EXHIBIT (h)
Xxxxxxxx & Xxxxxxxx/Claymore Total Return Fund Incorporated
(a Maryland corporation)
[ ] Shares of Common Stock
(Par Value $.01 Per Share)
FORM OF PURCHASE AGREEMENT
[ ], 2003
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
[Other Underwriters]
c/o Merrill Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxxxxx & Xxxxxxxx/Claymore Total Return Fund Incorporated, a Maryland
corporation (the "Fund") and the Fund's investment adviser, Xxxxxxxx & Xxxxxxxx
Incorporated, a California corporation (the "Adviser"), each confirms its
agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("Xxxxxxx Xxxxx") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters," which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Xxxxxxx Xxxxx and [Co-Managers] 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 shares of common stock, par value $.01 per share, of
the Fund ("Common Shares") set forth in said SCHEDULE A, and with respect to the
grant by the Fund to the Underwriters, acting severally and not jointly, of the
option described in Section 2(b) hereof to purchase all or any part of [ ]
additional Common Shares to cover over-allotments, if any. The aforesaid [ ]
Common Shares (the "Initial Securities") to be purchased by the Underwriters and
all or any part of the [ ] Common Shares subject to the option described in
Section 2(b) hereof (the "Option Securities") are hereinafter called,
collectively, the "Securities."
The Fund understands that the Underwriters propose to make a public
offering of the Securities 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. 333-106343 and No.
811-21380) covering the registration of the Securities under the Securities Act
of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses, and a notification on Form N-8A of registration of
the Fund as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations of the Commission under
the 1933 Act and the 1940 Act (the "Rules and Regulations"). Promptly after
execution and delivery of this Agreement, the Fund will either (i) prepare and
file a prospectus in accordance with the provisions of Rule 430A ("Rule 430A")
of the Rules and Regulations and paragraph (c) or (h) of Rule 497 ("Rule 497")
of the Rules and Regulations or (ii) if the Fund has elected to rely upon Rule
434 ("Rule 434") of the Rules and Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 497. The
information
included in any such prospectus 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 or 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 Securities, 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 [ ], 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.
SECTION 1. Representations and Warranties.
(a) REPRESENTATIONS AND WARRANTIES BY THE FUND AND THE ADVISER. The
Fund and the Adviser 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 as of each Date of Delivery (if any) referred to in Section
2(b) hereof, and agree with each Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
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 Adviser, are contemplated by the
Commission, and any request on the part of the Commission for additional
information has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement, the notification on Form N-8A and any
amendments and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act, the 1940 Act and the Rules
and Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. Neither
the Prospectus nor any amendments or supplements thereto, at the time the
Prospectus or any such amendment or
2
supplement was issued and at the Closing Time (and, if any Option
Securities are purchased, at the Date of Delivery), 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. The representations and
warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Fund in writing by any
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of
the Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 497 under the 1933 Act, complied when so
filed in all material respects with the Rules and Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters for
use in connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to 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 Securities, the Fund has complied or will
comply with the requirements of Rule 111 under the 1933 Act Regulations
relating to the payment of filing fees thereof.
(ii) INDEPENDENT ACCOUNTANTS. The accountants who certified
the statement of assets and liabilities included in the Registration
Statement 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 in accordance with
generally accepted accounting principles ("GAAP") in all material respects
the financial position of the Fund at the date indicated; said statement
has been prepared in conformity with GAAP.
(iv) EXPENSE SUMMARY. The information set forth in the
Prospectus in the Fee Table has been prepared in accordance in all material
respects with the requirements of Form N-2 and to the extent estimated or
projected, such estimates or projections are reasonably believed to be
attainable and reasonably based.
(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) there has been no dividend or
distribution of any kind declared, paid or made by the Fund on any class of
its capital stock.
(vi) GOOD STANDING OF THE FUND. The Fund has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Maryland and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under this Agreement; and the Fund is duly qualified as a foreign
corporation to transact business and is in good
3
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 and the Adviser, threatened by the Commission.
(ix) OFFICERS AND DIRECTORS. No person is serving or acting
as an officer, director or investment adviser of the Fund except in
accordance with the provisions of the 1940 Act and the Rules and
Regulations and no person is serving as an investment adviser of the Fund
except in accordance with 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), to the
knowledge of the Fund or the Adviser after due inquiry, no director of the
Fund is an "interested person" (as defined in the 0000 Xxx) of the Fund or
an "affiliated person" (as defined in the 0000 Xxx) of any Underwriter.
(x) CAPITALIZATION. The authorized, issued and outstanding
shares of common stock of the Fund are as set forth in the Prospectus as of
the date thereof under the caption "Description of Capital Stock." All
issued and outstanding shares of common stock of the Fund have been duly
authorized and validly issued and are fully paid and non-assessable, except
as provided for in the Fund's articles of incorporation, and have been
offered and sold or exchanged by the Fund in compliance with all applicable
laws (including, without limitation, federal and state securities laws);
none of the outstanding shares of common stock of the Fund were issued in
violation of the preemptive or other similar rights of any securityholder
of the Fund.
(xi) AUTHORIZATION AND DESCRIPTION OF SECURITIES. The
Securities 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 provided for in
the Fund's articles of incorporation. The Common Shares conform in all
material respects to all statements relating thereto contained in the
Prospectus and such description conforms in all material respects to the
rights set forth in the instruments defining the same; no holder of the
Securities will be subject to personal liability by reason of being such a
holder; and the issuance of the Securities is not subject to the preemptive
or other similar rights of any securityholder of the Fund.
(xii) ABSENCE OF DEFAULTS AND CONFLICTS. The Fund is not in
violation of its articles of incorporation or by-laws, or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which it is a party or by which it may be bound, or to which any of the
property or assets of the Fund is subject (collectively, "Agreements and
Instruments") except for such violations or defaults that would not result
in a Material Adverse Effect; and the execution, delivery and performance
of this Agreement, the Advisory Agreement and the Administration Agreement
referred to in the Registration Statement, the Custodian Services
Agreement, dated as of [ ], 2003 between the Fund and PFPC Trust
Company, and the Transfer and Dividend Disbursing Agent and Registrar
Agreement, dated as of [ ], 2003 between the Fund and PFPC, Inc., (as
used herein, the "Advisory Agreement," the "Administration Agreement," the
"Custodian Services
4
Agreement" and the "Transfer Agency And Registrar Agreement," respectively)
and the consummation of the transactions contemplated herein and in the
Registration Statement (including the issuance and sale of the Securities
and the use of the proceeds from the sale of the Securities as described in
the Prospectus under the caption "Use of Proceeds") and compliance by the
Fund with its obligations hereunder have been duly authorized by all
necessary corporate action and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Fund pursuant to, the
Agreements and Instruments (except for such conflicts, breaches or defaults
or liens, charges or encumbrances that would not result in a Material
Adverse Effect), nor will such action result in any violation of the
provisions of the articles of incorporation or by-laws of the Fund, nor
will such action result in any violation of 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,
except for such violations that would not result in a Material Adverse
Effect. 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 foreign, now pending, or, to the
knowledge of the Fund or the Adviser, threatened, against or affecting the
Fund, which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which would reasonably be expected to
result in a Material Adverse Effect, or which would 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, would not reasonably be expected to
result in a Material Adverse Effect.
(xiv) ACCURACY OF EXHIBITS. There are no contracts or
documents which are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits thereto by the 1933 Act, the
1940 Act or by the Rules and Regulations which have not been so described
and filed as required.
(xv) POSSESSION OF INTELLECTUAL PROPERTY. The Fund owns or
possesses, has the right to use or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by the Fund, and the Fund has not received any notice or is
not otherwise aware of any infringement of or conflict with asserted rights
of others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Fund therein, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the aggregate,
would result in a Material Adverse Effect.
(xvi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental
5
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 Securities 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"), or under
the rules of the National Association of Securities Dealers, Inc. ("NASD")
or state securities laws.
(xvii) POSSESSION OF LICENSES AND PERMITS. The Fund possesses
such permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to operate
its properties and to conduct the business as contemplated in the
Prospectus; the Fund is in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply would
not, singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when
the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and the Fund has not received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xviii) ADVERTISEMENTS. Any advertising, sales literature or
other promotional material (including "prospectus wrappers," "broker kits,
" "road-show slides" and "road-show scripts" and "electronic road show
presentations") authorized in writing by or prepared by the Fund or the
Adviser used in connection with the public offering of the Securities
(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 under 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, 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 Securities, will not distribute
any material to the public in connection with the offering and sale of the
Securities other than the Registration Statement, a preliminary prospectus,
the Prospectus or other material, if any, permitted by the 1933 Act or the
1940 Act or the Rules and Regulations.
(xxi) ACCOUNTING CONTROLS. The Fund has established a system
of internal accounting controls sufficient to provide reasonable assurances
that (A) transactions will be 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 will
be 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 will be permitted only in accordance with the management's
general or specific authorization; and (D) the recorded accountability for
assets will be compared with existing assets at reasonable intervals and
appropriate action will be taken with respect to any differences.
6
(xxii) ABSENCE OF UNDISCLOSED PAYMENTS. To the Fund's and the
Adviser'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.
(xxiii) MATERIAL AGREEMENTS. This Agreement, the Advisory
Agreement, the Administration Agreement, the Custodian Services Agreement
and the Transfer Agency And Registrar Agreement have each been duly
authorized by all requisite action on the part of the Fund and executed and
delivered by the Fund, as of the dates noted therein, and each complies
with all applicable provisions of the 1940 Act. Assuming due authorization,
execution and delivery by the other parties thereto with respect to the
Advisory Agreement, the Administration Agreement, the Custodian Services
Agreement and the Transfer Agency And Registrar Agreement, each of the
Advisory Agreement, the Administration Agreement, the Custodian Services
Agreement and the Transfer Agency And Registrar Agreement constitutes a
valid and binding agreement of the Fund, enforceable against it 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 or an
implied covenant of good faith and fair dealing).
(xxiv) REGISTRATION RIGHTS. There are no persons with
registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise registered
by the Fund under the 1933 Act.
(xxv) NYSE LISTING. The Securities have been duly authorized
for listing, upon notice of issuance, on the New York Stock Exchange
("NYSE") and the Fund's registration statement on Form 8-A under the 1934
Act has become effective.
(b) REPRESENTATIONS AND WARRANTIES BY THE ADVISER. The Adviser
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b) hereof as follows:
(i) GOOD STANDING OF THE ADVISER. The Adviser 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.
(ii) INVESTMENT ADVISER STATUS. The Adviser is duly
registered and in good standing with the Commission as an investment
adviser under the Advisers Act, and is not prohibited by the Advisers Act
or the 1940 Act, or the rules and regulations under such acts, from acting
under the Advisory Agreement for the Fund as contemplated by the
Prospectus.
(iii) DESCRIPTION OF ADVISER. The description of the Adviser
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 Adviser 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
Advisory Agreement to which it is a party.
7
(v) AUTHORIZATION OF AGREEMENTS; ABSENCE OF DEFAULTS AND
CONFLICTS. This Agreement, the Advisory Agreement and the Additional
Compensation Agreement have each been duly authorized, executed and
delivered by the Adviser, and (assuming due authorization, execution and
delivery by each of the other parties thereto) the Advisory Agreement and
the Additional Compensation Agreement each constitute a valid and binding
obligation of the Adviser, enforceable against it 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 except as any rights to
indemnity or contribution may be limited by federal and state securities
laws and public policy considerations; and neither the execution and
delivery of this Agreement, the Advisory Agreement or the Additional
Compensation Agreement nor the performance by the Adviser of its
obligations hereunder or thereunder will conflict with, or result in a
breach of any of the terms and provisions of, or constitute, with or
without the giving of notice or lapse of time or both, a default under, (i)
any agreement or instrument to which the Adviser is a party or by which it
is bound, (ii) the certificate of incorporation, the by-laws or other
organizational documents of the Adviser, or (iii) to the Adviser's
knowledge, by any law, order, decree, rule or regulation applicable to it
of any jurisdiction, court, federal or state regulatory body,
administrative agency or other governmental body, stock exchange or
securities association having jurisdiction over the Adviser or its
properties or operations other than, with respect to clauses (i) and (iii),
any conflict, breach or default that would not, individually or in the
aggregate, be expected to cause an Adviser Material Adverse Effect; and no
consent, approval, authorization or order of any court or governmental
authority or agency is required for the consummation by the Adviser of the
transactions contemplated by this Agreement, the Advisory Agreement and the
Additional Compensation Agreement, except as have been obtained or will
have been obtained prior to the Closing Time or may be required under the
1933 Act, the 1940 Act, the 1934 Act or state securities laws.
(vi) NO MATERIAL ADVERSE CHANGE. Since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred any
event which would reasonably be expected to have a material adverse effect
on the ability of the Adviser to perform its respective obligations under
this Agreement and the Advisory Agreement to which it is a party.
(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 Adviser, threatened against or affecting the Adviser or
any "affiliated person" of the Adviser (as such term is defined in the 0000
Xxx) or any partners, directors, officers or employees of the foregoing,
whether or not arising in the ordinary course of business, which would
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 Adviser, materially and adversely affect the
properties or assets of the Adviser or materially impair or adversely
affect the ability of the Adviser to function as an investment adviser or
perform its obligations under the Advisory Agreement, or which is required
to be disclosed in the Registration Statement and the Prospectus.
(viii) ABSENCE OF VIOLATION OR DEFAULT. The Adviser is not in
violation of its certificate of incorporation, by-laws or other
organizational documents or in default under any agreement, indenture or
instrument, except for such violations or defaults that would not have a
material adverse effect on the ability of the Adviser to perform its
respective obligations under this Agreement and the Advisory Agreement.
8
(c) OFFICER'S CERTIFICATES. Any certificate signed by any officer of
the Fund or the Adviser delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by the Fund or the
Adviser, as the case may be, to each Underwriter as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) INITIAL SECURITIES. 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 Initial
Securities set forth in SCHEDULE A opposite the name of such Underwriter, plus
any additional number of Initial Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) OPTION SECURITIES. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Fund hereby grants an option to the
Underwriters, severally and not jointly, to purchase up to an additional [ ]
Common Shares in the aggregate at the price per share set forth in SCHEDULE B,
less an amount per share equal to any dividends or distributions declared by the
Fund and payable on the Initial Securities but not payable on the Option
Securities. The option hereby granted will expire 45 days after the date hereof
and may be exercised in whole or in part from time to time only for the purpose
of covering over-allotments which may be made in connection with the offering
and distribution of the Initial Securities upon notice by the Representatives to
the Fund setting forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Securities. Any such time and date of delivery (a "Date
of Delivery") shall be determined by the Representatives, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in SCHEDULE A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as Xxxxxxx Xxxxx in its discretion shall make to eliminate any sales
or purchases of a fractional number of Option Securities.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Xxxxxxxx Chance US LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 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").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Fund, on each Date of Delivery as specified in the notice from the
Representatives to the Fund.
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 Securities to be purchased by them. It is understood that each
Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it
9
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 Initial Securities or the Option Securities, if any, to
be purchased by any Underwriter whose funds have not been received by the
Closing Time or the relevant Date of Delivery, as the case may be, but such
payment shall not relieve such Underwriter from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representatives may request in writing at least
one full business day before the Closing Time or the relevant Date of Delivery,
as the case may be. The certificates for the Initial Securities and the Option
Securities, if any, 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 or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants.
(a) The Fund, and so long as it is the investment adviser for the
Fund, the Adviser, jointly and severally, covenant with each Underwriter as
follows:
(i) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS. The Fund, subject to Section 3(a)(ii), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify the
Representatives immediately, and confirm the notice in writing, (i) when
any post-effective amendment to the Registration Statement shall become
effective, or any supplement to the Prospectus or any amended Prospectus
shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or
for additional information, and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or threatening
of any proceedings for any of such purposes. The Fund will promptly effect
the filings necessary pursuant to Rule 497 and will take such steps as it
deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 497 was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. The Fund will make every reasonable effort to prevent the
issuance of any stop order, or order of suspension or revocation of
registration pursuant to Section 8(e) of the 1940 Act, and, if any such
stop order or order of suspension or revocation of registration is issued,
to obtain the lifting thereof at the earliest possible moment.
(ii) FILING OF AMENDMENTS. The Fund will give the
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 and counsel for the
Underwriters, without charge, signed copies of the Registration Statement
as originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the
Representatives, without charge, a conformed copy of the
10
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.
(iv) DELIVERY OF PROSPECTUSES. The Fund has delivered to
each Underwriter, without charge, as many copies of each preliminary
prospectus as such Underwriter reasonably requested, and the Fund hereby
consents to the use of such copies for purposes permitted by the 1933 Act.
The Fund will furnish to each Underwriter, without charge, during the
period when the Prospectus is required to be delivered under the 1933 Act
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 Securities, any event shall occur or condition
shall exist as a result of which it is necessary, in the opinion of counsel
for the Underwriters or for the Fund, to amend the Registration Statement
or amend or supplement the Prospectus in order that the Prospectus will not
include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of
such counsel, at any such time to amend the Registration Statement or amend
or supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the Rules and Regulations, the Fund will promptly prepare
and file with the Commission, subject to Section 3(a)(ii), such amendment
or supplement as may be necessary to correct such statement or omission or
to make the Registration Statement or the Prospectus comply with such
requirements, and the Fund will furnish to the Underwriters such number of
copies of such amendment or supplement as the Underwriters may reasonably
request.
(vi) BLUE SKY QUALIFICATIONS. The Fund will cooperate with
the Underwriters, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions of the
United States as the Representatives may designate and to maintain such
qualifications in effect for so long as required for the distribution of
the Securities; provided, however, that the Fund shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is
not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.
(vii) RULE 158. The Fund will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated by,
the last paragraph of Section 11(a) of the 1933 Act.
(viii) USE OF PROCEEDS. The Fund will use the net proceeds
received by it from the sale of the Securities in the manner specified in
the Prospectus under "Use of Proceeds."
(ix) LISTING. The Fund will use its reasonable best efforts
to effect the listing of the Securities on the NYSE, subject to notice of
issuance, concurrently with the effectiveness of the Registration
Statement.
11
(x) RESTRICTION ON SALE OF SECURITIES. During a period of
180 days from the date of the Prospectus, the Fund will not, without the
prior written consent of Xxxxxxx Xxxxx, (A) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant
to purchase or otherwise transfer or dispose of Common Shares or any
securities convertible into or exercisable or exchangeable for Common
Shares or file any registration statement under the 1933 Act with respect
to any of the foregoing or (B) enter into any swap or any other agreement
or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Shares,
whether any such swap or transaction described in clause (A) or (B) above
is to be settled by delivery of Common Shares or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (1) the
Securities to be sold hereunder or (2) Common Shares issued pursuant to any
dividend reinvestment plan.
(xi) REPORTING REQUIREMENTS. The Fund, during the period
when the Prospectus is required to be delivered under the 1933 Act or the
1934 Act, will file all documents required to be filed with the Commission
pursuant to the 1940 Act and the 1934 Act within the time periods required
by the 1940 Act and the Rules and Regulations and the 1934 Act and the
rules and regulations of the Commission thereunder, respectively.
(xii) SUBCHAPTER M. The Fund will use its best efforts to
maintain its qualification as a regulated investment company under
Subchapter M of the Code.
(xiii) NO MANIPULATION OF MARKET FOR SECURITIES. Except for
the authorization of actions permitted to be taken by the Underwriters as
contemplated herein or in the Prospectus, the Fund will not (a) take,
directly or indirectly, any action designed to cause or to result in, or
that would 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 Securities, and (b) until the Closing Date, or the
Date of Delivery, if any, (i) sell, bid for or purchase the Securities or
pay any person any compensation for soliciting purchases of the Securities
or (ii) pay or agree to pay to any person any compensation for soliciting
another to purchase any other securities of the Fund.
(xiv) RULE 462(b) REGISTRATION STATEMENT. If the Fund elects
to rely upon Rule 462(b), the Fund shall file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement, and the Fund shall at
the time of filing either pay to the Commission the filing fee for the Rule
462(b) Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the 0000 Xxx.
(b) The Adviser covenants with each Underwriter that for a period of
180 days from the date of the Prospectus, the Adviser will not, without Xxxxxxx
Xxxxx'x prior written consent, which consent shall not be unreasonably withheld,
act as investment adviser to any other closed-end registered investment company
having an investment objective, policies and restrictions substantially similar
to those of the Fund, other than Preferred Income Fund Incorporated, Preferred
Income Opportunity Fund Incorporated and F&C/Claymore Preferred Securities
Income Fund Incorporated.
SECTION 4. Payment of Expenses.
(a) EXPENSES. The Fund will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the preparation, issuance and delivery of the
certificates
12
for the Securities 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 Securities to the Underwriters, (iv) the fees and disbursements of the
Fund's counsel, accountants and other advisers, (v) the qualification of the
Securities 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, (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 Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the NASD of the terms of the sale of the Securities, (x) the
fees and expenses incurred in connection with the listing of the Securities on
the NYSE and (xi) the printing of any sales material. Also, the Fund shall pay
to Xxxxxxx Xxxxx, on behalf of the Underwriters, $.0083 per share of the
securities purchased pursuant to this agreement as partial reimbursement of
expenses incurred in connection with the offering. The Adviser has agreed to pay
all organizational expenses of the Fund. The Adviser has also agreed to pay
those offering costs (other than sales load) of the Fund that exceed $.05 per
Common Share.
(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 Adviser, 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 Adviser
contained in Section 1 hereof or in certificates of any officer of the Fund or
the Adviser delivered pursuant to the provisions hereof, to the performance by
the Fund and the Adviser of their respective covenants and other obligations
hereunder, and to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act, no notice or
order pursuant to Section 8(e) of the 1940 Act shall have been issued, and no
proceedings with respect to either shall have been initiated or threatened by
the Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Underwriters. A prospectus containing the Rule 430A Information
shall have been filed with the Commission in accordance with Rule 497 (or a
post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A) or, if the
Fund has elected to rely on 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 ADVISER. At Closing Time,
the Representatives shall have received the favorable opinions, dated as of
Closing Time, of Xxxxxxx Xxxx & Xxxxxxxxx, counsel for the Fund, and Shearman &
Sterling, counsel for the Adviser, in form and substance satisfactory to counsel
for the Underwriters, together with signed or reproduced copies of such letters
for each of the other Underwriters as set forth in EXHIBIT A hereto.
(c) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Xxxxxxxx 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 charter or by-laws of the Fund), (viii) through (x),
13
inclusive, (xiv) (solely as to the information in the Prospectus under
"Description of Capital Stock") 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 Adviser, dated as of Closing Time, to the effect that (i) there
has been no such material adverse change, (ii) the representations and
warranties in Sections 1(a) and (b) hereof are true and correct with the same
force and effect as though expressly made at and as of Closing Time, (iii) each
of the Fund and the Adviser, respectively, has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
Closing Time, and (iv) no stop order suspending the effectiveness of the
Registration Statement, 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, to the knowledge of the Fund or the
Adviser, are pending or are contemplated by the Commission.
(e) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the Representatives shall have received from [KPMG, 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 KPMG, 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) APPROVAL OF LISTING. At Closing Time, the Securities shall have
been approved for listing on the NYSE, subject only to official notice of
issuance.
(h) EXECUTION OF ADDITIONAL COMPENSATION AGREEMENT. At Closing Time,
Xxxxxxx Xxxxx shall have received the Additional Compensation Agreement, dated
the date of the Closing Time, as executed by the Adviser.
(i) NO OBJECTION. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(j) CONDITIONS TO PURCHASE OF OPTION SECURITIES. In the event that
the Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations and
warranties of the Fund contained herein and the statements in any certificates
furnished by the Fund hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the Representatives shall have
received:
(i) OFFICERS' CERTIFICATES. Certificates, dated such Date
of Delivery, 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 Adviser confirming that the
14
information contained in the certificate delivered by each of them at the
Closing Time pursuant to Section 5(d) hereof remains true and correct as of
such Date of Delivery.
(ii) OPINIONS OF COUNSEL FOR THE FUND AND THE ADVISER. The
favorable opinions of Xxxxxxx Xxxx & Xxxxxxxxx, counsel for the Fund, and
Shearman & Sterling LLP, counsel for the Adviser, in form and substance
satisfactory to counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinions required by Section 5(b)
hereof.
(iii) OPINION OF COUNSEL FOR THE UNDERWRITERS. The favorable
opinion of Xxxxxxxx Chance US LLP, counsel for the Underwriters, dated such
Date of Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion required
by Section 5(c) hereof.
(iv) BRING-DOWN COMFORT LETTER. A letter from KPMG, LLP,
in form and substance satisfactory to the Representatives and dated such
Date of Delivery, substantially in the same form and substance as the
letter furnished to the Representatives pursuant to Section 5(f) hereof,
except that the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than five days prior to such Date of
Delivery.
(k) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of
Delivery, counsel for the Underwriters shall have been furnished with such
documents as they may reasonably require for the purpose of enabling them to
pass upon the issuance and sale of the Securities 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 Adviser in connection with the organization and
registration of the Fund under the 1940 Act and the issuance and sale of the
Securities as herein contemplated shall be reasonably satisfactory in form and
substance to the Representatives and counsel for the Underwriters.
(l) TERMINATION OF AGREEMENT. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Fund at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, 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 14
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) INDEMNIFICATION OF UNDERWRITERS. The Fund and the Adviser,
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, and any director, officer,
employee or affiliate thereof as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information
and the Rule 434 Information, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus filed as part of the Registration
Statement or the Prospectus (or any amendment or supplement thereto), or
the omission or alleged omission
15
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(e) below) any such settlement is effected with the prior written consent
of the Fund and the Adviser; and
(iii) against any and all expense whatsoever, as incurred
(including the 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
Adviser 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); and
provided further that the Fund or the Adviser will not be liable to any
Underwriter with respect to any Prospectus to the extent that the Fund or the
Adviser shall sustain the burden of proving that any such loss, liability,
claim, damage or expense resulted from the fact that such Underwriter, in
contravention of a requirement of this Agreement or applicable law, sold
Securities to a person to whom such Underwriter failed to send or give, at or
prior to the Closing Time, a copy of the final Prospectus, as then amended or
supplemented if: (i) the Fund has previously furnished copies thereof
(sufficiently in advance of the Closing Time to allow for distribution by the
Closing Time) to the Underwriter and the loss, liability, claim, damage or
expense of such Underwriter resulted from an untrue statement or omission of a
material fact contained in or omitted from the preliminary Prospectus which was
corrected in the final Prospectus as, if applicable, amended or supplemented
prior to the Closing Time and such final Prospectus was required by law to be
delivered at or prior to the written confirmation of sale to such person and
(ii) such failure to give or send such final Prospectus by the Closing Time to
the party or parties asserting such loss, liability, claim, damage or expense
would have constituted a defense to the claim asserted by such person.
(b) INDEMNIFICATION OF FUND, ADVISER, DIRECTORS AND OFFICERS. Each
Underwriter severally agrees to indemnify and hold harmless the Fund and the
Adviser, their respective directors and officers, each of the Fund's officers
who signed the Registration Statement, and each person, if any, who controls the
Fund or the Adviser within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or 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 Adviser by such Underwriter
through Xxxxxxx Xxxxx expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) INDEMNIFICATION FOR SALES MATERIALS. In addition to the foregoing
indemnification, the Fund and the Adviser 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
16
or Section 20 of the 1934 Act, against any and all loss, liability, claim,
damage and expense described in the indemnity contained in Section 6(a), as
limited by the proviso set forth therein, with respect to any sales material, as
defined in Section 1(a)(xviii).
(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 Adviser. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(e) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement; provided that an indemnifying party shall not be
liable for any such settlement effected without its consent if such indemnifying
party, prior to the date of such settlement, (1) reimburses such indemnified
party in accordance with such request for the amount of such fees and expenses
of counsel as the indemnifying party believes in good faith to be reasonable,
and (2) provides written notice to the indemnified party that the indemnifying
party disputes in good faith the reasonableness of the unpaid balance of such
fees and expenses.
(f) INDEMNIFICATION OR CONTRIBUTION BY THE FUND. Any indemnification
or contribution by the Fund shall be subject to the requirements and limitations
of Section 17(i) of the 1940 Act.
SECTION 7. Contribution.
If the indemnification provided for in Section 6 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Fund and the Adviser
17
on the one hand and the Underwriters on the other hand from the offering of the
Securities 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 Adviser 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 Adviser on the one hand
and the Underwriters on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities 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 Securities as
set forth on such cover.
The relative fault of the Fund and the Adviser 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 Adviser 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 Adviser 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 Securities 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 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Fund and each director of the Adviser, respectively, each
officer of the Fund who signed the Registration Statement, and each person, if
any, who controls the Fund or the Adviser, within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Fund and the Adviser, respectively. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in SCHEDULE A hereto and not joint.
18
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery.
All representations, warranties and agreements contained in this Agreement
or in certificates of officers of the Fund or the Adviser 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 Adviser, and shall survive delivery of the
Securities to the Underwriters.
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 Adviser,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or the international financial markets, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospective change in national or international political, financial
or economic conditions, in each case the effect of which is such as to make it,
in the judgment of the Representatives, impracticable or inadvisable to market
the Securities or to enforce contracts for the sale of the Securities, or (iii)
if trading in the Common Shares of the Fund has been suspended or materially
limited by the Commission or the NYSE, or if trading generally on the NYSE or
the American Stock Exchange or in the Nasdaq National Market has been suspended
or materially limited, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the NASD or any other governmental
authority, or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States, or (iv) if a
banking moratorium has been declared by either Federal or New York authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7, 8 and 13 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at Closing Time or a Date of
Delivery to purchase the Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), 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 Securities 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 Securities does not exceed 10% of the
number of Securities 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 Securities exceeds 10% of the number
of Securities to be purchased on such date, this Agreement or, with respect to
any Date of Delivery which occurs after the Closing Time, the obligation of the
Underwriters to purchase and of the Fund to sell the Option Securities to be
purchased and sold on such Date of Delivery shall terminate without liability on
the part of any non-defaulting Underwriter.
19
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 or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Fund to sell the relevant Option Securities, as
the case may be, either the Representatives or the Fund shall have the right to
postpone Closing Time or the relevant Date of Delivery, as the case may be, for
a period not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
As used herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10.
SECTION 11. Tax Disclosure.
Notwithstanding any other provision of this Agreement, from the
commencement of discussions with respect to the transactions contemplated
hereby, the Fund and the Adviser (and each employee, representative or other
agent of the Fund and the Adviser) 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, Xxxxxxx Xxxxx & Co., North Tower, 4 World Financial Center, Xxx
Xxxx, Xxx Xxxx 00000, attention of Equity Capital Markets; and notices to the
Fund or the Adviser shall be directed to the office of Xxxxxxxx & Xxxxxxxx
Incorporated, 000 Xxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx
00000, attention of Xxxxxx Xxxxxxxx.
SECTION 13. Parties.
This Agreement shall each inure to the benefit of and be binding upon the
Underwriters, the Fund, the Adviser 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 Adviser and their respective successors and the
controlling persons and officers, directors 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 Adviser and their respective partners and
successors, and said controlling persons and officers, trustees and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities 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.
20
SECTION 15. Effect of Headings.
The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.
21
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 Adviser in accordance with its terms.
Very truly yours,
XXXXXXXX & XXXXXXXX/CLAYMORE TOTAL
RETURN FUND INCORPORATED
By:
-------------------------------
Name:
Title:
XXXXXXXX & XXXXXXXX INCORPORATED
By:
-------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
[Other Underwriters]
By: Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
By:
----------------------------------------
Authorized Signatory
For themselves and as
Representatives of the
other Underwriters named
in SCHEDULE A hereto.
22
SCHEDULE A
NUMBER OF
NAME OF UNDERWRITER INITIAL SECURITIES
-------------------------------------------------------------------- ------------------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated [ ]
Total [ ]
============
Sch A-1
SCHEDULE B
Xxxxxxxx & Xxxxxxxx/Claymore Total Return Fund Incorporated
[ ] Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $25.00.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $23.875, being an amount equal to the initial
public offering price set forth above less $1.125 per share; provided that the
purchase price per share for any Option Securities purchased upon the exercise
of the over-allotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Fund
and payable on the Initial Securities but not payable on the Option Securities.
Sch B-1
Exhibit A
FORM OF OPINION OF FUND'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 corporation in good standing under the laws of the State of Maryland.
(ii) The Fund has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Purchase
Agreement.
(iii) The Fund is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse
Effect.
(iv) To our knowledge, the Fund does not have any subsidiaries.
(v) The authorized shares of common stock of the Fund are as set
forth in the Prospectus under the caption "Description of Capital
Stock--Common Stock" (except for subsequent issuances, if any, pursuant to
the Purchase Agreement); all issued and outstanding shares of common stock
of the Fund have been duly authorized and validly issued and are fully paid
and non-assessable; the Common Shares conform in all material respects as
to legal matters to all statements relating thereto contained in the
Prospectus under the caption "Description of Capital Stock--Common Stock";
and, to counsel's knowledge, none of the outstanding shares of Common Stock
of the Fund were issued in violation of the preemptive or other similar
rights of any securityholder of the Fund.
(vi) The Securities 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 Securities is or
will be subject to personal liability solely by reason of being such a
holder.
(vii) The issuance of the Securities is not subject to preemptive
or other similar rights of any securityholder of the Fund under the Charter
or Bylaws of the Fund or the Maryland General Corporation Law or, to
counsel's knowledge, otherwise.
(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 and
the 1940 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 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 our knowledge, no
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 threatened by the Commission.
A-1
(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, related
notes thereto 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 Common Shares
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the Charter and by-laws
of the Fund and the requirements of the
New York Stock Exchange.
(xiii) To 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 United States,
New York or Maryland court or governmental agency or
body 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 Stock" and "Taxation" and in the Registration Statement under Item
29 (Indemnification), to the extent that it constitutes summaries of legal
matters, the Fund's Charter 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 Advisory Agreement, the Administration
Agreement, the Custodian Services Agreement, the Transfer Agency And
Registrar Agreement and the Purchase 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
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 our knowledge, no director of the Fund is an "interested
person" (as defined in the 0000 Xxx) of the Fund, except as set forth in
the Registration Statement, or an "affiliated person" (as defined in the
0000 Xxx) of an Underwriter.
(xviii) To our knowledge, there are no United States federal
statutes or regulations that are required to be described in the Prospectus
that are not described as required.
(xix) All descriptions in the Registration Statement of contracts
and other documents to which the Fund is a party and which are included as
exhibits to the Registration Statement are accurate in all material
respects. To our knowledge, after due inquiry, 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.
A-2
(xx) To our knowledge, no filing with, or authorization,
approval, consent, license, order, registration, qualification or decree
of, any United States,
New York or Maryland 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 Securities or the consummation of the
transactions contemplated by this Agreement.
(xxi) 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 Securities and the use of the proceeds from the
sale of the Securities 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 and that is
normally applicable to transactions of the type contemplated by the
Purchase Agreement., of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Fund or any of its
properties, assets or operations.
(xxii) The Purchase Agreement, the Advisory Agreement, the
Administration Agreement, the Custodian Services Agreement and the Transfer
Agency And Registrar 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 Advisory
Agreement, Administration Agreement, Custodian Services Agreement and the
Transfer Agency And Registrar Agreement, each of the Advisory Agreement,
the Administration Agreement, the Custodian Services Agreement and the
Transfer Agency And Registrar Agreement constitutes a valid and binding
agreement of the Fund, enforceable against it 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
FORM OF OPINION OF ADVISER'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
[ ], 2003
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
[Other Underwriters]
As Representatives of the several Underwriters
named in Schedule A to the Purchase Agreement
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXXXXXXX & XXXXXXXX INCORPORATED
Ladies and Gentlemen:
We have acted as special counsel to Xxxxxxxx & Xxxxxxxx Incorporated, a
California corporation (the "Adviser"), the investment adviser to Xxxxxxxx &
Xxxxxxxx/Claymore Total Return Fund Incorporated, a Maryland corporation (the
"Fund"), in connection with the issue and sale to you by the Fund of [ ]
shares of its common stock, par value $.01 per share (the "Shares"), subject to
the terms and conditions set forth in the Purchase Agreement, dated [ ], 2003
(the "Purchase Agreement"), among you, the Fund and the Adviser.
In such capacity, we have examined executed copies of the Purchase
Agreement, the Advisory Agreement dated [ ], 2003 (the "Advisory Agreement")
between the Fund and the Adviser, the Additional Compensation Agreement dated as
of [ ], 2003 (the "Additional Compensation Agreement") between Xxxxxxx Xxxxx
& Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and the Adviser and
copies of the registration statement on Form N-2 (Registration Nos. 333-106393
and 811-21380), filed by the Fund under the Securities Act of 1933, as amended
(the "Securities Act"), and under the Investment Company Act of 1940, as amended
(the "Investment Company Act"), with the Securities and Exchange Commission (the
"Commission") on June 23, 2003, and of the amendment thereto filed by the Fund
with the Commission on [ ], 2003, and copies of the related prospectus (the
registration statement as amended at the time when it became effective,
including the information deemed to be part thereof at the time of effectiveness
pursuant to Rule 497(a) of the rules and regulations of the Commission under the
Securities Act, and also including the exhibits thereto and documents
incorporated by reference therein, being hereinafter referred to as the
"Registration Statement," and the final prospectus dated [ ], 2003 in the
form in which it was filed with the Commission pursuant to Rule 497(h) under the
Securities Act being hereinafter referred to as the "Prospectus"). The
Registration Statement and the Prospectus were prepared and filed by the Fund
without our participation.
We have also examined originals of copies identified to our satisfaction of
such corporate records of the Adviser, certificates of public officials,
officers and employees of the Adviser and other persons, and such other
documents, agreements or instruments as we have deemed necessary or appropriate
as the
A-4
basis for the opinions hereinafter expressed. In our examinations, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity with the originals of all
documents submitted to us as copies. In rendering our opinion, we have relied as
to factual matters, to the extent we deem proper, upon the representations and
warranties of the Adviser and the Fund contained in or made pursuant to the
Purchase Agreement, the Advisory Agreement, certificates of officers of the
Adviser and certificates of public officials.
Our opinions set forth below are limited to the laws of the States of
New
York and California and the federal laws of the United States, and we do not
express any opinion herein concerning any other laws.
Based upon and subject to the foregoing, we are of the opinion that:
(i) The Adviser is a corporation duly
incorporated and validly existing in good standing as a corporation under the
laws of the State of California with corporate power and authority under such
laws to own its properties and conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Purchase
Agreement. To our knowledge, the Adviser is not qualified to do business as a
foreign corporation in any jurisdiction;
(ii) Each of the Purchase Agreement and the
Additional Compensation Agreement has been duly authorized, executed and
delivered by the Adviser;
(iii) The Advisory Agreement has been duly
authorized, executed and delivered by the Adviser and, assuming due execution by
the Fund, the Advisory Agreement constitutes the valid and binding obligation of
the Adviser, enforceable against the Adviser in accordance with its terms,
except as (x) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally (including, without limitation, all laws
relating to fraudulent transfers) and (y) the enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law);
(iv) The execution, delivery and performance of
the Purchase Agreement (other than performance of the Adviser's indemnification
and contribution obligations thereunder, as to which we express no opinion), the
Advisory Agreement and the Additional Compensation Agreement (other than
performance of the Adviser's indemnification and contribution obligations
thereunder, as to which we express no opinion) by the Adviser will not result in
a breach or violation of any of the terms and provisions of, or result in the
creation or imposition of any lien, charge or encumbrance upon any of the assets
of the Adviser pursuant to the terms of, or constitute a default under, any
agreement, indenture or instrument known to us to be material to the Adviser, or
result in a violation of the corporate charter or by-laws of the Adviser or the
Securities Act, the Investment Company Act, the Investment Advisers Act of 1940,
as amended (the "Advisers Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act" and, together with the Securities Act, the
Investment Company Act, and the Advisers Act, being referred to herein,
collectively, as the "Acts"), or any other applicable statute, any rule or
regulation known to us of, or to our knowledge, any order of, any court or
governmental agency having jurisdiction over the Adviser or its property or
operations, except for such breaches, violations, liens or defaults that would
not, singly or in the aggregate, reasonably be expected to have a material
adverse effect on the Adviser;
(v) To our knowledge, no consent, authorization
or order of, or filing or registration with, any court or governmental agency
having jurisdiction over the Adviser, or over its property or operations, is
required for the execution, delivery and performance of the Purchase Agreement,
the Advisory Agreement or the Additional Compensation Agreement by the Adviser,
except
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(x) such as has been obtained under the Acts or (y) such as may be required
under state or other securities or Blue Sky laws in connection with the purchase
and the distribution of the Common Shares by you;
(vi) The Adviser is duly registered with the
Commission under the Advisers Act as an investment adviser and is not prohibited
by the Advisers Act or the Investment Company Act, or the rules and regulations
under such acts, from acting as the investment adviser to the Fund under the
Advisory Agreement;
(vii) To our knowledge, there is no litigation or
any proceeding pending or threatened to which the Adviser is a party, or to
which the property or assets of the Adviser are subject, which might reasonably
be expected to have a material adverse effect on the Adviser, or which might
reasonably be expected to materially and adversely affect the property or assets
thereof, the consummation of the transactions contemplated in the Purchase
Agreement, the Advisory Agreement, or the Additional Compensation Agreement, the
performance by the Adviser of its obligations thereunder or the registration or
good standing of the Adviser with the Commission, or which is required to be
disclosed in the Prospectus by the Securities Act which is not disclosed and
correctly summarized therein; and
(viii) To our knowledge, the Adviser is not in
violation of its corporate charter or by-laws.
This letter is being furnished to you solely for your benefit in connection
with your purchase of the Shares, and is not to be used, circulated, quoted or
otherwise referred to for any other purpose.
Very truly yours,
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[ ], 2003
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
[Other Underwriters]
As Representatives of the several Underwriters
named in Schedule A to the Purchase Agreement
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXXXXXXX & XXXXXXXX INCORPORATED
Ladies and Gentlemen:
We have acted as special counsel to Xxxxxxxx & Xxxxxxxx Incorporated, a
California corporation (the "Adviser"), the investment adviser to Xxxxxxxx &
Xxxxxxxx/Claymore Total Return Fund Incorporated, a Maryland corporation (the
"Fund"), in connection with the issue and sale to you by the Fund of [ ]
shares of its common stock, par value $.01 per share (the "Shares"), subject to
the terms and conditions set forth in the Purchase Agreement, dated [ ], 2003
(the "Purchase Agreement"), among you, the Fund and the Adviser.
In such capacity, we have examined executed copies of the Purchase
Agreement, the Investment Advisory Agreement dated [ ], 2003 (the "Advisory
Agreement") between the Fund and the Adviser, the Additional Compensation
Agreement dated as of [ ], 2003 (the "Additional Compensation Agreement")
between Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
and the Adviser and copies of the registration statement on Form N-2
(Registration Nos. 333-106393 and 811-21380), filed by the Fund under the
Securities Act of 1933, as amended (the "Securities Act"), and under the
Investment Company Act of 1940, as amended (the "Investment Company Act"), with
the Securities and Exchange Commission (the "Commission") on June 23, 2003, and
of the amendment thereto filed by the Fund with the Commission on [ ], 2003,
and copies of the related prospectus (the registration statement as amended at
the time when it became effective, including the information deemed to be part
thereof at the time of effectiveness pursuant to Rule 497(a) of the rules and
regulations of the Commission under the Securities Act, and also including the
exhibits thereto and documents incorporated by reference therein, being
hereinafter referred to as the "Registration Statement," and the final
prospectus dated [ ], 2003 in the form in which it was filed with the
Commission pursuant to Rule 497(h) under the Securities Act being hereinafter
referred to as the "Prospectus"). The Registration Statement and the Prospectus
were prepared and filed by the Fund without our participation.
In the course of our representation of the Adviser in connection with the
offering by the Fund of the Shares, we also participated in discussions with
certain officers and employees of the Adviser regarding statements relating to
or describing the Adviser in the sections of the Registration Statement and the
Prospectus captioned "Prospectus Summary - Investment Adviser and Servicing
Agent," "Management of the Fund -- Investment Adviser" and "Performance Related
and Comparative Information - About Xxxxxxxx & Xxxxxxxx Incorporated." We have
not independently checked or verified
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the accuracy, completeness or fairness of the information contained in the
Registration Statement and the Prospectus and the limitations inherent in the
independent verification of factual matters and in the role of the outside
counsel are such, however, that we cannot and do not assume any responsibility
for the accuracy, completeness or fairness of any of the statements made in the
Registration Statement and the Prospectus.
Subject to the limitations set forth in the immediately preceding
paragraph, we advise you that, on the basis of the information we gained in the
course of performing the services referred to above, no facts came to our
attention which gave us reason to believe that (i) the sections of the
Registration Statement captioned "Prospectus Summary - Investment Adviser and
Servicing Agent," "Management of the Fund - Investment Adviser and "Performance
Related and Comparative Information - About Xxxxxxxx & Xxxxxxxx Incorporated"
(other than the financial statements and other financial data contained therein
or omitted therefrom, as to which we have not been requested to comment) insofar
as such sections relate to or describe the Adviser, as of the date hereof,
contain an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein not misleading or (ii)
the sections of the Prospectus captioned "Prospectus Summary - Investment
Adviser and Servicing Agent," "Management of the Fund -- Investment Adviser" and
"Performance Related and Comparative Information - About Xxxxxxxx & Xxxxxxxx
Incorporated" (other than the financial statements and other financial data
contained therein or omitted therefrom, as to which we have not been requested
to comment) insofar as such sections relate to or describe the Adviser, as of
the date hereof, contain an untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
This letter is being furnished to you solely for your benefit in connection
with your purchase of the Shares, and is not to be used, circulated, quoted or
otherwise referred to for any other purpose.
Very truly yours,
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