Exhibit h.
----------
Western Asset Premier Bond Fund
(a Massachusetts business trust)
2,880 Auction Market Preferred Shares ("AMPS") of Beneficial Interest
1,440 Shares __ AMPS, Series M
1,440 Shares __ AMPS, Series W
Liquidation Preference $25,000 per share
FORM OF PURCHASE AGREEMENT
September 18, 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Western Asset Premier Bond Fund, a Massachusetts business trust (the
"Trust"), proposes, upon the terms and conditions set forth herein, to issue and
sell an aggregate of [ ] shares of its Auction Market Preferred Shares of
Beneficial Interest, Series M and [ ] shares of its Auction Market Preferred
Shares, Series W, each with a liquidation preference of $25,000 per share
(collectively, the "AMPS"). The AMPS will be authorized by, and subject to the
terms and conditions of, Amendment No. 1 to the Bylaws of the Trust, dated as of
[ ], 2002 ("Amendment No. 1") and the Agreement and Declaration of Trust of the
Trust, as amended and restated, dated as of February 5, 2002 (the
"Declaration"), in substantially the forms filed as exhibits to the Registration
Statement referred to in the second following paragraph of this Agreement, as
the same may be amended from time to time. The Trust, the Trust's investment
adviser, Western Asset Management Company, a California corporation ("WAM"), and
its investment sub-adviser, Western Asset Management Company Limited, a United
Kingdom corporation ("WAML") (each, an "Adviser" and together, the "Advisers"),
each confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") 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 ▇▇▇▇▇▇▇ ▇▇▇▇▇ is acting as representative (in such capacity,
the "Representative"), with respect to the issue and sale by the Trust and the
purchase by the Underwriters, acting severally and not jointly, of the
respective number of AMPS set forth in said Schedule A.
The Trust understands that the Underwriters propose to make a public
offering of the AMPS as soon as the Representative deems advisable after this
Agreement has been executed and delivered.
The Trust has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-90854 and No.
811-10603) covering the registration of the AMPS under the Securities Act of
1933, as amended (the "1933 Act"), including the related preliminary prospectus
or prospectuses, which registration statement also constitutes an amendment to
the Trust's registration statement under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the
rules and regulations of the Commission under the 1933 Act and the 1940 Act (the
"Rules and Regulations"). Promptly after execution and delivery of this
Agreement, the Trust 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 Trust has elected to rely upon Rule 434 ("Rule 434") of the Rules
and Regulations, prepare and file a term sheet (a "Term Sheet") in accordance
with the provisions of Rule 434 and Rule 497. The information included in any
such prospectus or in any such Term Sheet, as the case may be, that was omitted
from such registration statement at the time it became effective but that is
deemed to be part of such registration statement at the time it became
effective, if applicable, (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, including in each case any statement of additional information
incorporated therein by reference, is herein called a "preliminary prospectus."
Such registration statement, including the exhibits thereto and schedules
thereto at the time it became effective and including the Rule 430A Information
and the Rule 434 Information, as applicable, is herein called the "Registration
Statement." Any registration statement filed pursuant to Rule 462(b) of the
Rules and Regulations is herein referred to as the "Rule 462(b) Registration
Statement," and after such filing the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. The final prospectus in the form
first furnished to the Underwriters for use in connection with the offering of
the AMPS, including the statement of additional information incorporated therein
by reference, is herein called the "Prospectus." If Rule 434 is relied on, the
term "Prospectus" shall refer to the preliminary prospectus dated [__________],
2002 together with the Term Sheet and all references in this Agreement to the
date of the Prospectus shall mean the date of the Term Sheet. For purposes of
this Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any Term Sheet or any amendment or supplement to
any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all reference in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Trust and the Advisers. The
Trust 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 agree with each Underwriter, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act, or order of suspension or
revocation of registration pursuant to Section 8(e) of the 1940 Act, and no
proceedings for any such purpose have been instituted or are pending or, to
the knowledge of the Trust 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.
2
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments
thereto became effective and at the Closing Time, the Registration
Statement, the Rule 462(b) Registration Statement and any amendments
and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act, the 1940 Act and the
Rules and Regulations and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or
supplement was issued and at the Closing Time, included or will
include an untrue statement of a material fact or omitted or will omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. If Rule 434 is used, the Trust will comply with the
requirements of Rule 434 and the Prospectus shall not be "materially
different", as such term is used in Rule 434, from the prospectus
included in the Registration Statement at the time it became
effective.
Each preliminary prospectus and the prospectus filed as part of
the 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 AMPS, the Trust 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 Trust 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 Trust, the
descriptions of the 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
incorporated by reference into 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 Trust in all material respects at the date indicated;
said statement has been prepared in conformity with generally accepted
accounting principles ("GAAP").
(iv) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement
and the Prospectus, at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with
the requirements of the 1933 Act and the Rules and Regulations and,
when read together with the other information in the Prospectus, at
the time the Registration Statement became effective, at the time the
Prospectus was issued and at the Closing Time, did not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
3
(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 Trust,
whether or not arising in the ordinary course of business (a "Material
Adverse Effect"), (B) there have been no transactions entered into by
the Trust, other than those in the ordinary course of business, which
are material with respect to the Trust, and (C) except for regular
monthly dividends on the Trust's outstanding common shares of
beneficial interest, there has been no dividend or distribution of any
kind declared, paid or made by the Trust on any class of its capital
shares.
(vi) Good Standing of the Trust. The Trust has been duly
organized and is validly existing as an unincorporated voluntary
association in good standing under the laws of the Commonwealth of
Massachusetts and has power and authority to own and lease its
properties and to conduct its business as described in the Prospectus
and to enter into and perform its obligations under this Agreement;
and the Trust 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 Trust has no subsidiaries.
(viii) Investment Company Status. The Trust 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 Trust or Advisers,
threatened by the Commission.
(ix) Officers and Trustees. No person is serving or acting as
an officer, trustee or investment adviser of the Trust 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 Trust is (A) an "interested person" (as defined in the
▇▇▇▇ ▇▇▇) of the Trust or (B) an "affiliated person" (as defined in
the ▇▇▇▇ ▇▇▇) of any Underwriter. For purposes of this Section
1(a)(ix), the Trust and 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 Trust are as set forth in the
Prospectus as of the date thereof, except for shares issued in
connection with the Trust's dividend reinvestment plan. All issued and
outstanding common shares of beneficial interest of the Trust 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 Trust in compliance
with all applicable laws (including, without limitation, federal and
state securities laws); none of the outstanding common shares of
beneficial interest of the Trust was issued in violation of the
preemptive or other similar rights of any securityholder of the Trust.
(xi) Authorization and Description of AMPS. The AMPS to be
purchased by the Underwriters from the Trust have been duly authorized
for issuance and sale to the Underwriters pursuant to this Agreement
and, when issued and delivered by the Trust 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 AMPS conform to
all statements relating thereto contained in the Prospectus and such
description conforms to the rights set forth in the instruments
defining the same, to the
4
extent such rights are set forth; no holder of the AMPS 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
AMPS is not subject to the preemptive or other similar rights of any
securityholder of the Trust.
(xii) Absence of Defaults and Conflicts. The Trust is not in
violation of the Declaration or its 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 Trust is subject (collectively, "Agreements and
Instruments") except for such violations or defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement, the Investment Management Agreement,
the Administration Agreement, the Custodian Agreement, the Transfer
Agency and Service Agreement and the Auction Agency Agreement referred
to in the Registration Statement (as used herein, the "Investment
Management Agreement," the "Administration Agreement," the "Custodian
Agreement," the "Transfer Agency and Service Agreement" and the
"Auction Agency Agreement," respectively) and the consummation of the
transactions contemplated herein and in the Registration Statement
(including the issuance and sale of the AMPS and the use of the
proceeds from the sale of the AMPS as described in the Prospectus
under the caption "Use of Proceeds") and compliance by the Trust with
its obligations hereunder have been duly authorized by all necessary
corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Trust
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
Declaration or the by-laws of the Trust, 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 Trust or any
of its assets, properties or operations, other than State securities
or "blue sky" laws applicable in connection with the purchase and
distribution of the AMPS 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 Trust.
(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 Trust, threatened, against or affecting the
Trust, which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which might reasonably be
expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the
properties or assets of the Trust or the consummation of the
transactions contemplated in this Agreement or the performance by the
Trust of its obligations hereunder. The aggregate of all pending legal
or governmental proceedings to which the Trust is a party or of which
any of its property or assets is the subject which are not described
in the Registration Statement, including ordinary routine litigation
incidental to the business, could not reasonably be expected to result
in a Material Adverse Effect.
5
(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. Except for the
trademark "AMPS(R)," the Trust 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
Trust, except for failures to own or possess (or inability to acquire
on reasonable terms) that, singly or in the aggregate, would not
result in a Material Adverse Effect, and the Trust has not received
any notice or is not otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Trust therein, and which infringement or conflict (if
the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result in
a Material Adverse Effect.
(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 Trust of
its obligations hereunder, in connection with the offering, issuance
or sale of the AMPS hereunder or the consummation of the transactions
contemplated by this Agreement, except such as have been already
obtained or as may be required under the 1933 Act, the 1940 Act, the
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. Except for the
trademark "AMPS(R)," the Trust 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 Trust is in compliance with
the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, singly or in the aggregate,
have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to
be in full force and effect would not have a Material Adverse Effect;
and the Trust 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 Trust or the Advisers used in connection
with the public offering of the AMPS (collectively, "sales material")
does not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which
they were made, not misleading. Moreover, all sales material complied
and will comply in all material respects with the applicable
requirements of the 1933 Act, the 1940 Act, and the Rules and
Regulations and the rules and interpretations of the National
Association of Securities Dealers, Inc. ("NASD").
6
(xix) Subchapter M. The Trust 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 Trust has not
distributed and, prior to the later to occur of (A) the Closing Time
and (B) completion of the distribution of the AMPS, will not
distribute any offering material in connection with the offering and
sale of the AMPS other than the Registration Statement, a preliminary
prospectus, the Prospectus or other materials, if any, permitted by
applicable law.
(xxi) Accounting Controls. The Trust 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 Trust's
knowledge, neither the Trust nor any employee or agent of the Trust
has made any payment of funds of the Trust 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 Investment
Management Agreement, the Portfolio Management Agreement referred to
in the Registration Statement (the "Portfolio Management Agreement"),
the Administration Agreement, the Custodian Agreement, the Transfer
Agency and Service Agreement and the Auction Agency Agreement have
each been duly authorized by all requisite action on the part of the
Trust, executed and delivered by the Trust, as of the dates noted
therein and each complies with all applicable provisions of the 1940
Act in all material respects. Assuming due authorization, execution
and delivery by the other parties thereto, each such Agreement
constitutes a valid and binding agreement of the Trust, enforceable in
accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing and except as rights to indemnify or contribute
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 Trust registered pursuant to the Registration Statement or
otherwise registered by the Trust under the 1933 Act.
(xxv) NYSE Listing. The Trust's common shares of beneficial
interest have been duly authorized for listing upon notice of
issuance on the NYSE.
(xxvi) Ratings. The AMPS have been, or prior to the Closing
Time will be, assigned a rating of `Aaa' by ▇▇▇▇▇'▇ Investors Service,
Inc. ("Moody's") and "AAA" by Fitch Ratings ("Fitch").
7
(b) Representations and Warranties by the Advisers. The Advisers represent
and warrant to each Underwriter, and in the case of paragraph (iii) also
represent to the Trust, as of the date hereof and as of the Closing Time
referred to in Section 2(c) hereof as follows:
(i) Good Standing of the Advisers. Each of the Advisers has been
duly organized and is validly existing and in good standing as a
corporation under the laws of the State of California or the United
Kingdom, as the case may be, with full corporate 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 provide services to the
Trust.
(ii) Investment Adviser Status. Each of Advisers 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 respective
Investment Management Agreement and Portfolio Management Agreement for the
Trust as contemplated by the Prospectus.
(iii) Description of Advisers. The description of each Adviser in
the Registration Statement and the Prospectus (and any amendment or
supplement to either of them) complied and comply in all material respects
with the provisions of the 1933 Act, the 1940 Act, the Advisers Act, the
Rules and Regulations and the Advisers Act Rules and Regulations and is
true and correct and does not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(iv) Capitalization. Each of the Advisers has the financial
resources available to it necessary for the performance of its services and
obligations as contemplated in the Prospectus, this Agreement and under the
respective Investment Management Agreement and Portfolio Management
Agreement to which it is a party.
(v) Authorization of Agreements; Absence of Defaults and
Conflicts. This Agreement, the Investment Management Agreement and the
Portfolio Management Agreement have each been duly authorized, executed and
delivered by each respective Adviser, and, assuming due authorization,
execution and delivery by the other parties thereto, the Investment
Management Agreement and the Portfolio Management Agreement each constitute
a valid and binding obligation of each respective Adviser, enforceable in
accordance with its terms, except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing and except as rights to
indemnity and contribution thereunder may be limited by federal and state
law; and neither the execution and delivery of this Agreement, the
Investment Management Agreement or the Portfolio Management Agreement nor
the performance by either of the Advisers 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 either Adviser is a party or by which it is bound, the organizational
documents of each of the Advisers, or to each 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
8
exchange or securities association having jurisdiction over the Advisers or
their respective properties or operations, except where such breach would
not have a Material Adverse Effect on such Adviser's ability to perform the
services contemplated by such agreement; and no consent, approval,
authorization or order of any court or governmental authority or agency is
required for the consummation by the Advisers of the transactions
contemplated by this Agreement, the Investment Management Agreement or the
Portfolio Management Agreement, except as have been obtained or may be
required under the 1933 Act, the 1940 Act, the 1934 Act, NYSE or state
securities laws.
(vi) No Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred any
event which should reasonably be expected to have a material adverse effect
on the ability of either Adviser to perform its respective obligations
under this Agreement and the respective Investment Management Agreement and
Portfolio Management 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
the Advisers, threatened against or affecting either of the Advisers or any
parent or subsidiary of the Advisers or any partners, directors, officers
or employees of the foregoing, whether or not arising in the ordinary
course of business, which might reasonably be expected to result in any
material adverse change in the condition, financial or otherwise, or
earnings, business affairs or business prospects of either of the Advisers,
materially and adversely affect the properties or assets of either of the
Advisers or materially impair or adversely affect the ability of either of
the Advisers to function as an investment adviser or perform its
obligations under the Investment Management Agreement or the Portfolio
Management Agreement, or which is required to be disclosed in the
Registration Statement and the Prospectus (and has not been so disclosed).
(viii) Absence of Violation or Default. Each 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
either Adviser to perform its respective obligations under this Agreement
and the respective Investment Management Agreement and Portfolio Management
Agreement to which it is a party.
(c) Officer's Certificates. Any certificate signed by any officer of the
Trust or the Advisers delivered to the Representative or to counsel for the
Underwriters shall be deemed a representation and warranty by the Trust 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) AMPS. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Trust
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Trust, at
the price per share set forth in Schedule B, the number of AMPS set forth in
Schedule A opposite the name of such Underwriter, plus any additional number of
AMPS which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b) Commission. The Trust agrees to pay to the Underwriters a commission
set forth in Schedule B as compensation to the Underwriters for their
commitments under this Agreement.
9
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the AMPS shall be made at the offices of ▇▇▇▇▇▇▇▇ Chance
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or through the
facilities of the Depository Trust Company ("DTC") or at such other place as
shall be agreed upon by the Representative and the Trust, at 10:00 A.M. (Eastern
time) on the business day after the date hereof (unless postponed in accordance
with the provisions of Section 10), or such other time not later than ten
business days after such date as shall be agreed upon by the Representative and
the Trust (such time and date of payment and delivery being herein called
"Closing Time").
Payment shall be made to the Trust by wire transfer of immediately
available funds to a bank account designated by the Trust, against delivery to
the Representative for the respective accounts of the Underwriters of
certificates for the AMPS to be purchased by them. It is understood that each
Underwriter has authorized the Representative, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the AMPS
which it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the AMPS to be purchased by any Underwriter
whose funds have not been received by the Closing Time but such payment shall
not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the AMPS, each
representing one series of the Preferred Shares, shall be registered in the name
of Cede & Co., as nominee for the Depository Trust Company. The certificates for
the AMPS will be made available for examination and packaging by the
Representative in the City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time.
SECTION 3. Covenants.
(a) The Trust and the Advisers, jointly and severally, covenant with each
Underwriter, and, with respect to Section 3(c), the Underwriters, severally and
not jointly, covenant with the Trust and the Advisers, as follows:
(i) Compliance with Securities Regulations and Commission Requests.
For a period of one year from the date hereof, the Trust, subject to
Section 3(a)(ii), will comply with the requirements of Rule 430A or Rule
434, as applicable, and will notify the Representative immediately, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information, and (iv) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of
the qualification of the AMPS for offering or sale in any jurisdiction, or
of the initiation or, to the knowledge of the Trust, threatening of any
proceedings for any of such purposes. The Trust will promptly effect the
filings necessary pursuant to Rule 497 and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted
for filing under Rule 497 was received for filing by the Commission and, in
the event that it was not, it will promptly file such prospectus. The Trust
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. If at any time the Commission
shall issue any order suspending the effectiveness of the Registration
Statement, prohibiting or suspending the use of the Prospectus or any sales
material (or any amendment or supplement to any of the foregoing) or
suspending the qualification of the AMPS for offering or sale in any
jurisdiction, the Trust will use its reasonable
10
best efforts to obtain the withdrawal of such order at the earliest
possible time. If at any time the NASD, any state securities commission,
any national securities exchange, any arbitrator, any court or any other
governmental, regulatory, self-regulatory or administrative agency or any
official shall issue any order suspending the effectiveness of the
Registration Statement, prohibiting or suspending the use of the Prospectus
or any sales material (or any amendment or supplement to any of the
foregoing) or suspending the qualification of the AMPS for offering or sale
in any jurisdiction, the Trust will use its reasonable best efforts to
obtain the withdrawal of such order at the earliest possible time.
(ii) Filing of Amendments. For a period of one year from the date
hereof, the Trust will give the Representative notice of its intention to
file or prepare any amendment to the Registration Statement (including any
filing under Rule 462(b)), any Term Sheet or any amendment, supplement or
revision to either the prospectus included in the Registration Statement at
the time it became effective or to the Prospectus, will furnish the
Representative with copies of any such documents a reasonable amount of
time prior to such proposed filing or use, as the case may be, and will not
file or use any such document to which the Representative or counsel for
the Underwriters shall reasonably object.
(iii) Delivery of Registration Statements. The Trust has furnished
or will deliver to the Representative, 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 Representative, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the Underwriters. The copies of the
Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, 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 Trust has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Trust hereby consents to
the use of such copies for purposes permitted by the 1933 Act. The Trust
will furnish to each Underwriter, without charge, during the period when in
the opinion of counsel for the Underwriters the Prospectus is required to
be delivered under the 1933 Act in connection with sales by any Underwriter
or dealer or the 1934 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably request. The
Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted by Regulation S-T.
(v) Continued Compliance with Securities Laws. If at any time when
a prospectus is required by the 1933 Act to be delivered in connection with
sales of the AMPS, any event shall occur or condition shall exist as a
result of which it is necessary, in the reasonable opinion of counsel for
the Underwriters or for the Trust, to amend the Registration Statement or
amend or supplement the Prospectus in order that the Prospectus will not
include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the reasonable
opinion of such counsel, at any such time to amend the Registration
Statement or amend or supplement the Prospectus in order to comply with the
requirements of the 1933 Act or the Rules and Regulations, the Trust 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
11
Prospectus comply with such requirements, and the Trust 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 Trust in writing by the
Underwriters expressly for use in the Prospectus, the Trust may deliver
such supplement or amendment to the Underwriters and dealers at a
reasonable charge not to exceed the actual cost thereof to the Trust.
(vi) Blue Sky Qualifications. The Trust will use its best efforts,
if necessary, in cooperation with the Underwriters to qualify the AMPS for
offering and sale under the applicable securities laws of such states and
other jurisdictions of the United States as the Representative may
designate and to maintain such qualifications in effect for a period of not
less than one year from the later of the effective date of the Registration
Statement and any Rule 462(b) Registration Statement; provided, however,
that the Trust shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject. In each jurisdiction in which the
AMPS have been so qualified, the Trust will file such statements and
reports, if any, 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 Trust 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 Trust will use the net proceeds received
by it from the sale of the AMPS substantially in the manner specified in
the Prospectus under "Use of Proceeds".
(ix) Reporting Requirements. The Trust, 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.
(x) Subchapter M. The Trust 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.
(xi) No Manipulation of Market for AMPS. The Trust 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 Trust to facilitate the
sale or resale of the AMPS in violation of federal or state securities
laws, and (b) except for share repurchases permitted in accordance with
applicable laws, for purchases of securities in the open market pursuant to
the Trust's dividend reinvestment plan or as otherwise permitted by
applicable law or as contemplated hereunder, until the Closing Time
(i) sell, bid for or purchase the AMPS or pay any person any compensation
for soliciting purchases of the AMPS or (ii) pay or agree to pay to any
person any compensation for soliciting another to purchase any other
securities of the Trust.
(xii) Rule 462(b) Registration Statement. If the Trust elects to
rely upon Rule 462(b), the Trust 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 Trust shall
at the time of filing either pay to the Commission the filing fee for the
Rule 462(b)
12
Registration Statement or give irrevocable instructions for the payment of
such fee pursuant to Rule 111(b) under the 1933 Act.
(xiii) Accountant's Certificate. The Trust will furnish to the
Underwriters, on the date on which delivery is made to the Rating Agencies,
Accountant's confirmation (as defined in Amendment No. 1) required to be
delivered pursuant to 6(f) of Amendment No. 1.
(b) Except as provided in this Agreement, the Trust will not sell,
contract to sell or otherwise dispose of any of its preferred shares of
beneficial interest of the same series as the AMPS or any securities convertible
into or exercisable or exchangeable for its preferred shares of beneficial
interest of the same series as the AMPS, or grant any options or warrants to
purchase its preferred shares of beneficial interest of the same series as the
AMPS, for a period of 180 days after the date of the Prospectus, without the
prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇.
(c) No later than the Closing Time, the Underwriters will provide, and
will cause any selling group member to whom they have sold AMPS to provide, to
Deutsche Bank Trust Company Americas, as auction agent for the AMPS (the
"Auction Agent"), with a list of the record names of the persons to whom they
have sold AMPS, the number of AMPS sold to each person, and the number of AMPS
they are holding as of the Closing Time; provided that in lieu thereof, an
Underwriter may provide the Auction Agent with a list indicating itself as the
sole holder of all the AMPS sold by such Underwriter.
(d) On the Closing Date, the Fund will use a portion of the proceeds from
the issuance of the AMPS to repay each and every liability that the Fund has for
borrowed money outstanding on the Closing Date, including interest thereon,
including for this purpose every liability of the Fund under every reverse
repurchase agreement.
SECTION 4. Payment of Expenses.
(a) Expenses. The Trust 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 AMPS, (iii) the preparation, issuance and delivery of the certificates
for the AMPS to the Underwriters, including any stock or other transfer taxes
and any stamp or other duties payable upon the sale, issuance or delivery of the
AMPS to the Underwriters, (iv) the fees and disbursements of the Trust's
counsel, accountants and other advisors, (v) the qualification of the AMPS under
securities laws in accordance with the provisions of Section 3(a)(vi) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus,
Prospectus and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky survey and
any supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the AMPS, (ix) the filing fees incident to, and the reasonable
fees and disbursements of counsel to the Underwriters in connection with, the
review by the NASD of the terms of the sale of the AMPS, (x) the fees and
expenses incurred in connection with the rating of the AMPS and (xi) the
printing of any sales material.
(b) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section 9(a)
hereof, the Trust and the Advisers, jointly and severally, agree that they shall
reimburse the Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriters.
13
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 Trust and the Advisers
contained in Section 1 hereof or in certificates of any officer of the Trust or
the Advisers delivered pursuant to the provisions hereof, to the performance by
the Trust 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 Trust, 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 Trust has elected to
rely upon Rule 434, a Term Sheet shall have been filed with the Commission in
accordance with Rule 497.
(b) Opinions of Counsel for Trust and the Advisers. At Closing Time, the
Representative shall have received the favorable opinions, dated as of Closing
Time, of counsel for the Trust and the Advisers together with signed or
reproduced copies of such letter for each of the other Underwriters
substantially to the effect set forth in Exhibit A hereto or in such other forms
and substance reasonably satisfactory to counsel to the Underwriters.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters with respect to the matters set forth in clauses (A) (i), (ii),
(vi), (vii) (solely as to preemptive or other similar rights arising by
operation of law or under the charter or by-laws of the Trust), (viii) through
(x), inclusive, (xii), (xiv) (solely as to the information in the Prospectus
under "Description of Capitalization") and the last paragraph of Exhibit A
hereto. In giving such opinion such counsel may rely, as to all matters governed
by the laws of jurisdictions other than the law of the State of New York and the
federal law of the United States, upon the opinions of counsel satisfactory to
the Representative. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Trust 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
Trust, whether or not arising in the ordinary course of business, and the
Representative shall have received a certificate of a duly authorized officer of
the Trust and of the chief financial or chief accounting officer of the Trust
and of the President or a Vice President or Managing Director of each of the
Advisers, 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, as applicable, are true and correct with the same
force and effect as though expressly made at and as of Closing Time, (iii) each
of the Trust and the Advisers, respectively, has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied pursuant
to this Agreement at or prior to Closing Time, and (iv) with respect to the
Trust only, no stop order suspending the effectiveness of the Registration
Statement, or
14
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, to the knowledge of the Trust or the Advisers, as
applicable, are contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representative shall have received from Pricewaterhouse Coopers
LLP a letter dated such date, in form and substance satisfactory to the
Representative, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the Representative shall
have received from Pricewaterhouse Coopers LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(g) No Objection. The NASD shall have confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(h) Rating. The Trust shall have delivered and you shall have received
evidence satisfactory to you that the AMPS are rated `aaa' by ▇▇▇▇▇'▇ and `AAA'
by Fitch as of the Closing Time, and there shall not have been given any notice
of any intended or potential downgrading, or of any review for a potential
downgrading, in the rating accorded to the AMPS delivered to the Fund by ▇▇▇▇▇'▇
or by Fitch.
(i) Asset Coverage. Assuming the receipt of the net proceeds from the sale
of the AMPS, the 1940 Act Preferred Shares Asset Coverage and the Preferred
Shares Basic Maintenance Amount (each as defined in Amendment No. 1) each will
be met. For purposes of this section 5(i), the Trust may use portfolio holdings
and valuations as of the close of business of any day not more than six business
days preceding the Closing Time.
(j) Additional Documents. At Closing Time, 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 AMPS as herein contemplated, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Trust and
the Advisers in connection with the organization and registration of the Trust
under the 1940 Act and the issuance and sale of the AMPS as herein contemplated
shall be reasonably satisfactory in form and substance to the Representative 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 may be terminated by the Representative by notice to the Trust at any
time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7, 8 and 13 shall survive any such termination and
remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Trust 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
15
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
Trust; 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 Trust 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 AMPS which are the subject
thereof if the Prospectus corrected any such alleged untrue statement or
omission and if such Prospectus was delivered to such Underwriter in a timely
manner and if such Underwriter failed to send or give a copy of the Prospectus
to such person at or prior to the written confirmation of the sale of such AMPS
to such person.
(b) Indemnification of Trust, Advisers, Trustees, Directors and Officers.
Each Underwriter severally agrees to indemnify and hold harmless the Trust and
the Advisers, their respective trustees, directors and shareholders, each of the
Trust's officers who signed the Registration Statement, and each person, if any,
who controls the Trust 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 Trust 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 Trust 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
16
the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 6(a),
as limited by the provisos set forth therein, with respect to any sales
material.
(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 Trust 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 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 Trust and the Advisers on the one hand and the Underwriters on the other
hand from the offering of the AMPS pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Trust 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.
17
The relative benefits received by the Trust and the Advisers on the one
hand and the Underwriters on the other hand in connection with the offering of
the AMPS pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the AMPS pursuant to
this Agreement (before deducting expenses) received by the Trust and the total
underwriting discount received by the Underwriters (whether from the Trust or
otherwise), in each case as set forth on the cover of the Prospectus, or, if
Rule 434 is used, the corresponding location on the Term Sheet, bear to the
aggregate initial public offering price of the AMPS as set forth on such cover.
The relative fault of the Trust 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 Trust 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 Trust, 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 indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the AMPS underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each trustee and shareholder of the Trust and each director of the Advisers,
respectively, each officer of the Trust who signed the Registration Statement,
and each person, if any, who controls the Trust or the 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 Trust and the Advisers, respectively. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of AMPS set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and covenants contained in this Agreement
or in certificates of officers of the Trust or 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 Trust or the Advisers, and shall survive delivery of the
AMPS to the Underwriters.
18
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representative may terminate this Agreement,
by notice to the Trust, 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 Trust or the Advisers, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Representative, impracticable or inadvisable to market the AMPS
or to enforce contracts for the sale of the AMPS, or (iii) if trading in the
common shares of beneficial interest of the Trust has been suspended or
materially limited by the Commission or the NYSE, or if trading generally on the
American Stock Exchange or the NYSE or in the Nasdaq National Market has been
suspended or materially limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the NASD or any other
governmental authority, or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States, or
(iv) if a banking moratorium has been declared by either Federal or New York
authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7, 8 and 13 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at Closing Time to purchase
the AMPS which it or they are obligated to purchase under this Agreement (the
"Defaulted AMPS"), the Representative shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted AMPS in such amounts as may be agreed upon and upon the terms
herein set forth; if, however, the Representative shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted AMPS does not exceed 10% of the number of
AMPS to be purchased on such date, each of the non-defaulting Underwriters shall
be obligated, severally and not jointly, to purchase the full amount thereof in
the proportions that their respective underwriting obligations hereunder bear to
the underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted AMPS exceeds 10% of the number of AMPS to be
purchased on such date, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representative or the Trust shall have the right to
postpone Closing Time for a period not exceeding seven days in order to effect
any required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10.
19
SECTION 11. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representative, ▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇., ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ Financial Center,
New York, New York 10080, attention of Equity Capital Markets; and notices to
the Trust or the Advisers shall be directed, as appropriate, to the office of
Western Asset Management Company at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ III.
SECTION 12. Parties.
This Agreement shall each inure to the benefit of and be binding upon the
Underwriters, the Trust, the Advisers and their respective partners and
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Trust, 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 Trust, 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 AMPS from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. 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 14. Effect of Headings.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 15. Massachusetts Business Trust.
A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of State of the Commonwealth of Massachusetts, and notice is
hereby given that this Agreement is executed on behalf of the Trust by an
officer or trustee of the Trust in his or her capacity as an officer or trustee
of the Trust and not individually and that the obligations of or arising out of
this instrument are not binding upon any of the trustees, officers or
shareholders individually but are binding only upon the assets and property of
the Trust.
20
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 Trust and the Advisers in accordance with its terms.
Very truly yours,
Western Asset Premier Bond Fund
By: ________________________________________
Name:
Title:
Western Asset Management Company
By: ________________________________________
Name:
Title:
Western Asset Management Company Limited
By: ________________________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: ________________________________
Authorized Signatory
For itself and as
Representative of the
other Underwriters named
in Schedule A hereto.
21
SCHEDULE A
Number of
Name of Underwriter AMPS
------------------- ------------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ........ [ ]
Total ............................................ [ ]
==========
Sch A-1
SCHEDULE B
WESTERN ASSET PREMIER BOND FUND
[ ] Auction Market Preferred Shares of Beneficial Interest
[ ] Shares __ AMPS, Series M
[ ] Shares __ AMPS, Series W
Liquidation Preference $25,000 per share
1. The initial public offering price per share for the AMPS, determined as
provided in said Section 2, shall be $25,000.
2. The purchase price per share for the AMPS to be paid by the several
Underwriters shall be $25,000.
3. The commission to be paid to the Underwriters for their commitment
hereunder shall be $[ ] per share.
4. The initial dividend rate on the AMPS shall be [ ]% per annum for the
Series M and [ ]% per annum for the Series W.
Sch B-1
Exhibit A
FORM OF OPINION OF TRUST'S AND ADVISERS'
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(A) With respect to the Trust:
(i) The Trust has been duly organized and is validly existing as a
business trust in good standing under the laws of the Commonwealth of
Massachusetts.
(ii) The Trust has business trust 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 Trust is duly qualified as a foreign business trust to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse
Effect.
(iv) To the best of our knowledge, the Trust does not have any
subsidiaries.
(v) The authorized, issued and outstanding shares of beneficial
interest of the Trust is as set forth in the Prospectus under the caption
"Description of Preferred Shares" (except for subsequent issuances, if any,
pursuant to the Purchase Agreement); all issued and outstanding shares of
beneficial interest of the Trust have been duly authorized and validly
issued and are fully paid and non-assessable and have been offered and sold
or exchanged by the Trust in compliance with all applicable laws
(including, without limitation, federal and state securities laws); the
AMPS conform as to legal matters to all statements relating thereto
contained in the Prospectus and such description conforms to the rights set
forth in the instruments defining the same; and none of the outstanding
shares of common stock of the Trust was issued in violation of the
preemptive or other similar rights of any securityholder of the Trust.
(vi) The AMPS to be purchased by the Underwriters from the Trust
have been duly authorized for issuance and sale to the Underwriters
pursuant to the Purchase Agreement and, when issued and delivered by the
Trust pursuant to the Purchase Agreement against payment of the
consideration set forth in the Purchase Agreement, will be validly issued
and fully paid and non-assessable and no holder of the AMPS is or will be
subject to personal liability by reason of being such a holder.
(vii) The issuance of the AMPS is not subject to preemptive or other
similar rights of any securityholder of the Trust.
(viii) The Purchase Agreement has been duly authorized, executed and
delivered by the Trust.
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the Prospectus pursuant to Rule 497(c) or Rule 497(h)
has been made in the manner and within the time period required by Rule
497; and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act, and, to the best of our
knowledge, no order of suspension or revocation of registration
A-1
pursuant to Section 8(e) of the 1940 Act has been issued, and no
proceedings for any such purpose have been instituted or are pending or
threatened by the Commission.
(x) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the Prospectus and each amendment or supplement
to the Registration Statement and Prospectus as of their respective
effective or issue dates (other than the financial statements and
supporting schedules included therein or omitted therefrom, as to which we
need express no opinion), and the notification on Form N-8A complied as to
form in all material respects with the requirements of the 1933 Act, the
1940 Act and the Rules and Regulations.
(xi) If Rule 434 has been relied upon, the Prospectus was not
"materially different," as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time it became
effective.
(xii) The form of certificate used to evidence the AMPS complies in
all material respects with all applicable statutory requirements, with any
applicable requirements of the declaration of trust and by-laws of the
Trust and the requirements of the New York Stock Exchange.
(xiii) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to which
the Trust is a party, or to which the property of the Trust is subject,
before or brought by any court or governmental agency or body, domestic or
foreign, which might reasonably be expected to result in a Material Adverse
Effect, or which might reasonably be expected to materially and adversely
affect the properties or assets of the Trust or the consummation of the
transactions contemplated in the Purchase Agreement or the performance by
the Trust of its obligations thereunder.
(xiv) The information in the Prospectus under "Description of
Preferred Shares," "Description of Shares" and "Tax Matters" and in the
Registration Statement under Item 29 (Indemnification), to the extent that
it constitutes matters of law, summaries of legal matters, the Trust's
declaration of trust and by-laws or legal proceedings, or legal
conclusions, has been reviewed by us and is correct in all material
respects.
(xv) Each of the Investment Management Agreement, the Portfolio
Management Agreement, the Administration Agreement, the Custodian
Agreement, the Transfer Agency Agreement, the Purchase Agreement and the
Auction Agency Agreement comply in all material respects with all
applicable provisions of the 1940 Act, Advisers Act, the Rules and
Regulations and the Advisers Act Rules and Regulations.
(xvi) The Trust is duly registered with the Commission under the 1940
Act as a closed-end diversified management investment company; and, to the
best of our knowledge, no order of suspension or revocation of such
registration has been issued or proceedings therefor initiated or
threatened by the Commission.
(xvii) To the best of our knowledge, no person is serving as an
officer, trustee or investment adviser of the Trust except in accordance
with the 1940 Act and the Rules and Regulations and the Investment Advisers
Act and the Advisers Act Rules and Regulations. Except as disclosed in the
Registration Statement and Prospectus (or any amendment or supplement to
either of them), to the best of our knowledge, no trustee of the Trust is
an "interested person" (as defined in the ▇▇▇▇ ▇▇▇) of the Trust or an
"affiliated person" (as defined in the ▇▇▇▇ ▇▇▇) of an Underwriter.
A-2
(xviii) There are no statutes or regulations that are required to be
described in the Prospectus that are not described as required.
(xix) All descriptions in the Registration Statement of contracts
and other documents to which the Trust is a party are accurate in all
material respects. 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.
(xx) To the best of our knowledge, the Trust is not in violation of
its declaration of trust or by-laws and no default by the Trust exists in
the due performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument that is described
or referred to in the Registration Statement or the Prospectus or filed or
incorporated by reference as an exhibit to the Registration Statement.
(xxi) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency (other than under the 1933 Act, the 1934 Act, the 1940
Act and the Rules and Regulations, which have been obtained, or as may be
required under the securities or blue sky laws of the various states, as to
which we need express no opinion) is necessary or required in connection
with the due authorization, execution and delivery of the Purchase
Agreement or for the offering, issuance or sale of the AMPS or the
consummation of the transactions contemplated by this Agreement.
(xxii) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the
Purchase Agreement and in the Registration Statement (including the
issuance and sale of the AMPS and the use of the proceeds from the sale of
the AMPS as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Trust 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 Trust
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 Trust is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Trust is subject,
nor will such action result in any violation of the provisions of the
charter or by-laws of the Trust, 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 Trust or any of its properties, assets or
operations.
(xxiii) The Purchase Agreement, the Investment Management Agreement,
the Portfolio Management Agreement, the Administration Agreement, the
Custodian Agreement, the Transfer Agency Agreement and the Auction Agency
Agreement have each been duly authorized by all requisite action on the
part of the Trust, executed and delivered by the Trust, as of the dates
noted therein. Assuming due authorization, execution and delivery by the
other parties thereto with respect to the Administration Agreement, the
Custodian Agreement, the Transfer Agency Agreement and the Auction Agency
Agreement, each of the Investment Management Agreement, the Portfolio
Management Agreement, the Custodian Agreement, the Transfer Agency
Agreement and the Auction Agency Agreement constitutes a valid and binding
agreement of the Trust, enforceable in accordance with its terms, except as
affected by bankruptcy, insolvency,
A-3
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(B) With respect to the Advisers:
(i) Each Adviser has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of California or
the United Kingdom, as the case may be.
(ii) Each Adviser has full corporate power and authority to own,
lease and operate its properties and to conduct its business as described
in the Prospectus and to enter into and perform its obligations under the
Purchase Agreement.
(iii) Each Adviser is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to
so qualify would not result in a Material Adverse Effect.
(iv) Each Adviser is duly registered with the Commission as an
investment adviser under the Advisers Act and is not prohibited by the
Advisers Act, the Advisers Act Rules and Regulations, the 1940 Act or the
Rules and Regulations from acting under the Investment Management Agreement
and the Portfolio Management Agreement for the Trust as contemplated by the
Prospectus.
(v) The Purchase Agreement, the Investment Management Agreement and
the Portfolio Management Agreement have been duly authorized, executed and
delivered by the respective Adviser, and the Investment Management
Agreement and the Portfolio Management Agreement each constitutes a valid
and binding obligation of the respective Adviser, enforceable in accordance
with its terms, except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally and general equitable principles
(whether considered in a proceeding in equity or at law).
(vi) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to which
the Advisers are a party, or to which the property of the Advisers 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 Advisers,
materially and adversely affect the properties or assets of the Advisers or
materially impair or adversely affect the ability of the Advisers to
function as an investment adviser or perform its obligations under the
Investment Management Agreement or the Portfolio Management Agreement, or
which is required to be disclosed in the Registration Statement or the
Prospectus.
(vii) To the best of our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits
thereto, and the descriptions thereof or references thereto are correct in
all material respects.
(viii) To the best of our knowledge, each Adviser is not in violation
of its certificate of incorporation, by-laws or other organizational
documents and no default by the Advisers exists in the due performance or
observance of any material obligation, agreement, covenant or condition
A-4
contained in any contract, indenture, mortgage, loan agreement, note, lease
or other agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus or filed or incorporated by
reference as an exhibit to the Registration Statement.
(ix) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act,
the 1940 Act and the Rules and Regulations, which have been obtained, or as
may be required under the securities or blue sky laws of the various
states, as to which we need express no opinion) is necessary or required in
connection with the due authorization, execution and delivery of the
Purchase Agreement.
(x) The execution, delivery and performance of the Purchase Agreement
and the consummation of the transactions contemplated in the Purchase
Agreement and in the Registration Statement and compliance by the Advisers
with their 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 Advisers 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 Advisers is a party or
by which it or any of them may be bound, or to which any of the property or
assets of the Advisers is subject (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not have a Material
Adverse Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of the Advisers, 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 Advisers or any of its properties,
assets or operations.
In addition, we have participated in the preparation of the Registration
Statement and the Prospectus and participated in discussions with certain
officers, trustees and employees of the Trust, representatives of
Pricewaterhouse Coopers LLP, the independent accountants who examined the
statement of assets and liabilities of the Trust included or incorporated by
reference in the Registration Statement and the Prospectus, and you and your
representatives and we have reviewed certain Trust records and documents. While
we have not independently verified and are not passing upon, and do not assume
any responsibility for, the accuracy, completeness or fairness of the
information contained in the Registration Statement and the Prospectus, except
to the extent necessary to enable us to give the opinions with respect to the
Trust in paragraphs (A)(v), (xiv) and (xix), on the basis of such participation
and review, nothing has come to our attention that would lead us to believe that
the Registration Statement (except for financial statements, supporting
schedules and other financial data included therein or omitted therefrom and for
statistical information derived from such financial statements, supporting
schedules or other financial data, as to which we do not express any belief), at
the time such Registration Statement became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus (except for financial statements, supporting schedules and
other financial data included therein or omitted therefrom and for statistical
information derived from such financial statements, supporting schedules or
other financial data, as to which we do not express any belief), at the time the
Prospectus was issued, or at the Closing Time, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
A-5