Exhibit 99(h)
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
(a Delaware statutory trust)
Auction Market Preferred Shares ("AMPS") of Beneficial Interest
[ ] Shares __ AMPS, Series M7
[ ] Shares __ AMPS, Series W28
Liquidation Preference $25,000 per share
FORM OF PURCHASE AGREEMENT
October [ ], 2003
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx
Incorporated
X.X. Xxxxxxx & Sons, Inc.
c/x Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund, a
Delaware statutory trust (the "Fund"), proposes, upon the terms and conditions
set forth herein, to issue and sell an aggregate of [ ] shares of its Auction
Market Preferred Shares, Series M7 and [ ] shares of its Auction Market
Preferred Shares, Series W28, each with a liquidation preference of $25,000 per
share (the "AMPS"). The AMPS will be authorized by, and subject to the terms and
conditions of, the Statement of Preferences of AMPS (the "Statement") and the
Agreement and Declaration of Trust, as amended and restated, as of July 20, 2003
(the "Declaration"), in the form filed as an exhibits to the Registration
Statement referred to in the second following paragraph of this Agreement, as
the same may be amended from time to time. The Fund and the Fund's investment
adviser, MBIA Capital Management Corp., a Delaware corporation ("MBIA" or the
"Adviser") each confirms its agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch,
Xxxxxx, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") and each of the other
Underwriters named in Schedule A hereto (collectively, the "Underwriters", which
term shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof), for whom Xxxxxxx Xxxxx is acting as representative (in such
capacity, the "Representative"), with respect to the issue and sale by the Fund
and the purchase by the Underwriters, acting severally and not jointly, of the
respective number of AMPS set forth in said Schedule A.
The Fund understands that the Underwriters propose to make a public
offering of the AMPS as soon as the Representative deems advisable after this
Agreement has been executed and delivered.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-108691 and No.
811-21359) covering the registration of the AMPS under the Securities Act of
1933, as amended (the "1933 Act"), including the related preliminary prospectus
or prospectuses, and a notification on Form N-8A of registration (the "1940 Act
Notification") of the Fund as an investment company under the Investment Company
Act of 1940, as amended (the "1940 Act"), and the rules and regulations of the
Commission under the 1933 Act and the 1940 Act (the "Rules and Regulations").
Promptly after execution and delivery of this Agreement, the Fund will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the Rules and Regulations and paragraph (c) or (h) of Rule 497
("Rule 497") of the Rules and Regulations or
(ii) if the Fund has elected to rely upon Rule 434 ("Rule 434") of the Rules and
Regulations, prepare and file a term sheet (a "Term Sheet") in accordance with
the provisions of Rule 434 and Rule 497. The information included in any such
prospectus or in any such Term Sheet, as the case may be, that was omitted from
such registration statement at the time it became effective but that is deemed
to be part of such registration statement at the time it became effective, if
applicable, (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information." Each prospectus used before such registration statement
became effective, and any prospectus that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, including in each
case any statement of additional information incorporated therein by reference,
is herein called a "preliminary prospectus." Such registration statement,
including the exhibits thereto and schedules thereto at the time it became
effective and including the Rule 430A Information and the Rule 434 Information,
as applicable, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the Rules and Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final prospectus in the form first furnished to the Underwriters
for use in connection with the offering of the AMPS, including the statement of
additional information incorporated therein by reference, is herein called the
"Prospectus." If Rule 434 is relied on, the term "Prospectus" shall refer to the
preliminary prospectus dated October [ ], 2003 together with the Term Sheet and
all references in this Agreement to the date of the Prospectus shall mean the
date of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("XXXXX").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all reference in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934, as amended (the "1934
Act") which is incorporated by reference in the Registration Statement, such
preliminary prospectus or the Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) REPRESENTATIONS AND WARRANTIES BY THE FUND AND THE ADVISER. The Fund
and the Adviser jointly and severally represent and warrant to each Underwriter
as of the date hereof, as of the Closing Time referred to in Section 2(c) hereof
and agree with each Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act, or order of suspension or
revocation of registration pursuant to Section 8(e) of the 1940 Act, and no
proceedings for any such purpose have been instituted or are pending or, to
the knowledge of the Fund or the Adviser, are contemplated by the
Commission, and any request on the part of the Commission for additional
information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time, the Registration Statement, the Rule
462(b) Registration Statement, the notification of Form N-8A
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and any amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act, the 1940 Act and
the Rules and Regulations and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or supplement was
issued and at the Closing Time, included or will include an untrue
statement of a material fact or omitted or will omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434 is
used, the Fund will comply with the requirements of Rule 434 and the
Prospectus shall not be "materially different", as such term is used in
Rule 434, from the prospectus included in the Registration Statement at the
time it became effective.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 497 under the 1933 Act, complied when so
filed in all material respects with the Rules and Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters for
use in connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T.
If a Rule 462(b) Registration Statement is required in connection with
the offering and sale of the AMPS, the Fund has complied or will comply
with the requirements of Rule 111 under the 1933 Act Regulations relating
to the payment of filing fees thereof.
(ii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
statement of assets and liabilities included in the Registration Statement
are independent public accountants as required by the 1933 Act and the
Rules and Regulations.
(iii) FINANCIAL STATEMENTS. The statement of assets and
liabilities included in the Registration Statement and the Prospectus,
together with the related notes, presents fairly the financial position of
the Fund at the date indicated; said statement has been prepared in
conformity with generally accepted accounting principles ("GAAP").
(iv) EXPENSE SUMMARY. The information set forth in the Prospectus
in the Fee Table 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) INCORPORATED DOCUMENTS. The documents incorporated or deemed
to be incorporated by reference in the Registration Statement and the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1933 Act and the Rules and Regulations and, when read
together with the other information in the Prospectus, at the time the
Registration Statement became effective, at the time the Prospectus was
issued and at the Closing Time, did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading.
(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, (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
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to the Fund, and (C) there has been no dividend or distribution of any kind
declared, paid or made by the Fund on any class of its capital stock.
(vii) GOOD STANDING OF THE FUND. The Fund has been duly organized
and is validly existing as a statutory trust in good standing under the
laws of the State of Delaware and has the statutory power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under this Agreement; and the Fund is duly qualified as a foreign statutory
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.
(viii) NO SUBSIDIARIES. The Fund has no subsidiaries.
(ix) INVESTMENT COMPANY STATUS. The Fund is duly registered with
the Commission under the 1940 Act as a closed-end non-diversified
management investment company, and no order of suspension or revocation of
such registration has been issued or proceedings therefor initiated or
threatened by the Commission.
(x) OFFICERS AND DIRECTORS. No person is serving or acting as an
officer, director or investment adviser of the Fund except in accordance
with the provisions of the 1940 Act and the Rules and Regulations and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and the
rules and regulations of the Commission promulgated under the Advisers Act
(the "Advisers Act Rules and Regulations"). Except as disclosed in the
Registration Statement and the Prospectus (or any amendment or supplement
to either of them), no director of the Fund is an "interested person" (as
defined in the 1940 Act) of the Fund or an "affiliated person" (as defined
in the 1940 Act) of any Underwriter.
(xi) CAPITALIZATION. The authorized, issued and outstanding
common shares of beneficial interest of the Fund is as set forth in the
Prospectus as of the date thereof under the caption "Description of Common
Shares." All issued and outstanding common shares of 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); none of the outstanding common shares
of the Fund was issued in violation of the preemptive or other similar
rights of any securityholder of the Fund.
(xii) AUTHORIZATION AND DESCRIPTION OF AMPS. The AMPS to be
purchased by the Underwriters from the Fund have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Fund pursuant to this Agreement against payment
of the consideration set forth herein, will be validly issued and fully
paid and non-assessable. The AMPS conform to all statements relating
thereto contained in the Prospectus and such description conforms to the
rights of holders of AMPS set forth in the Charter and other documents
defining the same; no holder of the AMPS will be subject to personal
liability by reason of being such a holder; and the issuance of the AMPS is
not subject to the preemptive or other similar rights of any securityholder
of the Fund.
(xiii) ABSENCE OF DEFAULTS AND CONFLICTS. The Fund is not in
violation of its Charter or by-laws, or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which it is a party or by
which it may be bound, or to which any of the property or assets of the
Fund is subject (collectively, "Agreements and Instruments") except for
such violations or defaults that would not result in a Material Adverse
4
Effect; and the execution, delivery and performance of this Agreement, the
Investment Management Agreement, the Custodian Agreement, the Transfer
Agent and Service Agreement and the Auction Agency Agreement referred to in
the Registration Statement (as used herein, the "Management Agreement," the
"Custodian Agreement", the "Transfer Agency Agreement" and the "Auction
Agency Agreement," respectively) and the consummation of the transactions
contemplated herein and in the Registration Statement (including the
issuance and sale of the AMPS and the use of the proceeds from the sale of
the AMPS as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Fund with its obligations hereunder have
been duly authorized by all necessary corporate action and do not and will
not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Fund
pursuant to, the Agreements and Instruments (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
result in a Material Adverse Effect), nor will such action result in any
violation of the provisions of the Declaration or by-laws of the Fund or
any applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Fund or any of its assets, properties
or operations. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Fund.
(xiv) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Fund or the Adviser, threatened, against or affecting the
Fund, which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which might reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be expected
to materially and adversely affect the properties or assets of the Fund or
the consummation of the transactions contemplated in this Agreement or the
performance by the Fund of its obligations hereunder. The aggregate of all
pending legal or governmental proceedings to which the Fund is a party or
of which any of its property or assets is the subject which are not
described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Effect.
(xv) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto by the 1933 Act, the 1940 Act
or by the Rules and Regulations which have not been so described and filed
as required.
(xvi) 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 or of any facts or circumstances which would render
any Intellectual Property invalid or inadequate to protect the interest of
the Fund therein, and which infringement or conflict (if the subject of any
unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect.
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(xvii) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Fund of its obligations
hereunder, in connection with the offering, issuance or sale of the AMPS
hereunder or the consummation of the transactions contemplated by this
Agreement, except such as have been already obtained or as may be required
under the 1933 Act, the 1940 Act, the 1934 Act, or state securities laws.
(xviii) POSSESSION OF LICENSES AND PERMITS. The Fund possesses such
permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to operate
its properties and to conduct the business as contemplated in the
Prospectus; the Fund is in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply would
not, singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when
the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and the Fund has not received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xix) 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 Adviser used in connection with the public offering of
the AMPS (collectively, "sales material") does not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. Moreover, all sales material complied and will comply in all
material respects with the applicable requirements of the 1933 Act, the
1940 Act, the Rules and Regulations and the rules and interpretations of
the National Association of Securities Dealers, Inc. ("NASD").
(xx) 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.
(xxi) DISTRIBUTION OF OFFERING MATERIALS. The Fund has not
distributed and, prior to the later to occur of (A) the Closing Time and
(B) completion of the distribution of the AMPS, will not distribute any
offering material in connection with the offering and sale of the AMPS
other than the Registration Statement, a preliminary prospectus, the
Prospectus or other materials, if any, permitted by the 1933 Act or the
1940 Act or the Rules and Regulations.
(xxii) 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.
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(xxiii) 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.
(xxiv) MATERIAL AGREEMENTS. This Agreement, the Management
Agreement, the Custodian Agreement, the Transfer Agency Agreement and the
Auction Agency Agreement have each been duly authorized by all requisite
action on the part of the Fund, executed and delivered by the Fund, as of
the dates noted therein and each complies with all applicable provisions of
the 1940 Act. Assuming due authorization, execution and delivery by the
other parties thereto with respect to the Custodian Agreement, the Transfer
Agency Agreement and the Auction Agency Agreement, each of the Management
Agreement, the Custodian Agreement, the Transfer Agency Agreement and the
Auction Agency Agreement constitutes a valid and binding agreement of the
Fund, enforceable in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding
in equity or at law).
(xxv) REGISTRATION RIGHTS. There are no persons with registration
rights or other similar rights to have any securities registered pursuant
to the Registration Statement or otherwise registered by the Fund under the
1933 Act.
(xxvi) NYSE LISTING. The Fund's shares of common stock are duly
listed on the New York Stock Exchange ("NYSE").
(xxvii) RATINGS. The AMPS have been, or prior to the Closing Date
will be, assigned a rating of 'aaa' by Xxxxx'x Investors Service, Inc.
("Moody's") and "AAA" by Standard & Poor's Rating Services ("S&P").
(xxviii) LEVERAGE. The Fund has no liability for borrowed money,
including under any reverse repurchase agreement.
(b) REPRESENTATIONS AND WARRANTIES BY THE ADVISER. The Adviser represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof as follows:
(i) GOOD STANDING OF THE ADVISER. The Adviser has been duly
organized and is validly existing and in good standing as a corporation
under the laws of the State of Delaware with full corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required.
(ii) INVESTMENT ADVISER STATUS. The Adviser is duly registered
and in good standing with the Commission as an investment adviser under the
Advisers Act, and is not prohibited by the Advisers Act or the 1940 Act, or
the rules and regulations under such acts, from acting under the Management
Agreement for the Fund as contemplated by the Prospectus.
(iii) DESCRIPTION OF ADVISER. The description of the Adviser in
the Registration Statement and the Prospectus (and any amendment or
supplement to either of them) complied and comply in all material respects
with the provisions of the 1933 Act, the 1940 Act, the Advisers Act, the
Rules and Regulations and the Advisers Act Rules and Regulations and is
true and correct and does not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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(iv) CAPITALIZATION. The Adviser has the financial resources
available to it necessary for the performance of its services and
obligations as contemplated in the Prospectus, this Agreement and under the
Investment Management Agreement.
(v) AUTHORIZATION OF AGREEMENTS; ABSENCE OF DEFAULTS AND
CONFLICTS. This Agreement and the Management Agreement have each been duly
authorized, executed and delivered by the Adviser, and the Management
Agreement constitutes a valid and binding obligation of the Adviser,
enforceable in accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity
or at law); and neither the execution and delivery of this Agreement or the
Management Agreement nor the performance by the Adviser of its obligations
hereunder or thereunder will conflict with, or result in a breach of any of
the terms and provisions of, or constitute, with or without the giving of
notice or lapse of time or both, a default under, any agreement or
instrument to which the Adviser is a party or by which it is bound, the
certificate of incorporation, the by-laws or other organizational documents
of the Adviser, or to the Adviser's knowledge, by any law, order, decree,
rule or regulation applicable to it of any jurisdiction, court, federal or
state regulatory body, administrative agency or other governmental body,
stock exchange or securities association having jurisdiction over the
Adviser or its respective properties or operations; and no consent,
approval, authorization or order of any court or governmental authority or
agency is required for the consummation by the Adviser of the transactions
contemplated by this Agreement or the Management Agreement, except as have
been obtained or may be required under the 1933 Act, the 1940 Act, the 1934
Act or state securities laws.
(vi) NO MATERIAL ADVERSE CHANGE. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred any
event which should reasonably be expected to have a material adverse effect
on the ability of the Adviser to perform its obligations under this
Agreement and the Investment 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 Adviser, threatened against or affecting the Adviser or
any "affiliated person" of the Adviser (as such term is defined in the 1940
Act) or any partners, directors, officers or employees of the foregoing,
whether or not arising in the ordinary course of business, which might
reasonably be expected to result in any material adverse change in the
condition, financial or otherwise, or earnings, business affairs or
business prospects of the Adviser, materially and adversely affect the
properties or assets of the Adviser or materially impair or adversely
affect the ability of the Adviser to function as an investment adviser or
perform its obligations under the Management Agreement, or which is
required to be disclosed in the Registration Statement and the Prospectus.
(viii) ABSENCE OF VIOLATION OR DEFAULT. The Adviser is not in
violation of its certificate of incorporation, by-laws or other
organizational documents or in default under any agreement, indenture or
instrument except for such violations or defaults that would not result in
a Material Adverse Effect on the Adviser or the Fund.
(c) OFFICER'S CERTIFICATES. Any certificate signed by any officer of the
Fund or the Adviser delivered to the Representative or to counsel for the
Underwriters shall be deemed a representation and warranty by the Fund or the
Adviser, as the case may be, to each Underwriter as to the matters covered
thereby.
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SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) AMPS. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Fund
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Fund, at the
price per share set forth in SCHEDULE B, the number of AMPS set forth in
SCHEDULE A opposite the name of such Underwriter, plus any additional number of
AMPS which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b) COMMISSION. The Fund agrees to pay to the Underwriters a commission
set forth in Schedule B as compensation to the Underwriters for their
commitments under this Agreement.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the AMPS shall be made at the offices of Clifford Chance US
LLP, New York, New York 10166, or at such other place as shall be agreed upon by
the Representative and the Fund, at 10:00 A.M. (Eastern time) on the business
day after the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business days after such date
as shall be agreed upon by the Representative and the Fund (such time and date
of payment and delivery being herein called "Closing Time").
Payment shall be made to the Fund by wire transfer of immediately available
funds to a bank account designated by the Fund, against delivery to the
Representative for the respective accounts of the Underwriters of certificates
for the AMPS to be purchased by them. It is understood that each Underwriter has
authorized the Representative, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the AMPS which it has agreed to
purchase. Xxxxxxx Xxxxx, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the AMPS to be purchased by any Underwriter whose funds have not been
received by the Closing Time but such payment shall not relieve such Underwriter
from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the AMPS shall be in
such denominations and registered in such names as the Representative may
request in writing at least one full business day before the Closing Time. The
certificates for the AMPS will be made available for examination and packaging
by the Representative in the City of New York not later than 10:00 A.M. (Eastern
time) on the business day prior to the Closing Time.
SECTION 3. Covenants.
(a) The Fund and the Adviser, jointly and severally, covenant with each
Underwriter as follows:
(i) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS. The Fund, subject to Section 3(a)(ii), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and, will notify the
Representative immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement shall become
effective, or any supplement to the Prospectus or any amended Prospectus
shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or
for additional information, and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the AMPS for
offering or sale in any jurisdiction, or of the initiation or 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
9
the form of prospectus transmitted for filing under Rule 497 was received
for filing by the Commission and, in the event that it was not, it will
promptly file such prospectus. The Fund will make every reasonable effort
to prevent the issuance of any stop order, or order of suspension or
revocation of registration pursuant to Section 8(e) of the 1940 Act, and,
if any such stop order or order of suspension or revocation of registration
is issued, to obtain the lifting thereof at the earliest possible moment.
(ii) FILING OF AMENDMENTS. The Fund will give the Representative
notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or
to the Prospectus, will furnish the Representative with copies of any such
documents a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Representative or counsel for the Underwriters shall object.
(iii) DELIVERY OF REGISTRATION STATEMENTS. The Fund has furnished
or will deliver to the Representative and counsel for the Underwriters,
without charge, signed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the Representative,
without charge, a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) for each
of the Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(iv) DELIVERY OF PROSPECTUSES. The Fund has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Fund hereby consents to
the use of such copies for purposes permitted by the 1933 Act. The Fund
will furnish to each Underwriter, without charge, during the period when in
the opinion of counsel for the Underwriter the Prospectus is required under
the 1933 Act to be delivered in connection with sales by any Underwriter or
dealer or the 1934 Act, such number of copies of the Prospectus (as amended
or supplemented) as such Underwriter may reasonably request. The Prospectus
and any amendments or supplements thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(v) CONTINUED COMPLIANCE WITH SECURITIES LAWS. If at any time
when a prospectus is required by the 1933 Act to be delivered in connection
with sales of the AMPS, any event shall occur or condition shall exist as a
result of which it is necessary, in the opinion of counsel for the
Underwriters or for the Fund, to amend the Registration Statement or amend
or supplement the Prospectus in order that the Prospectus will not include
any untrue statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at
any such time to amend the Registration Statement or amend or supplement
the Prospectus in order to comply with the requirements of the 1933 Act or
the Rules and Regulations, the Fund will promptly prepare and file with the
Commission, subject to Section 3(a)(ii), such amendment or supplement as
may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements, and
the Fund will furnish to the Underwriters such number of copies of such
amendment or supplement as the Underwriters may reasonably request.
10
(vi) BLUE SKY QUALIFICATIONS. The Fund will use its best efforts,
in cooperation with the Underwriters, to qualify the AMPS for offering and
sale under the applicable securities laws of such states and other
jurisdictions of the United States as the Representative may designate and
to maintain such qualifications in effect for a period of not less than one
year from the later of the effective date of the Registration Statement and
any Rule 462(b) Registration Statement; provided, however, that the Fund
shall not be obligated to file any general consent to service of process or
to qualify as a foreign corporation or as a dealer in AMPS in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject. In each jurisdiction in which the AMPS have been
so qualified, the Fund will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the effective date of
the Registration Statement and any Rule 462(b) Registration Statement.
(vii) RULE 158. The Fund will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(viii) USE OF PROCEEDS. The Fund will use the net proceeds received
by it from the sale of the AMPS in the manner specified in the Prospectus
under "Use of Proceeds".
(ix) REPORTING REQUIREMENTS. The Fund, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant
to the 1940 Act and the 1934 Act within the time periods required by the
1940 Act and the Rules and Regulations and the 1934 Act and the rules and
regulations of the Commission thereunder, respectively.
(x) SUBCHAPTER M. The Fund will comply with the requirements of
Subchapter M of the Code to qualify as a regulated investment company under
the Code.
(xi) NO MANIPULATION OF MARKET FOR AMPS. The Fund will not (a)
take, directly or indirectly, any action designed to cause or to result in,
or that might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Fund to facilitate the
sale or resale of the AMPS, and (b) until the Closing Date, or the Date of
Delivery, if any, (i) sell, bid for or purchase the AMPS or pay any person
any compensation for soliciting purchases of the AMPS or (ii) pay or agree
to pay to any person any compensation for soliciting another to purchase
any other Shares of the Fund.
(xii) RULE 462(b) REGISTRATION STATEMENT. If the Fund elects to
rely upon Rule 462(b), the Fund shall file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement, and the Fund shall at
the time of filing either pay to the Commission the filing fee for the Rule
462(b) Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the 1933 Act.
(xiii) ACCOUNTANT'S CERTIFICATE. The Fund will furnish to the
Underwriters, on the date on which delivery is made to the Rating Agencies,
the Accountant's Certificate (as defined in the [ ] corresponding to
the [Certificate of Dividend Coverage] and [Certificate of Eligible Asset
Coverage] (as defined in the [ ]) for the first Valuation Date (as
defined in the [ ]) following the Closing Time.
(b) Except as provided in this Agreement, the Fund will not sell, contract
to sell or otherwise dispose of any of its preferred shares of beneficial
interest of the same series as the AMPS or any securities convertible into or
exercisable or exchangeable for its preferred shares of beneficial interest of
11
the same series as the AMPS, or grant any options or warrants to purchase its
preferred shares of beneficial interest of the same series as the AMPS, for a
period of 180 days after the date of the Prospectus, without the prior written
consent of Xxxxxxx Xxxxx.
SECTION 4. Payment of Expenses.
(a) EXPENSES. The Fund will pay all expenses incident to the performance
of its obligations under this Agreement, including (i) the preparation, printing
and filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery to the Underwriters of this Agreement, any
Agreement among Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the AMPS,
(iii) the preparation, issuance and delivery of the certificates for the AMPS to
the Underwriters, including any stock or other transfer taxes and any stamp or
other duties payable upon the sale, issuance or delivery of the AMPS to the
Underwriters, (iv) the fees and disbursements of the Fund's counsel, accountants
and other advisors, (v) the qualification of the AMPS under securities laws in
accordance with the provisions of Section 3(a)(vi) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, Prospectus and any
amendments or supplements thereto, (vii) the preparation, printing and delivery
to the Underwriters of copies of the Blue Sky Survey and any supplement thereto,
(viii) the fees and expenses of any transfer agent or registrar for the AMPS,
(ix) the fees and expenses incurred in connection with the rating of the AMPS
and (x) the printing of any sales material.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section 9(a)
hereof, the Fund and the Adviser, jointly and severally, agree that they shall
reimburse the Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations.
The obligations of the several Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Fund and the Adviser
contained in Section 1 hereof or in certificates of any officer of the Fund or
the Adviser delivered pursuant to the provisions hereof, to the performance by
the Fund and the Adviser of their respective covenants and other obligations
hereunder, and to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act, no notice or order pursuant
to Section 8(e) of the 1940 Act shall have been issued, and no proceedings with
respect to either shall have been initiated or threatened by the Commission, and
any request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
Underwriters. A prospectus containing the Rule 430A Information shall have been
filed with the Commission in accordance with Rule 497 (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the Fund has
elected to rely upon Rule 434, a Term Sheet shall have been filed with the
Commission in accordance with Rule 497.
(b) OPINION OF COUNSEL FOR TRUST AND THE ADVISER. At Closing Time, the
Representative shall have received the favorable opinions, dated as of Closing
Time, of Xxxxxxx Xxxxxxx & Xxxxxxx, LLP, counsel for the Fund, and [ ],
counsel to the Adviser, in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letters for each
of the
12
other Underwriters to the effect set forth in EXHIBIT A and EXHIBIT B,
respectively, hereto and to such further effect as counsel to the Underwriters
may reasonably request.
(c) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of Clifford Chance US LLP, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in clauses [(A) (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 penultimate 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
Representative. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Fund and certificates of public officials.
(d) OFFICERS' CERTIFICATES. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Fund, whether or not arising in the ordinary course of business, and the
Representative shall have received a certificate of a duly authorized officer of
the Fund and of the chief financial or chief accounting officer of the Fund and
of the President or a Vice President or Managing Director of the Adviser, dated
as of Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Sections 1(a) and (b)
hereof are true and correct with the same force and effect as though expressly
made at and as of Closing Time, (iii) each of the Fund and the Adviser,
respectively, has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement, or order
of suspension or revocation of registration pursuant to Section 8(e) of the 1940
Act, has been issued and no proceedings for any such purpose have been
instituted or are pending or are contemplated by the Commission.
(e) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the Representative shall have received from PricewaterhouseCoopers
LLP a letter dated such date, in form and substance satisfactory to the
Representative, 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 Representative shall
have received from PricewaterhouseCoopers LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(g) RATING. The Fund shall have delivered and you shall have received
evidence satisfactory to you that the AMPS are rated 'aaa' by Xxxxx'x and 'AAA'
by S&P as of the Closing Date, and there shall not have been given any notice of
any intended or potential downgrading, or of any review for a potential
downgrading, in the rating accorded to the AMPS or any other securities issued
by the Fund, by Xxxxx'x or by S&P.
(h) ASSET COVERAGE. As of the Closing Date and assuming the receipt of the
net proceeds from the sale of the AMPS, the 1940 Act Preferred Shares Asset
Coverage and the Preferred Shares Basic Maintenance Amount (each as defined in
the [ ]) each will be met.
13
(i) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the AMPS as herein contemplated, or in order to evidence
the accuracy of any of the representations or warranties, or the fulfillment of
any of the conditions, herein contained; and all proceedings taken by the Fund
and the Adviser in connection with the organization and registration of the Fund
under the 1940 Act and the issuance and sale of the AMPS as herein contemplated
shall be satisfactory in form and substance to the Representative and counsel
for the Underwriters.
(j) TERMINATION OF AGREEMENT. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representative by notice to the Fund at any
time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7, 8 and 13 shall survive any such termination and
remain in full force and effect.
SECTION 6. Indemnification.
(a) INDEMNIFICATION OF UNDERWRITERS. The Fund and the Adviser, jointly and
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information
and the Rule 434 Information, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(e) below) any such settlement is effected with the written consent of the
Fund; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Xxxxxxx Xxxxx),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or (ii)
above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund or the
Adviser by any Underwriter through Xxxxxxx Xxxxx expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
14
(b) INDEMNIFICATION OF FUND, ADVISER, DIRECTORS AND OFFICERS. Each
Underwriter severally agrees to indemnify and hold harmless the Fund and the
Adviser, their respective directors, each of the Fund's officers who signed the
Registration Statement, and each person, if any, who controls the Fund or the
Adviser within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Fund or the Adviser by such Underwriter
through Xxxxxxx Xxxxx expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) INDEMNIFICATION FOR MARKETING MATERIALS. In addition to the foregoing
indemnification, the Fund and the Adviser also, jointly and severally, agree to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, against any and all loss, liability, claim, damage
and expense described in the indemnity contained in Section 6(a), as limited by
the proviso set forth therein, with respect to any sales material.
(d) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Xxxxxxx Xxxxx, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Fund and the Adviser. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(e) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
15
SECTION 7. Contribution.
If the indemnification provided for in Section 6 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Fund and the Adviser on the one hand and the
Underwriters on the other hand from the offering of the AMPS pursuant to this
Agreement or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Fund and the Adviser on the one hand and of the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Fund and the Adviser on the one hand
and the Underwriters on the other hand in connection with the offering of the
AMPS pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the AMPS pursuant to
this Agreement (before deducting expenses) received by the Fund and the total
underwriting discount received by the Underwriters (whether from the Fund or
otherwise), in each case as set forth on the cover of the Prospectus, or, if
Rule 434 is used, the corresponding location on the Term Sheet, bear to the
aggregate initial public offering price of the AMPS as set forth on such cover.
The relative fault of the Fund and the Adviser on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Fund or the Adviser or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Fund, the Adviser and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the AMPS underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Fund and each director of the Adviser, respectively, each
officer of the Fund who signed the Registration Statement, and each person, if
any, who controls the Fund or the Adviser, within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Fund and the Adviser, respectively. The
16
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Shares set forth opposite their
respective names in SCHEDULE A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement
or in certificates of officers of the Fund or the Adviser submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or controlling person, or
by or on behalf of the Fund or the Adviser, and shall survive delivery of the
AMPS to the Underwriters.
SECTION 9. Termination of Agreement.
(a) TERMINATION; GENERAL. The Representative may terminate this Agreement,
by notice to the Fund, at any time at or prior to Closing Time (i) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Fund or the Adviser, whether or not arising
in the ordinary course of business, or (ii) if there has occurred any material
adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Representative, impracticable or inadvisable to market the AMPS
or to enforce contracts for the sale of the AMPS, or (iii) if trading in the
shares of common stock of the Fund has been suspended or materially limited by
the Commission or the NYSE, or if trading generally on the American Stock
Exchange or the NYSE or in the Nasdaq National Market has been suspended or
materially limited, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the NASD or any other governmental
authority, or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States, or (iv) if a
banking moratorium has been declared by either Federal or New York authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7, 8 and 13 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at Closing Time or a Date of
Delivery to purchase the AMPS which it or they are obligated to purchase under
this Agreement (the "Defaulted AMPS"), the Representative shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted AMPS in such amounts as may be agreed upon and
upon the terms herein set forth; if, however, the Representative shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted AMPS does not exceed 10% of the number of
AMPS to be purchased on such date, each of the non-defaulting Underwriters shall
be obligated, severally and not jointly, to purchase the full amount thereof in
the proportions that their respective underwriting obligations hereunder bear to
the underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted AMPS exceeds 10% of the number of AMPS to
be purchased on such date, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter.
17
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representative or the Fund shall have the right to
postpone Closing Time for a period not exceeding seven days in order to effect
any required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10.
SECTION 11. Tax Disclosure.
Notwithstanding any other provision of this Agreement, from the
commencement of discussions with respect to the transactions contemplated
hereby, the Fund and the Adviser (and each employee, representative or other
agent of the Fund) may disclose to any and all persons, without limitation of
any kind, the tax treatment and tax structure (as such terms are used in
Sections 6011, 6111 and 6112 of the U.S. Code and the Treasury Regulations
promulgated thereunder) of the transactions contemplated by this Agreement and
all materials of any kind (including opinions or other tax analyses) that are
provided relating to such tax treatment and tax structure.
SECTION 12. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representative, c/x Xxxxxxx Xxxxx & Co., 4 World Financial Center, New York, New
York 10080, attention of Equity Capital Markets; and notices to the Fund or the
Adviser shall be directed, as appropriate, to the office of MBIA
Capital Management Corp. at 000 Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000,
Attention: Xxxxxxxx Xxxxx.
SECTION 13. Parties.
This Agreement shall each inure to the benefit of and be binding upon the
Underwriters, the Fund, the Adviser and their respective partners and
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Fund, the Adviser and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal Representative, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters, the Fund, the
Adviser and their respective partners and successors, and said controlling
persons and officers, directors and their heirs and legal Representative, and
for the benefit of no other person, firm or corporation. No purchaser of Shares
from any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 14. GOVERNING LAW AND TIME.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SAID STATE. UNLESS OTHERWISE EXPLICITLY PROVIDED, SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings.
The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.
18
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a binding agreement among the
Underwriters, the Fund and the Adviser in accordance with its terms.
Very truly yours,
MBIA Capital/Claymore Managed Duration
Investment Grade Municipal Fund
By:
-------------------------------------
Name:
Title:
MBIA Capital Management Corp
By:
-------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX XXXXX, XXXXXX, XXXXXX & XXXXX
INCORPORATED
X.X. Xxxxxxx & Sons, Inc.
[other co-managers]
By: XXXXXXX XXXXX, XXXXXX, XXXXXX & XXXXX
INCORPORATED
By:
---------------------------------
Authorized Signatory
For themselves and as
Representative of the
other Underwriters named
in SCHEDULE A hereto.
19
SCHEDULE A
NUMBER OF
NAME OF UNDERWRITER SHARES
------------------- ---------------
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx Incorporated [ ]
X.X. Xxxxxxx & Sons, Inc.
Total [ ]
=======
Sch A-1
SCHEDULE B
MBIA CAPITAL/CLAYMORE MANAGED DURATION INVESTMENT GRADE MUNICIPAL
FUND
[ ] Auction Market Preferred Shares of Beneficial Interest Series M7
[ ] Auction Market Preferred Shares of Beneficial Interest Series W28
Liquidation Preference $25,000 per share
1. The initial public offering price per share for the AMPS, determined
as provided in said Section 2, shall be $25,000.
2. The purchase price per share for the AMPS to be paid by the several
Underwriters shall be $25,000.
3. The commission to be paid to the Underwriters for their commitment
hereunder shall be $[ ] per share.
4. The initial dividend rate on the AMPS, Series M7 shall be ___% per
annum.
The initial dividend rate on the AMPS, Series W28 shall be ___% per
annum.
Sch B-1
Exhibit A
FORM OF OPINION OF FUND'S AND ADVISER'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
FORM OF XXXXXXX XXXXXXX & XXXXXXXX LLP OPINION
1. The Fund (A) has been duly created and is validly existing in good standing
as a statutory trust under the Delaware Statutory Trust Act, 12 Del. C. Section
3801, et seq. (the "DSTA") and, under the DSTA, the Fund's Amended and Restated
Agreement and Declaration of Trust (the "Trust Agreement"), its By-Laws and
resolutions of the Fund's Board of Trustees, the Fund has the statutory trust
power and authority to conduct its business as described in the Registration
Statement and the Prospectus and (B) filed an Application for Authority to do
business in the State of New York (which is the only jurisdiction identified by
management of the Fund to us in which the Fund owns or leases property or
operates or conducts its business) on _______ __, 2003, and so far as shown by
the records of the Department of State of the State of New York, the Fund is
still authorized to do business in the State of New York;
2. To the best of our knowledge, the Fund does not have any subsidiaries.
3. The statements made in the Prospectus under the caption "Description of
AMPS," insofar as they purport to constitute summaries of the terms of the
Fund's AMPS, constitute accurate summaries of the terms of such AMPS under the
Trust Agreement, the Fund's By-Laws and under the DSTA in all material respects.
The AMPS have been duly authorized by the Fund and, upon payment and delivery in
accordance with the
Purchase Agreement, will be validly issued by the Fund,
fully paid and nonassessable; and no holder of the AMPS is or will be subject to
personal liability by reason of being such a holder. There are no preemptive or
other similar rights under federal or New York law or under the DSTA to
subscribe for or purchase AMPS upon the issuance thereof by the Fund. There are
no preemptive or other rights to subscribe for or to purchase any shares of
beneficial interest of the Fund's pursuant to the Trust Agreement, the Fund's
By-Laws or any agreement or other instrument filed or incorporated by reference
as an exhibit to the Registration Statement or otherwise known to us;
4. (A) Each of the
Purchase Agreement, the Investment Advisory Agreement dated
as of August 21, 2003 between the Fund and the Investment Adviser and the Waiver
Reliance Letter dated as of August 26, 2003 between the Fund and the Investment
Adviser (collectively, the "Investment Advisory Agreement"), the Custody
Agreement dated as of August 26, 2003 between the Fund and The Bank of New York
(the "Custody Agreement"), the Stock Transfer Agency Agreement dated as of
August 26, 2003 between the Fund and The Bank of New York (the "Transfer Agency
Agreement") and the Auction Agency Agreement dated as of November [ ], 2003
between [ ] (the "Auction Agency Agreement"; collectively with the
Investment Advisory Agreement, the Custody Agreement and the Stock Transfer
Agreement, the "Fund Agreements") have been duly authorized, executed and
delivered by the Fund and (B) each of the Fund Agreements, assuming that each is
the valid and legally binding obligation of the other parties thereto, is a
valid and legally binding agreement of the Fund, enforceable against the Fund in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and by 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 the
enforceability thereof may be limited
A-1
by considerations of public policy and provided that we express no opinion as to
the reasonableness of the compensation to be paid under the Investment Advisory
Agreement;
5. The issue and sale of the Shares by the Fund and the compliance by the Fund
with the provisions of the
Purchase Agreement and the Fund Agreements will not
breach or result in a default under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument filed or incorporated by reference as
an exhibit to the Registration Statement, nor will such action violate the Trust
Agreement, the Fund's By-Laws, or any federal or New York statute or any rule or
regulation thereunder or any law, rule or regulation of the State of Delaware
applicable to the Fund or order known to us issued pursuant to any federal or
New York statute or the DSTA by any court or governmental agency or body having
jurisdiction over the Fund or properties; any of its
6. No consent, approval, authorization, order, registration or qualification
of or with any federal or New York governmental agency or body or any
governmental authority or agency of the State of Delaware or, to our knowledge,
any federal or New York court or any Delaware court acting pursuant to the DSTA
is required for the issue and sale of the Shares by the Fund and the compliance
by the Fund with all of the provisions of the
Purchase Agreement and the Fund
Agreements, except for the filing by the Fund of an Application for Authority to
do business in the State of New York, the registration of the Shares under the
1933 Act and the 1940 Act pursuant to the Registration Statement and under the
Securities Exchange Act of 1934, as amended, pursuant to the Fund's Registration
Statement on Form 8-A, both of which have been filed and have become effective,
the notification of registration of the Fund as an investment company under the
1940 Act on Form N-8A and such consents, approvals, authorizations,
registrations or qualifications as may be required by the New York Stock
Exchange under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters;
7. To our knowledge, other than as described or contemplated in the
Prospectus, there are no legal or governmental proceedings pending or threatened
against the Fund, or to which the Fund or any of its properties is subject,
before or brought by any court or governmental agency or body, domestic or
foreign, which might reasonably be expected to materially and adversely affect
the properties or assets of the Fund or the consummation of the transactions
which are required to be described in the Prospectus or the performance by the
Fund of its obligations thereunder;
8. The statements made in the Prospectus under the captions "Description of
AMPS" and "Taxes," insofar as they purport to constitute summaries of matters of
United States federal tax law and regulations or legal conclusions with respect
thereto, constitute accurate summaries of the matters described therein in all
material respects;
9. Each of the Fund Agreements complies as to form in all material respects
with all applicable provisions of the 1940 Act, the Investment Advisers Act of
1940, as amended (the "Advisers Act"), the rules and regulations of the
Commission under the 1940 Act (the "1940 Act Rules and Regulations") and the
rules and regulations of the Commission under the Advisers Act (except that we
express no opinion as to the reasonableness or fairness of the compensation
payable under such agreements);
10. The Fund is duly registered with the Commission under the 1940 Act and the
1940 Act Rules and Regulations 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 threfor initiated
or threatened by the Commission;
11. To the best of our knowledge, no person is serving as an officer, director
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
A-2
Statement and Prospectus (or any amendment or supplement to either of them), to
the best of our knowledge, no director of the Fund is an "interested person" (as
defined in the 1940 Act) of the Fund or an "affiliated person" (as defined in
the 1940 Act) of an Underwriter.
We have been orally advised by the staff of the Commission that the Registration
Statement has become effective under the 1933 Act and the 1933 Act Rules and
Regulations and that no stop order suspending the effectiveness of the
Registration Statement or order pursuant to Section 8(e) of the 1940 Act has
been issued and no proceedings for either such purpose have been instituted or
threatened by the Commission; the Prospectus was filed on August ____, 2003
pursuant to Rule 497(h) of the 1933 Act Rules and Regulations,.
We have not independently verified the accuracy, completeness or fairness of the
statements made or included in the Registration Statement or the Prospectus and
take no responsibility therefor, except as and to the extent set forth in
paragraphs 2 and 10 above. In the course of the preparation by the Fund of the
Registration Statement and the Prospectus, we participated in conferences with
certain officers and employees of the Fund, the Investment Adviser, with
representatives of [ ] and with counsel to the Investment Adviser. Based
upon our examination of the Registration Statement and the Prospectus, our
investigations made in connection with the preparation of the Registration
Statement and the Prospectus and our participation in the conferences referred
to above, (i) we are of the opinion that the Registration Statement, as of its
effective date, and the Prospectus, as of October [ ], 2003, complied as
to form in all material respects with the requirements of the 1933 Act and the
1940 Act and the applicable rules and regulations of the Commission thereunder,
except that in each case we express no opinion with respect to the financial
statements or other financial contained or incorporated by reference in the
Registration Statement or the Prospectus, and (ii) we have no reason to believe
that the Registration Statement, as of its effective date, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading or that the Prospectus, as of [ ], 2003 and as of the date
hereof, contained or contains any untrue statement of a material fact or omitted
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that in each case we express no belief with respect to the
financial statements or other financial contained or incorporated by reference
in the Registration Statement or the Prospectus.
A-3
EXHIBIT B
FORM OF MBIA CAPITAL MANAGEMENT CORP.'S INTERNAL COUNSEL OPINION
1. Based on Certificates of the Secretary of State of the State of Delaware,
the Investment Adviser has been duly incorporated and is validly existing as a
corporation under the laws of the State of Delaware with full corporate power
and authority to conduct its business as described in the Registration Statement
and the Prospectus;
2. The Adviser 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.
3. The Investment Adviser is duly registered with the Commission as an
investment adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act") and is not prohibited by the Advisers Act, the rules and
regulations of the Commission under the Advisers Act (the "Advisers Act Rules
and Regulations"), the 1940 Act or the rules and regulations of the Commission
under the 1940 Act (the "1940 Act Rules and Regulations") from acting under the
Investment Advisory Agreement dated as of August 26, 2003 between the Fund and
the Investment Adviser and the Waiver Reliance Letter dated as of August 26,
2003 between the Fund and the Investment Adviser (collectively, the "Advisory
Agreement) for the Fund as contemplated by the Prospectus;
4. Each of the
Purchase Agreement and the Advisory Agreement (collectively,
the "Adviser Agreements") has been duly authorized, executed and delivered by
the Investment Adviser, and each of the Advisory Agreement and the Services
Agreement complies as to form in all material respects with all applicable
provisions of the 1940 Act, the 1940 Act Rules and Regulations, the Advisers Act
and the Advisers Act Rules and Regulations and, assuming that each such
agreement is the valid and legally binding agreement of the other parties
thereto, is a valid and legally binding agreement of the Investment Adviser,
enforceable against the Investment Adviser in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and by 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 the enforceability thereof may be limited by
considerations of public policy, and provided that no opinion is expressed
herein with respect to the reasonableness of the compensation to be paid under
the Investment Advisory Agreement;
5. Neither the execution, delivery or performance of the Adviser Agreements by
the Investment Adviser nor consummation by the Investment Adviser of the
transactions contemplated thereby will breach or result in a default under any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Investment Adviser is a party or by which its properties
are bound, nor will such action violate the certificate of incorporation or
by-laws of the Investment Adviser, or any federal statute or the Delaware
General Corporation Law or any rules or regulations thereunder, or order known
to me issued pursuant to any federal statute or the Delaware General Corporation
Law or by any court or governmental agency or body having jurisdiction over the
Investment Adviser or any of its properties, except where such breach, default
or violation would not reasonably be expected to have a material adverse effect
on the ability of the Investment Adviser to perform its obligations under the
Adviser Agreements;
6. To the best of my knowledge, the Adviser is not in violation of its
certificate of incorporation, by-laws or other organizational documents and no
default by the Adviser exists in the due performance or
A-4
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.
7. No consent, approval, authorization, order, registration, filing or
qualification of or with any federal governmental agency or body or any Delaware
governmental agency or body acting pursuant to the Delaware General Corporation
Law or, to my knowledge, any federal court or any Delaware court acting pursuant
to the Delaware General Corporation Law is required on the part of the
Investment Adviser for the execution, delivery and performance by the Investment
Adviser of the Adviser Agreements, except such consents, approvals,
authorizations, orders, registrations, filings or qualifications as have been
obtained or made prior to the date hereof;
8. To my knowledge, there are no legal or governmental proceedings pending or
threatened against the Investment Adviser, or to which the Investment Adviser or
any of its properties is subject, which are required to be described in the
Registration Statement or Prospectus that are not described as required or that
would, under Section 9 of the 1940 Act, make the Investment Adviser ineligible
to act as the Fund's investment adviser.
I have not independently verified the accuracy, completeness or fairness of the
statements made or included in the Registration Statement or the Prospectus and
take no responsibility therefor. In the course of the preparation by the Fund of
the Registration Statement and the Prospectus, I participated in conferences
with certain officers and employees of the Fund, and the Investment Adviser and
with counsel to the Fund. Based upon my examination of the Registration
Statement and the Prospectus, my investigations made in connection with the
preparation of the Registration Statement and the Prospectus and my
participation in the conferences referred to above, I have no reason to believe
that the Registration Statement, as of its effective date, contained any untrue
statement of a material fact concerning the Investment Adviser or omitted to
state any material fact concerning the Investment Adviser required to be stated
therein or necessary in order to make the statements therein not misleading or
that the Prospectus, as of its date and as of the date hereof, contained or
contains any untrue statement of a material fact concerning the Investment
Adviser or omitted or omits to state any material fact concerning the Investment
Adviser necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that in each
case I express no belief with respect to the financial statements or other
financial or statistical data contained or incorporated by reference in the
Registration Statement or the Prospectus.
A-5
