Exhibit 99.(h)(i)
CC US LLP DRAFT
2/18/04
TS&W/Claymore Tax-Advantaged Balanced Fund
(a Delaware statutory trust)
Common Shares of Beneficial Interest
(Par Value $.01 per share)
PURCHASE AGREEMENT
March [ ], 2004
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
[co-managers]
c/▇ ▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
TS&W/Claymore Tax-Advantaged Balanced Fund, a Delaware statutory trust (the
"Fund") and the Fund's investment adviser, Claymore Advisors, LLC, a Delaware
limited liability company (the "Investment Adviser") and its investment
sub-adviser, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Inc., a Virginia corporation (the
"Investment Sub-Adviser" and together with the Investment Adviser, the
"Advisers") each confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch,
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), [co-managers] 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 ▇▇▇▇▇▇▇ ▇▇▇▇▇,
[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 common shares of beneficial interest, par value $.01 per
share, of the Fund ("Common Shares") set forth in said SCHEDULE A, and with
respect to the grant by the Fund to the Underwriters, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or any
part of [ ] additional Common Shares for the sole purpose of covering
overallotments, if any. The aforesaid [ ] Common Shares (the "Initial
Securities") to be purchased by the Underwriters and all or any part of the [ ]
Common Shares subject to the option described in Section 2(b) hereof (the
"Option Securities") are hereinafter called, collectively, the "Securities."
The Fund understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-112832 and No.
811-21515) covering the registration of the Securities under the Securities Act
of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses, and a notification on Form N-8A of registration of
the Fund as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations of the Commission under
the 1933
C-1
Act and the 1940 Act (the "Rules and Regulations"). Promptly after execution and
delivery of this Agreement, the Fund will either (i) prepare and file a
prospectus in accordance with the provisions of Rule 430A ("Rule 430A") of the
Rules and Regulations and paragraph (c) or (h) of Rule 497 ("Rule 497") of the
Rules and Regulations or (ii) if the Fund has elected to rely upon Rule 434
("Rule 434") of the Rules and Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 497. The
information included in any such prospectus or in any such Term Sheet, as the
case may be, that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective, if applicable, (a) pursuant to paragraph (b) of
Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to paragraph
(d) of Rule 434 is referred to as "Rule 434 Information." Each prospectus
publicly distributed before such registration statement became effective, and
any prospectus that omitted, as applicable, the Rule 430A Information or the
Rule 434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, including in each case any statement
of additional information incorporated therein by reference, is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto and schedules thereto at the time it became effective and including the
Rule 430A Information and the Rule 434 Information, as applicable, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the Rules and Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final
prospectus in the form first filed under paragraph (c) or (h) of Rule 497 and
furnished to the Underwriters for use in connection with the offering of the
Securities, including the statement of additional information incorporated
therein by reference, is herein called the "Prospectus." If Rule 434 is relied
on, the term "Prospectus" shall refer to the preliminary prospectus dated
[ ], 2004 together with the Term Sheet and all references in this
Agreement to the date of the Prospectus shall mean the date of the Term Sheet.
For purposes of this Agreement, all references to the Registration Statement,
any preliminary prospectus, the Prospectus or any Term Sheet or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) REPRESENTATIONS AND WARRANTIES BY THE FUND AND THE ADVISERS.
The Fund and the Advisers jointly and severally represent and
warrant to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of
each Date of Delivery (if any) referred to in Section 2(b)
hereof, and agree with each Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration
Statement has become effective under the 1933 Act and no stop
order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act, or order of
2
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 Advisers, are contemplated by the Commission,
and any request on the part of the Commission for additional
information has been complied with in all material respects.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement, the notification of Form N-8A and any
amendments and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act, the 1940 Act and the Rules
and Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. Neither
the Prospectus nor any amendments or supplements thereto, on the respective
date of the Prospectus or any such amendment or supplement and at the
Closing Time (and, if any Option Securities are purchased, at the Date of
Delivery), included or will include an untrue statement of a material fact
or omitted or will omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. If Rule 434 is used, the Fund will comply in all
material respects 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
effective Registration Statement or as part of any amendment thereto, or
filed pursuant to Rule 497 under the 1933 Act, complied when so filed in
all material respects with the Rules and Regulations and each preliminary
prospectus and the Prospectus delivered to the Underwriters for use in
connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇,
except to the extent permitted by Regulation S-T.
If a Rule 462(b) Registration Statement is required in connection with
the offering and sale of the Securities, the Fund has complied or will
comply with the requirements of Rule 111 under the 1933 Act Regulations
relating to the payment of filing fees thereof.
The foregoing representations in this Section 1(a)(i) do not apply to
statements or omissions relating to the Underwriters made in reliance on
and in conformity with information furnished in writing to the Fund by the
Underwriters or their agents expressly for use in the Registration
Statement, the 462(b) Registration Statement, Prospectus or preliminary
prospectus (or any amendment or supplement to any of the foregoing), or
with respect to representations of the Fund, the descriptions of each of
Advisers (referred to in Section (1)(b)(iii) of this Agreement) contained
in the foregoing.
(ii) INDEPENDENT ACCOUNTANTS. As of the date of the report of the
independent accountants contained in the Registration
Statement, the accountants who certified the statement of
assets and liabilities included in the Registration Statement
are independent public accountants as required by the 1933 Act
and the Rules and Regulations.
(iii) FINANCIAL STATEMENTS. The statement of assets and liabilities
included in the Registration Statement and the Prospectus,
together with the related notes, presents fairly the financial
position of the Fund in all material respects at the date
indicated;
3
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 shares.
(vi) GOOD STANDING OF THE FUND. The Fund has been duly organized
and is validly existing as an unincorporated voluntary
association in good standing under the laws of the state of
Delaware and has power and authority to own and lease its
properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under
this Agreement; and the Fund is duly qualified to transact
business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(vii) NO SUBSIDIARIES. The Fund has no subsidiaries.
(viii) INVESTMENT COMPANY STATUS. The Fund is duly registered with
the Commission under the 1940 Act as a closed-end diversified
management investment company, and no order of suspension or
revocation of such registration has been issued or proceedings
therefor initiated or, to the knowledge of the Fund or each of
Advisers, 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 (A) an "interested person" (as defined in the 1940
Act) of the Fund or (B) an "affiliated person" (as defined in
the 1940 Act) of any Underwriter. For purposes of this Section
1(a)(ix), the Fund and each of Advisers shall be entitled to
rely on representations from such officers and trustees.
(x) CAPITALIZATION. The authorized, issued and outstanding shares
of beneficial interest of the Fund is as set forth in the
Prospectus. All issued and outstanding common shares of
beneficial interest of the Fund have been duly authorized and
validly issued and are fully paid and non-assessable (except
as described in the Registration Statement) and have been
offered and sold or exchanged by the Fund in compliance with
all
4
applicable laws (including, without limitation, federal and
state securities laws); none of the outstanding common shares
of beneficial interest of the Fund was issued in violation of
the preemptive or other similar rights of any securityholder
of the Fund.
(xi) AUTHORIZATION AND DESCRIPTION OF SECURITIES. The Securities to
be purchased by the Underwriters from the Fund have been duly
authorized for issuance and sale to the Underwriters pursuant
to this Agreement and, when issued and delivered by the Fund
pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and
fully paid and non-assessable (except as described in the
Registration Statement). In all material respects, the Common
Shares conform to all statements relating thereto contained in
the Prospectus and such description conforms to the rights set
forth in the instruments defining the same, to the extent such
rights are set forth; no holder of the Securities will be
subject to personal liability by reason of being such a holder
(except as described in the Registration Statement); and the
issuance of the Securities is not subject to the preemptive or
other similar rights of any securityholder of the Fund.
(xii) ABSENCE OF DEFAULTS AND CONFLICTS. The Fund is not in
violation of its agreement and declaration of trust or
by-laws, each as amended from time to time, or in default in
the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease
or other agreement or instrument to which it is a party or by
which it may be bound, or to which any of the property or
assets of the Fund is subject (collectively, "Agreements and
Instruments") except for such violations or defaults that
would not result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement, the
Investment Advisory Agreement dated as of [ ], 2004
between the Fund and the Investment Adviser (the "Management
Agreement"), the Sub-Advisory Agreement dated as of [ ],
2004 among the Fund, the Investment Adviser and the Investment
Sub-Adviser (the "Sub-Advisory Agreement"), the Custodian
Contract dated as of [ ], 2004 between the Fund
and [ ] (the "Custodian Agreement") and the
Registrar, Transfer Agency and Service Agreement dated as of
[ ], 2004 between the Fund and [ ]
(the "Transfer Agency Agreement") and the consummation of the
transactions contemplated herein and in the Registration
Statement (including the issuance and sale of the Securities
and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Fund with its obligations
hereunder have been duly authorized by all necessary action
under the Delaware Statutory Trust Act (the "Delaware Act")
and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute
a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Fund
pursuant to, the Agreements and Instruments (except for such
conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse
Effect), nor will such action result in any violation (except
for such violations that will not result in a Material Adverse
Effect) of the provisions of the agreement and declaration of
trust or by-laws of the Fund, each as amended from time to
time, or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having
jurisdiction over the Fund or any of its assets, properties or
operations, other than State securities or "blue sky" laws
applicable in connection with the purchase
5
and distribution of the Securities by the Underwriters
pursuant to this Agreement. As used herein, a "Repayment
Event" means any event or condition which gives the holder of
any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require
the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Fund.
(xiii) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Fund, threatened, against or
affecting the Fund, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or
which would (if determined in a manner adverse to the Fund)
reasonably be expected to result in a Material Adverse Effect
(including the consummation of the transactions contemplated
in this Agreement or the performance by the Fund of its
obligations hereunder). The aggregate of all pending legal or
governmental proceedings to which the Fund is a party or of
which any of its property or assets is the subject which are
not described in the Registration Statement, including
ordinary routine litigation incidental to the business, would
not (if determined in a manner adverse to the Fund) reasonably
be expected to result in a Material Adverse Effect.
(xiv) ACCURACY OF EXHIBITS. There are no material contracts or
documents which are required to be described in the
Registration Statement or the Prospectus or to be filed as
exhibits thereto by the 1933 Act, the 1940 Act or by the Rules
and Regulations which have not been so described and filed as
required.
(xv) POSSESSION OF INTELLECTUAL PROPERTY. The Fund owns or
possesses, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks, trade names or
other intellectual property (collectively, "Intellectual
Property") necessary to carry on the business now operated by
the Fund, and the Fund has not received any notice or is not
otherwise aware of any infringement of or conflict with
asserted rights of others with respect to any Intellectual
Property.
(xvi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order,
registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for
the performance by the Fund of its obligations hereunder, in
connection with the offering, issuance or sale of the
Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except as referred to in the
Prospectus or the Registration Statement and such as have been
already obtained or as may be required under the 1933 Act, the
1940 Act, the Securities Exchange Act of 1934, as amended (the
"1934 Act"), the rules of the New York Stock Exchange (the
"NYSE") or state securities laws.
(xvii) POSSESSION OF LICENSES AND PERMITS. The Fund possesses such
permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued
by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to operate its properties and to
conduct the business as contemplated in the Prospectus, except
where the absence of such possession would not result in a
Material Adverse Effect; the Fund is in compliance with the
terms and conditions of all such Governmental Licenses, except
where the 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
6
Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not have a
Material Adverse Effect; and the Fund has not received any
notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a Material
Adverse Effect.
(xviii) ADVERTISEMENTS. Any advertising, sales literature or other
promotional material (including "prospectus wrappers," "broker
kits," "road show slides" and "road show scripts") authorized
in writing by or prepared by the Fund or the Advisers and used
in connection with the public offering of the Securities
(collectively, "sales material") does not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which
they were made, not misleading. All sales material complied
and will comply in all material respects with the applicable
requirements of the 1933 Act, the 1940 Act and the Rules and
Regulations and the rules and interpretations of the 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 MATERIALS. The Fund has not
distributed and, prior to the later to occur of (A) the
Closing Time and (B) completion of the distribution of the
Common Shares, will not distribute any offering material in
connection with the offering and sale of the Common Shares
other than the Registration Statement, a preliminary
prospectus, the Prospectus or the sales materials.
(xxi) ACCOUNTING CONTROLS. The Fund maintains a system of internal
accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance
with management's general or specific authorization and with
the applicable requirements of the 1940 Act, the Rules and
Regulations and the Code; (B) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and
to maintain accountability for assets and to maintain
compliance with the books and records requirements under the
1940 Act and the Rules and Regulations; (C) access to assets
is permitted only in accordance with the management's general
or specific authorization; and (D) the recorded accountability
for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(xxii) ABSENCE OF UNDISCLOSED PAYMENTS. To the Fund's knowledge,
neither the Fund nor any employee or agent of the Fund has
made any payment of funds of the Fund or received or retained
any funds, which payment, receipt or retention of funds is of
a character required to be disclosed in the Prospectus.
(xxiii) MATERIAL AGREEMENTS. This Agreement, the Management Agreement,
the Sub-Advisory Agreement, the Custodian Agreement and the
Transfer Agency Agreement have each been duly authorized by
all requisite action on the part of the Fund, executed and
delivered by the Fund, as of the dates noted therein and each
complies in all material respects with all applicable
provisions of the 1940 Act. Assuming due authorization,
execution and delivery by the other parties thereto, each such
7
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, whether
statutory or decisional, relating to or affecting creditors'
rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing and except as rights
to indemnification or contribution thereunder may be limited
by federal or state laws.
(xxiv) REGISTRATION RIGHTS. There are no persons with registration
rights or other similar rights to have any securities of the
Fund registered pursuant to the Registration Statement or
otherwise registered by the Fund under the 1933 Act.
(xxv) NYSE LISTING. The Securities have been duly authorized for
listing, upon notice of issuance, on the NYSE and the Fund's
registration statement on Form 8-A under the 1934 Act has
become effective.
(b) REPRESENTATIONS AND WARRANTIES BY THE ADVISERS. Each of the
Advisers represents and warrants to each Underwriter, and in
the case of paragraph (iii) also represent to the Fund, as of
the date hereof, as of the Closing Time referred to in Section
2(c) hereof, and as of each Date of Delivery (if any) referred
to in Section 2(b) hereof as follows:
(i) GOOD STANDING OF THE ADVISERS. Such Adviser 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 (in the case of the Investment Adviser) and as a
corporation under the laws of the State of Virginia (in the
case of the Investment Sub-Adviser), with full power and
authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and each
is duly qualified as a foreign corporation to transact
business and is in good standing in each other jurisdiction in
which such qualification is required, except to the extent
that failure to be so qualified and in good standing would not
have a material adverse effect on the Adviser's ability to
perform its obligations under the Management Agreement (in the
case of the Investment Adviser) or the Sub-Advisory Agreement
(in the case of the Investment Sub-Adviser).
(ii) INVESTMENT ADVISER STATUS. Such Adviser is duly registered and
in good standing with the Commission as an investment adviser
under the Advisers Act, and is not prohibited by the Advisers
Act or the 1940 Act, or the rules and regulations under such
acts, from acting under the Management Agreement and the
Sub-Advisory Agreement for the Fund as contemplated by the
Prospectus.
(iii) DESCRIPTION OF THE ADVISERS. The description of such Adviser
in the Registration Statement and the Prospectus (and any
amendment or supplement to either of them) complied and comply
in all material respects with the provisions of the 1933 Act,
the 1940 Act, the Advisers Act, the Rules and Regulations and
the Advisers Act Rules and Regulations and does not contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(iv) CAPITALIZATION. Such Adviser (whether alone or together with
its affiliates) has the financial resources available to it
necessary for the performance of its services and
8
obligations as contemplated in the Prospectus, this Agreement
and under the Management Agreement and the Sub-Advisory
Agreement to which it is a party.
(v) AUTHORIZATION OF AGREEMENTS; ABSENCE OF DEFAULTS AND
CONFLICTS. Each of this Agreement, the Management Agreement
and the Sub-Advisory Agreement to which such Adviser is a
party has each been duly authorized, executed and delivered by
such Adviser, and, assuming due authorization, execution and
delivery by the other parties thereto, such Agreements to
which such Adviser is a party constitute valid and binding
obligations of the Adviser, enforceable in accordance with
their respective terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws, whether statutory or decisional,
relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a
proceeding in equity or at law) and except as rights to
indemnification and contribution thereunder may be limited by
federal and state law; and neither the execution and delivery
of any of this Agreement, the Management Agreement or the
Sub-Advisory Agreement to which such Adviser is a party nor
the performance by such Adviser of its obligations hereunder
or thereunder will conflict with, or result in a breach of any
of the terms and provisions of, or constitute, with or without
the giving of notice or lapse of time or both, a default
under, any agreement or instrument to which such Adviser is a
party or by which it is bound, the organizational documents of
the Adviser, or to the Adviser's knowledge, by any law, order,
decree, rule or regulation applicable to it of any
jurisdiction, court, federal or state regulatory body,
administrative agency or other governmental body, stock
exchange or securities association having jurisdiction over
the Adviser or its properties or operations, except where such
breach or default would not have a material adverse effect on
such Adviser's ability to perform the services contemplated by
this Agreement, the Management Agreement or the Sub-Advisory
Agreement; and no consent, approval, authorization or order of
any court or governmental authority or agency is required for
the consummation by the Adviser of the transactions
contemplated by this Agreement, the Management Agreement, or
the Sub-Advisory Agreement except as have been obtained or may
be required under the 1933 Act, the 1940 Act, the 1934 Act,
NYSE or state securities laws.
(vi) NO MATERIAL ADVERSE CHANGE. Since the respective dates as of
which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, there has
not occurred any event which would reasonably be expected to
have a material adverse effect on the ability of such Adviser
to perform its obligations under any of this Agreement, the
Management Agreement and the Sub-Advisory Agreement to which
it is a party.
(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 such Adviser, threatened against or
affecting the Adviser or any parent or subsidiary of the
Adviser or any partners, directors, officers or employees of
the foregoing, whether or not arising in the ordinary course
of business, which would reasonably be expected to result in
any material adverse change in the condition, financial or
otherwise, or earnings, business affairs or business prospects
of the Adviser, to materially and adversely affect the
properties or assets of the Adviser or to materially impair or
adversely affect the ability of the Adviser to function as an
investment adviser or perform its obligations under the
Management Agreement or the Sub-Advisory Agreement to which it
is a
9
party, or which is required to be disclosed in the
Registration Statement and the Prospectus (and has not been so
disclosed).
(viii) ABSENCE OF VIOLATION OR DEFAULT. Such Adviser is not in
violation of its organizational documents or in default under
any agreement, indenture or instrument, where such violation
or default would reasonably be expected to have a material
adverse effect on the ability of such Adviser to perform its
obligations under either of the Management Agreement or the
Sub-Advisory Agreement to which it is a party.
(c) OFFICER'S CERTIFICATES. Any certificate signed by any officer
of the Fund or any Adviser delivered to the Representatives or
to counsel for the Underwriters shall be deemed a
representation and warranty by the Fund or the Advisers, as
the case may be, to each Underwriter as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) INITIAL SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and
conditions herein set forth, the Fund agrees to sell to each
Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from the Fund,
at the price per share set forth in SCHEDULE B, the number of
Initial Securities set forth in SCHEDULE A opposite the name
of such Underwriter, plus any additional number of Initial
Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof.
(b) OPTION SECURITIES. In addition, on the basis of the
representations and warranties herein contained and subject to
the terms and conditions herein set forth, the Fund hereby
grants an option to the Underwriters, severally and not
jointly, to purchase up to an additional 6,075,000 Common
Shares in the aggregate at the price per share set forth in
SCHEDULE B, less an amount per share equal to any dividends or
distributions declared by the Fund and payable on the Initial
Securities but not payable on the Option Securities. The
option hereby granted will expire 45 days after the date
hereof and may be exercised in whole or in part from time to
time only for the purpose of covering overallotments which may
be made in connection with the offering and distribution of
the Initial Securities upon written notice by the
Representatives to the Fund setting forth the number of Option
Securities as to which the several Underwriters are then
exercising the option and the time and date of payment and
delivery for such Option Securities. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the
Representatives, but shall not be earlier than the third day
after the date on which the option is being exercised nor
later than seven full business days after the exercise of said
option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or
any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase
that proportion of the total number of Option Securities then
being purchased which the number of Initial Securities set
forth in SCHEDULE A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in
each case to such adjustments as ▇▇▇▇▇▇▇ ▇▇▇▇▇ in its
discretion shall make to eliminate any sales or purchases of a
fractional number of Option Securities plus any additional
number of Option Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10
hereof.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the
offices of ▇▇▇▇▇▇▇▇ Chance US LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as shall be agreed upon
10
by the Representatives and the Fund, at 10:00 A.M. (Eastern
time) on the third (fourth, if the pricing occurs after 4:30
P.M. (Eastern time) on any given day) business day after the
date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than
ten business days after such date as shall be agreed upon by
the Representatives and the Fund (such time and date of
payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Fund, on each Date of Delivery as specified in the notice from the
Representatives to the Fund.
Payment shall be made to the Fund by wire transfer of immediately available
funds to a bank account designated by the Fund, against delivery to the
Representatives for the respective accounts of the Underwriters of certificates
for the Securities to be purchased by them. It is understood that each
Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such
denominations and registered in such names as the
Representatives may request in writing at least one full
business day before the Closing Time or the relevant Date of
Delivery, as the case may be. The certificates for the Initial
Securities and the Option Securities, if any, will be made
available for examination and packaging by the Representatives
in the City of New York not later than 10:00 A.M. (Eastern
time) on the business day prior to the Closing Time or the
relevant Date of Delivery, as the case may be.
SECTION 3. Covenants.
(a) The Fund and the Advisers, jointly and severally, covenant
with each Underwriter as follows:
(i) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS. For a period of one year from the date hereof, the
Fund, subject to Section 3(a)(ii), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will
notify the Representatives immediately, and confirm the notice
in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall
have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information,
and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or
of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or, to the knowledge of the
Fund, threatening of any proceedings for any of such purposes.
The Fund will promptly effect the filings necessary pursuant
to Rule 497 and will take such steps as it deems
11
necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 497 was received for filing
by the Commission and, in the event that it was not, it will
promptly file such prospectus. The Fund will make every
reasonable effort to prevent the issuance of any stop order,
or order of suspension or revocation of registration pursuant
to Section 8(e) of the 1940 Act, and, if any such stop order
or order of suspension or revocation of registration is
issued, to obtain the lifting thereof at the earliest possible
moment.
(ii) FILING OF AMENDMENTS. For a period of one year from the date
hereof, the Fund will give the Representatives notice of its
intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the
prospectus included in the Registration Statement at the time
it became effective or to the Prospectus, will furnish the
Representatives with copies of any such documents a reasonable
amount of time prior to such proposed filing or use, as the
case may be, and will not file or use any such document to
which the Representatives or counsel for the Underwriters
shall reasonably object.
(iii) DELIVERY OF REGISTRATION STATEMENTS. The Fund has furnished or
will deliver to the Representatives, without charge, a signed
copy of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and a signed copy of all
consents and certificates of experts, and will also deliver to
the Representatives, without charge, a conformed copy of the
Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the
Underwriters. The copies of the Registration Statement and
each amendment thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof
filed with the Commission pursuant to ▇▇▇▇▇, except to the
extent permitted by Regulation S-T. No copy of a
post-effective amendment shall be required to be delivered
after one year from the date hereof.
(iv) DELIVERY OF PROSPECTUSES. The Fund has delivered to each
Underwriter, without charge, as many copies of each
preliminary prospectus as such Underwriter reasonably
requested, and the Fund hereby consents to the use of such
copies for purposes permitted by the 1933 Act. The Fund will
furnish to each Underwriter, without charge, during the period
when the Prospectus is required to be delivered under the 1933
Act, such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request. The
Prospectus and any amendments or supplements thereto furnished
to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant
to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(v) CONTINUED COMPLIANCE WITH SECURITIES LAWS. If at any time when
the Prospectus (as amended or supplemented) is required by the
1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as
a result of which it is necessary, in the reasonable opinion
of counsel for the Underwriters or for the Fund, to amend the
Registration Statement or amend or supplement the Prospectus
in order that the Prospectus will not include any untrue
statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the
time it is delivered to a purchaser, or if it shall be
necessary, in the reasonable opinion of such counsel, at any
such time to amend the Registration Statement or amend or
12
supplement the Prospectus in order to comply with the
requirements of the 1933 Act or the Rules and Regulations, the
Fund will promptly prepare and file with the Commission,
subject to Section 3(a)(ii), such amendment or supplement as
may be necessary to correct such statement or omission or to
make the Registration Statement or the Prospectus comply with
such requirements, and the Fund will furnish to the
Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request;
provided that, if the supplement or amendment is required
exclusively as a result of a misstatement in or omission from
the information provided to the Fund in writing by the
Underwriters expressly for use in the Prospectus, the Fund may
deliver such supplement or amendment to the Underwriters and
dealers at a reasonable charge not to exceed the actual cost
thereof to the Fund.
(vi) BLUE SKY QUALIFICATIONS. The Fund will use its best efforts,
in cooperation with the Underwriters, to qualify the
Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions of the
United States as the Representatives may designate 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 entity or as a dealer in securities in
any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified,
the Fund will file such statements and reports as may be
required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year
from the effective date of the Registration Statement and any
Rule 462(b) Registration Statement.
(vii) RULE 158. The Fund will make generally available to its
securityholders as soon as practicable an earnings statement,
if applicable, for the purposes of, and to provide the
benefits contemplated by, the last paragraph of Section 11(a)
of the 1933 Act.
(viii) USE OF PROCEEDS. The Fund will use the net proceeds received
by it from the sale of the Securities substantially in the
manner specified in the Prospectus under "Use of Proceeds."
(ix) LISTING. The Fund will use its reasonable best efforts to
cause the Securities to be duly authorized for listing by the
NYSE, prior to the date the Securities are issued.
(x) RESTRICTION ON SALE OF SECURITIES. During a period of 180 days
from the date of the Prospectus, the Fund will not, without
the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (A) directly or
indirectly, offer, pledge, sell, contract to sell, sell any
option, rights or warrant to purchase, purchase any option or
contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of Common Shares or
any securities convertible into or exercisable or exchangeable
for Common Shares or file any registration statement under the
1933 Act with respect to any of the foregoing or (B) enter
into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Shares,
whether any such swap or transaction described in clause (A)
or (B) above is to be settled by delivery of Common Shares or
such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (1) the Securities to be sold
hereunder or (2) Common Shares issued or, for avoidance of
doubt, purchased in the open market pursuant to any dividend
reinvestment plan.
13
(xi) REPORTING REQUIREMENTS. The Fund, during the period when the
Prospectus is required to be delivered under the 1933 Act,
will file all documents required to be filed with the
Commission pursuant to the 1940 Act and the 1934 Act within
the time periods required by the 1940 Act and the Rules and
Regulations and the 1934 Act and the rules and regulations of
the Commission thereunder, respectively.
(xii) SUBCHAPTER M. The Fund will use its best efforts to comply
with the requirements of Subchapter M of the Code to qualify
as a regulated investment company under the Code.
(xiii) NO MANIPULATION OF MARKET FOR SECURITIES. The Fund will not
(a) take, directly or indirectly, any action designed to cause
or to result in, or that might reasonably be expected to
constitute, the stabilization or manipulation of the price of
any security of the Fund to facilitate the sale or resale of
the Securities in violation of federal or state securities
laws, and (b) except for share repurchases permitted in
accordance with applicable laws and purchases of Securities in
the open market pursuant to the Fund's dividend reinvestment
plan, until the Closing Date, or the Date of Delivery, if any,
(i) sell, bid for or purchase the Securities or pay any person
any compensation for soliciting purchases of the Securities or
(ii) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the
Fund .
(xiv) RULE 462(b) REGISTRATION STATEMENT. If the Fund elects to rely
upon Rule 462(b), the Fund shall file a Rule 462(b)
Registration Statement with the Commission in compliance with
Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date
of this Agreement, and the Fund shall at the time of filing
either pay to the Commission the filing fee for the Rule
462(b) Registration Statement or give irrevocable instructions
for the payment of such fee pursuant to Rule 111(b) under the
1933 Act.
SECTION 4. Payment of Expenses.
(a) EXPENSES. The Fund will pay all expenses incident to the
performance of its obligations under this Agreement, including
(i) the preparation, printing and filing of the Registration
Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the
reasonable costs of the preparation, printing and delivery to
the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or
delivery of the Securities, (iii) the preparation, issuance
and delivery of the certificates, if any, for the Securities
to the Underwriters, including any stock or other transfer
taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters,
(iv) the fees and disbursements of the Fund's counsel,
accountants and other advisers, (v) the qualification of the
Securities, if required, 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 any requisite 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 any requisite Blue Sky Survey and
any supplement thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Securities, (ix) the
filing fees incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection
with, the review by the NASD of the terms of the sale of the
Securities, (x) the fees and expenses incurred in connection
with the listing of the Securities on the NYSE
14
and (xi) the printing of any sales material. Also, the Fund
shall pay the Underwriters $.00667 per Common Share purchased
by the Underwriters pursuant to this Agreement as partial
reimbursement of expenses incurred in connection with the
offering; provided, however, that such partial reimbursement
payable by the Fund shall not exceed 0.03335% of the aggregate
price to the public (as set forth in the Prospectus) of the
Initial Securities and any Option Securities that may be sold
to the Underwriters pursuant to Section 2(b) of this Agreement
(as used herein, the "Aggregate Offering Price"). The
Investment Adviser has agreed to pay (1) all organizational
expenses and (2) offering costs (other than sales load) of the
Fund that exceed $.04 per Common Share purchased by the
Underwriters pursuant to this Agreement (the "Offering Cost
Limitation"). The Fund shall pay to Claymore Securities, Inc.,
in connection with its distribution assistance in connection
with the sale of the Common Shares, an amount equal to the
lesser of (y) 0.10% of the Aggregate Offering Price and (z)
the positive amount by which the Offering Cost Limitation
exceeds the actual offering costs of the Fund or, if the
actual offering costs of the Fund are equal to or greater than
the Offering Cost Limitation, zero.
(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 each of
Advisers, jointly and severally, agree that they shall
reimburse the Underwriters for all of their out-of-pocket
expenses incurred, 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 Advisers
contained in Section 1 hereof or in certificates of any officer of the Fund or
any Adviser delivered pursuant to the provisions hereof, to the performance by
the Fund and the Advisers of their respective covenants and other obligations
hereunder, and to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement,
has become effective or will have become effective by 5:30
p.m., New York City time on the date hereof, and at Closing
Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933
Act, no notice or order pursuant to Section 8(e) of the 1940
Act shall have been issued, and no proceedings with respect to
either shall have been initiated or, to the knowledge of
counsel to the Underwriters and counsel to the Fund,
threatened by the Commission, and any request on the part of
the Commission for additional information shall have been
complied with or waived to the reasonable satisfaction of
counsel to the Underwriters. A prospectus containing the Rule
430A Information shall have been filed with the Commission in
accordance with Rule 497 (or a post-effective amendment
providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A or
a certificate must have been filed in accordance with Rule
497(j)) or, if the Fund has elected to rely upon Rule 434, a
Term Sheet shall have been filed with the Commission in
accordance with Rule 497.
(b) OPINION OF COUNSEL FOR THE FUND AND ADVISERS. At Closing Time,
the Representatives shall have received the favorable
opinions, dated as of Closing Time, of ▇▇▇▇▇▇▇, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the Fund, of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
general counsel of the Investment Adviser, and of [ ], counsel
for the Investment Sub-Adviser, together with signed or
reproduced copies of such letter for each of the
15
other Underwriters substantially to the effect set forth in
EXHIBIT A and EXHIBIT B hereto or in such other forms and
substance reasonably satisfactory to counsel to the
Underwriters.
(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 to
the effect set forth in EXHIBIT C 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, business affairs or business prospects of the
Fund, whether or not arising in the ordinary course of
business, and the Representatives shall have received a
certificate of a duly authorized officer of the Fund and of
the chief financial or chief accounting officer of the Fund
and of the President or a Vice President or Managing Director
of each Adviser, dated as of Closing Time, to the effect that
(i) there has been no such material adverse change, (ii) the
representations and warranties in Sections 1(a) and (b) hereof
are true and correct with the same force and effect as though
expressly made at and as of Closing Time, (iii) each of the
Fund and the Advisers, respectively, has complied with all
agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time, (iv) with
respect to the certificate by an officer of each Adviser only,
there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs
or business prospects of such Adviser, whether or not arising
in the ordinary course of business, and (v) with respect to
the Fund only, no stop order suspending the effectiveness of
the Registration Statement, or order of suspension or
revocation of registration pursuant to Section 8(e) of the
1940 Act, has been issued and no proceedings for any such
purpose have been instituted or 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
[ ] 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
customarily 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 [ ] a letter, dated
as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection
(e) of this Section, except that the specified date referred
to shall be a date not more than three business days prior to
Closing Time.
(g) APPROVAL OF LISTING. At Closing Time, the Securities shall
have been approved for listing on the NYSE, subject only to
official notice of issuance.
16
(h) NO OBJECTION. The NASD has confirmed that it has not raised
any objection with respect to the fairness and reasonableness
of the underwriting terms and arrangements.
(i) CONDITIONS TO PURCHASE OF OPTION SECURITIES. In the event that
the Underwriters exercise their option provided in Section
2(b) hereof to purchase all or any portion of the Option
Securities, the representations and warranties of the Fund
contained herein and the statements in any certificates
furnished by the Fund hereunder shall be true and correct as
of each Date of Delivery and, at the relevant Date of
Delivery, the Representatives shall have received:
(i) OFFICERS' CERTIFICATES. Certificates, dated such Date of
Delivery, of a duly authorized officer of the Fund and of the
chief financial or chief accounting officer of the Fund and of
the President or a Vice President or Managing Director of each
of Advisers confirming that the information contained in the
certificate delivered by each of them at the Closing Time
pursuant to Section 5(d) hereof remains true and correct as of
such Date of Delivery.
(ii) OPINIONS OF COUNSEL FOR THE FUND AND ADVISERS. The favorable
opinions of ▇▇▇▇▇▇▇, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel
for the Fund, of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, general counsel of the
Investment Adviser and of [ ], counsel for the Investment
Sub-Adviser, in form and substance reasonably satisfactory to
counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date
of Delivery and otherwise to the same effect as the opinion
required by Section 5(b) hereof.
(iii) OPINION OF COUNSEL FOR THE UNDERWRITERS. The favorable opinion
of Clifford Chance US LLP, counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(c) hereof.
(iv) BRING-DOWN COMFORT LETTER. A letter from [ ], in form and
substance satisfactory to the Representatives and dated such
Date of Delivery, substantially in the same form and substance
as the letter furnished to the Representatives pursuant to
Section 5(f) hereof, except that the "specified date" in the
letter furnished pursuant to this paragraph shall be a date
not more than five days prior to such Date of Delivery.
(j) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of
Delivery, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass
upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of
the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken
by the Fund and the Advisers in connection with the
organization and registration of the Fund under the 1940 Act
and the issuance and sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and
substance to the Representatives and counsel for the
Underwriters.
(k) TERMINATION OF AGREEMENT. If any condition specified in this
Section shall not have been fulfilled when and as required to
be fulfilled, this Agreement, or, in the case of any condition
to the purchase of Option Securities, on a Date of Delivery
which is after the Closing Time, the obligations of the
several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice
to the
17
Fund at any time at or prior to Closing Time or such Date of
Delivery, as the case may be, and such termination shall be
without liability of any party to any other party except as
provided in Section 4 and except that Sections 1, 6, 7, 8 and
13 shall survive any such termination and remain in full force
and effect.
SECTION 6. Indemnification.
(a) INDEMNIFICATION OF UNDERWRITERS. The Fund and the Advisers,
jointly and severally, agree to indemnify and hold harmless
each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434
Information, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged
untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 6(e)
below) any such settlement is effected with the written
consent of the Fund; and
(iii) against any and all expense whatsoever, as incurred (including
the reasonable fees and disbursements of counsel chosen by
▇▇▇▇▇▇▇ ▇▇▇▇▇), 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
Advisers 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); provided,
further, that the indemnity agreement contained in this Section 6(a) shall not
inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) from whom the person asserting any such loss,
liability, claim, damage and expense purchased the Securities which are the
subject thereof if the Prospectus (as amended or supplemented) corrected any
such alleged untrue statement or omission and if such Prospectus (as amended or
supplemented) was delivered to such Underwriter in a timely manner and if such
Underwriter failed to send or give a copy of the Prospectus
18
(as amended or supplemented) to such person at or prior to the written
confirmation of the sale of such Securities to such person.
(b) INDEMNIFICATION OF THE FUND, ADVISERS, TRUSTEES, DIRECTORS AND
OFFICERS. Each Underwriter severally agrees to indemnify and
hold harmless the Fund and the Advisers, their respective
trustees, directors and shareholders, each of the Fund's
officers who signed the Registration Statement, and each
person, if any, who controls the Fund or the Advisers 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 Advisers by such
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Registration Statement (or any amendment thereto), including
the Rule 430A Information and the Rule 434 Information, or
such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) INDEMNIFICATION FOR MARKETING MATERIALS. In addition to the
foregoing indemnification, the Fund and the Advisers 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 (to the
same extent as with respect to any preliminary prospectus or
the Prospectus).
(d) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party
shall give notice as promptly as reasonably practicable to
each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but
failure to so notify an indemnifying party shall not relieve
such indemnifying party from any liability hereunder to the
extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to
Section 6(a) above, counsel to the indemnified parties shall
be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, 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
Advisers. 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
19
actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such
litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any
indemnified party.
(e) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any
time an indemnified party shall have requested an indemnifying
party to reimburse the indemnified party for reasonable fees
and expenses of counsel, such indemnifying party agrees that
it shall be liable for any settlement of the nature
contemplated by Section 6(a)(ii) (through, if applicable, the
provisions of Section 6(b)) effected without its written
consent if (i) such settlement is entered into more than 60
days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior
to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of
such settlement.
SECTION 7. Contribution.
If the indemnification provided for in Section 6 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then, in lieu of indemnifying such indemnified party, each indemnifying party
shall contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Fund or the Advisers on the one hand and the Underwriters on the other hand
from the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Fund and the Advisers
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 Advisers on the one hand
and the Underwriters on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Fund and the total underwriting discount received by the Underwriters
(whether from the Fund or otherwise), in each case as set forth on the cover of
the Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the Securities as
set forth on such cover.
The relative fault of the Fund and the Advisers 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 Advisers 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 Advisers 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
20
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. No person shall be
entitled to indemnification or contribution under this Agreement against any
loss, claim, liability, expense or damage arising by reason of such person's
willful misfeasance or gross negligence in the performance of its duties
hereunder.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each trustee and shareholder of the Fund and each director of the Advisers,
respectively, each officer of the Fund who signed the Registration Statement,
and each person, if any, who controls the Fund or each of Advisers, 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 Advisers, respectively. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial Securities set forth opposite
their respective names in SCHEDULE A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery.
All representations, warranties and covenants contained in this Agreement
or in certificates of officers of the Fund or either of the Advisers 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 Advisers, and shall survive
delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) TERMINATION; GENERAL. The Representatives may terminate this
Agreement, by notice to the Fund, at any time at or prior to
Closing Time (i) if there has been, since the time of
execution of this Agreement or since the respective dates as
of which information is given in the Prospectus, any material
adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the
Fund or any Adviser, whether or not arising in the ordinary
course of business, or (ii) if there has occurred any material
adverse change in the financial markets in the United States
or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis
or any change or development involving a prospective change in
national or international political, financial or economic
conditions, in each case the effect of which is such as to
make it, in the judgment of the Representatives, impracticable
or inadvisable to market the Securities or to enforce
contracts for the sale of the Securities, or (iii) if trading
in the Common Shares of the Fund has been suspended or
materially limited by the Commission or the NYSE, or if
trading generally on the American Stock Exchange or the NYSE
or in the Nasdaq National Market has been suspended or
materially limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by
order of
21
the Commission, the NASD or any other governmental authority,
or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United
States, or (iv) if a banking moratorium has been declared by
either Federal or New York authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any
party to any other party except as provided in Section 4
hereof, and provided further that Sections 1, 6, 7, 8 and 13
shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at Closing Time or a Date of
Delivery to purchase the Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), the Representatives shall
have the right, within 24 hours thereafter, to make arrangements for one or more
of the non-defaulting Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the number of Securities to be purchased on such date, each of
the non-defaulting Underwriters shall be obligated, severally
and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this
Agreement or, with respect to any Date of Delivery which
occurs after the Closing Time, the obligation of the
Underwriters to purchase and of the Fund to sell the Option
Securities to be purchased and sold on such Date of Delivery
shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Fund to sell the relevant Option Securities, as
the case may be, either the Representatives or the Fund shall have the right to
postpone Closing Time or the relevant Date of Delivery, as the case may be, for
a period not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
As used herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10.
SECTION 11. Tax Disclosure.
Notwithstanding any other provision of this Agreement, from the
commencement of discussions with respect to the transactions contemplated
hereby, the Fund and each of Advisers (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.
22
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 each
of Advisers shall be directed, as appropriate, to the office of Claymore
Advisors, LLC at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Inc. at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇.▇.
Box 6883, Richmond, Virginia 23230, Attention: [ ], respectively.
SECTION 13. Parties.
This Agreement shall each inure to the benefit of and be binding upon the
Underwriters, the Fund, each of Advisers and its 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 Advisers and their respective successors and the
controlling persons and officers, trustees, shareholders and directors referred
to in Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the
Underwriters, the Fund, the Advisers and their respective partners and
successors, and said controlling persons and officers, trustees, shareholders
and directors and their heirs and legal representatives, and for the benefit of
no other person, firm or corporation. No purchaser of Securities from any
Underwriter shall be deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SAID STATE. UNLESS OTHERWISE EXPLICITLY PROVIDED, SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
23
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 each of Advisers in accordance with its terms.
Very truly yours,
TS&W/CLAYMORE TAX-ADVANTAGED
BALANCED FUND
By:
-------------------------------------
Name:
Title:
CLAYMORE ADVISORS, LLC
By:
-------------------------------------
Name:
Title:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, INC.
By:
-------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
[CO-MANAGERS]
By:
--------------------------------
Authorized Signatory
For themselves and as
Representatives of the
other Underwriters named
in SCHEDULE A hereto.
24
SCHEDULE A
NUMBER OF
NAME OF UNDERWRITER INITIAL SECURITIES
------------------- --------------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
--------------------
TOTAL:
====================
A-1
SCHEDULE B
TS&W/Claymore Tax-Advantaged Balanced Fund
Common Shares of Beneficial Interest
(Par Value $.01 per share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $20.00.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $19.10, being an amount equal to the initial
public offering price set forth above less $.90 per share; provided that the
purchase price per share for any Option Securities purchased upon the exercise
of the overallotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Fund
and payable on the Initial Securities but not payable on the Option Securities.
B-1
Exhibit A
FORM OF OPINION OF FUND'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(A) With respect to the Fund:
1. The Fund is in good standing and has a legal existence as a statutory
trust under the Delaware Statutory Trust Act.
2. The Fund has the necessary power and authority under the Delaware
Statutory Trust Act as a statutory trust to execute, deliver and perform
all of its obligations under the
Purchase Agreement and the Transaction
Documents. The execution and delivery by the Fund of the
Purchase
Agreement and the Transaction Documents and the consummation by the Fund
of the transactions contemplated thereby have been duly authorized by all
requisite action on the part of the Fund under the Delaware Statutory
Trust Act. Each of the
Purchase Agreement nad the Transaction Documents
has been duly executed and delivered by the Fund under the Applicable
Laws of the State of Delaware.
3. Each of the Transaction Documents (other than the Investment Advisory
Agreement and the Investment Sub-Advisory Agreement) constitutes the
valid and binding obligation of the Fund enforceable against the Fund in
accordance with its terms under the Applicable Laws of the State of New
York. Each of the Investment Advisory Agreement and the Investment
Sub-Advisory Agreement constitutes the valid and binding obligation of
the Fund enforceable against the Fund in accordance with its terms under
the Applicable Laws of the State of Delaware.
4. The execution and delivery by the Fund of the
Purchase Agreement and each
of the Transaction Documents and the performance by the Fund of its
obligations under the
Purchase Agreement and each of the Transaction
Documents, each in accordance with its terms, do not (i) conflict with
the Declaration or By-Laws of the Fund, (ii) constitute a violation of,
or a default under, any Applicable Contract or (iii) cause the creation
of any security interest or lien upon any of the property of the Fund
pursuant to any Applicable Contract. We do not express any opinion,
however, as to whether the execution, delivery or performance by the Fund
of the
Purchase Agreement or the Transaction Documents will constitute a
violation of, or a default under, any covenant, restriction or provision
with respect to financial ratios or tests or any aspect of the financial
condition or results of operations of the Fund.
5. Neither the execution, delivery or performance by the Fund of its
obligations under the
Purchase Agreement or the Transaction Documents nor
the compliance by the Fund with the terms and provisions thereof will
contravene any provision of Applicable Law or the 1940 Act or the 1940
Act Rules and Regulations in any material respect.
6. No Governmental Approval, which has not been obtained or taken and is not
in full force and effect, is required to authorize, or is required in
connection with, the execution, delivery or performance of the
Purchase
Agreement or any of the Transaction Documents.
7. Neither the execution, delivery or performance by the Fund of its
obligations under the
Purchase Agreement or the Transaction Documents nor
compliance by the Fund with the terms and provisions thereof will
contravene any Applicable Order.
8. The Fund is registered with the Commission pursuant to Section 8 of the
1940 Act as a diversified, closed-end management investment company; and
the Declaration and By-Laws comply in all material respects with the 1940
Act and the 1940 Act Rules and Regulations.
A-1
9. The Fund has an authorized capitalization as set forth in the Prospectus
(without giving effect to the issuance and sale of the Shares to you
pursuant to the Purchase Agreement); all of the outstanding Common Shares
have been duly authorized and validly issued, and are fully paid and
non-assessable (except as provided in the last sentence of Section 3.8 of
the Declaration) representing undivided beneficial ownership interests in
the assets of the Fund; the Shares have been duly authorized by all
necessary action of the Fund under the Delaware Statutory Trust Act and,
when issued to and paid for by the Underwriters pursuant to the Purchase
Agreement, will be validly issued, fully paid and non-assessable (except
as provided in the last sentence of Section 3.8 of the Declaration)
representing undivided beneficial ownership interests in the assets of
the Fund; the form of certificate that may be used to evidence the Common
Shares complies in all material respects with the applicable requirements
of the Declaration, the By-Laws and the Delaware Statutory Trust Act, in
each case as in effect on the date hereof. In rendering the opinion set
forth in this paragraph 9, we have assumed that if a holder of Common
Shares requests a certificate representing such holder's Common Shares,
that such certificate will conform to the specimen examined by us and
will have been signed by an authorized officer of the transfer agent and
registrar for the Common Shares and registered by such transfer agent and
registrar.
10. No holders of outstanding Common Shares are entitled as such to any
preemptive or other rights to subscribe for any Shares under any
Applicable Contract, under the Declaration or By-Laws or under the
Delaware Statutory Trust Act.
11. The statements set forth under the heading "Description of the Shares" in
the Prospectus, insofar as such statements purport to summarize certain
provisions of the 1940 Act, the Delaware Statutory Trust Act, the Common
Shares or the Declaration, fairly summarize such provisions in all
material respects.
12. To our knowledge, no legal or governmental proceedings are pending to
which the Fund is a party that are required to be described in the
Registration Statement or the Prospectus and are not so described
therein, and, to our knowledge, no contract or other document of the Fund
is required to be described in the Registration Statement or Prospectus
or to be filed as an exhibit to the Registration Statement that is not
described therein or filed as required.
13. The Registration Statement, the Prospectus and the 1940 Act Notification
(in each case, other than the financial statements and other financial
information contained therein or incorporated therein by reference and
other than any exhibits, schedules or appendices included or incorporated
by reference therein, as to which we express no opinion) comply as to
form in all material respects with the applicable requirements of the
1933 Act, the 1933 Act Rules and Regulations, the 1940 Act and the 1940
Act Rules and Regulations. Except to the extent set forth in paragraph 11
above and in our tax opinion dated even herewith, we do not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus.
We have been orally advised by the staff of the Commission that the
Registration Statement was declared effective on January 27, 2004, and that no
stop order suspending the effectiveness of the Registration Statement or the
1940 Act Notification's has been issued and, to our knowledge, no proceedings
for that purpose have been instituted or are pending or threatened by the
Commission.
14. We have been advised by the Fund that the Shares have been authorized for
listing on the New York Stock Exchange and that the Fund has filed with
the Commodity Futures Trading Commission and the National Futures
Association a notice of eligibility for relief from inclusion within the
definition of a commodity pool operator pursuant to Section 4.5 of the
general regulations under the Commodity Exchange Act. The filing of the
Prospectus pursuant to Rule 497(h)
A-2
under the 1933 Act Rules and Regulations has been made in the manner and
within the time period required by Rule 497(h) of the 1933 Act Rules and
Regulations.
15. Although the discussion in the Prospectus and Statement of Additional
Information under the headings "Taxation" does not purport to discuss all
possible United States federal income tax consequences relating to the
taxation of the Fund and the purchase, ownership and disposition of the
common shares of the Fund, such discussion constitutes, in all material
respects, a fair summary of the law and is based on our understanding of
the proposed operations of the Fund as disclosed in the Prospectus and
Statement of Additional Information.
In addition, we have participated in conferences with officers and other
representatives of the Fund, the Adviser, the Investment Sub-Adviser, counsel
for the Adviser, the Investment Sub-Adviser, representatives of the independent
public accountants of the Fund and representatives of the Underwriters and their
counsel at which the contents of the Registration Statement and the Prospectus
and related matters were discussed. Except to the extent set forth in paragraph
11 of our opinion to you dated the date hereof and in the sixth paragraph of our
tax opinion to you dated the date hereof, we do not pass upon, or assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, and we have made no
independent check or verification thereof.
Subject to the foregoing, we confirm to you that, on the basis of the
information we gained in the course of performing the services referred to
above, no facts have come to our attention that have caused us to believe that
the Registration Statement, at the time it became effective, contained an untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading or
that the Prospectus, as of its date and as of the date hereof, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (except that in each
case we do not express any view as to the financial statements, schedules and
other financial data and financial projections included or incorporated by
reference therein or excluded therefrom or the exhibits to the Registration
Statement).
A-3
FORM OF OPINION OF INVESTMENT ADVISER'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
1. Based on certificates of the Secretary of State of the State of
Delaware, the Investment Adviser is a limited liability company duly organized
and validly existing in good standing under the laws of the State of Delaware,
with all necessary limited liability company 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). Based on a certificates of the Secretaries of the States of New
Jersey and Illinois, the Investment Adviser is duly registered and qualified to
conduct its 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 to so register and
qualify does not have a material adverse effect on the ability of the Investment
Adviser to perform its obligations under the Purchase Agreement, the Investment
Advisory Agreement and the Investment Sub-Advisory Agreement to which it is a
party (the Purchase Agreement, the Investment Advisory Agreement and the
Investment Sub-Advisory Agreement collectively referred to herein as the
"Transaction Documents");
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 1940 Act or the rules
and regulations of the Commission under the 1940 Act from acting under the
Investment Advisory Agreement as contemplated by the Prospectus (or any
amendment or supplement thereto); and, to the best of my knowledge after
reasonable inquiry, there does not exist any proceeding which should reasonably
be expected to adversely affect the registration of the Investment Adviser with
the Commission;
3. The Investment Adviser has corporate power and authority to enter
into the Transaction Documents to which it is a party, and the Transaction
Documents to which the Investment Adviser is a party have been duly authorized,
executed and delivered by the Investment Adviser and the Investment Advisory
Agreement is a valid and legally binding agreement of the Investment Adviser,
enforceable against the Investment Adviser in accordance with its terms except
as rights to indemnity and contribution in the Transaction Documents may be
limited by federal or state securities laws or principles of public policy and
subject to the qualification that the enforceability of the Investment Adviser's
obligations 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;
4. Neither the execution, delivery or performance of the Transaction
Documents by the Investment Adviser, nor the consummation by the Investment
Adviser of the transactions contemplated thereby (A) conflicts or will conflict
with, or constitutes or will constitute a breach of or default under, the
certificate of incorporation or bylaws, or other organizational documents, of
the Investment Adviser or (B) conflicts or will conflict with, or constitutes or
will constitute a material breach of or material default under any material
agreement, indenture, lease or other instrument to which the Investment Adviser
is a party, or will result in the creation or imposition of any material lien,
charge or encumbrance upon any material property or material assets of the
Investment Adviser, nor will any such action result in any material violation of
any law of the State of New York, the Delaware General Corporation Law, the 1940
Act, the Advisers Act or any regulation or judgment, injunction, order or decree
applicable to the Investment Adviser or any of its properties;
5. No consent, approval, authorization or other order of, or
registration or filing with, the Commission, any arbitrator, any court,
regulatory body, administrative agency or other governmental
A-1
body, agency, or official of the State of New York is required on the part of
the Investment Adviser for the execution, delivery and performance of the
Transaction Documents, or the consummation by the Investment Adviser of the
transactions contemplated hereby and thereby;
6. To the best of my knowledge after reasonable inquiry, there is not
pending or, to the best of my knowledge, after due inquiry, threatened any
action, suit, proceeding, inquiry or investigation, to which the Investment
Adviser is a party, or to which the property of the Investment Adviser is
subject, before or brought by any court or governmental agency or body, domestic
or foreign, which might reasonably be expected to result in any material adverse
change in the condition, financial or otherwise, in the earnings, business
affairs or business prospects of the Investment Adviser, materially and
adversely affect the properties or assets of the Investment Adviser or
materially impair or adversely affect the ability of the Investment Adviser to
function as an investment adviser or perform its obligations under the
Investment Advisory Agreement, or which is required to be disclosed in the
Registration Statement or the Prospectus (or any amendment or supplemental to
either of them) but are not described as required; and
7. To the best of my knowledge, after due inquiry, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the Registration
Statement, or to be filed as exhibits thereto, other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto,
and the descriptions thereof or references thereto are correct in all respects.
In addition, I have participated in conferences with officers and
other representatives of, and counsel for, the Fund, representatives of the
independent public accountants of the Fund, counsel for the Underwriters and the
Underwriters at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although I am not passing
upon, and do not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus and have made no independent check or verification thereof, on the
basis of the foregoing, no facts have come to my attention that have led me to
believe that the Registration Statement, at the time it became effective,
contained an 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 to make the statements therein not
misleading or that the Prospectus, as of its date and as of the date hereof,
contained or contains an untrue statement of a material fact concerning the
Investment Adviser or omitted or omits to state a material fact concerning the
Investment Adviser necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
A-2
CC US LLP DRAFT
2/18/04
FORM OF OPINION OF INVESTMENT SUB-ADVISER'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly organized and is validly existing as
a corporation in good standing under the laws of the state of Virginia.
(ii) The Company has all requisite corporate power and authority to
own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and
perform its obligations under the Purchase Agreement.
(iii) The Company is duly qualified to transact business and is in
good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except
where the failure to so qualify would not result in a Material
Adverse Effect.
(iv) The Company is duly registered with the Commission as an
investment adviser under the Advisers Act and is not
prohibited by the Advisers Act, rules and regulations adopted
under the Advisers Act, the 1940 Act or rules and regulations
under the 1940 Act from acting under the Sub-Advisory
Agreement for the Fund to which it is a party as contemplated
by the Prospectus.
(v) The Purchase Agreement and the Sub-Advisory Agreement to which
the Company is a party have been duly authorized, executed and
delivered by the Company, and the Sub-Advisory Agreement to
which it is a party constitutes a valid and binding obligation
of the Company, 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), subject to any limitation
arising from a provision found to violate the public policy
underlying any law, rule or regulation (including any federal
or state securities law, rule or regulation).
(vi) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or
investigation, to which the Company is a party, or to which
the property of the Company is subject, before or brought by
any court or governmental agency or body, domestic or foreign,
which might reasonably be expected to result in any material
adverse change in the condition, financial or otherwise, in
the earnings, business affairs or business prospects of the
Company, materially and adversely affect the properties or
assets of the Company or materially impair or adversely affect
the ability of the Company to function as an investment
adviser or perform its obligations under the Sub-Advisory
Agreement to which it is a party, or which is required to be
disclosed in the Registration
A-3
Statement or the Prospectus. (For the purpose of rendering the
opinion set forth in this paragraph, we have relied solely on
our actual knowledge, and on the Officer's Certificate; we
have made no other inquiries or investigations or any search
of the public docket records of any court, governmental agency
or body or administrative agency.)
(vii) To the best of our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described or
referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to
therein or filed or incorporated by reference as exhibits
thereto, and the descriptions thereof or references thereto
are correct in all material respects.
(viii) To the best of our knowledge, the Company is not in violation
of its Operating Agreement or other organizational documents
and no default by the Company exists in the due performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument that
is described or referred to in the Registration Statement or
the Prospectus or filed or incorporated by reference as an
exhibit to the Registration Statement.
(ix) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign (other
than under the 1933 Act, the 1940 Act and the Rules and
Regulations, which have been obtained, or as may be required
under the securities or blue sky laws of the various states,
as to which we need express no opinion) is necessary or
required in connection with the due authorization, execution
and delivery of the Purchase Agreement by the Company.
(x) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions
contemplated in the Purchase Agreement and in the Registration
Statement and compliance by the Company with its obligations
under the Purchase Agreement do not and will not, whether with
or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or
Repayment Event (as defined in Section 1(a)(xii) of the
Purchase Agreement) under or result in the creation or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to any contract,
indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or any other agreement or instrument, known to us,
to which the Company is a party or by which it may be bound,
or to which any of the property or assets of the Company is
subject (except for such conflicts, breaches or defaults or
liens, charges or encumbrances that would not have a Material
Adverse Effect), nor will such action result in any violation
of the provisions of the charter or by-laws
A-4
of the Company, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, of
any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any of its
properties, assets or operations.
In addition, we have participated in the preparation of the sections
entitled "Prospectus Summary--Investment Adviser and Investment Sub-Adviser,"
"Investment Strategy," "Management of the Fund--The Investment Adviser,"
"Management of the Fund--The Sub-Adviser" in the Prospectus and "Management of
the Fund--Investment Advisory Agreement, "Management of the Fund--The
Sub-Advisory Agreement" and "Management of the Fund--Approval of Advisory
Agreement and Sub-Advisory Agreement" in the Statement of Additional Information
and participated in discussions with certain officers, trustees and employees of
the Company, and we have reviewed certain Company records and documents. While
we have not independently verified and are not passing upon, and do not assume
any responsibility for, the accuracy, completeness or fairness of the
information contained in the Registration Statement and the Prospectus, nothing
has come to our attention that would lead us to believe that the Registration
Statement (except for financial statements, supporting schedules and other
financial data included therein or omitted therefrom, supporting schedules or
other financial data, as to which we do not express any belief), at the time
such Registration Statement became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus (except for financial statements, supporting schedules and other
financial data included therein or omitted, supporting schedules or other
financial data, as to which we do not express any belief), at the time the
Prospectus was issued, or at the Closing Time, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
A-5