[ ] COMMON SHARES
MBIA CAPITAL/CLAYMORE MANAGED DURATION
INVESTMENT GRADE MUNICIPAL FUND
UNDERWRITING AGREEMENT
August ___, 2003
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇
& ▇▇▇▇▇ Incorporated
Advest, Inc.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., Incorporated
BB&T Capital Markets, a division of
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated
J.J.B. ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
McDonald Investment, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
Quick & ▇▇▇▇▇▇, Inc.
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc.
The ▇▇▇▇▇▇▇ Companies Incorporated
SunTrust ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ Fargo Securities LLC
As Representatives of the Several Underwriters
c/o ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned, MBIA Capital/Claymore Managed Duration Investment Grade
Municipal Fund, a Delaware statutory trust, (the "Fund") and MBIA Capital
Management Corp., a Delaware corporation (the "Adviser"), address you as
Underwriters and as the Representatives (the "Representatives") of each of the
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other persons, firms and corporations, if any, listed in Schedule I hereto
(herein collectively called "Underwriters"). The Fund proposes to issue and sell
an aggregate of _____________ shares of its common shares of beneficial
interest, $.001 par value per share (the "Firm Shares"), to the several
Underwriters. The Fund also proposes to sell upon the terms and conditions
contained in Section 2 hereof, up to _____________ additional common shares (the
"Additional Shares" which together with the Firm Shares are hereinafter
collectively referred to as the "Shares").
The Fund and the Adviser wish to confirm as follows their agreements with
you and the other several Underwriters on whose behalf you are acting in
connection with the several purchases of the Shares by the Underwriters.
The Fund has entered into an investment advisory agreement with the Adviser
dated as of August ___, 2003 (including the Waiver Reliance Letter of even date,
the "Advisory Agreement"), a Custody Agreement with The Bank of New York dated
as of August ___, 2003 (the "Custodian Contract"), a Stock Transfer Agency
Agreement with The Bank of New York dated as of August ___, 2003 (the "Transfer
Agency Agreement") and an Underwriter Participation Agreement dated as of August
___, 2003 among the Fund, the Adviser and Claymore Securities, Inc. (the
"Underwriter Participation Agreement"). In addition, the Fund has adopted an
automatic dividend reinvestment plan (the "Dividend Reinvestment Plan"),
pursuant to which holders of Shares shall have their dividends automatically
reinvested in additional common shares of the Fund unless they elect to receive
such dividends in cash. Collectively, the Advisory Agreement, Custodian
Contract, Transfer Agency Agreement, the Underwriter Participation Agreement and
the Dividend Reinvestment Plan are herein referred to as the "Fund Agreements."
In addition, the Adviser has entered into a Corporate Finance Services And
Consulting Agreement with ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. dated as of August ___, 2003
(the "Corporate Finance Services And Consulting Agreement"). This Underwriting
Agreement is herein referred to as the "Agreement."
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1. REGISTRATION STATEMENT AND PROSPECTUS. The Fund has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended (the
"1933 Act"), the Investment Company Act of 1940, as amended (the "1940 Act"),
and the rules and regulations of the Commission under the 1933 Act (the "1933
Act Rules and Regulations") and the 1940 Act (the "1940 Act Rules and
Regulations" and together with the 1933 Act Rules and Regulations, the "Rules
and Regulations") a registration statement on Form N-2 (File No. 333-105539
under the 1933 Act) (the "registration statement"), including a prospectus and
statement of additional information relating to the Shares, and a notification
of registration of the Fund as an investment company under the 1940 Act on Form
N-8A (File No. 811-21359 under the 1940 Act, the "1940 Act Notification"), and
may pursuant to the Rules and Regulations prepare and file an additional
registration statement relating to a portion of the Shares pursuant to Rule
462(b) of the 1933 Act Rules and Regulations (a "Rule 462 registration
statement"). The term "Registration Statement" as used in this Agreement means
(i) the registration statement (including all financial schedules and exhibits),
as amended at the time it becomes effective under the 1933 Act or (ii) (if the
registration statement became effective under the 1933 Act prior to the
execution of this Agreement) the registration statement (including all financial
schedules and exhibits), as amended or supplemented thereto, prior to the
execution of this Agreement and including any information deemed to be included
by Rule 430A under the 1933 Act Rules and Regulations. If it is contemplated, at
the time this Agreement is executed, that a post-effective amendment to the
registration statement will be filed under the 1933 Act and must be declared
effective before the offering of Shares may commence, the term "Registration
Statement" as used in this Agreement means the Registration Statement as amended
by said post-effective amendment. If the Fund has filed a Rule 462 registration
statement, then the reference herein to the term "Registration Statement" shall
include such Rule 462 registration statement. The term "Prospectus" as used in
this Agreement means the prospectus and statement of additional information in
the forms included in the
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Registration Statement or, if the prospectus and statement of additional
information included in the Registration Statement omit information in reliance
on Rule 430A under the 1933 Act Rules and Regulations and such information is
included in a prospectus and statement of additional information filed with the
Commission pursuant to Rule 497(h) under the 1933 Act Rules and Regulations, the
term "Prospectus" as used in this Agreement means the prospectus and statement
of additional information in the forms included in the Registration Statement as
supplemented by the addition of the information contained in the prospectus
(including the statement of additional information) filed with the Commission
pursuant to Rule 497(h). The term "Prepricing Prospectus" as used in this
Agreement means the prospectus and statement of additional information subject
to completion in the form included in Pre-Effective Amendment No. 1 to the
registration statement at the time of its filing with the Commission on July 24,
2003 and as such prospectus and statement of additional information shall have
been amended from time to time prior to the date of the Prospectus, together
with any other prospectus (including any other statement of additional
information) relating to the Fund other than the Prospectus. The terms
"Registration Statement," "Prospectus" and "Prepricing Prospectus" shall also
include any financial statements and other information included or incorporated
by reference therein.
The Fund has furnished the Representatives with copies of such registration
statement, each amendment to such registration statement filed with the
Commission and each Prepricing Prospectus.
2. AGREEMENTS TO SELL AND PURCHASE. The Fund hereby agrees, subject to
all the terms and conditions set forth herein, to issue and to sell to each
Underwriter and, upon the basis of the representations, warranties and
agreements of the Fund, and the Adviser herein contained and subject to all of
the other terms and conditions set forth herein, each Underwriter agrees,
severally and not jointly, to purchase from the Fund at a purchase price of
$____ per Share (the "Price per Share"), the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto.
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The Fund also agrees, subject to all the terms and conditions set forth
herein, to issue and to sell to the Underwriters and, upon the basis of the
representations, warranties and agreements of the Fund and the Adviser herein
contained and subject to all of the other terms and conditions set forth herein,
the Underwriters shall have the right to purchase from the Fund, at the Price
per Share, pursuant to an option (the "over-allotment option") which may be
exercised, in whole or in part, at any time and from time to time prior to 9:00
A.M., New York City time, on the 45th day after the date of the Prospectus (or
if such 45th day shall be a Saturday or a Sunday or a holiday, on the next
business day thereafter when the New York Stock Exchange (the "NYSE") is open
for trading), all or a portion of the Additional Shares. Additional Shares may
be purchased solely for the purpose of covering over-allotments made in
connection with the offering of the Shares. This option may be exercised by the
Representatives on behalf of the several Underwriters by written notice to the
Fund. Such notice shall set forth the aggregate number of Additional Shares as
to which the option is being exercised, and the date and time when the
Additional Shares are to be delivered (an "Option Closing Date"). Upon any
exercise of the over-allotment option, upon the basis of the representations,
warranties and agreements of the Fund and the Adviser, herein contained and
subject to all of the other terms and conditions set forth herein, each
Underwriter agrees, severally and not jointly, to purchase from the Fund the
number of Additional Shares specified in such notice (subject to such
adjustments as you may determine to avoid fractional shares) which bears the
same proportion to the number of such Additional Shares to be purchased by the
Underwriters as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I (or such number of Firm Shares increased as set forth
in Section 10 hereof) bears to the aggregate number of Firm Shares.
3. TERMS OF PUBLIC OFFERING. The Fund and the Adviser have been advised
by you that the Underwriters propose to make a public offering of their
respective portions of the Shares as soon after the Registration Statement and
this
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Agreement have become effective as in your judgment is advisable and initially
to offer the Shares upon the terms set forth in the Prospectus.
4. DELIVERY OF SHARES AND PAYMENTS THEREFOR.
(a) Delivery to the Underwriters of and payment to the Fund for the
Firm Shares and compensation of the Underwriters with respect thereto shall
be made at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois),
or those of its affiliated legal practice entity Skadden, Arps, Slate
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, or through the facilities of The Depository Trust
Company or another mutually agreeable facility at 8:00 a.m. central time on
August ___, 2003 (the "Closing Date"). The place of closing for the Firm
Shares and the Closing Date may be varied by agreement between the
Representatives and the Fund.
(b) Delivery to the Underwriters of and payment to the Fund for any
Additional Shares to be purchased by the Underwriters and compensation of
the Underwriters with respect thereto shall be made in the same manner and
at the same office as the payment for the Firm Shares at such time on such
Option Closing Date as is specified in the written notice of exercise as
set forth in Section 2, which may be the same as the Closing Date, but
shall in no event be earlier than the Closing Date nor earlier than two nor
later than three business days after the giving of the notice hereinafter
referred to, as shall be specified in a written notice from you on behalf
of the Underwriters to the Fund of the Underwriters' determination to
purchase a number, specified in said notice, of Additional Shares. The
place of closing for any Additional Shares and the Option Closing Date for
such Additional Shares may be varied by agreement between you and the Fund.
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(c) The Shares shall be registered in such names (including The
Depository Trust Company) and in such denominations as the Underwriters
shall request prior to 1:00 P.M., New York City time, (i) with respect to
the Firm Shares, on the second business day preceding the Closing Date (ii)
with respect to the Additional Shares, on the day of the giving of the
written notice in respect of such Additional Shares. Certificates for
shares will be made available to you in New York City for inspection and
packaging not later than 9:00 A.M., New York City time, on the business day
next preceding the Closing Date or any Option Closing Date, as the case may
be. The certificates evidencing the Firm Shares and any Additional Shares
to be purchased hereunder shall be delivered to you on the Closing Date or
the Option Closing Date, as the case may be, against payment of the
purchase price therefor in immediately available funds.
5. AGREEMENTS OF THE FUND AND THE ADVISER. The Fund and the Adviser,
jointly and severally, agree with the several Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment to
the Registration Statement to be declared effective under the 1933 Act
before the offering of the Shares may commence, the Fund will use its best
efforts to cause the registration statement or such post-effective
amendment to become effective under the 1933 Act as soon as possible. If
the Registration Statement has become effective and the Prospectus
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contained therein omits certain information at the time of effectiveness
pursuant to Rule 430A of the 1933 Act Rules and Regulations, the Fund will
file a prospectus including such information pursuant to Rule 497(h) of the
1933 Act Rules and Regulations no later than the second business day
following the earlier of the date of the determination of the offering
price of the Shares or the date the Prospectus is first used after the
effective date of the Registration Statement. If the Registration Statement
has become effective and the Prospectus contained therein does not so omit
such information, the Fund will file a Prospectus or certification pursuant
to Rule 497(c) or (j), as the case may be, of the 1933 Act Rules and
Regulations no later than the fifth business day following the date of the
later of the effective date of the Registration Statement or the
commencement of the public offering of the Shares after the effective date
of the Registration Statement. The Fund will advise you promptly and, if
requested by you, will confirm such advice in writing (i) when the
Registration Statement or such post-effective amendment has become
effective, (ii) when the Prospectus has been timely filed pursuant to Rule
497(c) or Rule 497(h) of the 1933 Act Rules and Regulations or (iii) when
the certification permitted pursuant to Rule 497(j) of the 1933 Act Rules
and Regulations has been timely filed, whichever is applicable.
(b) The Fund, and in the case of (iii)(B) below, the Adviser, will
advise you promptly and, if requested by you, will confirm such advice in
writing: (i) of any request made by the Commission for amendment of or a
supplement to the Registration Statement, the Prospectus or any Prepricing
Prospectus (or any amendment or supplement to any of the foregoing) or for
additional information, (ii) of the issuance by the Commission, the
National Association of Securities Dealers, Inc. (the "NASD"), any state
securities commission, any national securities exchange, any arbitrator,
any court or any other governmental, regulatory, self-regulatory or
administrative agency or any official of any order suspending the
effectiveness of the Registration Statement, prohibiting or suspending the
use of the Prospectus, any Prepricing Prospectus or any sales material (as
hereinafter defined), of any notice pursuant to Section 8(e) of the 1940
Act, of the suspension of qualification of the Shares for offering or sale
in any jurisdiction, or the initiation or contemplated initiation of any
proceeding for any such purposes, (iii) of receipt (within three years
after the date of this Agreement) by (A) the Fund (or by any affiliate of
the Fund or attorney of the Fund) of any
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other material communication from the Commission, or (B) the Fund or the
Adviser (or by any affiliate of the Fund or the Adviser or attorney of the
Fund or the Adviser) of any other material communication from the
Commission, the NASD, any state securities commission, any national
securities exchange, any arbitrator, any court or any other governmental,
regulatory, self-regulatory or administrative agency or any official, which
communication relates to the Registration Statement, the 1940 Act
Notification, the Prospectus, any Prepricing Prospectus, any sales material
(as hereinafter defined) (or any amendment or supplement to any of the
foregoing) or this Agreement or any of the Fund Agreements and (iv) within
the period of time referred to in paragraph (f) below, of any material,
adverse change in the condition (financial or other), general affairs,
business, properties, net assets (other than as a result of changes in
market conditions generally) or results of operations of the Fund or of 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 or the Advisory Agreement, as the case may be, or of the
happening of any event which makes any statement of a material fact made in
the Registration Statement, the Prospectus, any Prepricing Prospectus or
any sales material (or any amendment or supplement to any of the foregoing)
untrue or which requires the making of any additions to or changes in the
Registration Statement, the Prospectus, any Prepricing Prospectus or any
sales material (or any amendment or supplement to any of the foregoing) in
order to state a material fact required by the 1933 Act, the 1940 Act or
the Rules and Regulations to be stated therein or necessary in order to
make the statements therein (in the case of a prospectus or any sales
material, in light of the circumstances under which they were made) not
misleading or of the necessity to amend or supplement the Registration
Statement, the Prospectus, any Prepricing Prospectus or any sales material
(or any amendment or supplement to any of the foregoing) to comply with the
1933 Act, the 1940 Act, the Rules and Regulations or any other law or order
of any court or
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regulatory body. If at any time the Commission shall issue any order
suspending the effectiveness of the Registration Statement, prohibiting or
suspending the use of the Prospectus or any sales material (or any
amendment or supplement to any of the foregoing) or suspending the
qualification of the Shares for offering or sale in any jurisdiction, the
Fund and the Adviser will use their respective reasonable best efforts to
obtain the withdrawal of such order at the earliest possible time. If at
any time the NASD, any national securities exchange, any state securities
commission, any arbitrator, any court or any other governmental,
regulatory, self-regulatory or administrative agency or any official shall
issue any order suspending the effectiveness of the Registration Statement,
prohibiting or suspending the use of the Prospectus or any sales material
(or any amendment or supplement to any of the foregoing) or suspending the
qualification of the Shares for offering or sale in any jurisdiction, the
Fund and the Adviser will use their respective reasonable best efforts to
obtain the withdrawal of such order at the earliest possible time.
(c) The Fund will furnish to you, without charge, three signed copies
of the registration statement and the 1940 Act Notification as originally
filed with the Commission and of each amendment thereto, including
financial statements and all exhibits thereto and will also furnish to you,
without charge, such number of conformed copies of the registration
statement as originally filed and of each amendment thereto, with or
without exhibits, as you may reasonably request.
(d) The Fund will not (i) file any amendment to the registration
statement or the Registration Statement or make any amendment or supplement
to the Prospectus, any Prepricing Prospectus or any sales material (or any
amendment or supplement to any of the foregoing) of which you shall not
previously have been advised or to which you shall reasonably object within
a reasonable time after being so advised or (ii) so long as, in the opinion
of counsel for the Underwriters, a Prospectus is
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required to be delivered in connection with sales by any Underwriter or
dealer, file any information, documents or reports pursuant to the 1933
Act, the 1940 Act or the Securities Exchange Act of 1934, as amended (the
"1934 Act"), without delivering a copy of such information, documents or
reports to you, as Representatives of the Underwriters, prior to or
concurrently with such filing.
(e) Prior to the execution and delivery of this Agreement, the Fund
has delivered to you, without charge, in such quantities as you have
reasonably requested, copies of each form of any Prepricing Prospectus. The
Fund consents to the use, in accordance with the provisions of the 1933 Act
and with the securities or Blue Sky laws of the jurisdictions in which the
Shares are offered by the several Underwriters and by dealers, prior to the
date of the Prospectus, of the Prepricing Prospectus included in
Pre-Effective Amendment No. 1 to the registration statement so furnished by
the Fund.
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time, for such period as in the
opinion of counsel for the Underwriters a prospectus is required by the
1933 Act to be delivered in connection with sales of Shares by any
Underwriter or dealer, the Fund will expeditiously deliver to each
Underwriter and each dealer, without charge, as many copies of the
Prospectus (and of any amendment or supplement thereto) as you may
reasonably request. The Fund consents to the use of the Prospectus (and of
any amendments or supplements thereto) in accordance with the provisions of
the 1933 Act and with the securities or Blue Sky laws of the jurisdictions
in which the Shares are offered by the several Underwriters and by all
dealers to whom Shares may be sold, both in connection with the offering or
sale of the Shares and for such period of time thereafter as the Prospectus
is required by law to be delivered in connection with sales of Shares by
any Underwriter or dealer. If during such period of time any event shall
occur that in the judgment of the Fund
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or in the opinion of counsel for the Underwriters is required to be set
forth in the Registration Statement or the Prospectus (as then amended or
supplemented) or should be set forth therein in order to make the
statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading or if it is
necessary to supplement or amend the Registration Statement or the
Prospectus to comply with the 1933 Act, the 1940 Act, the Rules and
Regulations or any other law, rule or regulation, the Fund will forthwith
notify you of such event, prepare and, subject to the provisions of
paragraph (d) above, promptly file with the Commission an appropriate
amendment or supplement thereto and will expeditiously furnish to the
Underwriters and dealers, without charge, such number of copies thereof as
they may reasonably request; provided, that if the amendment or supplement
is required solely as a result of a misstatement in or omission from any
information provided to the Fund by the Underwriters in writing expressly
for use in the Registration Statement or the Prospectus, the Fund may
deliver such amendment or supplement at cost. In the event that the
Registration Statement or the Prospectus is to be amended or supplemented,
the Fund, if requested by you, will promptly issue a press release
announcing or disclosing the matters to be covered by the proposed
amendment or supplement or will otherwise appropriately disseminate the
required information in a manner reasonably acceptable to you.
(g) The Fund will cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of the
Shares for offering and sale by the several Underwriters and by dealers
under the securities or Blue Sky laws of such jurisdictions as you may
designate and will file such consents to service of process or other
documents necessary or appropriate in order to effect such registration or
qualification; provided that in no event shall the Fund be obligated to
qualify to do business in any jurisdiction where it is not now so qualified
or to take any action which would subject it to service of
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process in suits, other than those arising out of the offering or sale of
the Shares, in any jurisdiction where it is not now so subject.
(h) The Adviser will make generally available to the Underwriters its
staff, for assistance with roadshow presentations as the Underwriters may
reasonably request.
(i) As soon as practicable, but in no event later than the last day
of the 18th full calendar month following the calendar quarter in which the
effective date of the Registration Statement falls, the Fund will make
generally available to its security holders an earnings statement, which
need not be audited, which earnings statement shall satisfy the provisions
of Section 11(a) of the 1933 Act and Rule 158 of the 1933 Act Rules and
Regulations.
(j) The Fund will comply with the undertaking set forth in paragraph
6 of Item 33 of Part C of the Registration Statement.
(k) During the period of three years hereafter, the Fund will furnish
or will have furnished to you (i) as soon as available, a copy of each
report of the Fund mailed to shareholders or filed with the Commission
(other than reports on Form N-CSR) or furnished to the NYSE and (ii) from
time to time such other information concerning the Fund as you may
reasonably request.
(l) If this Agreement shall terminate or be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 10 hereof or by notice given by you terminating
this Agreement pursuant to Section 11 hereof) or if this Agreement shall be
terminated by the Underwriters because of (i) any failure or refusal on the
part of the Fund or the Adviser to comply with any term or fulfill any of
the conditions of this Agreement required to be complied with or fulfilled
by them, or (ii) the non-occurrence of any other condition required under
the
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terms of this Agreement to occur, in each case in connection with the
purchase, sale and public offering of the Shares, the Fund and the Adviser,
jointly and severally, agree to reimburse the Representatives for all
out-of-pocket expenses not to exceed the amounts set forth in Section 12 of
this Agreement (including reasonable fees and expenses of counsel for the
Underwriters) incurred by you in connection herewith.
(m) The Fund will direct the investment of the net proceeds of the
offering of the Shares (i) in accordance with the description set forth in
the Prospectus and (ii) in such a manner as to comply with the investment
objectives, policies and restrictions of the Fund as described in the
Prospectus.
(n) The Fund will advise you of the time and manner of its filing of
the requisite copies of the Prospectus with the Commission in a timely
fashion pursuant to Rule 497(c) or Rule 497(h) of the 1933 Act Rules and
Regulations, whichever is applicable or, if applicable, of the filing in a
timely fashion the certification permitted by Rule 497(j) of the 1933 Act
Rules and Regulations.
(o) The Fund will use its reasonable best efforts to have the shares
listed, subject to notice of issuance, on the NYSE concurrently with the
effectiveness of the Registration Statement and to comply with the rules or
regulations of such exchange.
(p) Except as provided in this Agreement or pursuant to any dividend
reinvestment plan of the Fund, none of the Fund, the Adviser, or their
respective officers, directors or trustees will sell, contract to sell or
otherwise dispose of, any common shares of beneficial interest of the Fund
or any securities convertible into or exercisable or exchangeable for such
common shares or grant any options or warrants to purchase such common
shares, for a period of 180 days after the date of the Prospectus, without
the prior written consent of the Representatives.
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(q) Except as stated in this Agreement and in the Prospectus, none of
the Fund or the Adviser will take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Shares.
(r) The Fund will direct the investment of the proceeds of the
offering of the Shares so as to comply with the requirements of Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"), to qualify
as a regulated investment company under the Code.
6. REPRESENTATIONS AND WARRANTIES OF THE FUND AND THE ADVISER. The Fund
and the Adviser, jointly and severally, represent and warrant to each
Underwriter that:
(a) Each Prepricing Prospectus included as part of the registration
statement or as part of any amendment or supplement thereto or filed
pursuant to Rule 497 of the 1933 Act Rules and Regulations, complied when
so filed in all material respects with the provisions of the 1933 Act, the
1940 Act and the Rules and Regulations and the Commission has not issued
any order preventing or suspending the use of any Prepricing Prospectus.
(b) The registration statement in the form in which it became or
becomes effective and also in such form as it may be when any
post-effective amendment thereto shall become effective, the Prospectus and
any amendment or supplement thereto when filed with the Commission under
Rule 497 of the 1933 Act Rules and Regulations and the 1940 Act
Notification when originally filed with the Commission and any amendment or
supplement thereto when filed with the Commission complied or will comply
in all material respects with the provisions of the 1933 Act, the 1940 Act
and the Rules and Regulations and each of the Registration Statement and
the Prospectus (or any supplement or amendment to either of them) did not
or will not at any
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such times contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading; except that this
representation and warranty does not apply to statements in or omissions
from the Registration Statement and the Prospectus (and any amendment or
supplement to either of them) made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Fund in writing by
or on behalf of any Underwriter through you expressly for use therein.
(c) All the outstanding shares of beneficial interest of the Fund
have been duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or similar rights, the Shares
have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable and free of any
preemptive or similar rights and the common shares of beneficial interest
of the Fund conform in all material respects to the description thereof in
the Registration Statement or the Prospectus (or any amendment or
supplement to either of them). Except for the Shares and the common shares
of beneficial interest issued in accordance with Section 14(a) of the 1940
Act, no other shares of beneficial interest are issued or outstanding and
the capitalization of the Fund conforms in all material respects to the
description thereof in the Registration Statement and the Prospectus (or
any amendment or supplement to either of them).
(d) The Fund has been duly created and is validly existing in good
standing as a statutory trust under the laws of the State of Delaware, with
full statutory trust power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement to either of
them) and is duly
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registered and qualified to conduct business and is in good standing in
each jurisdiction or place where the nature of its properties or the
conduct of its business requires such registration or qualification, except
where the failure so to register or to qualify, either alone or in the
aggregate, does not have or would not reasonably be expected to have a
material adverse effect on the condition (financial or otherwise),
business, properties, business prospects, net assets or results of
operations, whether or not occurring in the ordinary course of business (a
"Material Adverse Effect") of the Fund. The Fund has no subsidiaries.
(e) There are no legal or governmental proceedings pending or, to the
knowledge of the Fund, threatened, against the Fund, or to which the Fund
or any of its properties is subject, that are required to be described in
the Registration Statement or the Prospectus (and any amendment or
supplement to either of them) but are not described as required and there
are no agreements, contracts, indentures, leases or other instruments that
are required to be described in the Registration Statement or the
Prospectus (or any amendment or supplement to either of them) or to be
filed as an exhibit to the Registration Statement that are not described or
filed as required by the 1933 Act, the 1940 Act or the Rules and
Regulations.
(f) The Fund is not in violation of its Amended and Restated
Agreement and Declaration of Trust ("Declaration"), by-laws or other
organizational documents or any law, ordinance, administrative or
governmental rule or regulation applicable to the Fund or of any decree of
the Commission, the NASD, any state securities commission, any national
securities exchange, any arbitrator, any court or any other governmental,
regulatory, self-regulatory or administrative agency or any other agency or
any body or official having jurisdiction over the Fund or in breach or
default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any agreement,
17
indenture, lease or other instrument to which the Fund is a party or by
which it or any of its properties may be bound, except for such violation
or such breach or default that, either alone or in the aggregate, does not
have or would not reasonably be expected to have a Material Adverse Effect
on the Fund.
(g) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or any of the Fund Agreements by
the Fund, nor the consummation by the Fund of the transactions contemplated
hereby or thereby (i) requires any consent, approval, authorization or
order of or registration or filing with the Commission, the NASD, any state
securities commission, any national securities exchange, any arbitrator,
any court, regulatory body, administrative agency or other governmental
body, agency or official having jurisdiction over the Fund (except as
obtained or made prior to the date hereof or required for compliance with
the securities or Blue Sky laws of various jurisdictions which have been or
will be effected in accordance with this Agreement and except for
compliance with the filing requirements of the NASD Division of Corporate
Finance) or conflicts or will conflict with or constitutes or will
constitute a breach of the Declaration, bylaws, or other organizational
documents of the Fund or (ii) (A) conflicts or will conflict with or
constitutes or will constitute a breach of or a default under any
agreement, indenture, lease or other instrument to which the Fund is a
party or by which it or any of its properties may be bound or violates or
(B) will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Fund or any of its properties
or will result in the creation or imposition of any lien, charge or
encumbrance (collectively, a "Lien") upon any property or assets of the
Fund pursuant to the terms of any 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, except for such conflict, breach, default,
violation or lien that, either alone or in the aggregate, does not have or
would not reasonably be
18
expected to have a Material Adverse Effect on the Fund. As of the date
hereof, the Fund is not subject to any order of any court or of any
arbitrator, governmental authority or administrative agency.
(h) Since the date as of which information is given in the
Registration Statement and the Prospectus (and any amendment or supplement
to either of them), except as otherwise stated therein, (i) there has been
no material, adverse change in the condition (financial or other), general
affairs, business, properties, net assets (other than as a result of
changes in market conditions generally) or results of operations of the
Fund or of 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 or the Advisory Agreement, as the case may be, or the
happening of any event which makes any statement of a material fact made in
the Registration Statement, the Prospectus, any Prepricing Prospectus or
any sales material (or any amendment or supplement to any of the foregoing)
untrue or which requires the making of any additions to or changes in the
Registration Statement, the Prospectus, any Prepricing Prospectus or any
sales material (or any amendment or supplement to any of the foregoing) in
order to state a material fact required by the 1933 Act, the 1940 Act or
the Rules and Regulations to be stated therein or necessary in order to
make the statements therein (in the case of a prospectus or any sales
material, in light of the circumstances under which they were made) not
misleading or of the necessity to amend or supplement the Registration
Statement, the Prospectus, any Prepricing Prospectus or any sales material
(or any amendment or supplement to any of the foregoing) to comply with the
1933 Act, the 1940 Act, the Rules and Regulations or any other law or order
of any court or regulatory body, (ii) there have been no transactions
entered into by the Fund other than those in the ordinary course of its
business as described in the Prospectus (and any amendment or supplement
thereto) and (iii) there has been no dividend or distribution of any kind
declared, paid or made by the Fund on any class
19
of its common shares of beneficial interest.
(i) The accountants, PricewaterhouseCoopers LLP, who have audited the
Statement of Assets and Liabilities included in the Registration Statement
and the Prospectus (and any amendment or supplement to either of them), are
an independent public accounting firm as required by the 1933 Act, the 1940
Act and the Rules and Regulations.
(j) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement
or the Prospectus (or any amendment or supplement to either of them)
present fairly in all material respects the financial position of the Fund
on the basis stated in the Registration Statement at the respective dates
or for the respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved except as disclosed therein; and the other financial and
statistical information and data, if any, included in the Registration
Statement or the Prospectus (or any amendment or supplement thereto) are
accurately derived from such financial statements and the books and records
of the Fund.
(k) The Fund, subject to the Registration Statement having been
declared effective and the filing of the Prospectus under Rule 497 under
the 1933 Act Rules and Regulations, has taken all required action under the
1933 Act, the 1940 Act and the Rules and Regulations to make the public
offering and consummate the sale of the Shares as contemplated by this
Agreement.
(l) The execution and delivery of and the performance by the Fund of
its obligations under this Agreement and the Fund Agreements have been duly
and validly authorized by the Fund and this Agreement and each of the Fund
Agreements have been duly executed and
20
delivered by the Fund and, assuming due authorization, execution and
delivery by the other parties thereto, each constitutes the valid and
legally binding agreement of the Fund, enforceable against the Fund in
accordance with its terms, except as rights to indemnity and contribution
hereunder may be limited (based upon considerations of public policy) by
federal or state securities laws and subject to the qualification that the
enforceability of the Fund's obligations hereunder and thereunder may be
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights
generally and by general equitable principles (whether enforcement is
considered in a proceeding in equity or law).
(m) Except as disclosed in or contemplated by the Registration
Statement or the Prospectus (or any amendment or supplement to either of
them), subsequent to the respective dates as of which such information is
given in the Registration Statement and the Prospectus (and any amendment
or supplement to either of them), the Fund has not incurred any material
liability or obligation, direct or contingent, or entered into any
transaction, not in the ordinary course of business, and there has not been
any change in the shares of beneficial interest or any change or any
development involving or which should reasonably be expected to involve a
Material Adverse Effect on the Fund or its capitalization.
(n) The Fund has not distributed and, prior to the later to occur of
(i) the Closing Date and (ii) completion of the distribution of the Shares,
will not distribute to the public any offering material in connection with
the offering and sale of the Shares other than the Registration Statement,
the Prepricing Prospectus included in Pre-Effective Amendment No. 1 to the
registration statement, the Prospectus and the investor sales material (as
hereinafter defined) filed with the NASD by Claymore Securities, Inc. on
July 8, 2003.
21
(o) The Fund has such licenses, permits, and authorizations of
governmental or regulatory authorities ("permits") as are necessary to own
its property and to conduct its business in the manner described in the
Prospectus (and any amendment or supplement thereto); the Fund has
fulfilled and performed all its material obligations with respect to such
permits and no event has occurred which allows or, after notice or lapse of
time, would allow, revocation or termination thereof or results in any
other material impairment of the rights of the Fund under any such permit,
subject in each case to such qualification as may be set forth in the
Prospectus (and any amendment or supplement thereto), and except where the
lack of, revocation, termination or impairment of the Fund's rights under
such permits, either alone or in the aggregate, does not have or would not
reasonably be expected to have a Material Adverse Effect on the Fund; and,
except as described in the Prospectus (and any amendment or supplement
thereto), none of such permits contains any restriction that is materially
burdensome to the Fund.
(p) The Fund maintains and will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with the Board of Trustees' general
or specific authorization and with the investment policies and restrictions
of the Fund and the applicable requirements of the 1940 Act, the 1940 Act
Rules and Regulations and the Code; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles, to calculate net asset value and
fee accruals, to maintain accountability for assets and to maintain
compliance with the books and records requirements under the 1940 Act and
the 1940 Act Rules and Regulations; (iii) access to assets is permitted
only in accordance with the Board of Trustees' general or specific
authorization; and (iv) the recorded account for assets is compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
22
(q) The conduct by the Fund of its business (as described in the
Prospectus) does not require it to be the owner, possessor or licensee of
any patents, patent licenses, trademarks, service marks or trade names
which it does not own, possess or license, except where the failure to so
own, possess or license, either alone or in the aggregate, does not have or
would not reasonably be expected to have a Material Adverse Effect on the
Fund.
(r) Except as stated in this Agreement and in the Prospectus (and any
amendment or supplement thereto), the Fund has not taken, directly or
indirectly, any action designed to or which could cause or result in or
which will constitute stabilization or manipulation of the price of the
Shares in violation of federal securities laws and no such action has been,
or will be, taken by any affiliates of the Fund.
(s) The Fund is duly registered under the 1940 Act and the 1940 Act
Rules and Regulations as a closed-end, diversified management investment
company and the 1940 Act Notification has been duly filed with the
Commission and, at the time of filing thereof and at all times through the
date hereof the 1940 Act Notification conformed in all material respects
with all applicable provisions of the 1940 Act and the 1940 Act Rules and
Regulations; no order of suspension or revocation of such registration
under the 1940 Act and the 1940 Act Rules and Regulations has been issued
or proceedings therefor initiated or threatened by the Commission. The
provisions of the Declaration, and the investment policies and restrictions
described in each of the Registration Statement and the Prospectus, comply
in all material respects with, and do not violate in any material respect,
as the case may be, the requirements of the 1940 Act and the 1940 Act Rules
and Regulations.
(t) All advertising, sales literature or other promotional material
(including "prospectus wrappers") intended for public distribution and
authorized in
23
writing by or prepared by the Fund or the Adviser for use in connection
with the offering and sale of the Shares (collectively, "investor sales
material") complied and comply in all material respects with the applicable
requirements of the 1933 Act, the 1940 Act, the Rules and Regulations and
the rules and interpretations of the NASD and no such investor sales
material, when read together with the Prospectus, contained or contains an
untrue statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. No advertising, sales literature or other promotional material
(including "broker kits," "road show slides," "broker post-cards," "broker
reference cards" and "road show scripts") not intended for public
distribution ("broker sales material" and together with investor sales
material, "sales material") and authorized in writing by or prepared by the
Fund or the Adviser for use in connection with the offering and sale of the
Shares, when read together with the Prospectus, contained or contains an
untrue statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(u) This Agreement and each of the Fund Agreements complies in all
material respects with, and does not violate in any material respect, as
the case may be, the applicable provisions of the 1940 Act, the Rules and
Regulations, 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").
(v) No holder of any security of the Fund has any right to require
registration of any Shares, shares of beneficial interest or any other
security of the Fund because of the filing of the registration statement or
consummation of the transactions contemplated by this
24
Agreement.
(w) The Fund and the Adviser intend to direct the investment of the
proceeds of the offering of the Shares in such a manner as to comply with
the requirements of Subchapter M of the Code.
(x) In the event that the Fund or the Adviser makes available any
promotional materials intended for use only by qualified broker-dealers and
registered representatives thereof by means of an Internet web site or
similar electronic means, the Fund or the Adviser will install and maintain
pre-qualification and password-protection or similar procedures which are
reasonably designed effectively to prohibit access to such promotional
materials by persons other than qualified broker-dealers and registered
representatives thereof.
(y) The Commission has not issued any order preventing or suspending
the use of the Prospectus.
(z) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), no trustee
of the Fund is 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 listed in Schedule I hereto.
(aa) The Shares have been approved for listing on the NYSE and the
Fund's registration statement on Form 8-A under the 1934 Act has become
effective.
7. REPRESENTATIONS AND WARRANTIES OF THE ADVISER. The Adviser represents
and warrants to each Underwriter as follows:
(a) The Adviser is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware, with
full corporate power and authority to own, lease and operate its properties
and
25
to conduct its business as described in each of the Registration Statement
and the Prospectus (or any amendment or supplement to either of them) and
is duly registered and qualified to conduct business and is in good
standing in each jurisdiction or place where the nature of its properties
or conduct of its business requires such registration or qualification,
except where the failure so to register or to qualify would not have a
Material Adverse Effect on the Adviser or the Fund.
(b) The Adviser is duly registered with the Commission as an
investment adviser under the Advisers Act and is not prohibited by the
Advisers Act, the 1940 Act, the Advisers Act Rules and Regulations or the
1940 Act Rules and Regulations from acting under the Advisory Agreement for
the Fund as contemplated by the Registration Statement or the Prospectus
(or any amendment or supplement to either of them). There does not exist
any proceeding which has or would reasonably be expected to have a Material
Adverse Effect on the registration of the Adviser with the Commission.
(c) There are no legal or governmental proceedings pending or, to the
knowledge of the Adviser, threatened against the Adviser that are required
to be described in the Registration Statement or the Prospectus (or any
amendment or supplement to either of them) but are not described as
required or that could reasonably be expected to result in any Material
Adverse Effect on the Adviser or that could reasonably be expected to have
a material, adverse effect on the ability of the Adviser to perform its
obligations under this Agreement or under the Advisory Agreement, the
Corporate Finance Services and Consulting Agreement or the Underwriter
Participation Agreement (collectively, the "Adviser Agreements").
(d) Neither the execution, delivery or performance of this Agreement,
or any of the Adviser Agreements by the Adviser, nor the consummation by
the Adviser of the transactions contemplated hereby or thereby (i) requires
26
the Adviser to obtain any material consent, approval, authorization or
other order of, or registration or filing with, the Commission, the NASD,
any state securities commission, any national securities exchange, any
arbitrator, any court, regulatory body, administrative agency or other
governmental body, agency or official having jurisdiction over the Adviser,
or conflicts or will conflict with or constitutes or will constitute a
breach of or a default under, the certificate of incorporation or bylaws,
or other organizational documents of the Adviser or (ii) conflicts or will
conflict with or constitutes or will constitute a breach of or a default
under, any agreement, indenture, lease or other instrument to which the
Adviser is a party or by which the Adviser or any of its properties may be
bound, or violates or will violate any statute, law, regulation or
judgment, injunction, order or decree applicable to the Adviser or any of
its properties or will result in the creation or imposition of any Lien
upon any property or assets of the Adviser pursuant to the terms of any
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 Adviser is subject, except
in any case under clause (ii) for such conflict, breach, default, violation
or lien that, either alone or in the aggregate, does not have or would not
reasonably be expected to have a Material Adverse Effect on the Adviser or
on the ability of the Adviser to perform its obligations under this
Agreement or any of the Adviser Agreements. The Adviser is not subject to
any order of any court or of any arbitrator, regulatory body,
administrative agency or other governmental body, agency or official, which
order, either alone or in the aggregate, has or would not reasonably be
expected to have a Material Adverse Effect on the Adviser or on the ability
of the Adviser to perform its obligations under this Agreement or any of
the Adviser Agreements.
(e) The Adviser has full power and authority to enter into this
Agreement and each of the Adviser Agreements, the execution and delivery
of, and the performance by the Adviser of its obligations under,
27
this Agreement and each of the Adviser Agreements have been duly and
validly authorized by the Adviser and this Agreement and each of the
Adviser Agreements have been duly executed and delivered by the Adviser
and, assuming the due authorization, execution and delivery by the other
parties thereto, constitute the valid and legally binding agreements of the
Adviser, enforceable against the Adviser in accordance with their terms,
except as rights to indemnity and contribution hereunder may be limited
(based upon considerations of public policy) by federal or state securities
laws and subject to the qualification that the enforceability of the
Adviser's obligations hereunder and thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium
and other laws relating to or affecting creditors' rights generally and by
general equitable principles (whether enforcement is considered in a
proceeding in equity or at law).
(f) The Adviser has the financial resources necessary for the
performance of its services and obligations as contemplated in the
Registration Statement and the Prospectus (or any amendment or supplement
to either of them) or under this Agreement, or each of the Adviser
Agreements.
(g) The description of the Adviser and its business, in the
Registration Statement or the Prospectus (or 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 such description
and the statements attributable to the Adviser 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
(in the case of the Prospectus, in light of the circumstances under which
they were made) not misleading.
(h) Since the date as of which information is
28
given in the Registration Statement or the Prospectus (or any amendment or
supplement to either of them), except as otherwise stated therein, (i)
there has been no material adverse change in the condition (financial or
other), business, properties, net assets or results of operations or
business prospects of the Adviser, whether or not arising from the ordinary
course of business and (ii) there have been no transactions entered into by
the Adviser which are material to the Adviser other than those in the
ordinary course of its business as described in the Prospectus that has or
would reasonably be expected to have, either alone or in the aggregate, a
Material Adverse Effect on the Adviser or a material, adverse effect on the
ability of the Adviser to perform its obligations under this Agreement or
under any of the Adviser Agreements.
(i) The Adviser has such permits as are necessary to own its property
and to conduct its business in the manner described in the Prospectus (and
any amendment or supplement thereto); the Adviser has fulfilled and
performed all its material obligations with respect to such permits and no
event has occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any other impairment
of the rights of the Adviser under any such permit, except where the lack
of, revocation, termination or impairment of the Adviser's rights under
such permits has or would reasonably be expected to have, either alone or
in the aggregate, a Material Adverse Effect on the Adviser or a material,
adverse effect on the ability of the Adviser to perform its obligations
under this Agreement or under any of the Adviser Agreements.
(j) This Agreement and each of the Adviser Agreements do not violate
in any material respects any applicable provisions of the 1940 Act, the
1940 Act Rules and Regulations, the Advisers Act and the Advisers Act Rules
and Regulations.
(k) Except as stated in this Agreement, the Registration Statement or
the Prospectus (or in any amendment
29
or supplement to any of the foregoing), the Adviser has not taken,
directly or indirectly, any action designed to or which might reasonably be
expected to cause or result in or which will constitute stabilization or
manipulation of the price of the Shares or of any securities issued by the
Fund to facilitate the sale or resale of the Shares, in each case, in
violation of federal securities laws and the Adviser is not aware of any
such action taken or to be taken by any affiliates of the Adviser.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Fund and the Adviser, jointly and severally, agree to
indemnify and hold harmless each of you and each other 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, from and against any and
all losses, claims, damages, liabilities and expenses, joint or several
(including reasonable costs of investigation), arising out of or based upon
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Prospectus, any Prepricing
Prospectus, any sales material (as defined in Section 6(t) of this
Agreement) (or any amendment or supplement to any of the foregoing) or
arising out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of a prospectus, in light of the
circumstances under which they were made) not misleading, except insofar as
such losses, claims, damages, liabilities or expenses arise out of or are
based upon any untrue statement or omission or alleged untrue statement or
omission which has been made therein or omitted therefrom in reliance upon
and in conformity with the information relating to such Underwriters
furnished in writing to the Fund or to the Adviser by or on behalf of any
Underwriter through you expressly for use in connection therewith;
provided, however, that the foregoing indemnification contained in this
paragraph (a) with respect to the Prepricing Prospectus
30
contained in Pre-Effective Amendment No. 1 to the registration statement
shall not inure to the benefit of any Underwriter (or to the benefit of any
person controlling such Underwriter) on account of any such loss, claim,
damage, liability or expense arising from the sale of the Shares by such
Underwriter to any person if it is shown that a copy of the Prospectus
(which term as used in this proviso shall not include any statement of
additional information) was not delivered or sent to such person within the
time required by the 1933 Act and the 1933 Act Rules and Regulations and
the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such Prepricing Prospectus was
corrected in the Prospectus, provided that the Fund has delivered the
Prospectus to the several Underwriters in requisite quantity on a timely
basis to permit proper delivery or sending. The foregoing indemnity
agreement shall be in addition to any liability which the Fund or the
Adviser may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Fund or the Adviser, such Underwriter
or such controlling person shall promptly notify the Fund or the Adviser
and the Fund or the Adviser shall assume the defense thereof, including the
employment of counsel and the payment of all fees and expenses. Such
Underwriter or any such controlling person shall have the right to employ
separate counsel in any such action, suit or proceeding and to participate
in the defense thereof, but the fees and expenses of such counsel shall be
at the expense of such Underwriter or controlling person unless (i) the
Fund or the Adviser have agreed in writing to pay such fees and expenses,
(ii) the Fund or the Adviser have failed within a reasonable time to assume
the defense and employ counsel or (iii) the named parties to any such
action, suit or proceeding (including any impleaded parties) include both
such Underwriter or such controlling person and the Fund or the Adviser and
such
31
Underwriter or such controlling person shall have been advised by its
counsel that representation of such indemnified party and the Fund or the
Adviser by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation by
the same counsel has been proposed) due to actual or potential differing
interests between them (in which case the Fund and the Adviser shall not
have the right to assume the defense of such action, suit or proceeding on
behalf of such Underwriter or such controlling person). It is understood,
however, that the Fund and the Adviser shall, in connection with any one
such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of only one separate firm of attorneys (in
addition to any local counsel if there is any action, suit or proceeding in
more than one jurisdiction) at any time for all such Underwriters and
controlling persons not having actual or potential differing interests with
you or among themselves, which firm shall be designated in writing by the
Representatives and that, subject to the requirements of 1940 Act Release
No. 11330, all such fees and expenses shall be reimbursed promptly as they
are incurred. The Fund and the Adviser shall not be liable for any
settlement of any such action, suit or proceeding effected without the
written consent of the Fund or the Adviser, but if settled with such
written consent or if there be a final judgment for the plaintiff in any
such action, suit or proceeding, the Fund and the Adviser agree to
indemnify and hold harmless any Underwriter, to the extent provided in the
preceding paragraph and any such controlling person from and against any
loss, liability, damage or expense by reason by such settlement or
judgment.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Fund and the Adviser, their trustees or directors,
any officers of the Fund who sign the Registration Statement and any
32
person who controls the Fund or the Adviser within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act, to the same extent as the
foregoing indemnity from the Fund and the Adviser to each Underwriter, but
only with respect to information relating to such Underwriter furnished in
writing by or on behalf of such Underwriter through you expressly for use
in the Registration Statement, the Prospectus or any Prepricing Prospectus
(or any amendment or supplement thereto). If any action, suit or proceeding
shall be brought against the Fund or the Adviser, any of their trustees or
directors, any such officer or any such controlling person, based on the
Registration Statement, the Prospectus or any Prepricing Prospectus (or any
amendment or supplement thereto) and in respect of which indemnity may be
sought against any Underwriter pursuant to this paragraph (c), such
Underwriter shall have the rights and duties given to each of the Fund and
the Adviser by paragraph (b) above (except that if the Fund or the Adviser
shall have assumed the defense thereof such Underwriter shall not be
required to do so, but may employ separate counsel therein and participate
in the defense thereof, but the fees and expenses of such counsel shall be
at such Underwriter's expense) and the Fund and the Adviser, their trustees
or directors, any such officer and any such controlling person shall have
the rights and duties given to the Underwriters by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which
the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Fund and the Adviser on the one hand
(treated jointly for this
33
purpose as one person) and the Underwriters on the other from the offering
of the Shares or (ii) if the allocation provided by clause (i) above 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
(treated jointly for this purpose as one person) and of the Underwriters on
the other in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Fund and the Adviser on the one hand (treated jointly for this purpose as
one person) and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Fund bear to the total underwriting
discounts and commissions received by the Underwriters, in each case, as
set forth in the table on the cover page of the Prospectus. The relative
fault of the Fund and the Adviser on the one hand (treated jointly for this
purpose as one person) and of the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Fund and the Adviser on the one hand (treated jointly for this purpose as
one person) or by the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(e) The Fund, the Adviser, and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 8 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 that does
not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages,
34
liabilities and expenses referred to in paragraph (d) above shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating any claim or defending any such action, suit or proceeding.
Notwithstanding the provisions of this Section 8, no Underwriter shall be
required to contribute any amount in excess of the amount by which the
total price of the Shares underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of 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. The Underwriters' obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective number of Shares set forth opposite their names in Schedule I
(or such number of Shares increased as set forth in Section 10 hereof) and
not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability from claimants on
claims that are the subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall, subject to the requirements of Release No. 11330, be paid
by the indemnifying party to the indemnified party as such losses, claims,
damages, liabilities or expenses are incurred. The indemnity and
contribution agreements contained in this Section 8 and the representations
35
and warranties of each of the Fund and the Adviser set forth in this
Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of any Underwriter or any
person controlling any Underwriter, the Fund, the Adviser, or their
trustees, directors, officers or any person controlling the Fund or the
Adviser, (ii) acceptance of any Shares and payment therefor hereunder and
(iii) any termination of this Agreement. A successor to any Underwriter or
to the Fund or the Adviser or their trustees, directors, officers or any
person controlling the Fund or the Adviser shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 8.
(h) The Fund and the Adviser each acknowledge that the statements
with respect to (1) the public offering price of the Shares as set forth on
the cover page of the Prospectus and (2) as set forth under the caption
"Underwriting" in the Prospectus: (i) the names of the Underwriters, (ii)
the number of Firm Shares set forth opposite the name of each Underwriter,
(iii) the amount of the selling concessions and reallowances of selling
concessions set forth in the first sentence of the fourth paragraph, the
information set forth in the tenth, eleventh and twelfth paragraphs
relating to stabilization and the imposition of penalty bids and (iv) the
address of ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. and any other Underwriter in the final
paragraph constitute the only information furnished in writing to the Fund
by the Underwriters expressly for use in such document. The Underwriters
severally confirm that these statements are correct in all material
respects and were so furnished by or on behalf of the Underwriters
severally for use in the Prospectus.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase the Shares hereunder are subject to the accuracy of
and compliance with the representations, warranties and agreements of and by
each of the Fund and the Adviser
36
contained herein on and as of the date on which the Registration Statement
becomes or became effective, the date of the Prospectus (and of any amendment or
supplement thereto) and the Closing Date and, with respect to any Additional
Shares, any Option Closing Date; to the accuracy and completeness of all
statements made by the Fund, the Adviser, or any of their respective officers in
any certificate delivered to the Representatives or their counsel pursuant to
this Agreement, and to the following conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may
commence, the registration statement or such post-effective amendment shall
have become effective not later than 5:30 p.m., New York City time, on the
date hereof or at such later date and time as shall be consented to in
writing by you and all filings, if any, required by Rules 497 and 430A
under the 1933 Act and the 1933 Act Rules and Regulations shall have been
timely made; no stop order suspending the effectiveness of the Registration
Statement or order pursuant to Section 8(e) of the 1940 Act shall have been
issued and no proceeding for that purpose shall have been instituted or, to
the knowledge of the Fund, the Adviser or any Underwriter, threatened by
the Commission and any request of the Commission for additional information
(to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to your satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change or any development involving a prospective
change in or affecting the condition (financial or other), general affairs,
business, properties, net assets (in the case of the Fund, other than as a
result of changes in market conditions generally), or results of operations
of the Fund or the Adviser not contemplated by the Prospectus, which in
your opinion, would materially adversely affect the market for the Shares,
or (ii) any event or
37
development relating to or involving the Fund or the Adviser or any
officer, trustee, or director of the Fund or the Adviser, which makes any
statement made in the Prospectus untrue in any material respect or which,
in the opinion of the Fund and its counsel or the Underwriters and their
counsel, requires the making of any addition to or change in the Prospectus
in order to state a material fact required by the 1933 Act, the 1940 Act or
the Rules and Regulations or any other law to be stated therein or
necessary in order to make the statements therein not misleading, if
amending or supplementing the Prospectus to reflect such event or
development would, in your opinion, materially adversely affect the market
for the Shares.
(c) That you shall have received on the Closing Date an opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, special counsel for the Fund, dated the
Closing Date and addressed to you, as the Representatives of the several
Underwriters, in substantially the form attached hereto as Exhibit A. In
rendering its opinion, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP may rely, as to
matters of Delaware law, upon the opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇,
P.A. dated as of the date thereof.
(d) That you shall have received on the Closing Date an opinion of
the Adviser's internal counsel, dated the Closing Date and addressed to
you, as Representatives of the several Underwriters, in substantially the
form attached hereto as Exhibit B.
(e) That you shall have received on the Closing Date an opinion of
▇▇▇▇▇▇▇, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), dated the Closing Date and
addressed to you, as the Representatives of the several underwriters, with
respect to such matters as you may require and the Fund, the Adviser, and
their respective counsel shall have furnished to such counsel such
documents as they may request for the purpose of enabling them to pass upon
such matters. In rendering its opinion, Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ (Illinois) may rely, as to matters of Delaware law, upon the opinion
of ▇▇▇▇▇▇▇▇
38
▇▇▇▇▇▇ & Finger P.A. dated as of the date thereof in the same manner and to
the same extent as ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP.
(f) That you shall have received letters addressed to you, as the
Representatives of the several Underwriters and dated each of the date
hereof and the Closing Date from PricewaterhouseCoopers LLP, independent
certified public accountants, substantially in the forms heretofore
approved by you.
(g) (i) No order suspending the effectiveness of the Registration
Statement or prohibiting or suspending the use of the Prospectus (or any
amendment or supplement to any of the foregoing) or any Prepricing
Prospectus or any sales material shall have been issued and no proceedings
for such purpose or for the purpose of commencing an enforcement action
against the Fund or the Adviser, with respect to the transactions
contemplated by the Prospectus (or any amendment or supplement thereto) and
this Agreement, may be pending before or, to the knowledge of the Fund, the
Adviser, or any Underwriter or in the reasonable view of counsel to the
Underwriters, shall be threatened or contemplated by the Commission at or
prior to the Closing Date and that any request for additional information
on the part of the Commission (to be included in the Registration
Statement, the Prospectus or otherwise) be complied with to the
satisfaction of the Representatives, (ii) there shall not have been any
material change in the shares of beneficial interest of the Fund nor any
material increase in debt of the Fund from that set forth in the
Registration Statement or the Prospectus (or any amendment or supplement to
either of them) and the Fund shall not have sustained any material
liabilities or obligations, direct or contingent, other than those
reflected in or contemplated by the Registration Statement or the
Prospectus (or any amendment or supplement to either of them), (iii) since
the date of the Prospectus there shall not have been any material, adverse
change in the condition (financial or other), general affairs, business,
properties, net assets (in
39
the case of the Fund, other than as a result of changes in market
conditions generally) or results of operations of the Fund or the Adviser,
(iv) none of the Fund or the Adviser shall have sustained any material loss
or interference with their businesses from any court or from legislative or
other governmental action, order or decree or from any other occurrence not
described in the Registration Statement or the Prospectus (or any amendment
or supplement to either of them), and (v) all of the representations and
warranties of each of the Fund or the Adviser contained in this Agreement
shall be true and correct on and as of the date hereof and as of the
Closing Date as if made on and as of the Closing Date.
(h) That neither of the Fund or the Adviser shall have failed at or
prior to the Closing Date to have performed or complied with in any
material respect any of the agreements herein contained and required to be
performed or complied with by them at or prior to the Closing Date.
(i) That you shall have received on the Closing Date a certificate,
dated such date, of each of the chief executive officer and chief financial
officer of each of the Fund and the Adviser certifying that (i) the signers
have carefully examined the Registration Statement, the Prospectus (and any
amendments or supplements to either of them) and this Agreement, (ii) the
representations and warranties of the Fund (with respect to the
certificates from such Fund officers) and the representations and
warranties of the Adviser (with respect to the certificates from such
officers of the Adviser) in this Agreement are true and correct on and as
of the date of the certificate as if made on such date, (iii) since the
date of the Prospectus (and any amendment or supplement thereto) there has
not been any material, adverse change in the condition (financial or
other), business, properties, net assets (in the case of the Fund, other
than as a result of changes in market conditions generally) or results of
operations of the Fund (with respect to the certificates from such Fund
40
officers) or the Adviser (with respect to the certificates from such
officers of the Adviser), (iv) to the knowledge of such officers after
reasonable investigation, no order suspending the effectiveness of the
Registration Statement or prohibiting the sale of any of the Shares or
having a material, adverse effect on the Fund (with respect to the
certificates from such Fund officers) or the Adviser (with respect to
the certificates from such officers of the Adviser) has been issued and
no proceedings for any such purpose are pending before or threatened by
the Commission or any court or other regulatory body, the NASD, any state
securities commission, any national securities exchange, any arbitrator,
any court or any other governmental, regulatory, self-regulatory or
administrative agency or any official, (v) each of the Fund (with respect
to certificates from such Fund officers) and the Adviser (with respect to
certificates from such officers of the Adviser) has performed and complied
in all material respects with all agreements that this Agreement require
it to perform by such Closing Date, (vi) none of the Fund (with respect to
the certificate from such officers of the Fund) or the Adviser (with
respect to the certificate from such officers of the Adviser) has
sustained any material loss or interference with its business from any
court or from legislative or other governmental action, order or decree or
from any other occurrence not described in the Registration Statement or
the Prospectus and any amendment or supplement to either of them and
(vii) with respect to the certificate from such officers of the Fund,
there has not been any change in the shares of beneficial interest of
the Fund nor any increase in the debt of the Fund from that set forth in
the Prospectus (or any amendment or supplement thereto) and the Fund has
not sustained any material liabilities or obligations, direct or
contingent, other than those reflected in the Prospectus (or any amendment
or supplement thereto).
(j) That the Fund and the Adviser shall have furnished to you such
further letters, certificates, documents and opinions of counsel as you
shall
41
reasonably request (including certificates of officers of the Fund and the
Adviser).
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and your counsel acting in good faith.
Any certificate or document signed by any officer of the Fund or the
Adviser and delivered to you, as the Representatives of the Underwriters or to
Underwriters' counsel, shall be deemed a representation and warranty by the Fund
or the Adviser to each Underwriter as to the statements made therein.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to (i) the accuracy of and compliance with the
representations and warranties of the Fund and the Adviser contained herein on
and as of the Option Closing Date as though made on any Option Closing Date,
(ii) satisfaction on and as of any Option Closing Date of the conditions set
forth in this Section 9 except that, if any Option Closing Date is other than
the Closing Date, the certificates, opinions and letters referred to in Sections
9 (c), (d), (e), (f) and (j) and this paragraph shall be dated the Option
Closing Date in question and the opinions called for by Sections 9 (c), (d), (e)
and (f) shall be revised to reflect the sale of Additional Shares and (iii) the
absence of circumstances on or prior to the Option Closing Date which would
permit termination of this Agreement pursuant to Section 11 hereof if they
existed on or prior to the Closing Date.
10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective:
(i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at
the time this Agreement is executed and delivered, it is necessary for the
registration statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, when the Registration
Statement or such post-effective amendment has become effective. Until such time
as this Agreement shall have become effective, it may be terminated
42
by the Fund by notifying you, or by you by notifying the Fund.
If any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they have agreed to purchase hereunder and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares, each non-defaulting Underwriter shall be obligated, severally, in
the proportion which the aggregate number of Shares set forth opposite its name
in Schedule I hereby bears to the aggregate number of Shares set forth opposite
the names of all non-defaulting Underwriters or in such other proportion as you
may specify in accordance with Section 7 of the Master Agreement Among
Underwriters, to purchase Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase. If any Underwriter or
Underwriters shall fail or refuse to purchase Shares and the aggregate number of
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares and arrangements satisfactory to you and the Fund for
the purchase of such Shares by one or more non-defaulting Underwriters or other
party or parties approved by you and the Fund are not made within 36 hours after
such default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Fund. In any such case which does not result
in termination of this Agreement, either you or the Fund shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and the
Prospectus or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect to any such default of any such Underwriter under this
Agreement. The term "Underwriter" as used in this Agreement includes, for all
purposes of this Agreement, any party not listed in Schedule I hereto who, with
your approval and the approval of the Fund, purchases Shares which a defaulting
Underwriter agreed, but failed or refused, to purchase.
43
Any notice under this Section 10 may be made by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Fund or the Adviser by notice to the Fund or the Adviser if
prior to the Closing Date or any Option Closing Date (if different from the
Closing Date and then only as to the Additional Shares), as the case may be, (i)
trading in securities generally on the New York Stock Exchange, American Stock
Exchange, Nasdaq National Market, Nasdaq SmallCap Market or the Nasdaq Stock
Market shall have been suspended or limited or minimum prices shall have been
established, (ii) additional governmental restrictions not in force on the date
of this Agreement have been imposed upon trading in securities generally or a
general moratorium on commercial banking activities shall have been declared by
Federal or any state's authorities or (iii) any outbreak or material escalation
of hostilities or other international or domestic calamity, crisis or change in
political, financial, economic, legal or regulatory conditions, occurs, the
effect of which is such as to make it, in your judgment, impracticable or
inadvisable to commence or continue the offering of the Shares at the offering
price to the public set forth on the cover page of the Prospectus or to enforce
contracts for the resale of the Shares by the Underwriters. Notice of such
termination may be given to the Fund or the Adviser by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
12. EXPENSES. The Fund agrees to pay the following costs and expenses and
all other costs and expenses incident to the performance by the Fund of its
obligations hereunder: (a) the preparation, printing or reproduction, filing
(including, without limitation, the filing or registration fees prescribed by
the 1933 Act, the 1934 Act, the 1940 Act and the Rules and Regulations) and
distribution of the Registration Statement (including exhibits thereto), the
Prospectus, each Prepricing Prospectus and the 1940 Act Notification and all
amendments or supplements to any of them, (b) the expenses of printing (or
reproduction) and
44
delivery to the Underwriters and dealers (including postage, air freight and the
cost of counting and packaging) of copies of the Prospectus, each Prepricing
Prospectus, any sales material (and all amendments or supplements to any of
them) as may be reasonably requested by the Representatives and counsel for the
Underwriters for use in connection with the preparation of the offering and sale
of the Shares, (c) the preparation, printing, authentication, issuance and
delivery of certificates (if any) for the Shares, including any stamp taxes and
transfer agent and registrar fees payable in connection with the original
issuance and sale of such Shares, (d) the registrations or qualifications of the
Shares for offer and sale under the securities or Blue Sky laws of the several
states as provided in Section 5(g) hereof (including the reasonable fees,
expenses and disbursements of counsel for the Underwriters relating to the
preparation, printing or reproduction and delivery of the preliminary and
supplemental Blue Sky Memoranda and such registration and qualification), (e)
the fees and expenses of the Fund's independent accountants, counsel for the
Fund and of the transfer agent, (f) the printing (or reproduction) and delivery
of this Agreement, any dealer agreements, the preliminary and supplemental Blue
Sky Memoranda and all other company-authorized agreements or other documents
printed (or reproduced) and delivered in connection with the offering of the
Shares, (g) the filing fees, and the fees, expenses and disbursements of counsel
for the Underwriters in connection with any filings required to be made with the
NASD and incurred with respect to the review by the NASD of this Agreement, the
sales materials and other matters in connection with the offering of the Shares,
which fees, expenses and disbursements of counsel, together with the fees,
expenses and disbursements of counsel set forth in paragraph (d) of this Section
12 above, shall not exceed $25,0000 [cap to be split among three funds],
exclusive of NASD and state filing fees, (h) the transportation, lodging,
graphics and other expenses related to the Fund's preparation for and
participation in the roadshow, (i) the listing of the Shares on the NYSE and (j)
an amount not to exceed the greater of $___ per Share or $________ payable on
the Closing Date to the Representatives in partial reimbursement of their
expenses (but not including reimbursement for the cost of one
45
tombstone advertisement in a newspaper that is one-quarter of a newspaper page
or less in size) in connection with the offering. The Adviser and Claymore
Securities, Inc. have jointly agreed to pay organizational expenses and offering
costs of the Fund (other than sales load) that exceed $0.03 per Common Share.
Notwithstanding the foregoing, in the event that the sale of the Shares is
not consummated pursuant to Section 2 hereof, the Adviser will pay the costs and
expenses of the Fund set forth above in this Section 12(a) through (i), and
reimbursements of Underwriter expenses in connection with the offering shall be
made in accordance with Section 5(l) hereof.
13. MISCELLANEOUS. Except as otherwise provided in Sections 5, 10 and 11
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (a) if to the Fund or the Adviser, c/o MBIA
Capital Management Corp., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or (b) if to you, as Representatives of the Underwriters, at the
office of ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇, with a copy to ▇▇▇▇▇▇▇, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Fund, the Adviser, their trustees, directors, officers, and
the other controlling persons referred to in Section 8 hereof and their
respective successors and assigns, to the extent provided herein and no other
person shall acquire or have any right under or by virtue of this Agreement.
Neither the term "successor" or the term "successors and assigns" as used in
this Agreement shall include a purchaser from any Underwriter of any of the
Shares in his status as such purchaser.
14. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
46
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
47
Please confirm that the foregoing correctly sets forth the agreement among
the Fund, the Adviser, and the several Underwriters.
Very truly yours,
MBIA CAPITAL/CLAYMORE
MANAGED DURATION
INVESTMENT GRADE MUNICIPAL
FUND
By:
----------------
Title:
MBIA CAPITAL MANAGEMENT
CORP.
By:
----------------
Title:
48
Confirmed as of the date
first above written on
behalf of themselves and
the other several Under-
writers named in Schedule
I hereto.
AS REPRESENTATIVE OF THE SEVERAL UNDERWRITERS
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
By:
----------------------------------
Title:
49
SCHEDULE I
Underwriter Number of Shares
----------- ----------------
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇
& ▇▇▇▇▇ Incorporated
Advest, Inc.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., Incorporated
BB&T Capital Markets, a division of
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated
J.J.B. ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
McDonald Investment, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
Quick & ▇▇▇▇▇▇, Inc.
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc.
The ▇▇▇▇▇▇▇ Companies Incorporated
SunTrust ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ Fargo Securities LLC
50
EXHIBIT A
FORM OF ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP OPINION
1. The Fund (A) has been duly formed and is validly existing and in good
standing as a statutory trust under the laws of the State of Delaware and has
full 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. The statements made in the Prospectus under the caption "Description of
Shares - Common Shares," insofar as they purport to constitute summaries of the
terms of the Fund's common shares of beneficial interest, constitute accurate
summaries of the terms of such common shares of beneficial interest under the
Fund's Amended and Restated Agreement and Declaration of Trust (the
"Declaration"), By-Laws and under the Delaware Statutory Trust Act (the "DSTA")
in all material respects;
3. All outstanding shares of beneficial interest of the Fund have been duly
authorized and validly issued by the Fund, and are fully paid and nonassessable;
4. The Shares have been duly authorized and, upon payment and delivery in
accordance with the Underwriting Agreement, will be validly issued by the Fund,
fully paid and nonassessable. There are no preemptive rights under federal or
New York law or under the DSTA to subscribe for or purchase Shares 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 Fund's Declaration, 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;
5. (A) Each of the Underwriting Agreement, the Underwriter Participation
Agreement dated as of August __, 2003, among the Fund, the Investment Adviser
and Claymore Securities, Inc. ("Claymore") (the "Underwriter Participation
Agreement") the
51
Investment Advisory Agreement dated as of August __, 2003 between the Fund and
the Investment Adviser and the Waiver Reliance Letter dated as of August __,
2003 between the Fund and the Investment Adviser (collectively, the "Investment
Advisory Agreement), the Custody Agreement dated as of August __, 2003 between
the Fund and The Bank of New York (the "Custody Agreement"), and the Stock
Transfer Agency Agreement dated as of August __, 2003 between the Fund and The
Bank of New York (the "Transfer Agency Agreement"; collectively with the
Investment Advisory Agreement and Custody 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 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;
6. The issue and sale of the Shares by the Fund and the compliance by the Fund
with the provisions of the Underwriting Agreement, the Underwriter Participation
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 Fund's Declaration or By-Laws, or
any federal or New York statute or any rule or regulation thereunder or the DSTA
or any rule or regulation thereunder, 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 any of its properties;
7. No consent, approval, authorization, order, registration or qualification
of or with any federal or New York governmental agency or body or any Delaware
governmental agency or body acting pursuant to the DSTA 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
52
Underwriting Agreement, the Underwriter Participation Agreement and the Fund
Agreements, except for 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;
8. 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,
which are required to be described in the Prospectus;
9. The statements made in the Prospectus under the caption "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;
10. 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);
11. 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.
We have been advised that the Registration Statement has become effective under
the 1933 Act and the 1933 Act Rules and Regulations and the Prospectus was filed
on August __, 2003 pursuant to Rule 497(h) of the 1933 Act Rules and
Regulations, and 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,
to our knowledge, no proceedings
53
for that purpose have been instituted or threatened by the Commission.
We have been advised by the Fund that the Shares have been authorized for
listing, subject to notice of issuance, on the New York Stock Exchange.
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 PricewaterhouseCoopers LLP 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 its date,
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 or statistical data 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 its
date 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 or statistical data
contained or incorporated by reference in the Registration Statement or the
Prospectus.
54
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 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 from acting under the Investment Adviser and the Waiver
Reliance Letter dated as of August __, 2003 between the Fund and the Investment
Adviser (collectively, the "Investment Advisory Agreement) for the Fund as
contemplated by the Prospectus;
3. Each of the Underwriting Agreement, the Advisory Agreement, the Corporate
Finance Services and Consulting Agreement dated as of August __. 2003 between
the Investment Adviser and ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. (the "Services Agreement")
and the Underwriter Participation Agreement dated August __, 2003 among the
Fund, the Investment Adviser and Claymore Securities, Inc. (the "Participation
Agreement," and, together with the Underwriting Agreement, the Investment
Advisory Agreement and the Services Agreement, 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 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
55
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;
4. 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;
5. 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;
6. 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.
56
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, contains any
untrue statement of a material fact concerning the Investment Adviser 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.
57