Exhibit (h)
Advent Claymore Convertible Securities and Income Fund
(a Delaware statutory trust)
Auction Market Preferred Shares ("AMPS")
2,150 Shares AMPS, Series M7
2,150 Shares AMPS, Series T28
2,150 Shares AMPS, Series W7
2,150 Shares AMPS, Series TH28
Liquidation Preference $25,000 per share
FORM OF PURCHASE AGREEMENT
July , 2003
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Wachovia Capital Markets, LLC
c/▇ ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
Advent Claymore Convertible Securities and Income Fund, a Delaware
statutory trust (the "Fund"), proposes, upon the terms and conditions set forth
herein, to issue and sell an aggregate of 2,150 Shares of its Auction Market
Preferred Stock, Series M7, 2,150 Shares of its Auction Market Preferred Stock,
Series T28, 2,150 Shares of its Auction Market Preferred Stock, Series W7 and
2,150 Shares of its Auction Market Preferred Stock, Series TH28 (the "AMPS").
The AMPS will be authorized by, and subject to the terms and conditions of, the
Fund's Agreement and Declaration of Trust, dated as of February 19, 2003 (the
"Charter"), in the form filed as an exhibit to the Registration Statement
referred to in the second following paragraph to this Agreement, as the same may
be amended from time to time. The Fund and the Fund's investment adviser, Advent
Capital Management, LLC, a Delaware limited liability company (the "Advisor"),
each confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated (together, "▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other
Underwriters named in Schedule A hereto (collectively, the "Underwriters", which
term shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇ and [Co-Managers] are acting as
representatives (in such capacity, the "Representatives"), with respect to the
issue and sale by the Fund and the purchase by the Underwriters, acting
severally and not jointly, of the respective number of AMPS set forth in said
SCHEDULE A.
The Fund understands that the Underwriters propose to make a public
offering of the AMPS as soon as the Representatives deem advisable after this
Agreement has been executed and delivered.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-105785 and No.
811-21309) covering the registration of the AMPS under the Securities Act of
1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses, and a notification on Form N-8A of registration (the
"1940 Act notification") of the Fund as an investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations of the Commission under the 1933 Act and the 1940 Act (the "Rules
and Regulations"). Promptly after execution and delivery of this Agreement, the
Fund will either (i) prepare and file a prospectus in accordance with the
provisions of Rule 430A ("Rule 430A") of the Rules and Regulations and paragraph
(c) or (h) of Rule 497 ("Rule 497") of the Rules and Regulations or (ii) if the
Fund has elected to rely upon Rule 434 ("Rule 434") of the Rules and
Regulations, prepare and file a term sheet (a "Term Sheet") in accordance with
the provisions of Rule 434 and Rule 497. The information included in any such
prospectus or in any such Term Sheet, as the case may be, that was omitted from
such registration statement at the time it became effective but that is deemed
to be part of such registration statement at the time it became effective, if
applicable, (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information." Each prospectus used before such registration statement
became effective, and any prospectus that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, including in each
case any statement of additional information incorporated therein by reference,
is herein called a "preliminary prospectus." Such registration statement,
including the exhibits thereto and schedules thereto at the time it became
effective and including the Rule 430A Information or the Rule 434 Information,
as applicable, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the Rules and Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final prospectus in the form first furnished to the Underwriters
for use in connection with the offering of the AMPS, including the Statement of
Additional Information incorporated therein by reference, is herein called the
"Prospectus." If Rule 434 is relied on, the term "Prospectus" shall refer to the
preliminary prospectus dated July 15, 2003 together with the Term Sheet and all
references in this Agreement to the date of the Prospectus shall mean the date
of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) REPRESENTATIONS AND WARRANTIES BY THE FUND AND THE ADVISOR. The
Fund and the Advisor jointly and severally represent and warrant to each
Underwriter as of the date hereof, as of the Closing Time referred to in Section
2(c) hereof, and agree with each Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act, or order of
suspension or revocation of registration pursuant to Section 8(e) of
the 1940 Act, and no proceedings for any such purpose have been
instituted or are pending or, to the knowledge of the Fund or the
Advisor, are contemplated by the
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Commission, and any request on the part of the Commission for
additional information has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time, the Registration Statement,
the Rule 462(b) Registration Statement, the notification of Form N-8A
and any amendments and supplements thereto complied and will comply in
all material respects with the requirements of the 1933 Act, the 1940
Act and the Rules and Regulations and did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. Neither the Prospectus nor any amendments or
supplements thereto, at the time the Prospectus or any such amendment
or supplement was issued and at the Closing Time, included or will
include an untrue statement of a material fact or omitted or will omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. If Rule 434 is used, the Fund will comply with the
requirements of Rule 434 and the Prospectus shall not be "materially
different", as such term is used in Rule 434, from the prospectus
included in the Registration Statement at the time it became effective.
Each preliminary prospectus and the prospectus filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 497 under the 1933 Act,
complied when so filed in all material respects with the Rules and
Regulations and each preliminary prospectus and the Prospectus
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted
by Regulation S-T.
If a Rule 462(b) Registration Statement is required in
connection with the offering and sale of the AMPS, the Fund has
complied or will comply with the requirements of Rule 111 under the
1933 Act Regulations relating to the payment of filing fees thereof.
(ii) INDEPENDENT ACCOUNTANTS. The accountants who certified
the statement of assets and liabilities included in the Registration
Statement are independent public accountants as required by the 1933
Act and the Rules and Regulations.
(iii) FINANCIAL STATEMENTS. The financial statements included
in the Registration Statement and the Prospectus, together with the
related notes, presents fairly the financial position of the Fund at
the date indicated; said statement has been prepared in conformity with
generally accepted accounting principles ("GAAP").
(iv) EXPENSE SUMMARY. The information set forth in the
Prospectus in the Fee Table has been prepared in accordance with the
requirements of Form N-2 and to the extent estimated or projected, such
estimates or projections are reasonably believed to be attainable and
reasonably based.
(v) NO MATERIAL ADVERSE CHANGE. Since the respective dates as
of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Fund,
whether or not arising in the ordinary course of business (a "Material
Adverse Effect"), (B) there have been no transactions entered into by
the Fund, other than those in the ordinary course of business, which
are material with respect to the Fund, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Fund
on any class of its capital stock, other than dividends declared on the
Fund's common stock.
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(vi) GOOD STANDING OF THE FUND. The Fund has been duly
organized and is validly existing as a statutory trust in good standing
under the laws of the State of Delaware and has the power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its
obligations under this Agreement; and the Fund is duly qualified as a
foreign trust to transact business and is in good standing in each
other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(vii) NO SUBSIDIARIES. The Fund has no subsidiaries.
(viii) INVESTMENT COMPANY STATUS. The Fund is duly registered
with the Commission under the 1940 Act as a closed-end diversified
management investment company, and no order of suspension or revocation
of such registration has been issued or proceedings therefor initiated
or threatened by the Commission.
(ix) OFFICERS AND TRUSTEES. No person is serving or acting as
an officer, trustee or investment adviser of the Fund except in
accordance with the provisions of the 1940 Act and the Rules and
Regulations and the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and the rules and regulations of the Commission
promulgated under the Advisers Act (the "Advisers Act Rules and
Regulations"). Except as disclosed in the Registration Statement and
the Prospectus (or any amendment or supplement to either of them), no
trustee of the Fund is 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.
(x) CAPITALIZATION. The authorized, issued and outstanding
shares of beneficial interest of the Fund is as set forth in the
Prospectus as of the date thereof under the caption "Capitalization
(unaudited)." All issued and outstanding shares of beneficial interest
of the Fund have been duly authorized and validly issued and are fully
paid and non-assessable, except as provided for in the Fund's Charter,
and have been offered and sold or exchanged by the Fund in compliance
with all applicable laws (including, without limitation, federal and
state securities laws); none of the outstanding shares of beneficial
interest of the Fund was issued in violation of the preemptive or other
similar rights of any securityholder of the Fund.
(xi) AUTHORIZATION AND DESCRIPTION OF AMPS. The AMPS to be
purchased by the Underwriters from the Fund have been duly authorized
for issuance and sale to the Underwriters pursuant to this Agreement
and, when issued and delivered by the Fund pursuant to this Agreement
against payment of the consideration set forth herein, will be validly
issued and fully paid and non-assessable, except as provided for in the
Fund's Charter. The AMPS conform to all statements relating thereto
contained in the Prospectus and such description conforms to the rights
set forth in the instruments defining the same; no holder of the AMPS
will be subject to personal liability by reason of being such a holder;
and the issuance of the AMPS is not subject to the preemptive or other
similar rights of any securityholder of the Fund.
(xii) ABSENCE OF DEFAULTS AND CONFLICTS. The Fund is not in
violation of its Charter or bylaws, or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which
it is a party or by which it may be bound, or to which any of the
property or assets of the Fund is subject (collectively, "Agreements
and Instruments") except for such violations or defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement, the Management Agreement, the
Administration Agreement, the Custodian Agreement, the Stock Transfer
Agency Agreement and the Auction Agency Agreement referred to in the
Registration Statement (as used
4
herein, the "Management Agreement," the "Administration Agreement," the
"Custodian Agreement" the "Stock Transfer Agency Agreement," and the
"Auction Agency Agreement" respectively) and the consummation of the
transactions contemplated herein and in the Registration Statement
(including the issuance and sale of the AMPS and the use of the
proceeds from the sale of the AMPS as described in the Prospectus under
the caption "Use of Proceeds") and compliance by the Fund with its
obligations hereunder have been duly authorized by all necessary
corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Fund pursuant
to, the Agreements and Instruments (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not result in
a Material Adverse Effect), nor will such action result in any
violation of the provisions of the Charter or bylaws of the Fund or any
applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Fund or any of its assets,
properties or operations. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Fund.
(xiii) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Fund or the Advisor, threatened, against or
affecting the Fund, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which
might reasonably be expected to result in a Material Adverse Effect, or
which might reasonably be expected to materially and adversely affect
the properties or assets of the Fund or the consummation of the
transactions contemplated in this Agreement or the performance by the
Fund of its obligations hereunder. The aggregate of all pending legal
or governmental proceedings to which the Fund is a party or of which
any of its property or assets is the subject which are not described in
the Registration Statement, including ordinary routine litigation
incidental to the business, could not reasonably be expected to result
in a Material Adverse Effect.
(xiv) ACCURACY OF EXHIBITS. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits thereto by the
1933 Act, the 1940 Act or by the Rules and Regulations which have not
been so described and filed as required.
(xv) POSSESSION OF INTELLECTUAL PROPERTY. The Fund owns or
possesses, or can acquire on reasonable terms, adequate patents, patent
rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks, trade names or other intellectual property (collectively,
"Intellectual Property") necessary to carry on the business now
operated by the Fund, and the Fund has not received any notice or is
not otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any
facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Fund therein, and
which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, singly or in
the aggregate, would result in a Material Adverse Effect, provided that
the Fund's right to use the name "Advent" is limited as set forth in
Section 14 of the Management Agreement.
5
(xvi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Fund of its
obligations hereunder, in connection with the offering, issuance or
sale of the AMPS hereunder or the consummation of the transactions
contemplated by this Agreement, except such as have been already
obtained or as may be required under the 1933 Act, the 1940 Act or
state securities laws.
(xvii) POSSESSION OF LICENSES AND PERMITS. The Fund possesses
such permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies
necessary to operate its properties and to conduct the business as
contemplated in the Prospectus; the Fund is in compliance with the
terms and conditions of all such Governmental Licenses, except where
the failure so to comply would not, singly or in the aggregate, have a
Material Adverse Effect; all of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to
be in full force and effect would not have a Material Adverse Effect;
and the Fund has not received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
(xviii) ADVERTISEMENTS. Any advertising, sales literature or
other promotional material (including "prospectus wrappers", "broker
kits," "road show slides" and "road show scripts" and "electronic road
show presentations") authorized in writing by or prepared by the Fund
or the Advisor used in connection with the public offering of the AMPS
(collectively, "sales material") does not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading. Moreover, all sales material complied and will comply in
all material respects with the applicable requirements of the 1933 Act,
the 1940 Act, the Rules and Regulations and the rules and
interpretations of the National Association of Securities Dealers, Inc
("NASD").
(xix) SUBCHAPTER M. The Fund intends to direct the investment
of the proceeds of the offering described in the Registration Statement
in such a manner as to comply with the requirements of Subchapter M of
the Internal Revenue Code of 1986, as amended ("Subchapter M of the
Code" and the "Code," respectively), and intends to qualify as a
regulated investment company under Subchapter M of the Code.
(xx) DISTRIBUTION OF OFFERING OR OTHER MATERIALS. The Fund has
not distributed or made available, or permitted any other person to
distribute or make available, and, prior to the later to occur of (A)
the Closing Time and (B) completion of the distribution of the AMPS,
the Fund will not distribute, nor will it permit any other person to
distribute or make available any material (including, without
limitation, any material distributed or made available by mail, radio,
television, printed publication or by internet) in connection with the
offering and sale of the AMPS or otherwise having the affect to
condition the market for the offer of the AMPS, other than the
Registration Statement, a preliminary prospectus, the Prospectus or
other materials, if any, permitted by the 1933 Act or the 1940 Act or
the Rules and Regulations.
(xxi) ACCOUNTING CONTROLS. The Fund maintains a system of
internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorization and with the applicable
requirements of the 1940 Act, the Rules and Regulations and the Code;
(B) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets and to maintain
compliance with the books and records requirements under the 1940 Act
and the Rules and
6
Regulations; (C) access to assets is permitted only in accordance with
the management's general or specific authorization; and (D) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(xxii) ABSENCE OF UNDISCLOSED PAYMENTS. To the Fund's
knowledge, neither the Fund nor any employee or agent of the Fund has
made any payment of funds of the Fund or received or retained any
funds, which payment, receipt or retention of funds is of a character
required to be disclosed in the Prospectus.
(xxiii) MATERIAL AGREEMENTS. This Agreement, the Management
Agreement, the Administration Agreement, the Custodian Agreement, the
Stock Transfer Agency Agreement and the Auction Agency Agreement have
each been duly authorized by all requisite action on the part of the
Fund and executed and delivered by the Fund, as of the dates noted
therein, and each complies with all applicable provisions of the 1940
Act. Assuming due authorization, execution and delivery by the other
parties thereto with respect to the Management Agreement, the
Administration Agreement, the Custodian Agreement, the Stock Transfer
Agency Agreement and the Auction Agency Agreement, each of the
Management Agreement, the Administration Agreement, the Custodian
Agreement, the Stock Transfer Agency Agreement, and the Auction Agency
Agreement constitutes a valid and binding agreement of the Fund,
enforceable in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law).
(xxiv) REGISTRATION RIGHTS. There are no persons with
registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise
registered by the Fund under the 1933 Act.
(xxv) RATINGS. The AMPS have been, or prior to the Closing
Time will be, assigned a rating of "Aaa" by ▇▇▇▇▇'▇ Investors Service,
Inc. ("▇▇▇▇▇'▇") and "AAA" by Fitch Ratings ("Fitch").
(xxvi) LEVERAGE. The Fund has no liability for borrowed money,
including under any reverse repurchase agreements.
(b) REPRESENTATIONS AND WARRANTIES BY THE ADVISOR. The Advisor
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof as follows:
(i) GOOD STANDING OF THE ADVISOR. The Advisor has been duly
organized and is validly existing and in good standing as a limited
liability company under the laws of the State of Delaware with full
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is duly
qualified as a foreign company to transact business and is in good
standing in each other jurisdiction in which such qualification is
required.
(ii) INVESTMENT ADVISOR STATUS. The Advisor is duly registered
and in good standing with the Commission as an investment adviser under
the Advisers Act, and is not prohibited by the Advisers Act or the 1940
Act, or the rules and regulations under such acts, from acting under
the Management Agreement for the Fund as contemplated by the
Prospectus.
(iii) DESCRIPTION OF ADVISOR. The description of the Advisor
in the Registration Statement and the Prospectus (and any amendment or
supplement to either of them) complied and comply in all material
respects with the provisions of the 1933 Act, the 1940 Act, the
Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations and is true and correct and does not contain any untrue
statement of a material fact or omit to state any material
7
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(iv) CAPITALIZATION. The Advisor has the financial resources
available to it necessary for the performance of its services and
obligations as contemplated in the Prospectus, this Agreement and under
the Management Agreement to which it is a party.
(v) AUTHORIZATION OF AGREEMENTS; ABSENCE OF DEFAULTS AND
CONFLICTS. This Agreement and the Management Agreement have each been
duly authorized, executed and delivered by the Advisor, and the
Management Agreement constitutes a valid and binding obligation of the
Advisor, enforceable in accordance with its terms, except as affected
by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and general equitable principles (whether considered
in a proceeding in equity or at law); and neither the execution and
delivery of this Agreement or the Management Agreement, nor the
performance by the Advisor of its obligations hereunder or thereunder
will conflict with, or result in a breach of any of the terms and
provisions of, or constitute, with or without the giving of notice or
lapse of time or both, a default under, any agreement or instrument to
which the Advisor is a party or by which it is bound, the certificate
of formation, the operating agreement or other organizational documents
of the Advisor, or to the Advisor's knowledge, by any law, order,
decree, rule or regulation applicable to it of any jurisdiction, court,
federal or state regulatory body, administrative agency or other
governmental body, stock exchange or securities association having
jurisdiction over the Advisor or its properties or operations; and no
consent, approval, authorization or order of any court or governmental
authority or agency is required for the consummation by the Advisor of
the transactions contemplated by this Agreement, the Management
Agreement and the Additional Compensation Agreement, except as have
been obtained or may be required under the 1933 Act, the 1940 Act, the
1934 Act or state securities laws.
(vi) NO MATERIAL ADVERSE CHANGE. Since the respective dates as
of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred
any event which should reasonably be expected to have a material
adverse effect on the ability of the Advisor to perform its respective
obligations under this Agreement and the Management Agreement.
(vii) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Advisor, threatened against or affecting the
Advisor or any "affiliated person" of the Advisor (as such term is
defined in the 1940 Act) or any partners, directors, officers or
employees of the foregoing, whether or not arising in the ordinary
course of business, which might reasonably be expected to result in any
material adverse change in the condition, financial or otherwise, or
earnings, business affairs or business prospects of the Advisor,
materially and adversely affect the properties or assets of the Advisor
or materially impair or adversely affect the ability of the Advisor to
function as an investment adviser or perform its obligations under the
Management Agreement, or which is required to be disclosed in the
Registration Statement and the Prospectus.
(viii) ABSENCE OF VIOLATION OR DEFAULT. The Advisor is not in
violation of its certificate of formation, its operating agreement or
other organizational documents or in default under any agreement,
indenture or instrument except for such violations or defaults that
would not result in a Material Adverse Effect on the Advisor or the
Fund.
(c) OFFICER'S CERTIFICATES. Any certificate signed by any officer of
the Fund or the Advisor delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and
8
warranty by the Fund or the Advisor, as the case may be, to each Underwriter
as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) AMPS. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Fund
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Fund, at the
price per share set forth in SCHEDULE B, the number of AMPS set forth in
SCHEDULE A opposite the name of such Underwriter, plus any additional number of
AMPS which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b) COMMISSION. The Fund agrees to pay to the Underwriters a commission
set forth in SCHEDULE B, as compensation to the Underwriters for their
commitments under this Agreement.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the AMPS shall be made at the offices of Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, Four Times Square, New York, New York 10036 or at such other
place as shall be agreed upon by the Representatives and the Fund, at 10:00 A.M.
(Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
Representatives and the Fund (such time and date of payment and delivery being
herein called "Closing Time").
Payment shall be made to the Fund by wire transfer of immediately
available funds to a bank account designated by the Fund, against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the AMPS to be purchased by them. It is understood that each
Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for AMPS that
it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative
of the Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the AMPS to be purchased by any Underwriter whose funds have
not been received by the Closing Time but such payment shall not relieve such
Underwriter from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the AMPS shall be in
such denominations and registered in such names as the Representatives may
request in writing at least one full business day before the Closing Time. The
certificates for the AMPS will be made available for examination and packaging
by the Representatives in the City of New York not later than 10:00 A.M.
(Eastern time) on the business day prior to the Closing Time.
SECTION 3. Covenants.
(a) The Fund and the Advisor, jointly and severally, covenant with each
Underwriter as follows:
(i) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS. The Fund, subject to Section 3(a)(ii), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify
the Representatives immediately, and confirm the notice in writing, (i)
when any post-effective amendment to the Registration Statement shall
become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments
from the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement
to the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing
or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the AMPS for offering or sale in any
jurisdiction, or of the initiation or threatening of any
9
proceedings for any of such purposes. The Fund will promptly effect the
filings necessary pursuant to Rule 497 and will take such steps as it
deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 497 was received for filing by the
Commission and, in the event that it was not, it will promptly file
such prospectus. The Fund will make every reasonable effort to prevent
the issuance of any stop order, or order of suspension or revocation of
registration pursuant to Section 8(e) of the 1940 Act, and, if any such
stop order or order of suspension or revocation of registration is
issued, to obtain the lifting thereof at the earliest possible moment.
(ii) FILING OF AMENDMENTS. The Fund will give the
Representatives notice of its intention to file or prepare any
amendment to the Registration Statement (including any filing under
Rule 462(b)), any Term Sheet or any amendment, supplement or revision
to either the prospectus included in the Registration Statement at the
time it became effective or to the Prospectus, will furnish the
Representatives with copies of any such documents a reasonable amount
of time prior to such proposed filing or use, as the case may be, and
will not file or use any such document to which the Representatives or
counsel for the Underwriters shall object.
(iii) DELIVERY OF REGISTRATION STATEMENTS. The Fund has
furnished or will deliver to the Representatives and counsel for the
Underwriters, without charge, signed copies of the Registration
Statement as originally filed and of each amendment thereto (including
exhibits filed therewith or incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will
also deliver to the Representatives, without charge, a conformed copy
of the Registration Statement as originally filed and of each amendment
thereto (without exhibits) for each of the Underwriters. The copies of
the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the
extent permitted by Regulation S-T.
(iv) DELIVERY OF PROSPECTUSES. The Fund has delivered to each
Underwriter, without charge, as many copies of each preliminary
prospectus as such Underwriter reasonably requested, and the Fund
hereby consents to the use of such copies for purposes permitted by the
1933 Act. The Fund will furnish to each Underwriter, without charge,
during the period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, such number of copies of the Prospectus
(as amended or supplemented) as such Underwriter may reasonably
request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇,
except to the extent permitted by Regulation S-T.
(v) CONTINUED COMPLIANCE WITH SECURITIES LAWS. If at any time
when a prospectus is required by the 1933 Act to be delivered in
connection with sales of the AMPS, any event shall occur or condition
shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriters or for the Fund, to amend the Registration
Statement or amend or supplement the Prospectus in order that the
Prospectus will not include any untrue statements of a material fact or
omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, or if it shall be necessary,
in the opinion of such counsel, at any such time to amend the
Registration Statement or amend or supplement the Prospectus in order
to comply with the requirements of the 1933 Act or the Rules and
Regulations, the Fund will promptly prepare and file with the
Commission, subject to Section 3(a)(ii), such amendment or supplement
as may be necessary to correct such statement or omission or to make
the Registration Statement or the Prospectus comply with such
requirements, and the Fund will furnish to the Underwriters such number
of copies of such amendment or supplement as the Underwriters may
reasonably request.
10
(vi) BLUE SKY QUALIFICATIONS. The Fund will use its best
efforts, in cooperation with the Underwriters, to qualify the AMPS for
offering and sale under the applicable securities laws of such states
and other jurisdictions of the United States as the Representatives may
designate and to maintain such qualifications in effect for a period of
not less than one year from the later of the effective date of the
Registration Statement and any Rule 462(b) Registration Statement;
provided, however, that the Fund shall not be obligated to file any
general consent to service of process or to qualify as a foreign trust
or as a dealer in securities in any jurisdiction in which it is not so
qualified or to subject itself to taxation in respect of doing business
in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the AMPS have been so qualified, the Fund will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of
not less than one year from the effective date of the Registration
Statement and any Rule 462(b) Registration Statement.
(vii) RULE 158. The Fund will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(viii) USE OF PROCEEDS. The Fund will use the net proceeds
received by it from the sale of the AMPS in the manner specified in the
Prospectus under "Use of Proceeds".
(ix) REPORTING REQUIREMENTS. The Fund, during the period when
the Prospectus is required to be delivered under the 1933 Act or the
1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1940 Act and the 1934 Act within the time
periods required by the 1940 Act and the Rules and Regulations and the
1934 Act and the rules and regulations of the Commission thereunder,
respectively.
(x) SUBCHAPTER M. The Fund will comply with the requirements
of Subchapter M of the Code to qualify as a regulated investment
company under the Code.
(xi) NO MANIPULATION OF MARKET FOR AMPS. The Fund will not (a)
take, directly or indirectly, any action designed to cause or to result
in, or that might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Fund
to facilitate the sale or resale of the AMPS, and (b) until the Closing
Time (i) sell, bid for or purchase the AMPS or pay any person any
compensation for soliciting purchases of the AMPS or (ii) pay or agree
to pay to any person any compensation for soliciting another to
purchase any other securities of the Fund.
(xii) RULE 462(b) REGISTRATION STATEMENT. If the Fund elects
to rely upon Rule 462(b), the Fund shall file a Rule 462(b)
Registration Statement with the Commission in compliance with Rule
462(b) by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement, and the Fund shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or
give irrevocable instructions for the payment of such fee pursuant to
Rule 111(b) under the 1933 Act.
(xiii) ACCOUNTANT'S CERTIFICATE. The Fund will furnish to the
Underwriters, on the date on which delivery is made to the ▇▇▇▇▇'▇
Investors Service, Inc. and Standard & Poor's Ratings Group, the
Accountant's Confirmation (as defined in the Charter) corresponding to
the Certificate of Dividend Coverage and Certificate of Eligible Asset
Coverage (as defined in the Charter) for the first Annual Valuation
Date (as defined in the Charter) following the Closing Time.
(b) Except as provided in this Agreement, the Fund will not sell,
contract to sell or otherwise dispose of any of its preferred shares of
beneficial interest of the same series as the AMPS or any securities convertible
into or exercisable or exchangeable for its preferred shares of beneficial
interest of
11
the same series as the AMPS, or grant any options or warrants to purchase its
preferred shares of beneficial interest of the same series as the AMPS, for a
period of 180 days after the date of the Prospectus, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION 4. Payment of Expenses.
(a) EXPENSES. The Fund will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the AMPS, (iii) the preparation, issuance and delivery of the certificates
for the AMPS to the Underwriters, including any stock or other transfer taxes
and any stamp or other duties payable upon the sale, issuance or delivery of the
AMPS to the Underwriters, (iv) the fees and disbursements of the Fund's counsel,
accountants and other advisers, (v) the qualification of the AMPS under
securities laws in accordance with the provisions of Section 3(a)(vi) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus,
Prospectus and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey and
any supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the AMPS, (ix) the filing fees incident to, and the reasonable
fees and disbursements of counsel to the Underwriters in connection with, the
review by the NASD of the terms of the sale of the AMPS, (x) the printing of any
sales material.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section 9(a)
hereof, the Fund and the Advisor, jointly and severally, agree that they shall
reimburse the Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations.
The obligations of the several Underwriters hereunder are subject to
the accuracy of the representations and warranties of the Fund and the Advisor
contained in Section 1 hereof or in certificates of any officer of the Fund or
the Advisor delivered pursuant to the provisions hereof, to the performance by
the Fund and the Advisor of their respective covenants and other obligations
hereunder, and to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act, no notice or
order pursuant to Section 8(e) of the 1940 Act shall have been issued, and no
proceedings with respect to either shall have been initiated or threatened by
the Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Underwriters. A prospectus containing the Rule 430A Information
shall have been filed with the Commission in accordance with Rule 497 (or a
post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A) or, if the
Fund has elected to rely on upon Rule 434, a Term Sheet shall have been filed
with the Commission in accordance with Rule 497.
(b) OPINION OF COUNSEL FOR THE FUND AND THE ADVISOR. At Closing Time,
the Representatives shall have received the favorable opinions, dated as of
Closing Time, from ▇▇▇▇▇▇▇, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the
Fund and ▇▇▇▇ ▇▇▇▇▇▇, counsel for the Advisor, in form and substance
12
reasonably satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letters for each of the other Underwriters
substantially to the effect set forth in EXHIBIT A hereto and to such further
effect as counsel to the Underwriters may reasonably request.
(c) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Clifford Chance US LLP, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in clauses (A) (i), (ii), (vi), (vii)
(solely as to preemptive or other similar rights arising by operation of law or
under the Charter or bylaws of the Fund), (viii) through (x), inclusive, (xiv)
(solely as to the information in the Prospectus under "Description of AMPS") and
the last paragraph of EXHIBIT A hereto. In giving such opinion such counsel may
rely, as to all matters governed by the laws of jurisdictions other than the law
of the State of New York and the federal law of the United States, upon the
opinions of counsel satisfactory to the Representatives. Such counsel may also
state that, insofar as such opinion involves factual matters, they have relied,
to the extent they deem proper, upon certificates of officers of the Fund and
certificates of public officials.
(d) OFFICERS' CERTIFICATES. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings or business affairs or business prospects of
the Fund, whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of a duly authorized officer
of the Fund and of the chief financial or chief accounting officer of the Fund
and of the President or a Vice President or Managing Director of the Advisor,
dated as of Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Sections 1(a) and (b)
hereof are true and correct with the same force and effect as though expressly
made at and as of Closing Time, (iii) each of the Fund and the Advisor,
respectively, has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to Closing Time and (iv) no
stop order suspending the effectiveness of the Registration Statement, or order
of suspension or revocation of registration pursuant to Section 8(e) of the 1940
Act, has been issued and no proceedings for any such purpose have been
instituted or are pending or are contemplated by the Commission.
(e) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the Representatives shall have received from PricewaterhouseCoopers
LLP, a letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(f) BRING-DOWN COMFORT LETTER. At Closing Time, the Representatives
shall have received from PricewaterhouseCoopers LLP a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(g) RATING. The Fund shall have delivered and you shall have received
evidence satisfactory to you that the AMPS are rated `Aaa' by Moody's and `AAA'
by Fitch as of the Closing Date, and there shall not have been given any notice
of any intended or potential downgrading, or of any review for a potential
downgrading, in the rating accorded to the AMPS or any other securities of the
Fund issued by Moody's or by Fitch.
(h) ASSET COVERAGE. As of the Closing Time and assuming the receipt of
the net proceeds from the sale of the AMPS, the Investment Company Act Preferred
Shares Asset Coverage and the Preferred Shares Basic Maintenance Amount (each as
defined in the Charter) each will be met.
13
(i) ADDITIONAL DOCUMENTS. At Closing Time, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may require
for the purpose of enabling them to pass upon the issuance and sale of the AMPS
as herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Fund and the Advisor in
connection with the organization and registration of the Fund under the 1940 Act
and the issuance and sale of the AMPS as herein contemplated shall be
satisfactory in form and substance to the Representatives and counsel for the
Underwriters.
(j) TERMINATION OF AGREEMENT. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representatives by notice to the Fund at any
time at or prior to Closing Time and such termination shall be without liability
of any party to any other party except as provided in Section 4 and except that
Sections 1, 6, 7, 8 and 13 shall survive any such termination and remain in full
force and effect.
SECTION 6. Indemnification.
(a) INDEMNIFICATION OF UNDERWRITERS. The Fund and the Advisor, jointly
and severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, and any director, officer, employee
or affiliate thereof as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 6(e) below) any such settlement is effected
with the written consent of the Fund and the Advisor; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇
▇▇▇▇▇), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund or the
Advisor by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
14
(b) INDEMNIFICATION OF FUND, ADVISOR, TRUSTEES AND OFFICERS. Each
Underwriter severally agrees to indemnify and hold harmless the Fund and the
Advisor, their respective trustees, each of the Fund's officers who signed the
Registration Statement, and each person, if any, who controls the Fund or the
Advisor within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Fund or the Advisor by such Underwriter
through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) INDEMNIFICATION FOR MARKETING MATERIALS. In addition to the
foregoing indemnification, the Fund and the Advisor also, jointly and severally,
agree to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, against any and all loss, liability, claim, damage
and expense described in the indemnity contained in Section 6(a), as limited by
the proviso set forth therein, with respect to any sales material.
(d) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Fund and the Advisor. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(e) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
15
SECTION 7. Contribution.
If the indemnification provided for in Section 6 hereof is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Fund and the Advisor on the one
hand and the Underwriters on the other hand from the offering of the AMPS
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Fund and the Advisor on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Fund and the Advisor on the one
hand and the Underwriters on the other hand in connection with the offering of
the AMPS pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the AMPS pursuant to
this Agreement (before deducting expenses) received by the Fund and the total
underwriting discount received by the Underwriters (whether from the Fund or
otherwise), in each case as set forth on the cover of the Prospectus or, if Rule
434 is used, the corresponding location on the Term Sheet, bear to the aggregate
initial public offering price of the AMPS as set forth on such cover.
The relative fault of the Fund and the Advisor on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Fund or the Advisor or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Fund, the Advisor and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the AMPS underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each trustee of the Fund and each director of the Advisor, respectively, each
officer of the Fund who signed the Registration Statement, and each person, if
any, who controls the Fund or the Advisor, within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Fund and the Advisor, respectively. The
16
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of AMPS set forth opposite their
respective names in SCHEDULE A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery.
All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Fund or the Advisor submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or controlling
person, or by or on behalf of the Fund or the Advisor, and shall survive
delivery of the AMPS to the Underwriters.
SECTION 9. Termination of Agreement.
(a) TERMINATION; GENERAL. The Representatives may terminate this
Agreement, by notice to the Fund, at any time at or prior to Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund or the Advisor,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or the international financial markets, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospective change in national or international political, financial
or economic conditions, in each case the effect of which is such as to make it,
in the judgment of the Representatives, impracticable or inadvisable to market
the AMPS or to enforce contracts for the sale of the AMPS, or (iii) if trading
in the shares of common stock of the Fund has been suspended or materially
limited by the Commission or the NYSE, or if trading generally on the NYSE or
the American Stock Exchange or in the Nasdaq National Market has been suspended
or materially limited, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the NASD or any other governmental
authority, or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States, or (iv) if a
banking moratorium has been declared by either Federal or New York authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7, 8 and 13 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at Closing Time to
purchase the AMPS which it or they are obligated to purchase under this
Agreement (the "Defaulted AMPS"), the Representatives shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted AMPS in such amounts as may be agreed upon and
upon the terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted AMPS does not exceed 10% of the number
of AMPS to be purchased on such date, each of the non-defaulting Underwriters
shall be obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted AMPS exceeds 10% of the number of AMPS
to be purchased on such date, this Agreement shall terminate without liability
on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
17
In the event of any such default which does not result in a termination
of this Agreement, either the Representatives or the Fund shall have the right
to postpone Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.
SECTION 11. Tax Disclosure.
Notwithstanding any other provision of this Agreement, from the
commencement of discussions with respect to the transactions contemplated
hereby, the Fund and the Adviser (and each employee, representative or other
agent of the Fund) may disclose to any and all persons, without limitation of
any kind, the tax treatment and tax structure (as such terms are used in
Sections 6011, 6111 and 6112 of the U.S. Code and the Treasury Regulations
promulgated thereunder) of the transactions contemplated by this Agreement and
all materials of any kind (including opinions or other tax analyses) that are
provided relating to such tax treatment and tax structure.
SECTION 12. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representatives, ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., 4 World Financial Center, New York, New
York 10080, attention of Equity Capital Markets; and notices to the Fund or the
Advisor shall be directed, as appropriate, to the office of Advent Capital
Management, LLC, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
attention of ▇▇▇▇ ▇▇▇▇▇▇.
SECTION 13. Parties.
This Agreement shall each inure to the benefit of and be binding upon
the Underwriters, the Fund, the Advisor and their respective partners and
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Fund, the Advisor and their respective successors and the
controlling persons and officers and trustees referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters, the Fund, the
Advisor and their respective partners and successors, and said controlling
persons and officers, trustees and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of AMPS from any Underwriter shall be deemed to be a successor by
reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED IN SAID STATE. UNLESS OTHERWISE EXPLICITLY PROVIDED, SPECIFIED TIMES
OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
18
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriters, the Fund and the Advisor in accordance with its terms.
Very truly yours,
ADVENT CLAYMORE CONVERTIBLE SECURITIES AND INCOME FUND
By:
-------------------------------------------------
Name:
Title:
ADVENT CAPITAL MANAGEMENT, LLC
By:
-------------------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
[other Underwriters]
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
By:
------------------------------------------------
Authorized Signatory
For themselves and as
Representatives of the
other Underwriters named
in SCHEDULE A hereto.
19
SCHEDULE A
NUMBER OF INITIAL AMPS
----------------------
SERIES SERIES SERIES SERIES
UNDERWRITER M7 T28 W7 TH28
----------- ------ ------ ------ ------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Wachovia Capital Markets, LLC
Sch A-1
SCHEDULE B
Advent Claymore Convertible Securities and Income Fund
Auction Market Preferred Shares
2,150 Shares Series M7
2,150 Shares Series T28
2,150 Shares Series W7
2,150 Shares Series TH28
Liquidation Preference $25,000 per share
1. The initial public offering price per share for the AMPS, determined
as provided in said Section 2, shall be $25,000.
2. The purchase price per share for the AMPS to be paid by the several
Underwriters shall be $ , such discount from the initial public offering
price representing the commission to be paid to the Underwriters for their
commitment hereunder of $ per share.
3. The initial dividend rate of the AMPS, Series M7 shall be % per
annum.
4. The initial dividend rate of the AMPS, Series T28 shall be % per
annum.
5. The initial dividend rate of the AMPS, Series W7 shall be % per
annum.
6. The initial dividend rate of the AMPS, Series TH28 shall be % per
annum.
Sch B-1
Exhibit A
FORM OF OPINION OF FUND'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
A-1
FORM OF OPINION OF ADVISER'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
A-2