Exhibit 99.(h.1)
Western Asset/Claymore U.S. Treasury Inflation Protected Securities Fund 2
(a Massachusetts business trust)
Common Shares of Beneficial Interest
(No Par Value)
FORM OF PURCHASE AGREEMENT
February [ ], 2004
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
X.X. Xxxxxxx & Sons, Inc.
Xxxxxxxxxxx & Co. Inc.
RBC Xxxx Xxxxxxxx Inc.
Xxxxx Fargo Securities, LLC
Advest, Inc.
BB&T Capital Markets, a division of Xxxxx & Xxxxxxxxxxxx, Inc.
Xxxxxx X. Xxxxx & Co. Incorporated
Xxxxxx, Xxxxx Xxxxx, Incorporated
J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc.
Xxxxxx Xxxxxxxxxx Xxxxx LLC
XxXxxxxx Investments Inc., a KeyCorp Company
Quick & Xxxxxx, Inc.
Xxxx Xxxx & Co., Inc.
Wedbush Xxxxxx Securities Inc.
Claymore Securities, Inc.
c/o Merrill Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Western Asset/Claymore U.S. Treasury Inflation Protected Securities Fund, a
Massachusetts business trust (the "Fund"), the Fund's investment manager,
Western Asset Management Company, a California corporation ("WAM" or the
"Investment Manager"), and Claymore Advisors, Inc. ("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, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), Xxxx Xxxxx
Xxxx Xxxxxx, Incorporated, X.X. Xxxxxxx & Sons, Inc., Xxxxxxxxxxx & Co. Inc.,
RBC Xxxx Xxxxxxxx Inc., Xxxxx Fargo Securities, LLC, Advest, Inc., BB&T Capital
Markets, a division of Xxxxx & Xxxxxxxxxxxx, Inc., Xxxxxx X. Xxxxx & Co.
Incorporated, Xxxxxx, Xxxxx Xxxxx, Incorporated, J.J.B. Xxxxxxxx, X.X. Xxxxx,
Inc., Xxxxxx Xxxxxxxxxx Xxxxx LLC, XxXxxxxx Investments Inc., a KeyCorp Company,
Quick & Xxxxxx, Inc., Xxxx Xxxx & Co., Inc., Wedbush Xxxxxx Securities Inc.,
Claymore Securities, Inc. and each of the other Underwriters named in Schedule A
hereto (collectively, the "Underwriters," which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for whom
Xxxxxxx Xxxxx, Xxxx Xxxxx Xxxx
Xxxxxx, Incorporated, X.X. Xxxxxxx & Sons, Inc., Xxxxxxxxxxx & Co. Inc., RBC
Xxxx Xxxxxxxx Inc., Xxxxx Fargo Securities, LLC, Advest, Inc., BB&T Capital
Markets, a division of Xxxxx & Xxxxxxxxxxxx, Inc., Xxxxxx X. Xxxxx & Co.
Incorporated, Xxxxxx, Xxxxx Xxxxx, Incorporated, J.J.B. Xxxxxxxx, X.X. Xxxxx,
Inc., Xxxxxx Xxxxxxxxxx Xxxxx LLC, XxXxxxxx Investments Inc., a KeyCorp Company,
Quick & Xxxxxx, Inc., Xxxx Xxxx & Co., Inc., Wedbush Xxxxxx Securities Inc. and
Claymore Securities, 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 common shares of beneficial interest, no par value, of the
Fund ("Common Shares") set forth in said SCHEDULE A, and with respect to the
grant by the Fund to the Underwriters, acting severally and not jointly, of the
option described in Section 2(b) hereof to purchase all or any part of [ ]
additional Common Shares for the sole purpose of covering overallotments, if
any. The aforesaid [ ] Common Shares (the "Initial Securities") to be
purchased by the Underwriters and all or any part of the [ ] Common Shares
subject to the option described in Section 2(b) hereof (the "Option Securities")
are hereinafter called, collectively, the "Securities."
The Fund understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-111316 and No.
811-21477) covering the registration of the Securities under the Securities Act
of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses, and a notification on Form N-8A of registration of
the Fund as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations of the Commission under
the 1933 Act and the 1940 Act (the "Rules and Regulations"). Promptly after
execution and delivery of this Agreement, the Fund will either (i) prepare and
file a prospectus in accordance with the provisions of Rule 430A ("Rule 430A")
of the Rules and Regulations and paragraph (c) or (h) of Rule 497 ("Rule 497")
of the Rules and Regulations or (ii) if the Fund has elected to rely upon Rule
434 ("Rule 434") of the Rules and Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 497. The
information included in any such prospectus 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 used after such effectiveness and prior to the
execution and delivery of this Agreement, including in each case any statement
of additional information incorporated therein by reference, is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto and schedules thereto at the time it became effective and including the
Rule 430A Information and the Rule 434 Information, as applicable, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the Rules and Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final
prospectus in the form first filed under paragraph (c) or (h) of Rule 497 and
furnished to the Underwriters for use in connection with the offering of the
Securities, including the statement of additional information incorporated
therein by reference, is herein called the "Prospectus." If Rule 434 is relied
on, the term "Prospectus" shall refer to the preliminary prospectus dated
January 26, 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").
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All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) REPRESENTATIONS AND WARRANTIES BY THE FUND AND THE 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 as of each Date of Delivery (if any) referred to in Section 2(b)
hereof, and agree with each Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act, or order of suspension or
revocation of registration pursuant to Section 8(e) of the 1940 Act, and no
proceedings for any such purpose have been instituted or are pending or, to
the knowledge of the Fund or the 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 Securities is completed) became effective and at the
Closing Time (and, if any Option Securities are purchased, at the Date of
Delivery), the Registration Statement, the Rule 462(b) Registration
Statement, the notification of Form N-8A and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the 1933 Act, the 1940 Act and the Rules and Regulations
and did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. Neither the Prospectus nor any
amendments or supplements thereto, at the time the Prospectus or any such
amendment or supplement was issued and at the Closing Time (and, if any
Option Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
If Rule 434 is used, the Fund will comply with the requirements of Rule 434
and the Prospectus shall not be "materially different", as such term is
used in Rule 434, from the prospectus included in the Registration
Statement at the time it became effective.
Each preliminary prospectus delivered to the Underwriters for use in
connection with the offering of the Securities 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 Securities, the Fund has complied or will
comply with the requirements of Rule 111 under the 1933 Act Regulations
relating to the payment of filing fees thereof.
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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 Section (1)(b)(iii) and (c)(iii) of this
Agreement) contained in the foregoing.
(ii) INDEPENDENT ACCOUNTANTS. To the knowledge of the Fund, based
on representations from PricewaterhouseCoopers LLP, as of the date of the
report of the independent accountants contained in the Registration
Statement, the accountants who certified the statement of assets and
liabilities 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) EXPENSE SUMMARY. The information set forth in the Prospectus
in the fee table contained in the section of the Prospectus entitled
"Summary of Fund Expenses" has been prepared in accordance with the
requirements of Form N-2 and to the extent estimated or projected, such
estimates or projections are reasonably believed to be attainable and
reasonably based.
(v) NO MATERIAL ADVERSE CHANGE. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund, whether or
not arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the Fund,
other than those in the ordinary course of business, which are material
with respect to the Fund, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Fund on any class of
its capital 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
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Act"), and the rules and regulations of the Commission promulgated under
the Advisers Act (the "Advisers Act Rules and Regulations"). Except as
disclosed in the Registration Statement and the Prospectus (or any
amendment or supplement to either of them), no trustee of the Fund is (A)
an "interested person" (as defined in the 0000 Xxx) of the Fund or (B) an
"affiliated person" (as defined in the 0000 Xxx) 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. 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 SECURITIES. The Securities
to be purchased by the Underwriters from the Fund have been duly authorized
for issuance and sale to the Underwriters pursuant to this Agreement and,
when issued and delivered by the Fund pursuant to this Agreement against
payment of the consideration set forth herein, will be validly issued and
fully paid and non-assessable (except as described in the Registration
Statement). In all material respects, the Common Shares 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
Securities 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 Securities is not subject to the preemptive or other
similar rights of any securityholder of the Fund (other than the right of
WAM to purchase securities as set forth in Section 2 hereof).
(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 Transfer
Agency and Service 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
"Transfer Agency Agreement," respectively) and the consummation of the
transactions contemplated herein and in the Registration Statement
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Prospectus
under the caption "Use of Proceeds") and compliance by the Fund with its
obligations hereunder have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of,
or default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Fund pursuant to, the Agreements and Instruments (except
for such conflicts, breaches or defaults or liens, charges or encumbrances
that would not result in a Material Adverse Effect), nor will such action
result in any violation (except
5
for such violations that will not result in a Material Adverse Effect) of
the provisions of the agreement and declaration of trust or 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,
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 Securities 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. 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
Securities hereunder or the consummation of the transactions contemplated
by this Agreement, except such as have been already obtained or as may be
required under the 1933 Act, the 1940 Act, the Securities Exchange Act of
1934, as amended (the "1934 Act"), 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. 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
6
failure so to comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental Licenses
or the failure of such Governmental Licenses to be in full force and effect
would not have a Material Adverse Effect; and the Fund has not received any
notice of proceedings relating to the revocation or modification of any
such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xviii) ADVERTISEMENTS. Any advertising, sales literature or other
promotional material (including "prospectus wrappers," "broker kits," "road
show slides" and "road show scripts") authorized in writing by or prepared
by the Fund or the Advisors used in connection with the public offering of
the Securities (collectively, "sales material") does not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances 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 Common Shares, will not
distribute any offering material in connection with the offering and sale
of the Common Shares other than the Registration Statement, a preliminary
prospectus, the Prospectus or the sales materials.
(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.
(xxiii) MATERIAL AGREEMENTS. This Agreement, the Management
Agreement, the Advisory Agreement, the Administrative Services Agreement,
the Custodian Agreement and the Transfer 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,
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except as affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing and except as rights to 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 Securities have been duly authorized for
listing, upon notice of issuance, on the NYSE and the Fund's registration
statement on Form 8-A under the 1934 Act has become effective.
(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, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b) hereof as follows:
(i) GOOD STANDING OF THE 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 ADVISOR 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 each
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 the 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, NYSE or state securities
laws.
(vi) NO MATERIAL ADVERSE CHANGE. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred any
event which should reasonably be expected to have a material adverse effect
on the ability of the Investment 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 might reasonably be
expected to result in any material adverse change in the condition,
financial or otherwise, or earnings, business affairs or business prospects
of the Investment Manager, 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 adviser or perform its obligations under the Management
Agreement, or which is required to be disclosed in the Registration
Statement and the Prospectus (and has not been so disclosed).
(viii) ABSENCE OF VIOLATION OR DEFAULT. The Investment 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, and as of each Date of Delivery
(if any) referred to in Section 2(b) 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 Management
Agreement and the Advisory Agreement for the Fund as contemplated by the
Prospectus.
(iii) DESCRIPTION OF THE INVESTMENT ADVISOR. The description of the
Investment Advisor in the Registration Statement and the Prospectus (and
any amendment or supplement to either of them) complied and comply in all
material respects with the provisions of the 1933 Act, the 1940 Act, the
Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations and does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(iv) CAPITALIZATION. The Investment Advisor has the financial
resources available to it necessary for the performance of its services and
obligations as contemplated in the Prospectus, this Agreement and under the
Management Agreement and the Advisory Agreement.
(v) AUTHORIZATION OF AGREEMENTS; ABSENCE OF DEFAULTS AND
CONFLICTS. Each of this Agreement, the Management Agreement and the
Advisory Agreement has each 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 limited liability company
agreement 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, the Management 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,
NYSE or state securities laws.
(vi) NO MATERIAL ADVERSE CHANGE. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred any
event which would reasonably be expected to have a material adverse effect
on the ability of the Investment Advisor to perform its obligations under
this Agreement, the Management 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 might reasonably be
expected to result in any material adverse change in the condition,
financial or otherwise, or earnings, business affairs or business prospects
of the Investment Advisor, 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
Management Agreement or 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) INITIAL SECURITIES. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Fund agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Fund, at the
price per share set forth in SCHEDULE B, the number of Initial Securities set
forth in SCHEDULE A opposite the name of such Underwriter, plus any additional
number of Initial Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof.
(b) OPTION SECURITIES. In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Fund hereby grants an option to the Underwriters, severally and not
jointly, to purchase up to an additional [ ] Common Shares in the aggregate at
the price per share set forth in SCHEDULE B, less an amount per share equal to
any dividends or distributions declared by the Fund and payable on the Initial
Securities but not payable on the Option Securities. The option hereby granted
will expire 45 days after the date hereof and may be exercised in whole or in
part from time to time only for the purpose of covering overallotments which may
be made in connection with the offering and distribution of the Initial
Securities upon written notice by the Representatives to the Fund setting forth
the number of Option Securities as to which the several Underwriters are then
exercising the option and the time and date of payment and delivery for such
Option Securities. Any such time and date of delivery (a "Date of Delivery")
shall be determined by the Representatives, but shall not be earlier than the
third day after the date on which the option is being exercised nor later than
seven full business days after the exercise of said option, nor in any event
prior to the Closing Time, as hereinafter defined. If the option is exercised as
to all or any portion of the Option Securities, each of the Underwriters, acting
severally and not jointly, will purchase that proportion of the total number of
Option Securities then being purchased which the number of Initial Securities
set forth in SCHEDULE A opposite the name of such Underwriter bears to the total
number of Initial Securities, subject
11
in each case to such adjustments as Xxxxxxx Xxxxx in its discretion shall make
to eliminate any sales or purchases of a fractional number of Option Securities
plus any additional number of Option Securities which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 10 hereof.
The Fund also agrees, subject to all the terms and conditions set forth
herein, to sell to WAM, and, upon the basis of the representations, warranties
and agreements of the Fund herein contained and subject to all the terms and
conditions set forth herein, WAM shall have the right to purchase from the Fund,
at the same purchase price per share as the Underwriters shall pay for the
Option Securities, up to an aggregate of 6,981 Securities (the "WAM
Securities").
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Xxxxxxxx Chance US LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other place as shall be agreed upon by the Representatives and the Fund, at
10:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30
P.M. (Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
Representatives and the Fund (such time and date of payment and delivery being
herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Fund, on each Date of Delivery as specified in the notice from the
Representatives to the Fund.
Payment shall be made to the Fund by wire transfer of immediately available
funds to a bank account designated by the Fund, against delivery to the
Representatives for the respective accounts of the Underwriters of certificates
for the Securities to be purchased by them. It is understood that each
Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. Xxxxxxx Xxxxx, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
The place and time of closing for the WAM Securities shall be as agreed
upon by WAM and the Fund, except that the date of such closing for the WAM
Securities shall in no event be earlier than the relevant Date of Delivery.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in the City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
12
SECTION 3. Covenants.
(a) The Fund and the Advisors, jointly and severally, covenant with each
Underwriter 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 Securities 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.
(ii) FILING OF AMENDMENTS. For a period of one year from the date
hereof, the Fund will give the Representatives notice of its intention to
file or prepare any amendment to the Registration Statement (including any
filing under Rule 462(b)), any Term Sheet or any amendment, supplement or
revision to either the prospectus included in the Registration Statement at
the time it became effective or to the Prospectus, will furnish the
Representatives with copies of any such documents a reasonable amount of
time prior to such proposed filing or use, as the case may be, and will not
file or use any such document to which the Representatives or counsel for
the Underwriters shall reasonably object.
(iii) DELIVERY OF REGISTRATION STATEMENTS. The Fund has furnished
or will deliver to the Representatives, without charge, a signed copy of
the Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by reference
therein) and a signed copy of all consents and certificates of experts, and
will also deliver to the Representatives, without charge, a conformed copy
of the Registration Statement as originally filed and of each amendment
thereto (without exhibits) for each of the Underwriters. The copies of the
Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T. No copy of a post-effective amendment shall be
required to be delivered after one year from the date hereof.
(iv) DELIVERY OF PROSPECTUSES. The Fund has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Fund hereby consents to
the use of such copies for purposes permitted by 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
13
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 Securities, 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 Securities for
offering and sale under the applicable securities laws of such states and
other jurisdictions of the United States as the Representatives may
designate (if qualification is required under applicable law) and to
maintain such qualifications in effect for a period of not less than one
year from the later of the effective date of the Registration Statement and
any Rule 462(b) Registration Statement; provided, however, that the Fund
shall not be obligated to file any general consent to service of process or
to qualify as a foreign business trust or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject. In each jurisdiction in which the Securities 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 Securities substantially in the manner specified
in the Prospectus under "Use of Proceeds".
(ix) LISTING. The Fund will use its reasonable best efforts to
cause the Securities to be duly authorized for listing by the NYSE, subject
to notice of issuance, prior to the date the Securities are issued.
(x) RESTRICTION ON SALE OF SECURITIES. During a period of
180 days from the date of the Prospectus, the Fund will not, without the
prior written consent of Xxxxxxx Xxxxx, (A) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option, rights or warrant to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of Common Shares or
any securities convertible into or exercisable or
14
exchangeable for Common Shares or file any registration statement under the
1933 Act with respect to any of the foregoing or (B) enter into any swap or
any other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Common
Shares, whether any such swap or transaction described in clause (A) or (B)
above is to be settled by delivery of Common Shares or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to
(1) the Securities to be sold hereunder (including the WAM Securities) or
(2) Common Shares issued or, for avoidance of doubt, purchased in the open
market pursuant to any dividend reinvestment plan.
(xi) REPORTING REQUIREMENTS. The Fund, during the period when the
Prospectus is required to be delivered under the 1933 Act, will file all
documents required to be filed with the Commission pursuant to the 1940 Act
and the 1934 Act within the time periods required by the 1940 Act and the
Rules and Regulations and the 1934 Act and the rules and regulations of the
Commission thereunder, respectively.
(xii) SUBCHAPTER M. The Fund will use its best efforts to comply
with the requirements of Subchapter M of the Code to qualify as a regulated
investment company under the Code.
(xiii) NO MANIPULATION OF MARKET FOR SECURITIES. 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 Securities in violation of federal or state
securities laws, and (b) except for share repurchases permitted in
accordance with applicable laws and purchases of Securities in the open
market pursuant to the Fund's dividend reinvestment plan, until the Closing
Date, or the Date of Delivery, if any, (i) sell, bid for or purchase the
Securities or pay any person any compensation for soliciting purchases of
the Securities or (ii) pay or agree to pay to any person any compensation
for soliciting another to purchase any other securities of the Fund.
(xiv) RULE 462(b) REGISTRATION STATEMENT. If the Fund elects to
rely upon Rule 462(b), the Fund shall file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement, or as soon thereafter
as practicable, 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.
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 Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters, (iv) the fees and
disbursements of the Fund's counsel, accountants and other advisors, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(a)(vi) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection therewith
and in connection with the preparation of the Blue Sky survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, Prospectus and any amendments or supplements thereto,
(vii) the preparation, printing and delivery to the Underwriters of copies of
the Blue Sky Survey and any supplement thereto, (viii) the fees and expenses of
any transfer agent or registrar for the Securities, (ix) the filing fees
incident to, and the reasonable fees
15
and disbursements of counsel to the Underwriters in connection with, the
review by the NASD of the terms of the sale of the Securities, (x) the fees
and expenses incurred in connection with the listing of the Securities on the
NYSE and (xi) the printing of any sales material. Also, the Fund shall pay
the Underwriters $.005 per common share purchased hereunder as partial
reimbursement of expenses incurred in connection with the offering. The
amount paid by the Fund as this partial reimbursement to the Underwriters
will not exceed .03333% of the total price to the public of the Common Shares
sold in this offering. The Advisors, in each of their capacities as a party
to an Expense Reimbursement and Underwriter Participation Agreement among
Claymore Securities, Inc., the Fund, Claymore & WAM, have agreed to pay the
Fund's offering expenses (other than sales load, but including a $.005 per
common share reimbursement of expenses to the underwriters) and the Fund's
organizational expenses. To the extent that the preceding sentence is
inconsistent with any provision of the Expense Reimbursement and Underwriter
Participation Agreement, the applicable provision of the Expense
Reimbursement and Underwriter Participation Agreement shall control.
(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) OPINION 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 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 opinion involves factual
16
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 Xxxxxxxx Chance US LLP, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in [clauses (A) (i), (ii), (vi), (vii)
(solely as to preemptive or other similar rights arising by operation of law or
under the charter or by-laws of the Fund), (viii) through (x), inclusive, (xii),
(xiv) (solely as to the information in the Prospectus under "Description of
Shares") 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 the Advisors, 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) APPROVAL OF LISTING. At Closing Time, the Securities shall have been
approved for listing on the NYSE, subject only to official notice of issuance.
(h) NO OBJECTION. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(i) CONDITIONS TO PURCHASE OF OPTION SECURITIES. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the
17
representations and warranties of the Fund contained herein and the statements
in any certificates furnished by the Fund hereunder shall be true and correct as
of each Date of Delivery and, at the relevant Date of Delivery, the
Representatives shall have received:
(i) OFFICERS' CERTIFICATES. Certificates, dated such Date of
Delivery, of a duly authorized officer of the Fund and of the chief
financial or chief accounting officer of the Fund and of the President or a
Vice President or Managing Director of each of the Advisors confirming that
the information contained in the certificate delivered by each of them at
the Closing Time pursuant to Section 5(d) hereof remains true and correct
as of such Date of Delivery.
(ii) OPINIONS OF COUNSEL FOR THE FUND AND THE ADVISORS. The
favorable opinions of counsel for the Fund and the Advisors, in form and
substance reasonably satisfactory to counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the opinions
required by Section 5(b) hereof.
(iii) OPINION OF COUNSEL FOR THE UNDERWRITERS. The favorable
opinion of Xxxxxxxx Chance US LLP, counsel for the Underwriters, dated such
Date of Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion required
by Section 5(c) hereof.
(iv) BRING-DOWN COMFORT LETTER. A letter from
PricewaterhouseCoopers LLP, in form and substance satisfactory to the
Representatives and dated such Date of Delivery, substantially in the same
form and substance as the letter furnished to the Representatives pursuant
to Section 5(f) hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more than five
days prior to such Date of Delivery.
(j) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may reasonably require for the purpose of enabling them to pass
upon the issuance and sale of the Securities as herein contemplated, or in order
to evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Fund and the Advisors in connection with the organization and
registration of the Fund under the 1940 Act and the issuance and sale of the
Securities as herein contemplated shall be reasonably satisfactory in form and
substance to the Representatives and counsel for the Underwriters.
(k) TERMINATION OF AGREEMENT. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Fund at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7, 8 and 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
18
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;
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 Securities 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 Securities 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 an Advisor by such Underwriter
through Xxxxxxx Xxxxx expressly for use in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, or such preliminary prospectus or the Prospectus (or any amendment
or supplement thereto).
(c) INDEMNIFICATION FOR MARKETING MATERIALS. In addition to the foregoing
indemnification, the Fund and the Advisors also, jointly and severally, agree to
indemnify and hold harmless each Underwriter
19
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
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 Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Fund and the Advisors
on the one hand and of the Underwriters on the other hand in connection with the
statements or omissions
20
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
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Fund and the total underwriting discount received by the Underwriters
(whether from the Fund or otherwise), in each case as set forth on the cover of
the Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the Securities as
set forth on such cover.
The relative fault of the Fund and the 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 this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each 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 Initial Securities 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
21
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 Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) TERMINATION; GENERAL. The Representatives may terminate this Agreement,
by notice to the Fund, at any time at or prior to Closing Time (i) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Fund or 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
judgment of the Representatives, impracticable or inadvisable to market the
Securities or to enforce contracts for the sale of the Securities, or (iii) if
trading in the Common Shares of the Fund has been suspended or materially
limited by the Commission or the NYSE, or if trading generally on the American
Stock Exchange or the NYSE or in the Nasdaq National Market has been suspended
or materially limited, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the NASD or any other governmental
authority, or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States, or (iv) if a
banking moratorium has been declared by either Federal or New York authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7, 8 and 13 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at Closing Time or a Date of
Delivery to purchase the Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), the Representatives shall
have the right, within 24 hours thereafter, to make arrangements for one or more
of the non-defaulting Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the number
of Securities to be purchased on such date, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to any
Date of Delivery which occurs after the Closing Time, the obligation of the
Underwriters to purchase and of the Fund to sell the Option Securities to be
purchased and sold on such Date of Delivery shall terminate without liability on
the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Fund to sell the relevant Option Securities, as
the case
22
may be, either the Representatives or the Fund shall have the right to postpone
Closing Time or the relevant Date of Delivery, as the case may be, for a period
not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
As used herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10.
SECTION 11. Tax Disclosure.
Notwithstanding any other provision of this Agreement, from the
commencement of discussions with respect to the transactions contemplated
hereby, the Fund and the 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., 0 Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, 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.
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 Securities from any
Underwriter shall be deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SAID STATE. UNLESS OTHERWISE EXPLICITLY PROVIDED, SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.
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.
23
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.
24
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 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:
25
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
XXXX XXXXX XXXX XXXXXX, INCORPORATED
X.X. XXXXXXX & SONS, INC.
XXXXXXXXXXX & CO. INC.
RBC XXXX XXXXXXXX INC.
XXXXX FARGO SECURITIES, LLC
ADVEST, INC.
BB&T CAPITAL MARKETS, A DIVISION OF XXXXX & XXXXXXXXXXXX, INC.
XXXXXX X. XXXXX & CO. INCORPORATED
XXXXXX, XXXXX XXXXX, INCORPORATED
J.J.B. XXXXXXXX, X.X. XXXXX, INC.
XXXXXX XXXXXXXXXX XXXXX LLC
XXXXXXXX INVESTMENTS INC., A KEYCORP COMPANY
QUICK & XXXXXX, INC.
XXXX XXXX & CO., INC.
WEDBUSH XXXXXX SECURITIES INC.
CLAYMORE SECURITIES, INC.
By: Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
By:
----------------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
SCHEDULE A hereto.
26
SCHEDULE A
NUMBER OF
NAME OF UNDERWRITER INITIAL SECURITIES
-------------------------------------------------------------- ------------------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
X.X. Xxxxxxx & Sons, Inc.
Xxxxxxxxxxx & Co. Inc.
RBC Xxxx Xxxxxxxx Inc.
Xxxxx Fargo Securities, LLC
Advest, Inc.
BB&T Capital Markets, a division of Xxxxx & Xxxxxxxxxxxx, Inc.
Xxxxxx X. Xxxxx & Co. Incorporated
Xxxxxx, Xxxxx Xxxxx, Incorporated
J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc.
Xxxxxx Xxxxxxxxxx Xxxxx LLC
XxXxxxxx Investments Inc., a KeyCorp Company
Quick & Xxxxxx, Inc.
Xxxx Xxxx & Co., Inc.
Wedbush Xxxxxx Securities Inc.
Claymore Securities, Inc.
Total
Sch A-1
SCHEDULE B
Western Asset/Claymore U.S. Treasury Inflation Protected Securities Fund 2
Common Shares of Beneficial Interest
(No Par Value)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $15.00.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $14.325, being an amount equal to the initial
public offering price set forth above less $.675 per share; provided that the
purchase price per share for any Option Securities purchased upon the exercise
of the overallotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Fund
and payable on the Initial Securities but not payable on the Option Securities.
Sch B-1
Exhibit A
FORM OF OPINION OF FUND'S AND ADVISORS'
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
Registration Statement and Prospectus.
(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 Shares--Common Shares" (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 Common Shares
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
beneficial interest of the Fund was issued in violation of the preemptive
or other similar rights of any securityholder of the Fund.
(vi) The Securities to be purchased by the Underwriters from the
Fund have been duly authorized for issuance and sale to the Underwriters
pursuant to the
Purchase Agreement and, when issued and delivered by the
Fund pursuant to the
Purchase Agreement against payment of the
consideration set forth in the
Purchase Agreement, will be validly issued
and fully paid and non-assessable and no holder of the Securities is or
will be subject to personal liability by reason of being such a holder.
(vii) The issuance of the Securities is not subject to preemptive or
other similar rights of any securityholder of the Fund.
(viii) The
Purchase Agreement has been duly authorized, executed and
delivered by the Fund.
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the Prospectus pursuant to Rule 497(c) or Rule 497(h)
has been made in the manner and within the time period required by Rule
497; and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act, and, to the best of our
knowledge, no order of suspension or revocation of registration pursuant to
Section 8(e) of the 1940 Act has been issued, and no proceedings for any
such purpose have been instituted or are pending or threatened by the
Commission.
A-1
(x) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the Prospectus and each amendment or supplement
to the Registration Statement and Prospectus as of their respective
effective or issue dates (other than the financial statements and
supporting schedules included therein or omitted therefrom, as to which we
need express no opinion), and the notification on Form N-8A complied as to
form in all material respects with the requirements of the 1933 Act, the
1940 Act and the Rules and Regulations.
(xi) If Rule 434 has been relied upon, the Prospectus was not
"materially different," as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time it became
effective.
(xii) The form of certificate used to evidence the Common Shares
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the 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
Shares" and "Tax Matters" and in the Registration Statement under Item 29
(Indemnification), to the extent that it constitutes matters of law,
summaries of legal matters, the Fund's declaration of trust and by-laws or
legal proceedings, or legal conclusions, has been reviewed by us and is
correct in all material respects.
(xv) Each of the Management Agreement, Advisory Agreement, the
Administrative Services Agreement, the Custodian Agreement, the Transfer
Agency Agreement and the
Purchase Agreement comply in all material respects
with all applicable provisions of the 1940 Act, Advisers Act, the Rules and
Regulations and the Advisers Act Rules and Regulations.
(xvi) The Fund is duly registered with the Commission under the 1940
Act as a closed-end diversified management investment company; and, to the
best of our knowledge, no order of suspension or revocation of such
registration has been issued or proceedings therefor initiated or
threatened by the Commission.
(xvii) To the best of our knowledge, no person is serving as an
officer, trustee or investment adviser of the Fund except in accordance
with the 1940 Act and the Rules and Regulations and the Investment Advisers
Act and the Advisers Act Rules and Regulations. Except as disclosed in the
Registration Statement and Prospectus (or any amendment or supplement to
either of them), to the best of our knowledge, no trustee of the Fund is an
"interested person" (as defined in the 0000 Xxx) of the Fund or an
"affiliated person" (as defined in the 0000 Xxx) 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,
A-2
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 Securities 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 Securities and the use of the proceeds from the
sale of the Securities as described in the Prospectus under the caption
"Use of Proceeds") and compliance by the Fund with its obligations under
the Purchase Agreement do not and will not, whether with or without the
giving of notice or lapse of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined in Section 1(a)(xii)
of the Purchase Agreement) under or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Fund
pursuant to any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or any other agreement or instrument, known
to us, to which the Fund is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Fund is subject,
nor will such action result in any violation of the provisions of the
charter or by-laws of the Fund, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, 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 Transfer Agency Agreement have each been duly authorized by all
requisite action on the part of the Fund, executed and delivered by the
Fund, as of the dates noted therein. Assuming due authorization, execution
and delivery by the other parties thereto with respect to the
Administrative Services Agreement, the Custodian Agreement and the Transfer
Agency Agreement, each of the Management Agreement, the Advisory Agreement,
the Administrative Services Agreement, the Custodian Agreement and the
Transfer Agency Agreement constitutes a valid and binding agreement of the
Fund, enforceable in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding
in equity or at law) and an implied covenant of good faith and fair
dealing.
A-3
In addition, we have participated in the preparation of the of the
Registration Statement and 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 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
A-4
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, 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,
"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
A-5
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.
(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
A-6
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 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 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--Investment Manager, "Investment Advisor, Investment Manager and
Administrator--Certain Terms of the Investment Advisory Agreement and the
Investment Management Agreement," "Investment Advisor,
A-7
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
