statement and the Prospectus, except
to the extent necessary to enable us to give the opinions with respect to the
Fund in paragraphs (A)(v), (xiv) and (xix), on the basis of such participation
and review, nothing has come to our attention that would lead us to believe that
the Registration Statement (except for financial statements, supporting
schedules and other financial data included therein or omitted therefrom and for
statistical information derived from such financial statements, supporting
schedules or other financial data, as to which we do not express any belief), at
the time such Registration Statement became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus (except for financial statements, supporting schedules and
other financial data included therein or omitted therefrom and for statistical
information derived from such financial statements, supporting schedules or
other financial data, as to which we do not express any belief), at the time the
Prospectus was issued, or at the Closing Time, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
A-5
