Exhibit 99.(h)1
Western Asset/Claymore U.S. Treasury Inflation Protected Securities Fund 2
(a Massachusetts business trust)
16,400 Auction Market Preferred Shares ("AMPS") of Beneficial Interest
3,280 Shares AMPS, Series M
3,280 Shares AMPS, Series T
3,280 Shares AMPS, Series W
3,280 Shares AMPS, Series TH
3,280 Shares AMPS, Series F
Liquidation Preference $25,000 per share
FORM OF PURCHASE AGREEMENT
May [___], 2004
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
X.X. Xxxxxxx & Sons, Inc.
c/x Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx
Incorporated
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
Western Asset/Claymore U.S. Treasury Inflation Protected Securities Fund
2, a Massachusetts business trust (the "Fund"), proposes, upon the terms and
conditions set forth herein, to issue and sell an aggregate of 3,280 shares of
its Auction Market Preferred Shares of Beneficial Interest, Series M, 3,280
shares of its Auction Market Preferred Shares of Beneficial Interest, Series T,
3,280 shares of its Auction Market Preferred Shares of Beneficial Interest,
Series W, 3,280 shares of its Auction Market Preferred Shares of Beneficial
Interest, Series TH, and 3,280 shares of its Auction Market Preferred Shares of
Beneficial Interest, Series F, each with a liquidation preference of $25,000 per
share (collectively, the "AMPS"). The AMPS will be authorized by, and subject to
the terms and conditions of, the Amended and Restated Bylaws of the Fund, dated
as of May 4, 2004 (the "Bylaws") and the Agreement and Declaration of
Trust of the Fund, as amended and restated, dated as of October 27, 2003 (the
"Declaration"), in substantially the forms filed as exhibits to the Registration
Statement referred to in the second following paragraph of this Agreement, as
the same may be amended from time to time. The Fund, the Fund's investment
manager, Western Asset Management Company, a California corporation ("WAM" or
the "Investment Manager") and the Fund's investment advisor, Claymore Advisors,
LLC, a Delaware limited liability company ("Claymore" or the "Investment
Advisor," and together with the Investment Manager, the "Advisors" and each an
"Advisor," each confirms its agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch,
Xxxxxx, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), Xxxx Xxxxx Xxxx Xxxxxx,
Incorporated and X.X. Xxxxxxx & Sons, Inc. (collectively, the "Underwriters,"
which term shall also include any underwriter substituted as hereinafter
provided in Section 10 hereof), for whom Xxxxxxx Xxxxx, Xxxx Xxxxx Xxxx Xxxxxx,
Incorporated and X.X. Xxxxxxx & Sons, Inc. are acting as representatives (in
such capacity, the "Representatives"), with respect to the issue and sale by the
Fund
and the purchase by the Underwriters, acting severally and not jointly, of the
respective number of AMPS set forth in said SCHEDULE A.
The Fund understands that the Underwriters propose to make a public
offering of the AMPS as soon as the Representatives deem advisable after this
Agreement has been executed and delivered.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-113551 and No.
811-21477) covering the registration of the AMPS under the Securities Act of
1933, as amended (the "1933 Act"), including the related preliminary prospectus
or prospectuses, which registration statement also constitutes an amendment to
the Fund's registration statement under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations of the Commission under
the 1933 Act and the 1940 Act (the "Rules and Regulations"). Promptly after
execution and delivery of this Agreement, the Fund will either (i) prepare and
file a prospectus in accordance with the provisions of Rule 430A ("Rule 430A")
of the Rules and Regulations and paragraph (c) or (h) of Rule 497 ("Rule 497")
of the Rules and Regulations or (ii) if the Fund has elected to rely upon Rule
434 ("Rule 434") of the Rules and Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 497. The
information included in any such prospectus or in any such Term Sheet, as the
case may be, that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective, if applicable, (a) pursuant to paragraph (b) of
Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to paragraph
(d) of Rule 434 is referred to as "Rule 434 Information." Each prospectus
publicly distributed before such registration statement became effective, and
any prospectus that omitted, as applicable, the Rule 430A Information or the
Rule 434 Information, that was publicly distributed after such effectiveness and
prior to the execution and delivery of this Agreement, including in each case
any statement of additional information incorporated therein by reference, is
herein called a "preliminary prospectus." Such registration statement, including
the exhibits thereto and schedules thereto at the time it became effective and
including the Rule 430A Information and the Rule 434 Information, as applicable,
is herein called the "Registration Statement." Any registration statement filed
pursuant to Rule 462(b) of the Rules and Regulations is herein referred to as
the "Rule 462(b) Registration Statement," and after such filing the term
"Registration Statement" shall include the Rule 462(b) Registration Statement.
The final prospectus in the form first filed under paragraph (c) or (h) of Rule
497 and furnished to the Underwriters for use in connection with the offering of
the AMPS, including the statement of additional information incorporated therein
by reference, is herein called the "Prospectus." If Rule 434 is relied on, the
term "Prospectus" shall refer to the preliminary prospectus dated May 3, 2004
together with the Term Sheet and all references in this Agreement to the date of
the Prospectus shall mean the date of the Term Sheet. For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any Term Sheet or any amendment or supplement to
any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("XXXXX").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all reference in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934, as amended (the "1934
Act"), which is incorporated by reference in the Registration Statement, such
preliminary prospectus or the Prospectus, as the case may be.
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SECTION 1. Representations and Warranties.
(a) REPRESENTATIONS AND WARRANTIES BY THE FUND AND THE ADVISORS. The
Fund and the Advisors jointly and severally represent and warrant to each
Underwriter as of the date hereof, as of the Closing Time referred to in Section
2(c) hereof and agree with each Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration 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 Advisors, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with in all
material respects.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
(except any post-effective amendments filed with the Commission after
the later of (x) one year from the date of this Agreement or (y) the
date on which the distribution of the AMPS is completed) became
effective and at the Closing Time, the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements
of the 1933 Act, the 1940 Act and the Rules and Regulations and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading. Neither the Prospectus nor any
amendments or supplements thereto, at the time the Prospectus or any
such amendment or supplement was issued and at the Closing Time,
included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which
they were made, not misleading. If Rule 434 is used, the Fund will
comply with the requirements of Rule 434 and the Prospectus shall not be
"materially different," as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time it became
effective.
Each preliminary prospectus delivered to the Underwriters for
use in connection with the offering of the AMPS and the prospectus filed
as part of the effective Registration Statement or as part of any
amendment thereto, or filed pursuant to Rule 497 under the 1933 Act,
complied when so filed in all material respects with the Rules and
Regulations and each preliminary prospectus and the Prospectus delivered
to the Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
If a Rule 462(b) Registration Statement is required in
connection with the offering and sale of the AMPS, the Fund has complied
or will comply with the requirements of Rule 111 under the 1933 Act
Regulations relating to the payment of filing fees thereof.
The foregoing representations in this Section 1(a)(i) do not
apply to statements or omissions relating to the Underwriters made in
reliance on and in conformity with information furnished in writing to
the Fund by the Underwriters or their agents expressly for use in the
Registration Statement, the 462(b) Registration Statement, Prospectus or
preliminary prospectus (or any amendment or supplement to any of the
foregoing), or with respect to representations of the Fund, the
descriptions of each of the Advisors (referred to in Sections
(1)(b)(iii) and 1(c)(iii) of this Agreement) contained in the foregoing.
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(ii) INDEPENDENT ACCOUNTANTS. To the knowledge of the Fund,
based on representations from PricewaterhouseCoopers LLP, as of the date
of the report of the independent accountants contained in the
Registration Statement, the accountants who certified the statement of
assets and liabilities 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 the financial position
of the Fund in all material respects at the date indicated; said
statement has been prepared in conformity with generally accepted
accounting principles ("GAAP").
(iv) INCORPORATED DOCUMENTS. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement and
the Prospectus, at the time they were or hereafter are filed with the
Commission, complied and (with respect to documents filed hereafter)
will comply in all material respects with the requirements of the 1933
Act and the Rules and Regulations and, when read together with the other
information in the Prospectus, at the time the Registration Statement
became effective, at the time the Prospectus was issued and at the
Closing Time, did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(v) NO MATERIAL ADVERSE CHANGE. Since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Fund,
whether or not arising in the ordinary course of business (a "Material
Adverse Effect"), (B) there have been no transactions entered into by
the Fund, other than those in the ordinary course of business, which are
material with respect to the Fund, and (C) except for regular monthly
dividends on the Fund's outstanding common shares of beneficial
interest, there has been no dividend or distribution of any kind
declared, paid or made by the Fund on any class of its capital shares.
(vi) GOOD STANDING OF THE FUND. The Fund has been duly
organized and is validly existing as an unincorporated voluntary
association in good standing under the laws of The Commonwealth of
Massachusetts and has power and authority to own and lease its
properties and to conduct its business as described in the Prospectus
and to enter into and perform its obligations under this Agreement; and
the Fund is duly qualified to transact business and is in good standing
in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(vii) NO SUBSIDIARIES. The Fund has no subsidiaries.
(viii) INVESTMENT COMPANY STATUS. The Fund is duly registered
with the Commission under the 1940 Act as a closed-end diversified
management investment company, and no order of suspension or revocation
of such registration has been issued or proceedings therefor initiated
or, to the knowledge of the Fund or either of the Advisors, threatened
by the Commission.
(ix) OFFICERS AND TRUSTEES. No person is serving or acting as
an officer, trustee or investment adviser of the Fund except in
accordance with the provisions of the 1940 Act and the Rules and
Regulations and the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and the rules and regulations of the Commission
promulgated under the Advisers Act (the "Advisers Act Rules and
Regulations"). Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), no
trustee of the Fund is
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(A) an "interested person" (as defined in the 1940 Act) of the Fund or
(B) an "affiliated person" (as defined in the 1940 Act) of any
Underwriter. For purposes of this Section 1(a)(ix), the Fund and each of
the Advisors shall be entitled to rely on representations from such
officers and trustees.
(x) CAPITALIZATION. The authorized, issued and outstanding
shares of beneficial interest of the Fund are as set forth in the
Prospectus as of the date thereof, except for shares issued in
connection with the Fund's dividend reinvestment plan. All issued and
outstanding common shares of beneficial interest of the Fund have been
duly authorized and validly issued and are fully paid and non-assessable
(except as described in the Registration Statement), and have been
offered and sold or exchanged by the Fund in compliance with all
applicable laws (including, without limitation, federal and state
securities laws); none of the outstanding common shares of beneficial
interest of the Fund was issued in violation of the preemptive or other
similar rights of any securityholder of the Fund.
(xi) AUTHORIZATION AND DESCRIPTION OF AMPS. The AMPS to be
purchased by the Underwriters from the Fund have been duly authorized
for issuance and sale to the Underwriters pursuant to this Agreement
and, when issued and delivered by the Fund pursuant to this Agreement
against payment of the consideration set forth herein, will be validly
issued and fully paid and non-assessable (except as described in the
Registration Statement). In all material respects, the AMPS conform to
all statements relating thereto contained in the Prospectus and such
description conforms to the rights set forth in the instruments defining
the same, to the extent such rights are set forth; no holder of the AMPS
will be subject to personal liability by reason of being such a holder
(except as described in the Registration Statement), and the issuance of
the AMPS is not subject to the preemptive or other similar rights of any
securityholder of the Fund.
(xii) ABSENCE OF DEFAULTS AND CONFLICTS. The Fund is not in
violation of its agreement and declaration of trust or by-laws, each as
amended from time to time, or in default in the performance or
observance of any obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which it is a
party or by which it may be bound, or to which any of the property or
assets of the Fund is subject (collectively, "Agreements and
Instruments") except for such violations or defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement, the Investment Management Agreement, the
Investment Advisory Agreement, the Administrative Services Agreement,
the Custodian Agreement, and the Auction Agency Agreement referred to in
the Registration Statement (as used herein, the "Management Agreement,"
the "Advisory Agreement," the "Administrative Services Agreement," the
"Custodian Agreement," and the "Auction Agency Agreement," respectively)
and the consummation of the transactions contemplated herein and in the
Registration Statement (including the issuance and sale of the AMPS and
the use of the proceeds from the sale of the AMPS as described in the
Prospectus under the caption "Use of Proceeds") and compliance by the
Fund with its obligations hereunder have been duly authorized by all
necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Fund pursuant
to, the Agreements and Instruments (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation
(except for such violations that will not result in a Material Adverse
Effect) of the provisions of the agreement and declaration of trust or
the by-laws of the Fund, each as amended from time to time, or any
applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government,
5
government instrumentality or court, domestic or foreign, having
jurisdiction over the Fund or any of its assets, properties or
operations, other than State securities or "blue sky" laws applicable in
connection with the purchase and distribution of the AMPS by the
Underwriters pursuant to this Agreement. As used herein, a "Repayment
Event" means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Fund.
(xiii) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Fund, threatened, against or affecting the Fund,
which is required to be disclosed in the Registration Statement (other
than as disclosed therein), or which 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 material contracts or
documents which are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits thereto by the
1933 Act, the 1940 Act or by the Rules and Regulations which have not
been so described and filed as required.
(xv) POSSESSION OF INTELLECTUAL PROPERTY. Except for the
trademark "AMPS(R)," the Fund owns or possesses, or can acquire on
reasonable terms, adequate patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by the Fund, 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.
(xvi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Fund of its
obligations hereunder, in connection with the offering, issuance or sale
of the AMPS hereunder or the consummation of the transactions
contemplated by this Agreement, except such as have been already
obtained or as may be required under the 1933 Act, the 1940 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), the rules
of the National Association of Securities Dealers, Inc. ("NASD"), the
rules of the New York Stock Exchange (the "NYSE") or state securities
laws.
(xvii) POSSESSION OF LICENSES AND PERMITS. Except for the
trademark "AMPS," the Fund possesses such permits, licenses, approvals,
consents and other authorizations (collectively, "Governmental
Licenses") issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies necessary to operate its properties and to
conduct the business as contemplated in the Prospectus, except where the
absence of such possession would not result in a Material Adverse
Effect; the Fund is in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply would
not, singly or in the aggregate, have a Material Adverse Effect; all of
the Governmental Licenses are valid and in full
6
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") authorized in writing
by or prepared by the Fund or the Advisors used in connection with the
public offering of the AMPS (collectively, "sales material") does not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading. Moreover, all sales material complied and will
comply in all material respects with the applicable requirements of the
1933 Act, the 1940 Act, and the Rules and Regulations and the rules and
interpretations of the NASD.
(xix) SUBCHAPTER M. The Fund intends to direct the investment
of the proceeds of the offering described in the Registration Statement
in such a manner as to comply with the requirements of Subchapter M of
the Internal Revenue Code of 1986, as amended ("Subchapter M of the
Code" and the "Code," respectively), and intends to qualify as a
regulated investment company under Subchapter M of the Code.
(xx) DISTRIBUTION OF OFFERING MATERIALS. The Fund has not
distributed and, prior to the later to occur of (A) the Closing Time and
(B) completion of the distribution of the AMPS, will not distribute any
offering material in connection with the offering and sale of the AMPS
other than the Registration Statement, a preliminary prospectus, the
Prospectus, and other materials, if any, permitted by applicable law.
(xxi) ACCOUNTING CONTROLS. The Fund maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (A) transactions are executed in accordance with management's
general or specific authorization and with the applicable requirements
of the 1940 Act, the Rules and Regulations and the Code; (B)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets and to maintain
compliance with the books and records requirements under the 1940 Act
and the Rules and Regulations; (C) access to assets is permitted only in
accordance with the management's general or specific authorization; and
(D) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xxii) ABSENCE OF UNDISCLOSED PAYMENTS. To the Fund's
knowledge, neither the Fund nor any employee or agent of the Fund has
made any payment of funds of the Fund or received or retained any funds,
which payment, receipt or retention of funds is of a character required
to be disclosed in the Prospectus and is not so disclosed.
(xxiii) MATERIAL AGREEMENTS. This Agreement, the Management
Agreement, the Advisory Agreement, the Administrative Services
Agreement, the Custodian Agreement, and the Auction Agency Agreement
have each been duly authorized by all requisite action on the part of
the Fund, executed and delivered by the Fund, as of the dates noted
therein and each complies with all applicable provisions of the 1940 Act
in all material respects. Assuming due authorization, execution and
delivery by the other parties thereto, each such Agreement constitutes a
valid and binding agreement of the Fund, enforceable in accordance with
its terms, except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, general equitable
7
principles (whether considered in a proceeding in equity or at law) and
an implied covenant of good faith and fair dealing and except as rights
to indemnity or contribution thereunder may be limited by federal or
state laws.
(xxiv) REGISTRATION RIGHTS. There are no persons with
registration rights or other similar rights to have any securities of
the Fund registered pursuant to the Registration Statement or otherwise
registered by the Fund under the 1933 Act.
(xxv) NYSE LISTING. The Fund's common shares of beneficial
interest have been duly authorized for listing upon notice of issuance
on the NYSE.
(xxvi) RATINGS. The AMPS have been, or prior to the Closing
Time will be, assigned a rating of "Aaa" by Xxxxx'x Investors Service,
Inc. ("Moody's") and "AAA" by Fitch Ratings ("Fitch").
(b) REPRESENTATIONS AND WARRANTIES BY THE INVESTMENT MANAGER. The
Investment Manager represents and warrants to each Underwriter, and in the case
of paragraph (iii) also represents to the Fund, as of the date hereof and as of
the Closing Time referred to in Section 2(c) hereof as follows:
(i) GOOD STANDING OF THE INVESTMENT MANAGER. The Investment
Manager has been duly organized and is validly existing and in good
standing as a corporation under the laws of the State of 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 the Investment Manager is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, except to the extent that failure
to be so qualified and in good standing would not have a Material
Adverse Effect on the Investment Manager's ability to provide services
to the Fund.
(ii) INVESTMENT ADVISER STATUS. The Investment Manager is
duly registered with the Commission as an investment adviser under the
Advisers Act, and is not prohibited by the Advisers Act or the 1940 Act,
or the rules and regulations under such acts, from acting under the
Management Agreement for the Fund as contemplated by the Prospectus.
(iii) DESCRIPTION OF THE INVESTMENT MANAGER. The description
of the Investment Manager in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them) complied
and comply in all material respects with the provisions of the 1933 Act,
the 1940 Act, the Advisers Act, the Rules and Regulations and the
Advisers Act Rules and Regulations and is true and correct and does not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
(iv) CAPITALIZATION. The Investment Manager has the financial
resources available to it necessary for the performance of its services
and obligations as contemplated in the Prospectus, this Agreement and
under the Management Agreement.
(v) AUTHORIZATION OF AGREEMENTS; ABSENCE OF DEFAULTS AND
CONFLICTS. Each of this Agreement and the Management Agreement has been
duly authorized, executed and delivered by the Investment Manager, and,
assuming due authorization, execution and delivery by the other parties
thereto, such Agreements constitute valid and binding obligations of the
Investment Manager, enforceable in accordance with their respective
terms, except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law) and
an implied covenant of good faith and fair dealing and except as rights
to indemnity and contribution thereunder may be limited by federal
8
and state law; and neither the execution and delivery of this Agreement
or the Management Agreement nor the performance by the Investment
Manager of its obligations hereunder or thereunder will conflict with,
or result in a breach of any of the terms and provisions of, or
constitute, with or without the giving of notice or lapse of time or
both, a default under, any agreement or instrument to which the
Investment Manager is a party or by which it is bound, the
organizational documents of the Investment Manager, or to the Investment
Manager's knowledge, any law, order, decree, rule or regulation
applicable to it of any jurisdiction, court, federal or state regulatory
body, administrative agency or other governmental body, stock exchange
or securities association having jurisdiction over the Investment
Manager or its properties or operations, except where such breach would
not have a Material Adverse Effect on such Investment Manager's ability
to perform the services contemplated by this Agreement or the Management
Agreement; and no consent, approval, authorization or order of any court
or governmental authority or agency is required for the consummation by
the Investment Manager of the transactions contemplated by this
Agreement or the Management Agreement, except as have been obtained or
may be required under the 1933 Act, the 1940 Act, the 1934 Act or state
securities laws.
(vi) NO MATERIAL ADVERSE CHANGE. Since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred
any event which would reasonably be expected to have a material adverse
effect on the ability of the Investment Manager to perform its
obligations under this Agreement and the Management Agreement.
(vii) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Investment Manager, threatened against or affecting
either the Investment Manager or any parent or subsidiary of the
Investment Manager 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 Investment Manager, to
materially and adversely affect the properties or assets of the
Investment Manager or to materially impair or adversely affect the
ability of the Investment Manager to function as an investment manager
or perform its obligations under the Management Agreement, or which is
required to be disclosed in the Registration Statement and the
Prospectus (and has not been so disclosed).
(viii) ABSENCE OF VIOLATION OR DEFAULT. The Investment Manager
is not in violation of its organizational documents or in default under
any agreement, indenture or instrument where such violation or default
would reasonably be expected to have a Material Adverse Effect on the
ability of the Investment Manager to function as an investment adviser
or perform its obligations under the Management Agreement.
(c) REPRESENTATIONS AND WARRANTIES BY THE INVESTMENT ADVISOR. The
Investment Advisor represents and warrants to each Underwriter, and in the case
of paragraph (iii) also represents to the Fund, as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof as follows:
(i) GOOD STANDING OF THE INVESTMENT ADVISOR. The Investment
Advisor has been duly organized and is validly existing and in good
standing as a limited liability company under the laws of Delaware with
full limited liability company power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and the Investment Advisor is duly qualified as a foreign
limited liability company to transact business and is in good standing
in each other jurisdiction in which such qualification is required,
except to
9
the extent that failure to be so qualified and in good standing would
not have a Material Adverse Effect on the Investment Advisor's ability
to provide services to the Fund.
(ii) INVESTMENT ADVISOR STATUS. The Investment Advisor is
duly registered with the Commission as an investment adviser under the
Advisers Act, and is not prohibited by the Advisers Act or the 1940 Act,
or the rules and regulations under such acts, from acting under the
Advisory Agreement for the Fund as contemplated by the Prospectus.
(iii) DESCRIPTION OF THE INVESTMENT ADVISER. The description
of the Investment Advisor in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them) complied
and comply in all material respects with the provisions of the 1933 Act,
the 1940 Act, the Advisers Act, the Rules and Regulations and the
Advisers Act Rules and Regulations and is true and correct and does not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
(iv) CAPITALIZATION. The Investment Advisor has the financial
resources available to it necessary for the performance of its services
and obligations as contemplated in the Prospectus, this Agreement and
under the Advisory Agreement.
(v) AUTHORIZATION OF AGREEMENTS; ABSENCE OF DEFAULTS AND
CONFLICTS. Each of this Agreement, the Management Agreement and the
Advisory Agreement has been duly authorized, executed and delivered by
the Investment Advisor, and, assuming due authorization, execution and
delivery by the other parties thereto, such Agreements constitute valid
and binding obligations of the Investment Advisor, enforceable in
accordance with their respective terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith
and fair dealing and except as rights to indemnity and contribution
thereunder may be limited by federal and state law; and neither the
execution and delivery of this Agreement, the Management Agreement or
the Advisory Agreement nor the performance by the Investment Advisor of
its obligations hereunder or thereunder will conflict with, or result in
a breach of any of the terms and provisions of, or constitute, with or
without the giving of notice or lapse of time or both, a default under,
any agreement or instrument to which the Investment Advisor is a party
or by which it is bound, the organizational documents of the Investment
Advisor, or to the Investment Advisor's knowledge, any law, order,
decree, rule or regulation applicable to it of any jurisdiction, court,
federal or state regulatory body, administrative agency or other
governmental body, stock exchange or securities association having
jurisdiction over the Investment Advisor or its properties or
operations, except where such breach would not have a Material Adverse
Effect on the Investment Advisor's ability to perform the services
contemplated by this Agreement or the Advisory Agreement; and no
consent, approval, authorization or order of any court or governmental
authority or agency is required for the consummation by the Investment
Advisor of the transactions contemplated by this Agreement, the
Management Agreement or the Advisory Agreement, except as have been
obtained or may be required under the 1933 Act, the 1940 Act, the 1934
Act or state securities laws.
(vi) NO MATERIAL ADVERSE CHANGE. Since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred
any event which would reasonably be expected to have a material adverse
effect on the ability of the Investment Advisor to perform its
obligations under this Agreement and the Advisory Agreement.
10
(vii) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Investment Advisor, threatened against or affecting
either the Investment Advisor or any parent or subsidiary of the
Investment Advisor or any partners, directors, officers or employees of
the foregoing, whether or not arising in the ordinary course of
business, which 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 Investment Advisor, to
materially and adversely affect the properties or assets of the
Investment Advisor or to materially impair or adversely affect the
ability of the Investment Advisor to function as an investment adviser
or perform its obligations under the Management Agreement or the
Advisory Agreement, or which is required to be disclosed in the
Registration Statement and the Prospectus (and has not been so
disclosed).
(viii) ABSENCE OF VIOLATION OR DEFAULT. The Investment Advisor
is not in violation of its limited liability company agreement or in
default under any agreement, indenture or instrument, where such
violation or default would reasonably be expected to have a Material
Adverse Effect on the ability of the Investment Advisor to perform its
obligations under the Advisory Agreement.
(d) OFFICER'S CERTIFICATES. Any certificate signed by any officer of
the Fund or any Advisor delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by the Fund or such
Advisor, as the case may be, to each Underwriter as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) AMPS. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Fund
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Fund, at the
price per share set forth in SCHEDULE B, the number of AMPS set forth in
SCHEDULE A opposite the name of such Underwriter, plus any additional number of
AMPS which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b) COMMISSION. The Fund agrees to pay to the Underwriters a
commission set forth in SCHEDULE B as compensation to the Underwriters for their
commitments under this Agreement.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the AMPS shall be made at the offices of Clifford Chance US
LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or through the facilities of the
Depository Trust Company ("DTC") or at such other place as shall be agreed upon
by the Representatives and the Fund, at 10:00 A.M. (Eastern time) on the third
(fourth, if the pricing occurs after 4:30 p.m. (Eastern Time) on any given day)
business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Representatives and the Fund
(such time and date of payment and delivery being herein called "Closing Time").
Payment shall be made to the Fund by wire transfer of immediately
available funds to a bank account designated by the Fund, against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the AMPS to be purchased by them. It is understood that each
Underwriter has authorized the Representatives, for their account, to accept
delivery of, receipt for, and make payment of the purchase price for, the AMPS
which it has agreed to purchase. Xxxxxxx Xxxxx, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the AMPS to be purchased by any Underwriter
whose funds have not
11
been received by the Closing Time but such payment shall not relieve such
Underwriter from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the AMPS, each
representing one series of the Preferred Shares, shall be registered in the name
of Cede & Co., as nominee for the Depository Trust Company. The certificates for
the AMPS will be made available for examination and packaging by the
Representatives in the City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time.
SECTION 3. Covenants.
(a) The Fund and the Advisors, jointly and severally, covenant with
each Underwriter, and, with respect to Section 3(c), the Underwriters, severally
and not jointly, covenant with the Fund and the Advisors, as follows:
(i) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS. For a period of one year from the date hereof, the Fund,
subject to Section 3(a)(ii), will comply with the requirements of Rule
430A or Rule 434, as applicable, and will notify the Representatives
immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement shall become
effective, or any supplement to the Prospectus or any amended Prospectus
shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any amendment to
the Registration Statement or any amendment or supplement to the
Prospectus or for additional information, and (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use
of any preliminary prospectus, or of the suspension of the qualification
of the AMPS for offering or sale in any jurisdiction, or of the
initiation or, to the knowledge of the Fund, threatening of any
proceedings for any of such purposes. The Fund will promptly effect the
filings necessary pursuant to Rule 497 and will take such steps as it
deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 497 was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. The Fund will make every reasonable effort to prevent the
issuance of any stop order, or order of suspension or revocation of
registration pursuant to Section 8(e) of the 1940 Act, and, if any such
stop order or order of suspension or revocation of registration is
issued, to obtain the lifting thereof at the earliest possible moment.
If at any time the Commission shall issue any order suspending the
effectiveness of the Registration Statement, prohibiting or suspending
the use of the Prospectus or any sales material (or any amendment or
supplement to any of the foregoing) or suspending the qualification of
the AMPS for offering or sale in any jurisdiction, the Fund will use its
reasonable efforts to obtain the withdrawal of such order at the
earliest possible time. If at any time any state securities commission,
any national securities exchange, any arbitrator, any court or any other
governmental, regulatory, self-regulatory or administrative agency or
any official shall issue any order suspending the effectiveness of the
Registration Statement, prohibiting or suspending the use of the
Prospectus or any sales material (or any amendment or supplement to any
of the foregoing) or suspending the qualification of the AMPS for
offering or sale in any jurisdiction, the Fund will use its reasonable
efforts to obtain the withdrawal of such order at the earliest possible
time.
(ii) FILING OF AMENDMENTS. For a period of one year from the
date hereof, the Fund will give the Representatives notice of its
intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)), any Term Sheet or any
amendment, supplement or revision to either the prospectus included in
the Registration Statement at the time it became effective or to the
Prospectus, will furnish the Representatives with copies of any such
documents a reasonable amount of time prior to such proposed filing or
12
use, as the case may be, and will not file or use any such document to
which the Representatives or counsel for the Underwriters shall
reasonably object.
(iii) DELIVERY OF REGISTRATION STATEMENTS. The Fund has
furnished or will deliver to the Representatives, without charge, a
signed copy of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and a signed copy of all consents and
certificates of experts, and will also deliver to the Representatives,
without charge, a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) for
each of the Underwriters. The copies of the Registration Statement and
each amendment thereto furnished to the Underwriters will be identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T. No copy of a post-effective amendment shall be required
to be delivered after one year from the date hereof.
(iv) DELIVERY OF PROSPECTUSES. The Fund has delivered to each
Underwriter, without charge, as many copies of each preliminary
prospectus as such Underwriter reasonably requested, and the Fund hereby
consents to the use of such copies for purposes permitted by the 1933
Act. The Fund will furnish to each Underwriter, without charge, during
the period when the Prospectus is required to be delivered by an
Underwriter or dealer under the 1933 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 the Prospectus (as amended or supplemented) is required by the
1933 Act to be delivered in connection with sales of the AMPS, any event
shall occur or condition shall exist as a result of which it is
necessary, in the reasonable opinion of counsel for the Underwriters or
for the Fund, to amend the Registration Statement or amend or supplement
the Prospectus in order that the Prospectus will not include any untrue
statements of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser,
or if it shall be necessary, in the reasonable opinion of such counsel,
at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the Rules and Regulations, the Fund will promptly
prepare and file with the Commission, subject to Section 3(a)(ii), such
amendment or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement or the Prospectus comply
with such requirements, and the Fund will furnish to the Underwriters
such number of copies of such amendment or supplement as the
Underwriters may reasonably request; provided that, if the supplement or
amendment is required exclusively as a result of a misstatement in or
omission from the information provided to the Fund in writing by the
Underwriters expressly for use in the Prospectus, the Fund may deliver
such supplement or amendment to the Underwriters and dealers at a
reasonable charge not to exceed the actual cost thereof to the Fund.
(vi) BLUE SKY QUALIFICATIONS. The Fund will use its best
efforts in cooperation with the Underwriters to qualify the AMPS for
offering and sale under the applicable securities laws of such states
and other jurisdictions of the United States as the Representatives may
designate (if qualification is required under applicable law) and to
maintain such qualifications in effect for a period of not less than one
year from the later of the effective date of the Registration Statement
and any Rule 462(b) Registration Statement; provided, however, that the
Fund shall not be obligated to file any general consent to service of
process or to qualify as a foreign business trust or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to
13
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject. In each jurisdiction in which the AMPS have
been so qualified, the Fund will file such statements and reports as may
be required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
effective date of the Registration Statement and any Rule 462(b)
Registration Statement.
(vii) RULE 158. The Fund will make generally available to its
securityholders as soon as practicable an earnings statement, if
applicable, for the purposes of, and to provide the benefits
contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(viii) USE OF PROCEEDS. The Fund will use the net proceeds
received by it from the sale of the AMPS substantially in the manner
specified in the Prospectus under "Use of Proceeds."
(ix) REPORTING REQUIREMENTS. The Fund, during the period when
the Prospectus is required to be delivered under the 1933 Act, will file
all documents required to be filed with the Commission pursuant to the
1940 Act and the 1934 Act within the time periods required by the 1940
Act and the Rules and Regulations and the 1934 Act and the rules and
regulations of the Commission thereunder, respectively.
(x) SUBCHAPTER M. The Fund will use its best efforts to
comply with the requirements of Subchapter M of the Code to qualify as a
regulated investment company under the Code.
(xi) NO MANIPULATION OF MARKET FOR AMPS. The Fund will not
(a) take, directly or indirectly, any action designed to cause or to
result in, or that might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Fund
to facilitate the sale or resale of the AMPS in violation of federal or
state securities laws, and (b) except as permitted by applicable law,
until the Closing Time (i) sell, bid for or purchase the AMPS or pay any
person any compensation for soliciting purchases of the AMPS or (ii) pay
or agree to pay to any person any compensation for soliciting another to
purchase any other securities of the Fund.
(xii) RULE 462(b) REGISTRATION STATEMENT. If the Fund elects
to rely upon Rule 462(b), the Fund shall file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) by 10:00
P.M., Washington, D.C. time, on the date of this Agreement, and the Fund
shall at the time of filing either pay to the Commission the filing fee
for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under
the 1933 Act.
(xiii) ACCOUNTANT'S CERTIFICATE. The Fund will furnish to the
Underwriters, on the date on which delivery is made to the Rating
Agencies, the Auditor's Confirmation (as defined in the Bylaws) required
to be delivered pursuant to paragraph 6(c) of Part I of Section 12.1 of
the Bylaws.
(b) Except as provided in this Agreement, the Fund will not sell,
contract to sell or otherwise dispose of any of its preferred shares of
beneficial interest of the same series as the AMPS or any securities convertible
into or exercisable or exchangeable for its preferred shares of beneficial
interest of the same series as the AMPS, or grant any options or warrants to
purchase its preferred shares of beneficial interest of the same series as the
AMPS, for a period of 180 days after the date of the Prospectus, without the
prior written consent of Xxxxxxx Xxxxx, which consent may not be unreasonably
withheld.
(c) No later than the Closing Time, the Underwriters will provide,
and will cause any selling group member to whom they have sold AMPS to provide,
to The Bank of New York, as auction agent for the AMPS (the "Auction Agent"), a
list of the record names of the persons to whom they have sold
14
AMPS, the number of AMPS sold to each person, and the number of AMPS they are
holding as of the Closing Time; provided that in lieu thereof, an Underwriter
may provide the Auction Agent with a list indicating itself as the sole holder
of all the AMPS sold by such Underwriter.
SECTION 4. Payment of Expenses.
(a) EXPENSES. The Fund will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the reasonable costs of the preparation, printing and delivery to
the Underwriters of this Agreement, any Agreement among Underwriters and such
other documents as may be required in connection with the offering, purchase,
sale, issuance or delivery of the AMPS, (iii) the preparation, issuance and
delivery of the certificates for the AMPS to the Underwriters, including any
stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the AMPS to the Underwriters, (iv) the fees and
disbursements of the Fund's counsel, accountants and other advisors, (v) the
qualification of the AMPS under securities laws in accordance with the
provisions of Section 3(a)(vi) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection therewith
and in connection with the preparation of the Blue Sky survey and any supplement
thereto, (vi) the printing and delivery (including electronic delivery) to the
Underwriters of copies of each preliminary prospectus, Prospectus and any
amendments or supplements thereto, (vii) the preparation, printing and delivery
to the Underwriters of copies of the Blue Sky survey and any supplement thereto,
(viii) the fees and expenses of any transfer agent or registrar for the AMPS,
(ix) the fees and expenses incurred in connection with the rating of the AMPS
and (x) the printing of any sales material by the Fund.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Fund and each of the Advisors, 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 Advisors
contained in Section 1 hereof or in certificates of any officer of the Fund or
the Advisors delivered pursuant to the provisions hereof, to the performance by
the Fund and the Advisors of their respective covenants and other obligations
hereunder, and to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective or will have become effective by 5:30 p.m., New York City time on the
date hereof, and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act, no notice
or order pursuant to Section 8(e) of the 1940 Act shall have been issued, and no
proceedings with respect to either shall have been initiated or, to the
knowledge of counsel to the Underwriters and counsel to the Fund, threatened by
the Commission, and any request on the part of the Commission for additional
information shall have been complied with or waived to the reasonable
satisfaction of counsel to the Underwriters. A prospectus containing the Rule
430A Information shall have been filed with the Commission in accordance with
Rule 497 (or a post-effective amendment providing such information shall have
been filed and declared effective in accordance with the requirements of Rule
430A or a certificate must have been filed in accordance with Rule 497(j)) or,
if the Fund has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 497.
(b) OPINIONS OF COUNSEL FOR FUND AND THE ADVISORS. At Closing Time,
the Representatives shall have received the favorable opinions, dated as of
Closing Time, of counsel for the Fund and the
15
Advisors, together with signed or reproduced copies of such letters, for each of
the other Underwriters substantially to the effect set forth in EXHIBIT A hereto
or in such other forms and substance reasonably satisfactory to counsel to the
Underwriters. Such counsel may also state that, insofar as such opinions involve
factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Fund or the Advisors and certificates of public
officials.
(c) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Clifford Chance US LLP, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in clauses (A) (i), (ii), (vi), (vii)
(solely as to preemptive or other similar rights arising by operation of law or
under the charter or by-laws of the Fund), (viii) through (x), inclusive, (xii),
(xiv) (solely as to the information in the Prospectus under "Description of
Capital Structure") and the last paragraph of EXHIBIT A hereto. In giving such
opinion such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York and the federal law of
the United States, upon the opinions of counsel satisfactory to the
Representatives. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Fund or the Advisors 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 each of the Advisors, 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), (b) and (c) hereof, as applicable, are true and
correct with the same force and effect as though expressly made at and as of
Closing Time, (iii) each of the Fund and each Advisor, respectively, has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied pursuant to this Agreement at or prior to Closing Time,
(iv) with respect to each Advisor only, there has been no material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of such Advisor, whether or not arising in the
ordinary course of business and (v) with respect to the Fund only, no stop order
suspending the effectiveness of the Registration Statement, or order of
suspension or revocation of registration pursuant to Section 8(e) of the 1940
Act, has been issued and no proceedings for any such purpose have been
instituted or, to the best of their knowledge, are pending or are contemplated
by the Commission.
(e) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of
this Agreement, the Representatives shall have received from
PricewaterhouseCoopers LLP a letter dated such date, in form and substance
satisfactory to the Representatives, together with signed or reproduced copies
of such letter for each of the other Underwriters containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus.
(f) BRING-DOWN COMFORT LETTER. At Closing Time, the Representatives
shall have received from PricewaterhouseCoopers LLP a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(g) RATING. The Fund shall have delivered and the Representatives
shall have received evidence satisfactory to the Representatives that the AMPS
are rated "Aaa" by Xxxxx'x and "AAA" by Fitch as of the Closing Time, and there
shall not have been given any notice of any intended or potential
16
downgrading, or of any review for a potential downgrading, in the rating
accorded to the AMPS delivered to the Fund by Xxxxx'x or by Fitch.
(h) ASSET COVERAGE. As of closing time and assuming the receipt of
the net proceeds from the sale of the AMPS, the 1940 Act Preferred Shares Asset
Coverage and the Preferred Shares Basic Maintenance Amount (each as defined in
the Bylaws) each will be met. For purposes of this Section 5(h), the Fund may
use portfolio holdings and valuations as of the close of business of any day not
more than six business days preceding the Closing Time.
(i) ADDITIONAL DOCUMENTS. At Closing Time, counsel for the
Underwriters shall have been furnished with such documents and opinions as they
may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the AMPS as herein contemplated, or in order to evidence
the accuracy of any of the representations or warranties, or the fulfillment of
any of the conditions, herein contained; and all proceedings taken by the Fund
and each of the Advisors in connection with the organization and registration of
the Fund under the 1940 Act and the issuance and sale of the AMPS as herein
contemplated shall be reasonably satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(j) TERMINATION OF AGREEMENT. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representatives by notice to the Fund at any
time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7, 8 and 13 shall survive any such termination and
remain in full force and effect.
SECTION 6. Indemnification.
(a) INDEMNIFICATION OF UNDERWRITERS. The Fund and the Advisors,
jointly and severally, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or the omission
or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission; provided that (subject to
Section 6(e) below) any such settlement is effected with the written
consent of the Fund; and
(iii) against any and all expense whatsoever, as incurred
(including the reasonable fees and disbursements of counsel chosen by
Xxxxxxx Xxxxx), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
17
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 an Advisor by any Underwriter through Xxxxxxx
Xxxxx expressly for use in the Registration Statement (or any amendment
thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); provided, further,
that the indemnity agreement contained in this Section 6(a) shall not
inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) from whom the person asserting any such
loss, liability, claim, damage and expense purchased the AMPS which are
the subject thereof if the Prospectus (as amended or supplemented)
corrected any such alleged untrue statement or omission and if such
Prospectus (as amended or supplemented) was delivered to such
Underwriter in a timely manner and if such Underwriter failed to send or
give a copy of the Prospectus (as amended or supplemented) to such
person at or prior to the written confirmation of the sale of such AMPS
to such person.
(b) INDEMNIFICATION OF THE FUND, ADVISORS, TRUSTEES, DIRECTORS,
SHAREHOLDERS AND OFFICERS. Each Underwriter severally agrees to indemnify and
hold harmless the Fund and each of the Advisors, their respective trustees,
directors and shareholders, each of the Fund's officers who signed the
Registration Statement, and each person, if any, who controls the Fund or an
Advisor within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Fund or the Advisors by such Underwriter
through Xxxxxxx Xxxxx expressly for use in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, or such preliminary prospectus or the Prospectus (or any amendment
or supplement thereto).
(c) INDEMNIFICATION FOR MARKETING MATERIALS. In addition to the
foregoing indemnification, the Fund and the Advisors also, jointly and
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 6(a),
as limited by the provisos set forth therein, with respect to any sales material
(to the same extent as with respect to any preliminary prospectus or the
Prospectus).
(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 Advisors. 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
18
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(e) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for reasonable fees and expenses of counsel,
such indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) (through, if applicable, the provisions
of Section 6(b)) effected without its written consent if (i) such settlement is
entered into more than 60 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. Contribution.
If the indemnification provided for in Section 6 hereof is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then, in lieu of indemnifying such indemnified party, each indemnifying
party shall contribute to the aggregate amount of such losses, liabilities,
claims, damages and expenses incurred by such indemnified party, as incurred,
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Fund or the Advisors on the one hand and the Underwriters on the
other hand from the offering of the AMPS pursuant to this Agreement or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Fund and the
Advisors 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 Advisors on the one
hand and the Underwriters on the other hand in connection with the offering of
the AMPS pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the AMPS pursuant to
this Agreement (before deducting expenses) received by the Fund and the total
underwriting discount received by the Underwriters (whether from the Fund or
otherwise), in each case as set forth on the cover of the Prospectus, or, if
Rule 434 is used, the corresponding location on the Term Sheet, bear to the
aggregate initial public offering price of the AMPS as set forth on such cover.
The relative fault of the Fund and the Advisors 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 Advisors 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 Advisors 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
19
this Section 7 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the AMPS underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each trustee and shareholder of the Fund and each director of an Advisor,
respectively, each officer of the Fund who signed the Registration Statement,
and each person, if any, who controls the Fund or an Advisor, within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Fund and such Advisor, respectively. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of AMPS set forth opposite their
respective names in SCHEDULE A hereto and not joint.
Any indemnification or contribution by the Fund shall be subject to the
requirements and limitations of Section 17(i) of the 1940 Act.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery.
All representations, warranties and covenants contained in this
Agreement or in certificates of officers of the Fund or an Advisor submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or controlling
person, or by or on behalf of the Fund or an Advisor, and shall survive delivery
of the AMPS 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 an Advisor,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or the international financial markets, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospective change in national or international political, financial
or economic conditions, in each case the effect of which is such as to make it,
in the reasonable judgment of the Representatives, impracticable or inadvisable
to market the AMPS or to enforce contracts for the sale of the AMPS, or (iii) if
trading in the common shares of beneficial interest of the Fund has been
suspended or materially limited by the Commission or the NYSE, or if trading
generally on the American Stock Exchange or the NYSE or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the NASD
or any other governmental authority, or a material disruption has occurred in
commercial banking or securities settlement or clearance services in the United
States, or (iv) if a banking moratorium has been declared by either federal or
New York authorities.
20
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7, 8 and 13 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at Closing Time to
purchase the AMPS which it or they are obligated to purchase under this
Agreement (the "Defaulted AMPS"), the Representatives shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted AMPS in such amounts as may be agreed upon and
upon the terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(i) if the number of Defaulted AMPS does not exceed 10% of
the number of AMPS to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(ii) if the number of Defaulted AMPS exceeds 10% of the
number of AMPS to be purchased on such date, this Agreement shall
terminate without liability on the part of any non-defaulting
Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Representatives or the Fund shall have the right
to postpone Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.
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 Advisors (and each employee, representative or other
agent of the Fund) may disclose to any and all persons, without limitation of
any kind, the tax treatment and tax structure (as such terms are used in
Sections 6011, 6111 and 6112 of the U.S. Code and the Treasury Regulations
promulgated thereunder) of the transactions contemplated by this Agreement and
all materials of any kind (including opinions or other tax analyses) that are
provided relating to such tax treatment and tax structure.
SECTION 12. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representatives, Xxxxxxx Xxxxx & Co., 4 World Financial Center, New York, New
York 10080, attention of Equity Capital Markets; notices to the Fund or WAM
shall be directed, as appropriate, to the office of Western Asset Management
Company at 000 Xxxx Xxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, Attention:
Xxxxxxx X. XxXxxx; and notices to Claymore shall be directed, as appropriate, to
the office of Claymore Advisors, LLC at 000 Xxxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000, Attention: Xxxxxxxx Xxxxxxx.
21
SECTION 13. Parties.
This Agreement shall each inure to the benefit of and be binding upon
the Underwriters, the Fund, the Advisors 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 Advisors and their respective successors and the
controlling persons and officers, trustees, shareholders and directors referred
to in Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the
Underwriters, the Fund, the Advisors and their respective partners and
successors, and said controlling persons and officers, trustees, shareholders
and directors and their heirs and legal representatives, and for the benefit of
no other person, firm or corporation. No purchaser of AMPS from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SAID STATE. UNLESS OTHERWISE EXPLICITLY PROVIDED, SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 16. Massachusetts Business Trust.
A copy of the Agreement and Declaration of Trust of the Fund is on file
with the Secretary of The Commonwealth of Massachusetts, and notice is hereby
given that this Agreement is executed on behalf of the Fund by an officer or
trustee of the Fund in his or her capacity as an officer or trustee of the Fund
and not individually and that the obligations of or arising out of this
instrument are not binding upon any of the trustees, officers or shareholders
individually but are binding only upon the assets and property of the Fund.
22
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 Advisors in accordance with its terms.
Very truly yours,
WESTERN ASSET/CLAYMORE U.S.
TREASURY INFLATION PROTECTED
SECURITIES FUND 2
By:
------------------------------------
Name:
Title:
WESTERN ASSET MANAGEMENT COMPANY
By:
------------------------------------
Name:
Title:
CLAYMORE ADVISORS, LLC
By:
------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, XXXXXX, XXXXXX & XXXXX
INCORPORATED
XXXX XXXXX XXXX XXXXXX, INCORPORATED
X.X. XXXXXXX & SONS, INC.
By: Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx
Incorporated
By:
------------------------------------
Authorized Signatory
For themselves and as
Representatives of the
23
other Underwriters named in
SCHEDULE A hereto.
24
SCHEDULE A
NUMBER OF
NAME OF UNDERWRITER AMPS
----------------------------------------- --------------------------------------------------------------------
SERIES M SERIES T SERIES W SERIES TH SERIES F
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx &
Xxxxx Incorporated [____] [____] [____] [____] [____]
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated [____] [____] [____] [____] [____]
X.X. Xxxxxxx & Sons, Inc. [____] [____] [____] [____] [____]
-------- -------- -------- --------- --------
Total 3,280 3,280 3,280 3,280 3,280
======== ======== ======== ========= ========
Sch A-1
SCHEDULE B
WESTERN ASSET/CLAYMORE
U.S. TREASURY INFLATION PROTECTED SECURITIES FUND 2
16,400 Auction Market Preferred Shares ("AMPS") of Beneficial Interest
3,280 Shares AMPS, Series M
3,280 Shares AMPS, Series T
3,280 Shares AMPS, Series W
3,280 Shares AMPS, Series TH
3,280 Shares AMPS, Series F
Liquidation Preference $25,000 per share
1. The initial public offering price per share for the AMPS, determined as
provided in Section 2 hereto, shall be $25,000.
2. The purchase price per share for the AMPS to be paid by the several
Underwriters shall be $24,750.
3. The commission to be paid to the Underwriters for their commitment
hereunder shall be $250 per share.
4. The initial dividend rate on the AMPS shall be [ ]% per annum for the
Series M AMPS, [ ]% per annum for the Series T AMPS, [ ]% per annum for the
Series W AMPS, [ ]% per annum for the Series TH AMPS and [ ]% per annum for the
Series F AMPS.
Sch B-1
Exhibit A
FORM OF OPINION OF FUND'S AND INVESTMENT MANAGER'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(A) With respect to the Fund:
(i) The Fund has been duly organized and is validly existing
as a business trust in good standing under the laws of The Commonwealth
of Massachusetts.
(ii) The Fund has business trust power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its
obligations under the Purchase Agreement.
(iii) The Fund is duly qualified as a foreign business trust
to transact business and is in good standing in each other jurisdiction
in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.
(iv) To the best of our knowledge, the Fund does not have any
subsidiaries.
(v) The authorized, issued and outstanding shares of
beneficial interest of the Fund is as set forth in the Prospectus under
the caption "Description of Capital Structure" (except for subsequent
issuances, if any, pursuant to the Purchase Agreement); all issued and
outstanding shares of beneficial interest of the Fund have been duly
authorized and validly issued and are fully paid and non-assessable and
have been offered and sold or exchanged by the Fund in compliance with
all applicable laws (including, without limitation, federal and state
securities laws); the AMPS conform as to legal matters to all statements
relating thereto contained in the Prospectus and such description
conforms to the rights set forth in the instruments defining the same;
and none of the outstanding shares of common stock of the Fund was
issued in violation of the preemptive or other similar rights of any
securityholder of the Fund.
(vi) The AMPS to be purchased by the Underwriters from the
Fund have been duly authorized for issuance and sale to the Underwriters
pursuant to the Purchase Agreement and, when issued and delivered by the
Fund pursuant to the Purchase Agreement against payment of the
consideration set forth in the Purchase Agreement, will be validly
issued and fully paid and non-assessable and no holder of the AMPS is or
will be subject to personal liability by reason of being such a holder.
(vii) The issuance of the AMPS is not subject to preemptive or
other similar rights of any securityholder of the Fund.
(viii) The Purchase Agreement has been duly authorized,
executed and delivered by the Fund.
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act;
any required filing of the Prospectus pursuant to Rule 497(c) or Rule
497(h) has been made in the manner and within the time period required
by Rule 497; and, to the best of our knowledge, no stop order suspending
the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933
A-1
Act, and, to the best of 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.
(x) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the Prospectus and each amendment or
supplement to the Registration Statement and Prospectus as of their
respective effective or issue dates (other than the financial statements
and supporting schedules included therein or omitted therefrom, as to
which we need express no opinion), and the notification on Form N-8A
complied as to form in all material respects with the requirements of
the 1933 Act, the 1940 Act and the Rules and Regulations.
(xi) If Rule 434 has been relied upon, the Prospectus was not
"materially different," as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time it became
effective.
(xii) The form of certificate used to evidence the AMPS
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the declaration of
trust and by-laws of the Fund and the requirements of the New York Stock
Exchange.
(xiii) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to
which the Fund is a party, or to which the property of the Fund is
subject, before or brought by any court or governmental agency or body,
domestic or foreign, which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets of the Fund or
the consummation of the transactions contemplated in the Purchase
Agreement or the performance by the Fund of its obligations thereunder.
(xiv) The information in the Prospectus under "Description of
Capital Structure" and "Tax Matters" and in the Registration Statement
under Item 29 (Indemnification), to the extent that it constitutes
matters of law, summaries of legal matters, the Fund's declaration of
trust and by-laws or legal proceedings, or legal conclusions, has been
reviewed by us and is correct in all material respects.
(xv) Each of the Management Agreement, the Advisory
Agreement, the Administrative Services Agreement, the Custodian
Agreement, the Auction Agency Agreement and the Purchase Agreement
complies in all material respects with all applicable provisions of the
1940 Act, Advisers Act, the Rules and Regulations and the Advisers Act
Rules and Regulations.
(xvi) The Fund is duly registered with the Commission under
the 1940 Act as a closed-end diversified management investment company;
and, to the best of our knowledge, no order of suspension or revocation
of such registration has been issued or proceedings therefor initiated
or threatened by the Commission.
(xvii) To the best of our knowledge, no person is serving as an
officer, trustee or investment adviser of the Fund except in accordance
with the 1940 Act and the Rules and Regulations and the Investment
Advisers Act and the Advisers Act Rules and Regulations. Except as
disclosed in the Registration Statement and Prospectus (or any amendment
or supplement to either of them), to the best of our knowledge, no
trustee of the Fund is an
A-2
"interested person" (as defined in the 1940 Act) of the Fund or an
"affiliated person" (as defined in the 1940 Act) of an Underwriter.
(xviii) There are no statutes or regulations that are required
to be described in the Prospectus that are not described as required.
(xix) All descriptions in the Registration Statement of
contracts and other documents to which the Fund is a party are accurate
in all material respects. To the best of our knowledge, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits thereto other than
those described or referred to therein or filed or incorporated by
reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.
(xx) To the best of our knowledge, the Fund is not in
violation of its declaration of trust or by-laws and no default by the
Fund exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration
Statement or the Prospectus or filed or incorporated by reference as an
exhibit to the Registration Statement.
(xxi) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency (other than under the 1933 Act, the
1934 Act, the 1940 Act and the Rules and Regulations, which have been
obtained, or as may be required under the securities or blue sky laws of
the various states, as to which we need express no opinion) is necessary
or required in connection with the due authorization, execution and
delivery of the Purchase Agreement or for the offering, issuance or sale
of the AMPS or the consummation of the transactions contemplated by this
Agreement.
(xxii) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the
Purchase Agreement and in the Registration Statement (including the
issuance and sale of the AMPS and the use of the proceeds from the sale
of the AMPS as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Fund with its obligations under the
Purchase Agreement do not and will not, whether with or without the
giving of notice or lapse of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined in Section
1(a)(xii) of the Purchase Agreement) under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Fund pursuant to any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or any other agreement
or instrument, known to us, to which the Fund is a party or by which it
or any of them may be bound, or to which any of the property or assets
of the Fund is subject, nor will such action result in any violation of
the provisions of the charter or by-laws of the Fund, or any applicable
law, statute, rule, regulation, judgment, order, writ or decree, known
to us, of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Fund or any of its properties,
assets or operations.
(xxiii) The Purchase Agreement, the Management Agreement, the
Advisory Agreement, the Administrative Services Agreement, the Custodian
Agreement and the Auction Agency Agreement have each been duly
authorized by all requisite action on the part of the Fund, executed and
delivered by the Fund, as of the dates noted therein. Assuming due
authorization, execution and delivery by the other parties thereto with
respect to the Administrative Services
A-3
Agreement, the Custodian Agreement and the Auction Agency Agreement,
each of the Management Agreement, the Advisory Agreement, the
Administrative Services Agreement, the Custodian Agreement, and the
Auction Agency Agreement constitutes a valid and binding agreement of
the Fund, enforceable in accordance with its terms, except as affected
by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing.
In addition, we have participated in the preparation of the Registration
Statement and the Prospectus and participated in discussions with certain
officers, trustees and employees of the Fund, representatives of
PricewaterhouseCoopers LLP, the independent accountants who examined the
statement of assets and liabilities of the Fund included or incorporated by
reference in the Registration Statement and the Prospectus, and you and your
representatives and we have reviewed certain Fund records and documents. While
we have not independently verified and are not passing upon, and do not assume
any responsibility for, the accuracy, completeness or fairness of the
information contained in the Registration Statement and the Prospectus, except
to the extent necessary to enable us to give the opinions with respect to the
Fund in paragraphs (A)(v), (xiv) and (xix), on the basis of such participation
and review, nothing has come to our attention that would lead us to believe that
the Registration Statement (except for financial statements, supporting
schedules and other financial data included therein or omitted therefrom and for
statistical information derived from such financial statements, supporting
schedules or other financial data, as to which we do not express any belief), at
the time such Registration Statement became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus (except for financial statements, supporting schedules and
other financial data included therein or omitted therefrom and for statistical
information derived from such financial statements, supporting schedules or
other financial data, as to which we do not express any belief), at the time the
Prospectus was issued, or at the Closing Time, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(B) With respect to the Investment Advisor:
(i) The Investment Advisor has been duly organized and is
validly existing as a limited liability company in good standing under
the laws of the State of Delaware.
(ii) The Investment Advisor has full limited liability
company power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus and to enter into
and perform its obligations under the Purchase Agreement.
(iii) The Investment Advisor is duly qualified as a foreign
limited liability company to transact business and is in good standing
in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure to so qualify would not result in
a Material Adverse Effect.
(iv) The Investment Advisor is duly registered with the
Commission as an investment adviser under the Advisers Act and is not
prohibited by the Advisers Act, the Advisers Act Rules and Regulations,
the 1940 Act or the Rules and Regulations from acting under the
Management Agreement for the Fund as contemplated by the Prospectus.
(v) The Purchase Agreement, the Management Agreement and the
Advisory Agreement have been duly authorized, executed and delivered by
the Investment Advisor, and the
A-4
Management Agreement and the Advisory Agreement each constitute valid
and binding obligation of the Investment Advisor, enforceable in
accordance with its terms, except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and general
equitable principles (whether considered in a proceeding in equity or at
law).
(vi) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to
which the Investment Advisor is a party, or to which the property of the
Investment Advisor is subject, before or brought by any court or
governmental agency or body, domestic or foreign, which might reasonably
be expected to result in any material adverse change in the condition,
financial or otherwise, in the earnings, business affairs or business
prospects of the Investment Advisor, materially and adversely affect the
properties or assets of the Investment Advisor or materially impair or
adversely affect the ability of the Investment Advisor to function as an
investment adviser or perform its obligations under the Management
Agreement and the Management Agreement, or which is required to be
disclosed in the Registration Statement or the Prospectus.
(vii) To the best of our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto other than
those described or referred to therein or filed or incorporated by
reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.
(viii) To the best of our knowledge, the Investment Advisor is
not in violation of its certificate of incorporation, by-laws or other
organizational documents and no default by the Investment Advisor exists
in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument
that is described or referred to in the Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.
(ix) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign (other than under
the 1933 Act, the 1940 Act and the Rules and Regulations, which have
been obtained, or as may be required under the securities or blue sky
laws of the various states, as to which we need express no opinion) is
necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement.
(x) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the
Purchase Agreement and in the Registration Statement and compliance by
the Investment Advisor with its obligations under the Purchase Agreement
do not and will not, whether with or without the giving of notice or
lapse of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined in Section 1(a)(xii) of the
Purchase Agreement) under or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Investment Advisor pursuant to any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or any other agreement
or instrument, known to us, to which the Investment Advisor is a party
or by which it or any of them may be bound, or to which any of the
property or assets of the Investment Advisor is subject (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that
would not have a Material Adverse Effect), nor will such action result
in any violation of the provisions of the charter or by-laws of the
Investment Advisor, or any applicable law, statute,
A-5
rule, regulation, judgment, order, writ or decree, known to us, of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Investment Advisor or any of its
properties, assets or operations.
In addition, we have participated in the preparation of the sections
entitled ["Prospectus Summary--Investment Advisor and Investment Manager,"
"Portfolio Contents and Management Strategies," "Management of the
Fund--Investment Advisor and Investment Manager" and "Management of the
Fund--Investment Advisory Agreement and Investment Management Agreement" in the
Prospectus and "Investment Advisor, Investment Manager and
Administrator--Certain Terms of the Investment Advisory Agreement and the
Investment Management Agreement," "Investment Advisor, Investment Manager and
Administrator--Trustee Approval of the Investment Advisory Agreement and the
Investment Management Agreement" and "Portfolio Transactions--Investment
Decisions and Portfolio Transactions" in the Statement of Additional
Information] and participated in discussions with certain officers, trustees and
employees of the Fund, representatives of PricewaterhouseCoopers LLP, the
independent accountants who examined the statement of assets and liabilities of
the Fund included or incorporated by reference in the Registration Statement and
the Prospectus, and you and your representatives and we have reviewed certain
Fund records and documents. While we have not independently verified and are not
passing upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the information contained in such sections of the
Registration Statement and the Prospectus, except to the extent necessary to
enable us to give the opinions with respect to the Fund in paragraphs (A)(v),
(xiv) and (xix), on the basis of such participation and review, nothing has come
to our attention that would lead us to believe that such sections of the
Registration Statement (except for financial statements, supporting schedules
and other financial data included therein or omitted therefrom and for
statistical information derived from such financial statements, supporting
schedules or other financial data, as to which we do not express any belief), at
the time such Registration Statement became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that such sections of the Prospectus (except for financial statements,
supporting schedules and other financial data included therein or omitted
therefrom and for statistical information derived from such financial
statements, supporting schedules or other financial data, as to which we do not
express any belief), at the time the Prospectus was issued, or at the Closing
Time, included or includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(C) With respect to the Investment Manager:
(i) The Investment Manager has been duly organized and is
validly existing as a corporation in good standing under the laws of the
State of California.
(ii) The Investment Manager has full corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under the Purchase Agreement.
(iii) The Investment Manager is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify would not result in a Material
Adverse Effect.
(iv) The Investment Manager is duly registered with the
Commission as an investment adviser under the Advisers Act and is not
prohibited by the Advisers Act, the Advisers Act Rules and Regulations,
the 1940 Act or the Rules and Regulations from acting under the
Management Agreement for the Fund as contemplated by the Prospectus.
A-6
(v) The Purchase Agreement and the Management Agreement have
been duly authorized, executed and delivered by the Investment Manager,
and the Management Agreement constitutes a valid and binding obligation
of the Investment Manager, enforceable in accordance with its terms,
except as affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and general equitable principles
(whether considered in a proceeding in equity or at law).
(vi) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to
which the Investment Manager is a party, or to which the property of the
Investment Manager is subject, before or brought by any court or
governmental agency or body, domestic or foreign, which might reasonably
be expected to result in any material adverse change in the condition,
financial or otherwise, in the earnings, business affairs or business
prospects of the Investment Manager, materially and adversely affect the
properties or assets of the Investment Manager or materially impair or
adversely affect the ability of the Investment Manager to function as an
investment adviser or perform its obligations under the Management
Agreement, or which is required to be disclosed in the Registration
Statement or the Prospectus.
(vii) To the best of our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto other than
those described or referred to therein or filed or incorporated by
reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.
(viii) To the best of our knowledge, the Investment Manager is
not in violation of its certificate of incorporation, by-laws or other
organizational documents and no default by the Investment Manager exists
in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument
that is described or referred to in the Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.
(ix) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign (other than under
the 1933 Act, the 1940 Act and the Rules and Regulations, which have
been obtained, or as may be required under the securities or blue sky
laws of the various states, as to which we need express no opinion) is
necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement.
(x) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the
Purchase Agreement and in the Registration Statement and compliance by
the Investment Manager with its obligations under the Purchase Agreement
do not and will not, whether with or without the giving of notice or
lapse of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined in Section 1(a)(xii) of the
Purchase Agreement) under or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Investment Manager pursuant to any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or any other agreement
or instrument, known to us, to which the Investment Manager is a party
or by which it or any of them may be bound, or to which any of the
property or assets of the Investment Manager is subject (except for such
conflicts, breaches or defaults or liens, charges or
A-7
encumbrances that would not have a Material Adverse Effect), nor will
such action result in any violation of the provisions of the charter or
by-laws of the Investment Manager, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Investment Manager or any of its
properties, assets or operations.
In addition, we have participated in the preparation of the sections
entitled ["Prospectus Summary--Investment Advisor and Investment Manager,"
"Portfolio Contents and Management Strategies," "Management of the
Fund--Investment Advisor and Investment Manager" and "Management of the
Fund--Investment Advisory Agreement and Investment Management Agreement" in the
Prospectus and "Investment Advisor, Investment Manager and
Administrator--Certain Terms of the Investment Advisory Agreement and the
Investment Management Agreement," "Investment Advisor, Investment Manager and
Administrator--Trustee Approval of the Investment Advisory Agreement and the
Investment Management Agreement" and "Portfolio Transactions--Investment
Decisions and Portfolio Transactions" in the Statement of Additional
Information] and participated in discussions with certain officers, trustees and
employees of the Fund, representatives of PricewaterhouseCoopers LLP, the
independent accountants who examined the statement of assets and liabilities of
the Fund included or incorporated by reference in the Registration Statement and
the Prospectus, and you and your representatives and we have reviewed certain
Fund records and documents. While we have not independently verified and are not
passing upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the information contained in such sections of the
Registration Statement and the Prospectus, except to the extent necessary to
enable us to give the opinions with respect to the Fund in paragraphs (A)(v),
(xiv) and (xix), on the basis of such participation and review, nothing has come
to our attention that would lead us to believe that such sections of the
Registration Statement (except for financial statements, supporting schedules
and other financial data included therein or omitted therefrom and for
statistical information derived from such financial statements, supporting
schedules or other financial data, as to which we do not express any belief), at
the time such Registration Statement became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that such sections of the Prospectus (except for financial statements,
supporting schedules and other financial data included therein or omitted
therefrom and for statistical information derived from such financial
statements, supporting schedules or other financial data, as to which we do not
express any belief), at the time the Prospectus was issued, or at the Closing
Time, included or includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
A-8
