Exhibit (h)(1)
Dreman/Claymore Dividend & Income Fund
(a Delaware statutory trust)
[ ] Auction Market Preferred Stock ("AMPS")
[ ] Shares [ ]%, Series [ ]
Liquidation Preference $25,000 per share
FORM OF PURCHASE AGREEMENT
[ ], 2004
Xxxxxxx Xxxxx & Co.
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx
Incorporated
[other co-managers]
c/x Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx
Incorporated
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
Dreman/Claymore Dividend & Income Fund, a Delaware statutory trust (the
"Fund"), proposes, upon the terms and conditions set forth herein, to issue and
sell an aggregate of [ ] Shares of its Auction Market Preferred Stock, Series __
[and Series __] (the "AMPS"). The AMPS will be authorized by, and subject to the
terms and conditions of, the Agreement and Declaration of Trust, as amended
through [ ], 2004 (the "Charter"), in the form filed as an exhibit to the
Registration Statement filed with respect to the common shares of the Fund (No.
333-109918 and No. 811-21455), as the same may be amended from time to time. The
Fund and the Fund's investment adviser, Claymore Advisors, LLC, a Delaware
limited liability company (the "Investment Adviser") and its investment manager,
Dreman Value Management LLC, a Delaware limited liability company (the
"Investment Manager" and together with the Investment Adviser, the "Advisers")
each confirms its agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Xxxxxx,
Xxxxxx & Xxxxx Incorporated (together, "Xxxxxxx Xxxxx") and each of the other
Underwriters named in Schedule A hereto (collectively, the "Underwriters", which
term shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof), for whom Xxxxxxx Xxxxx and [other co-managers] are acting as
representatives (in such capacity, the "Representatives"), with respect to the
issue and sale by the Fund and the purchase by the Underwriters, acting
severally and not jointly, of the respective number of AMPS set forth in said
SCHEDULE A.
The Fund understands that the Underwriters propose to make a public
offering of the AMPS as soon as the Representatives deem advisable after this
Agreement has been executed and delivered.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-112390 and No.
811-21455) covering the registration of the AMPS under the Securities Act of
1933, as amended (the "1933 Act"), including the related preliminary prospectus
or prospectuses, and a notification on Form N-8A of registration (the "1940 Act
notification") of the Fund as an investment company under the Investment Company
Act of 1940, as amended (the
"1940 Act"), and the rules and regulations of the Commission under the 1933 Act
and the 1940 Act (the "Rules and Regulations"). Promptly after execution and
delivery of this Agreement, the Fund will either (i) prepare and file a
prospectus in accordance with the provisions of Rule 430A ("Rule 430A") of the
Rules and Regulations and paragraph (c) or (h) of Rule 497 ("Rule 497") of the
Rules and Regulations or (ii) if the Fund has elected to rely upon Rule 434
("Rule 434") of the Rules and Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 497. The
information included in any such prospectus or in any such Term Sheet, as the
case may be, that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective, if applicable, (a) pursuant to paragraph (b) of
Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to paragraph
(d) of Rule 434 is referred to as "Rule 434 Information." Each prospectus
publicly distributed before such registration statement became effective, and
any prospectus that omitted, as applicable, the Rule 430A Information or the
Rule 434 Information, as the case may be, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, including in each
case any statement of additional information incorporated therein by reference,
is herein called a "preliminary prospectus." Such registration statement,
including the exhibits thereto and schedules thereto at the time it became
effective and including the Rule 430A Information and the Rule 434 Information,
as applicable, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the Rules and Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final prospectus in the form first filed under paragraph (c) or
(h) of Rule 497 and furnished to the Underwriters for use in connection with the
offering of the 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 [ ], 2004 together with the Term Sheet and all references in
this Agreement to the date of the Prospectus shall mean the date of the Term
Sheet. For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the Prospectus or any Term Sheet or any
amendment or supplement to any of the foregoing shall be deemed to include the
copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("XXXXX").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be.
Representations and Warranties.
REPRESENTATIONS AND WARRANTIES BY THE FUND AND THE ADVISERS. The Fund
and the Advisers jointly and severally represent and warrant to each
Underwriter as of the date hereof, as of the Closing Time referred to
in Section 2(c) hereof, and agree with each Underwriter, as follows:
COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the Registration
Statement and any Rule 462(b) Registration Statement has become
effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act, or order of
suspension or revocation of registration pursuant to Section 8(e) of
the 1940 Act, and no proceedings for any such purpose have been
instituted or are pending or, to the knowledge of the Fund or the
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.
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At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time, the Registration Statement, the Rule
462(b) Registration Statement, the notification of Form N-8A and any
amendments and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act, the 1940 Act and the Rules
and Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. Neither
the Prospectus nor any amendments or supplements thereto, on the respective
date of the Prospectus or any such amendment or supplement was issued and
at the Closing Time, included or will include an untrue statement of a
material fact or omitted or will omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. If Rule 434 is used, the Fund
will comply in all material respects with the requirements of Rule 434 and
the Prospectus shall not be "materially different", as such term is used in
Rule 434, from the prospectus included in the Registration Statement at the
time it became effective.
Each preliminary prospectus and the prospectus filed as part of the
effective Registration Statement or as part of any amendment thereto, or
filed pursuant to Rule 497 under the 1933 Act, complied when so filed in
all material respects with the Rules and Regulations and each preliminary
prospectus and the Prospectus delivered to the Underwriters for use in
connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T.
If a Rule 462(b) Registration Statement is required in connection with
the offering and sale of the AMPS, the Fund has complied or will comply
with the requirements of Rule 111 under the 1933 Act Regulations relating
to the payment of filing fees thereof.
The foregoing representations in this Section 1(a)(i) do not apply to
statements or omissions relating to the Underwriters made in reliance on
and in conformity with information furnished in writing to the Fund by the
Underwriters or their agents expressly for use in the Registration
Statement, the 462(b) Registration Statement, Prospectus or preliminary
prospectus (or any amendment or supplement to any of the foregoing), or
with respect to representations of the Fund, the descriptions of each of
the Advisers (referred to in Section (1)(b)(iii) of this Agreement)
contained in the foregoing.
INDEPENDENT ACCOUNTANTS. As of the date of the report of the independent
accountants contained in the Registration Statement, the accountants
who certified the statement of assets and liabilities included in the
Registration Statement are independent public accountants as required
by the 1933 Act and the Rules and Regulations.
FINANCIAL STATEMENTS. The statement of assets and liabilities included
in the Registration Statement and the Prospectus, together with the
related notes, presents fairly the financial position of the Fund in
all material respects at the date indicated; said statement has been
prepared in conformity with generally accepted accounting principles
("GAAP").
EXPENSE SUMMARY. The information set forth in the Prospectus in the Fee
Table has been prepared in accordance with the requirements of Form
N-2 and to the extent estimated or projected, such estimates or
projections are reasonably believed to be attainable and reasonably
based.
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)
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there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Fund, whether or not arising in the ordinary course
of business (a "Material Adverse Effect"), (B) there have been no
transactions entered into by the Fund, other than those in the
ordinary course of business, which are material with respect to the
Fund, and (C) there has been no dividend or distribution of any kind
declared, paid or made by the Fund on any class of its capital shares.
GOOD STANDING OF THE FUND. The Fund has been duly organized and is
validly existing as an unincorporated voluntary association in good
standing under the laws of the State of Delaware and has power and
authority to own and lease its properties and to conduct its business
as described in the Prospectus and to enter into and perform its
obligations under this Agreement; and the Fund is duly qualified to
transact business and is in good standing in each other jurisdiction
in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.
NO SUBSIDIARIES. The Fund has no subsidiaries.
INVESTMENT COMPANY STATUS. The Fund is duly registered with the
Commission under the 1940 Act as a closed-end non-diversified
management investment company, and no order of suspension or
revocation of such registration has been issued or proceedings
therefor initiated or, to the knowledge of the Fund or each of the
Advisers, threatened by the Commission.
OFFICERS AND TRUSTEES. No person is serving or acting as an officer,
trustee or investment adviser of the Fund except in accordance with
the provisions of the 1940 Act and the Rules and Regulations and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and
the rules and regulations of the Commission promulgated under the
Advisers Act (the "Advisers Act Rules and Regulations"). Except as
disclosed in the Registration Statement and the Prospectus (or any
amendment or supplement to either of them), no trustee of the Fund is
(A) an "interested person" (as defined in the 1940 Act) of the Fund or
(B) an "affiliated person" (as defined in the 1940 Act) of any
Underwriter. For purposes of this Section 1(a)(ix), the Fund and each
of the Advisers shall be entitled to rely on representations from such
officers and trustees.
CAPITALIZATION. The authorized, issued and outstanding shares of
beneficial interest of the Fund is as set forth in the Prospectus. All
issued and outstanding common shares of beneficial interest of the
Fund have been duly authorized and validly issued and are fully paid
and non-assessable (except as described in the Registration
Statement), and have been offered and sold or exchanged by the Fund in
compliance with all applicable laws (including, without limitation,
federal and state securities laws); none of the outstanding common
shares of beneficial interest of the Fund was issued in violation of
the preemptive or other similar rights of any securityholder of the
Fund.
AUTHORIZATION AND DESCRIPTION OF AMPS. The AMPS to be purchased by the
Underwriters from the Fund have been duly authorized for issuance and
sale to the Underwriters pursuant to this Agreement and, when issued
and delivered by the Fund pursuant to this Agreement against payment
of the consideration set forth herein, will be validly issued and
fully paid and non-assessable (except as 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
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defining the same, to the 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 Fund.
ABSENCE OF DEFAULTS AND CONFLICTS. The Fund is not in violation of its
agreement and declaration of trust or by-laws, each as amended from
time to time, or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which it is
a party or by which it may be bound, or to which any of the property
or assets of the Fund is subject (collectively, "Agreements and
Instruments") except for such violations or defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement, the Investment Advisory Agreement dated
as of January 27, 2004 between the Fund and the Investment Adviser
(the "Management Agreement"), the Sub-Advisory Agreement dated as of
January 27, 2004 among the Fund, the Investment Adviser and the
Investment Manager (the "Sub-Advisory Agreement"), the Custodian
Contract dated as of January 27, 2004 between the Fund and The Bank of
New York (the "Custodian Agreement") and the Registrar, Transfer
Agency and Service Agreement dated as of January 27, 2004 between the
Fund and The Bank of New York (the "Transfer Agency Agreement"),
Auction Agency Agreement dated as of March [__], 2004 between the Fund
and The Bank of New York (the "Auction Agency Agreement") and the
consummation of the transactions contemplated herein and in the
Registration Statement (including the issuance and sale of the AMPS
and the use of the proceeds from the sale of the AMPS as described in
the Prospectus under the caption "Use of Proceeds") and compliance by
the Fund with its obligations hereunder have been duly authorized by
all necessary action under the Delaware Statutory Trust Act (the
"Delaware Act") and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Fund pursuant
to, the Agreements and Instruments (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
result in a Material Adverse Effect), nor will such action result in
any violation (except for such violations that will not result in a
Material Adverse Effect) of the provisions of the agreement and
declaration of trust or by-laws of the Fund, each as amended from time
to time, or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Fund or any
of its assets, properties or operations, other than State securities
or "blue sky" laws applicable in connection with the purchase 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 Fund.
ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or
body, domestic or foreign, now pending, or, to the knowledge of the
Fund, threatened, against or affecting the Fund, which is required to
be disclosed in the Registration Statement (other than as disclosed
therein), or which would (if determined in a manner adverse to the
Fund) reasonably be expected to result in a Material Adverse Effect
(including the consummation of the
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transactions contemplated in this Agreement or the performance by the
Fund of its obligations hereunder). The aggregate of all pending legal
or governmental proceedings to which the Fund is a party or of which
any of its property or assets is the subject which are not described
in the Registration Statement, including ordinary routine litigation
incidental to the business, would not (if determined in a manner
adverse to the Fund) reasonably be expected to result in a Material
Adverse Effect.
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.
POSSESSION OF INTELLECTUAL PROPERTY. The Fund owns or possesses, or can
acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade
names or other intellectual property (collectively, "Intellectual
Property") necessary to carry on the business now operated by the
Fund, and the Fund has not received any notice or is not otherwise
aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property.
ABSENCE OF FURTHER REQUIREMENTS. No filing with, or authorization,
approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary
or required for the performance by the Fund of its obligations
hereunder, in connection with the offering, issuance or sale of the
AMPS hereunder or the consummation of the transactions contemplated by
this Agreement, except as referred to in the Prospectus or the
Registration Statement and such as have been already obtained or as
may be required under the 1933 Act, the 1940 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), or under the rules
of the New York Stock Exchange (the "NYSE") or state securities laws.
POSSESSION OF LICENSES AND PERMITS. The Fund possesses such permits,
licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to operate
its properties and to conduct the business as contemplated in the
Prospectus, except where the absence of such possession would not
result in a Material Adverse Effect; the Fund is in compliance with
the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, singly or in the aggregate,
have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to
be in full force and effect would not have a Material Adverse Effect;
and the Fund has not received any notice of proceedings relating to
the revocation or modification of any such Governmental Licenses
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a Material Adverse
Effect.
ADVERTISEMENTS. Any advertising, sales literature or other promotional
material (including "prospectus wrappers", "broker kits," "road show
slides" and "road show scripts" authorized in writing by or prepared
by the Fund or the Advisers and used in connection with the public
offering of the 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. All sales material complied and will comply in all
6
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").
SUBCHAPTER M. The Fund intends to direct the investment of the proceeds
of the offering described in the Registration Statement in such a
manner as to comply with the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended ("Subchapter M of the Code"
and the "Code," respectively), and intends to qualify as a regulated
investment company under Subchapter M of the Code.
(i) DISTRIBUTION OF OFFERING MATERIALS. The Fund has not distributed
and, prior to the later to occur of (A) the Closing Time and (B) completion
of the distribution of the AMPS, will not distribute any offering material
in connection with the offering and sale of the AMPS other than the
Registration Statement, a preliminary prospectus, the Prospectus or the
sales material.
(ii) ACCOUNTING CONTROLS. The Fund maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or
specific authorization and with the applicable requirements of the 1940
Act, the Rules and Regulations and the Code; (B) transactions are recorded
as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain
accountability for assets and to maintain compliance with the books and
records requirements under the 1940 Act and the Rules and Regulations; (C)
access to assets is permitted only in accordance with the management's
general or specific authorization; and (D) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(iii) ABSENCE OF UNDISCLOSED PAYMENTS. To the Fund's knowledge,
neither the Fund nor any employee or agent of the Fund has made any payment
of funds of the Fund or received or retained any funds, which payment,
receipt or retention of funds is of a character required to be disclosed in
the Prospectus.
MATERIAL AGREEMENTS. This Agreement, the Management Agreement, the
Sub-Advisory Agreement, the Custodian Agreement, the Transfer Agency
Agreement and the Auction Agency Agreement have each been duly
authorized by all requisite action on the part of the Fund and
executed and delivered by the Fund, as of the dates noted therein, and
each complies in all material respects with all applicable provisions
of the 1940 Act. Assuming due authorization, execution and delivery by
the other parties thereto, each such Agreement constitutes a valid and
binding agreement of the Fund, enforceable in accordance with its
terms, except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws, whether
statutory or decisional, relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing and except as rights to indemnification or
contribution thereunder may be limited by federal or state laws.
REGISTRATION RIGHTS. There are no persons with registration rights or
other similar rights to have any securities of the Fund registered
pursuant to the Registration Statement or otherwise registered by the
Fund under the 1933 Act.
RATINGS. The AMPS have been, or prior to the Closing Date will be,
assigned a rating of "Aaa" by Xxxxx'x Investors Service, Inc.
("Xxxxx'x") and "AAA" by Fitch Ratings ("Fitch").
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LEVERAGE. Any liabilities of the Fund for borrowed money, including
under any reverse repurchase agreements, margin lending or other
similar agreements, are within the asset coverage requirements of
Sectioin 18 of the 1940 Act.
REPRESENTATIONS AND WARRANTIES BY THE ADVISERS. Each of the Advisers
represents and warrants to each Underwriter, and in the case of
paragraph (iii) also represent to the Fund, as of the date hereof, as
of the Closing Time referred to in Section 2(c) hereof, and as of each
Date of Delivery (if any) referred to in Section 2(b) hereof as
follows:
GOOD STANDING OF THE ADVISERS. Such Adviser has been duly organized and
is validly existing and in good standing as a limited liability
company under the laws of the State of Delaware with full power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and each is duly qualified as
a foreign entity to transact business and is in good standing in each
other jurisdiction in which such qualification is required, except to
the extent that failure to be so qualified and in good standing would
not have a material adverse effect on the Adviser's ability to perform
its obligations under the Management Agreement (in the case of the
Investment Adviser) or the Sub-Advisory Agreement (in the case of the
Investment Manager).
INVESTMENT ADVISER STATUS. Such Adviser is duly registered and in good
standing with the Commission as an investment adviser under the
Advisers Act, and is not prohibited by the Advisers Act or the 1940
Act, or the rules and regulations under such acts, from acting under
the Management Agreement and the Sub-Advisory Agreement for the Fund
as contemplated by the Prospectus.
DESCRIPTION OF THE ADVISERS. The description of such Adviser in the
Registration Statement and the Prospectus (and any amendment or
supplement to either of them) complied and comply in all material
respects with the provisions of the 1933 Act, the 1940 Act, the
Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations and does not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
CAPITALIZATION. Such Adviser (whether alone or together with its
affiliates) has the financial resources available to it necessary for
the performance of its services and obligations as contemplated in the
Prospectus, this Agreement and under the Management Agreement and the
Sub-Advisory Agreement to which it is a party.
AUTHORIZATION OF AGREEMENTS; ABSENCE OF DEFAULTS AND CONFLICTS. Each of
this Agreement, the Management Agreement and the Sub-Advisory
Agreement to which such Adviser is a party has each been duly
authorized, executed and delivered by such Adviser, and (assuming due
authorization, execution and delivery by the other parties thereto)
such Agreements to which such Adviser is a party constitute valid and
binding obligations of the Adviser, enforceable in accordance with
their respective terms, except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws, whether statutory or decisional, relating to or affecting
creditors' rights generally and general equitable principles (whether
considered in a proceeding in equity or at law) and except as rights
to indemnification and contribution thereunder may be limited by
federal and state law; and neither the execution and delivery of any
of this Agreement, the Management Agreement or the Sub-Advisory
Agreement to which such Adviser is a party nor the performance by such
Adviser of its obligations hereunder or thereunder will conflict with,
or result in a breach of any of the terms and provisions of, or
constitute, with or without the giving of notice or lapse of time or
both, a default
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under, any agreement or instrument to which such Adviser is a party or
by which it is bound, the organizational documents of the Adviser, or
to the Adviser's knowledge, by any law, order, decree, rule or
regulation applicable to it of any jurisdiction, court, federal or
state regulatory body, administrative agency or other governmental
body, stock exchange or securities association having jurisdiction
over the Adviser or its properties or operations, except where such
breach or default would not have a material adverse effect on such
Adviser's ability to perform the services contemplated by this
Agreement, the Management Agreement or the Sub-Advisory Agreement; and
no consent, approval, authorization or order of any court or
governmental authority or agency is required for the consummation by
the Adviser of the transactions contemplated by this Agreement, the
Management Agreement or the Sub-Advisory Agreement, except as have
been obtained or may be required under the 1933 Act, the 1940 Act, the
1934 Act, NYSE or state securities laws.
NO MATERIAL ADVERSE CHANGE. Since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
except as otherwise stated therein, there has not occurred any event
which would reasonably be expected to have a material adverse effect
on the ability of such Adviser to perform its obligations under any of
this Agreement, the Management Agreement and the Sub-Advisory
Agreement to which it is a party.
ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or
body, domestic or foreign, now pending, or, to the knowledge of such
Adviser, threatened against or affecting the Adviser or any parent or
subsidiary of the Adviser or any partners, directors, officers or
employees of the foregoing, whether or not arising in the ordinary
course of business, which would reasonably be expected to result in
any material adverse change in the condition, financial or otherwise,
or earnings, business affairs or business prospects of the Adviser, to
materially and adversely affect the properties or assets of the
Adviser or to materially impair or adversely affect the ability of the
Adviser to function as an investment adviser or perform its
obligations under the Management Agreement or the Sub-Advisory
Agreement to which it is a party, or which is required to be disclosed
in the Registration Statement and the Prospectus (and has not been so
disclosed).
ABSENCE OF VIOLATION OR DEFAULT. Such Adviser is not in violation of its
organizational documents or in default under any agreement, indenture
or instrument, where such violation or default would reasonably be
expected to have a material adverse effect on the ability of such
Adviser to perform its obligations under either of the Management
Agreement or the Sub-Advisory Agreement to which it is a party..
OFFICER'S CERTIFICATES. Any certificate signed by any officer of the
Fund or any Adviser delivered to the Representatives or to counsel for
the Underwriters shall be deemed a representation and warranty by the
Fund or the Advisers, as the case may be, to each Underwriter as to
the matters covered thereby.
Sale and Delivery to Underwriters; Closing.
AMPS. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth,
the Fund agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to
purchase from the Fund, at the price per share set forth in SCHEDULE
B, the number of AMPS set forth in SCHEDULE A opposite the name of
such Underwriter, plus any
9
additional number of AMPS which such Underwriter may become obligated
to purchase pursuant to the provisions of Section 10 hereof.
COMMISSION. The Fund agrees to pay to the Underwriters a commission set
forth in SCHEDULE B, as compensation to the Underwriters for their
commitments under this Agreement.
PAYMENT. Payment of the purchase price for, and delivery of certificates
for, the AMPS shall be made at the offices of Clifford Chance US LLP,
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other place as
shall be agreed upon by the Representatives and the Fund, at 10:00
A.M. (Eastern time) on the third (fourth, if the pricing occurs after
4:30 P.M. (Eastern time) on any given day) business day after the date
hereof (unless postponed in accordance with the provisions of Section
10), or such other time not later than ten business days after such
date as shall be agreed upon by the Representatives and the Fund (such
time and date of payment and delivery being herein called "Closing
Time").
Payment shall be made to the Fund by wire transfer of immediately available
funds to a bank account designated by the Fund, against delivery to the
Representatives for the respective accounts of the Underwriters of certificates
for the AMPS to be purchased by them. It is understood that each Underwriter has
authorized the Representatives, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for AMPS that it has agreed to
purchase. Xxxxxxx Xxxxx, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the AMPS to be purchased by any Underwriter whose funds have not been
received by the Closing Time or the relevant Date of Delivery, as the case may
be, but such payment shall not relieve such Underwriter from its obligations
hereunder.
DENOMINATIONS; REGISTRATION. Certificates for the AMPS shall be in such
denominations and registered in such names as the Representatives may
request in writing at least one full business day before the Closing
Time or the relevant Date of Delivery, as the case may be. The
certificates for the AMPS will be made available for examination and
packaging by the Representatives in the City of New York not later
than 10:00 A.M. (Eastern time) on the business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.
Covenants.
The Fund and the Advisers, jointly and severally, covenant with each
Underwriter as follows:
COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. For a
period of one year from the date hereof, the Fund, subject to Section
3(a)(ii), will comply with the requirements of Rule 430A or Rule 434,
as applicable, and will notify the Representatives immediately, and
confirm the notice in writing, (i) when any post-effective amendment
to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii)
of any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of
the AMPS for offering or sale in any jurisdiction, or of the
initiation or, to the knowledge of the Fund, threatening of any
proceedings for any of such purposes. The Fund will promptly effect
the filings necessary pursuant to Rule 497 and will take such steps as
it deems necessary to ascertain promptly whether the form of
10
prospectus transmitted for filing under Rule 497 was received for
filing by the Commission and, in the event that it was not, it will
promptly file such prospectus. The Fund will make every reasonable
effort to prevent the issuance of any stop order, or order of
suspension or revocation of registration pursuant to Section 8(e) of
the 1940 Act, and, if any such stop order or order of suspension or
revocation of registration is issued, to obtain the lifting thereof at
the earliest possible moment.
FILING OF AMENDMENTS. For a period of one year from the date hereof, the
Fund will give the Representatives notice of its intention to file or
prepare any amendment to the Registration Statement (including any
filing under Rule 462(b)), any Term Sheet or any amendment, supplement
or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus, will
furnish the Representatives with copies of any such documents a
reasonable amount of time prior to such proposed filing or use, as the
case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall reasonably
object.
DELIVERY OF REGISTRATION STATEMENTS. The Fund has furnished or will
deliver to the Representatives, without charge, a signed copy of the
Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by
reference therein) and a signed copy of all consents and certificates
of experts, and will also deliver to the Representatives, without
charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the
Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to
the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, 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.
DELIVERY OF PROSPECTUSES. The Fund has delivered to each Underwriter,
without charge, as many copies of each preliminary prospectus as such
Underwriter reasonably requested, and the Fund hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Fund
will furnish to each Underwriter, without charge, during the period
when the Prospectus is required to be delivered under the 1933 Act,
such number of copies of the Prospectus (as amended or supplemented)
as such Underwriter may reasonably request. The Prospectus and any
amendments or supplements thereto furnished to the Underwriters will
be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to XXXXX, except to the extent permitted
by Regulation S-T.
CONTINUED COMPLIANCE WITH SECURITIES LAWS. If at any time when the
Prospectus (as amended or supplemented) is required by the 1933 Act to
be delivered in connection with sales of the 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
Fund, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue
statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in
the light of the circumstances existing at the time it is delivered to
a purchaser, or if it shall be necessary, in the reasonable opinion of
such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the
requirements of the 1933 Act or the Rules and Regulations, the Fund
will promptly prepare and file with the Commission, subject to Section
3(a)(ii), such amendment or
11
supplement as may be necessary to correct such statement or omission
or to make the Registration Statement or the Prospectus comply with
such requirements, and the Fund will furnish to the Underwriters such
number of copies of such amendment or supplement as the Underwriters
may reasonably request; provided that, if the supplement or amendment
is required exclusively as a result of a misstatement in or omission
from the information provided to the Fund in writing by the
Underwriters expressly for use in the Prospectus, the Fund may deliver
such supplement or amendment to the Underwriters and dealers at a
reasonable charge not to exceed the actual cost thereof to the Fund.
BLUE SKY QUALIFICATIONS. The Fund will use its best efforts, in
cooperation with the Underwriters, to qualify the AMPS for offering
and sale under the applicable securities laws of such states and other
jurisdictions of the United States as the Representatives may
designate and to maintain such qualifications in effect for a period
of not less than one year from the later of the effective date of the
Registration Statement and any Rule 462(b) Registration Statement;
provided, however, that the Fund shall not be obligated to file any
general consent to service of process or to qualify as a foreign
entity or as a dealer in securities in any jurisdiction in which it is
not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.
In each jurisdiction in which the AMPS have been so qualified, the
Fund will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification in effect for
a period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
RULE 158. The Fund will make generally available to its securityholders
as soon as practicable an earnings statement, if applicable, for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
USE OF PROCEEDS. The Fund 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".
RESTRICTION ON SALE OF AMPS. During a period of 180 days from the date
of the Prospectus, the Fund will not, without the prior written
consent of Xxxxxxx Xxxxx, (A) directly or indirectly, offer, pledge,
sell, contract to sell, sell any option, rights or warrant to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of AMPS
or any securities convertible into or exercisable or exchangeable for
AMPS or file any registration statement under the 1933 Act with
respect to any of the foregoing or (B) enter into any swap or any
other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of
the AMPS, whether any such swap or transaction described in clause (A)
or (B) above is to be settled by delivery of AMPS or such other
securities, in cash or otherwise. The foregoing sentence shall not
apply to the AMPS to be sold hereunder.
REPORTING REQUIREMENTS. The Fund, during the period when the Prospectus
is required to be delivered under the 1933 Act, will file all
documents required to be filed with the Commission pursuant to the
1940 Act and the 1934 Act within the time periods required by the 1940
Act and the Rules and Regulations and the 1934 Act and the rules and
regulations of the Commission thereunder, respectively.
SUBCHAPTER M. The Fund will use its best efforts to comply with the
requirements of Subchapter M of the Code to qualify as a regulated
investment company under the Code.
12
NO MANIPULATION OF MARKET FOR AMPS. The Fund will not (a) take, directly
or indirectly, any action designed to cause or to result in, or that
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Fund to facilitate
the sale or resale of the AMPS in violation of federal or state
securities laws, and (b) except for share repurchases permitted in
accordance with applicable laws and purchases of securities in the
open market pursuant to the Fund's dividend reinvestment plan, until
the Closing Date, or the Date of Delivery, if any, (i) sell, bid for
or purchase the AMPS or pay any person any compensation for soliciting
purchases of the AMPS or (ii) pay or agree to pay to any person any
compensation for soliciting another to purchase any other securities
of the Fund.
RULE 462(B) REGISTRATION STATEMENT. If the Fund elects to rely upon Rule
462(b), the Fund shall file a Rule 462(b) Registration Statement with
the Commission in compliance with Rule 462(b) by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement, and the Fund
shall at the time of filing either pay to the Commission the filing
fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under
the 1933 Act.
ACCOUNTANT CONFIRMATION. The Fund will furnish to the Underwriters, on
the date on which delivery is made to the Rating Agencies, an
accountant confirmation corresponding to the Preferred Shares Basic
Maintenance Report as defined in the Fund's Statement of Preferences
for the first Valuation Date as defined in the Fund's Statement of
Preferences.
On the date of the purchase and sale contemplated by this Agreement (the
"Closing Date"), and assuming the receipt of the proceeds of the
issuance of the AMPS on such date, the Fund will use all or a portion
of such proceeds to repay any liability that the Fund has for borrowed
money outstanding on the Closing Date (except for short-term
liabilities in connection with settling sales or purchases of
portfolio securities), including interest thereon, including for this
purpose any liability of the Fund outstanding on such date under any
reverse repurchase agreement.
Payment of Expenses.
EXPENSES. The Fund will pay all expenses incident to the performance of
its obligations under this Agreement, including (i) the preparation,
printing and filing of the Registration Statement (including financial
statements and exhibits) as originally filed and of each amendment
thereto, (ii) the reasonable costs of the preparation, printing and
delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection
with the offering, purchase, sale, issuance or delivery of the AMPS,
(iii) the preparation, issuance and delivery of the certificates, if
any, for the AMPS to the Underwriters, including any stock or other
transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the AMPS to the Underwriters, (iv) the fees
and disbursements of the Fund's counsel, accountants and other
advisers, (v) the qualification of the AMPS, if required, under
securities laws in accordance with the provisions of Section 3(a)(vi)
hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith
and in connection with the preparation of any requisite Blue Sky
survey and any supplement thereto, (vi) the printing and delivery to
the Underwriters of copies of each preliminary prospectus, Prospectus
and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of any requisite
Blue Sky survey and any supplement thereto, (viii) the fees and
expenses of any transfer agent or registrar for the AMPS, (ix) the
filing fees incident to, and the reasonable fees
13
and disbursements of counsel to the Underwriters in connection with,
the review by the NASD, if required, of the terms of the sale of the
AMPS, (x) the printing of any sales material.
TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or
Section 9(a) hereof, the Fund and each of the Advisers, jointly and
severally, agree that they shall reimburse the Underwriters for all of
their out-of-pocket expenses incurred, including the reasonable fees
and disbursements of counsel for the Underwriters.
Conditions of Underwriters' Obligations.
The obligations of the several Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Fund and the Advisers
contained in Section 1 hereof or in certificates of any officer of the Fund or
any Adviser delivered pursuant to the provisions hereof, to the performance by
the Fund and the Advisers of their respective covenants and other obligations
hereunder, and to the following further conditions:
EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective
or will have become effective by 5:30 p.m., New York City time on the
date hereof, and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued
under the 1933 Act, no notice or order pursuant to Section 8(e) of the
1940 Act shall have been issued, and no proceedings with respect to
either shall have been initiated or, to the knowledge of counsel to
the Underwriters and counsel to the Fund, threatened by the
Commission, and any request on the part of the Commission for
additional information shall have been complied with or waived to the
reasonable satisfaction of counsel to the Underwriters. A prospectus
containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 497 (or a post-effective amendment
providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A or a
certificate must have been filed in accordance with Rule 497(j)) or,
if the Fund has elected to rely upon Rule 434, a Term Sheet shall have
been filed with the Commission in accordance with Rule 497.
OPINION OF COUNSEL FOR THE FUND AND THE ADVISERS. At Closing Time, the
Representatives shall have received the favorable opinions, dated as
of Closing Time, of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel
for the Fund, of Xxxxxxxx Xxxxxxx, general counsel of the Investment
Adviser, and of Xxxxxxxxx Xxxxxxx LLP, counsel for the Investment
Manager, together with signed or reproduced copies of such letters for
each of the other Underwriters substantially to the effect set forth
in EXHIBIT A and in EXHIBITS B-1 AND B-2 hereto or in such other forms
and substance reasonably satisfactory to counsel to the Underwriters
may reasonably request.
OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Clifford Chance US LLP, counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of
the other Underwriters to the effect set forth in EXHIBIT C hereto. In
giving such opinion such counsel may rely, as to all matters governed
by the laws of jurisdictions other than the law of the State of New
York and the federal law of the United States, upon the opinions of
counsel satisfactory to the Representatives. Such counsel may also
state that, insofar as such opinion involves factual matters, they
have relied, to the extent they deem proper, upon certificates of
officers of the Fund and certificates of public officials.
14
OFFICERS' CERTIFICATES. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in
the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Fund, whether or not arising in
the ordinary course of business, and the Representatives shall have
received a certificate of a duly authorized officer of the Fund and of
the chief financial or chief accounting officer of the Fund and of the
President or a Vice President or Managing Director of each 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 Fund 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
Fund only, no stop order suspending the effectiveness of the
Registration Statement, or order of suspension or revocation of
registration pursuant to Section 8(e) of the 1940 Act, has been issued
and no proceedings for any such purpose have been instituted or are
pending or, to the knowledge of such officer, are contemplated by the
Commission.
ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the Representatives shall have received from Ernst & Young
LLP a letter dated such date, in form and substance satisfactory to
the Representatives, together with signed or reproduced copies of such
letter for each of the other Underwriters containing statements and
information of the type customarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement
and the Prospectus.
BRING-DOWN COMFORT LETTER. At Closing Time, the Representatives shall
have received from Ernst & Young 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.
RATING. The Fund shall have delivered and you shall have received
evidence satisfactory to you that the AMPS are rated `Aaa' by Xxxxx'x
and `AAA' by Fitch as of the Closing Date, and there shall not have
been given any notice of any intended or potential downgrading, or of
any review for a potential downgrading, in the rating accorded to the
AMPS or any other securities issued by Xxxxx'x or by Fitch.
ASSET COVERAGE. As of the Closing Date and assuming the receipt of the
net proceeds from the sale of the AMPS, the 1940 Act Preferred Shares
Asset Coverage and the Preferred Shares Basic Maintenance Amount (each
as defined in the Fund's Statement of Preferences) each will be met.
ADDITIONAL DOCUMENTS. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such
documents and opinions as they may reasonably require for the purpose
of enabling them to pass upon the issuance and sale of the AMPS as
herein contemplated, or in order to evidence the accuracy of any of
the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Fund
and the Advisers in connection with the organization and registration
of the Fund under the 1940 Act and the issuance and sale of the AMPS
as herein contemplated shall be reasonably satisfactory in form and
substance to the Representatives and counsel for the Underwriters.
15
TERMINATION OF AGREEMENT. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled,
this Agreement may be terminated by the Representatives by notice to
the Fund at any time at or prior to Closing Time or such Date of
Delivery, as the case may be, and such termination shall be without
liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 6, 7, 8 and 13 shall survive any
such termination and remain in full force and effect.
Indemnification.
INDEMNIFICATION OF UNDERWRITERS. The Fund and the Advisers, jointly and
severally, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act as
follows:
against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission; provided that (subject
to Section 6(e) below) any such settlement is effected with the
written consent of the Fund; and
against any and all expense whatsoever, as incurred (including the
reasonable fees and disbursements of counsel chosen by Xxxxxxx Xxxxx),
reasonably incurred in investigating, preparing or defending against
any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund or the
Advisers by any Underwriter through Xxxxxxx Xxxxx expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); 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 (as amended or supplemented) corrected any such
alleged untrue statement or omission and if such Prospectus (as amended or
supplemented) was delivered to such Underwriter in a timely manner and if such
Underwriter failed to send or give a copy of the Prospectus (as amended or
supplemented) to such person at or prior to the written confirmation of the sale
of such AMPS to such person.
16
INDEMNIFICATION OF THE FUND, ADVISERS, TRUSTEES, DIRECTORS AND OFFICERS.
Each Underwriter severally agrees to indemnify and hold harmless the
Fund and the Advisers, their respective trustees, directors and
shareholders, each of the Fund's officers who signed the Registration
Statement, and each person, if any, who controls the Fund or the
Advisers within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of
this Section, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or any
preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written
information furnished to the Fund or the Advisers by such Underwriter
through Xxxxxxx Xxxxx 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).
INDEMNIFICATION FOR MARKETING MATERIALS. In addition to the foregoing
indemnification, the Fund and the Advisers also, jointly and
severally, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against
any and all loss, liability, claim, damage and expense described in
the indemnity contained in Section 6(a), as limited by the proviso set
forth therein, with respect to any sales material (to the same extent
as with respect to any preliminary prospectus or the Prospectus).
ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall give
notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity
may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result
thereof and in any event shall not relieve it from any liability which
it may have otherwise than on account of this indemnity agreement. In
the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Xxxxxxx Xxxxx,
and, in the case of parties indemnified pursuant to Section 6(b)
above, counsel to the indemnified parties shall be selected by the
Fund and the 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.
17
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.
Contribution.
If the indemnification provided for in Section 6 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then, in lieu of indemnifying such indemnified party, each indemnifying party
shall contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Fund or the Advisers on the one hand and the Underwriters on the other hand
from the offering of the AMPS pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Fund and the Adviser
on the one hand and of the Underwriters on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Fund and the 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 Fund and the total
underwriting discount received by the Underwriters (whether from the Fund or
otherwise), in each case as set forth on the cover of the Prospectus or, if Rule
434 is used, the corresponding location on the Term Sheet, bear to the aggregate
initial public offering price of the AMPS as set forth on such cover.
The relative fault of the Fund and the Advisers on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Fund or the Advisers or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Fund, the Advisers and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such 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
18
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. No person shall be
entitled to indemnification or contribution under this Agreement against any
loss, claim, liability, expense or damage arising by reason of such person's
willful misfeasance or gross negligence in the performance of its duties
hereunder.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each trustee and shareholder of the Fund and each director of the Advisers,
respectively, each officer of the Fund who signed the Registration Statement,
and each person, if any, who controls the Fund or each of 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 Fund 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.
Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and covenants contained in this Agreement
or in certificates of officers of the Fund or either of the Advisers submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or controlling
person, or by or on behalf of the Fund or the Advisers, and shall survive
delivery of the AMPS to the Underwriters.
Termination of Agreement.
TERMINATION; GENERAL. The Representatives may terminate this Agreement,
by notice to the Fund, at any time at or prior to Closing Time (i) if
there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of the Fund or any Adviser, whether or not arising in the ordinary
course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or
international political, financial or economic conditions, in each
case the effect of which is such as to make it, in the judgment of the
Representatives, impracticable or inadvisable to market the AMPS or to
enforce contracts for the sale of the AMPS, or (iii) if trading in the
common shares of beneficial interest of the Fund has been suspended or
materially limited by the Commission or the NYSE, or if trading
generally on the American Stock Exchange or the NYSE or in the Nasdaq
National Market has been suspended or materially limited, or minimum
or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system
or by order of the Commission, the NASD or any other governmental
authority, or a material disruption has occurred in commercial banking
or securities settlement or clearance services in the United States,
or (iv) if a banking moratorium has been declared by either Federal or
New York authorities.
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
19
provided further that Sections 1, 6, 7, 8 and 13 shall survive such
termination and remain in full force and effect.
Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at Closing Time or a Date of
Delivery to purchase the AMPS which it or they are obligated to purchase under
this Agreement (the "Defaulted AMPS"), the Representatives shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted AMPS in such amounts as may be agreed upon and
upon the terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
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
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 Representatives or the Fund shall have the right to
postpone Closing Time or the relevant Date of Delivery, as the case may be, for
a period not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
As used herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10.
Tax Disclosure.
Notwithstanding any other provision of this Agreement, from the
commencement of discussions with respect to the transactions contemplated
hereby, the Fund and each of the Advisers (and each employee, representative or
other agent of the Fund) may disclose to any and all persons, without limitation
of any kind, the tax treatment and tax structure (as such terms are used in
Sections 6011, 6111 and 6112 of the U.S. Code and the Treasury Regulations
promulgated thereunder) of the transactions contemplated by this Agreement and
all materials of any kind (including opinions or other tax analyses) that are
provided relating to such tax treatment and tax structure.
Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representatives, Xxxxxxx Xxxxx & Co., 4 World Financial Center, New York, New
York 10080, attention of Equity Capital Markets; and notices to the Fund or each
of Advisers shall be directed, as appropriate, to the office of Claymore
Advisors, LLC at 000 Xxxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention:
Xxxxxxxx Xxxxxxx or Dreman Value Management LLC at 00 Xxxxxxxx Xxxxx, Xxxxx
0000, Xxxxxx Xxxx, Xxx Xxxxxx 00000, Attention: Xxxxx X. Xxxxx, respectively.
Parties.
This Agreement shall each inure to the benefit of and be binding upon the
Underwriters, the Fund, each of the Advisers and its respective partners and
successors. Nothing expressed or mentioned in
20
this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters, the Fund, the Advisers and their
respective successors and the controlling persons and officers, trustees,
shareholders and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters, the Fund, the Advisers and their
respective partners and successors, and said controlling persons and officers,
trustees, shareholders and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No purchaser of
AMPS from any Underwriter shall be deemed to be a successor by reason merely of
such purchase.
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.
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.
21
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a binding agreement among the
Underwriters, the Fund and each of the Advisers in accordance with its terms.
Very truly yours,
DREMAN/CLAYMORE DIVIDEND & INCOME FUND
By:
--------------------------------------------
Name:
Title:
CLAYMORE ADVISORS, LLC
By:
--------------------------------------------
Name:
Title:
DREMAN VALUE MANAGEMENT LLC
By:
--------------------------------------------
Name:
Title:
22
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX XXXXX, XXXXXX, XXXXXX & XXXXX
INCORPORATED
[other co-managers]
By: Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx Incorporated
By:
-------------------------------------
Authorized Signatory
For [itself] and as
Representative of the
other Underwriters named
in SCHEDULE A hereto.
23
SCHEDULE A
NUMBER OF
NAME OF UNDERWRITER AMPS
------------------- ---------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Total
Sch A-1
SCHEDULE B
Dreman/Claymore Dividend & Income Fund
[ ] Auction Market Preferred Shares
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 $[24,750], such discount from the initial public offering
price representing the commission to be paid to the Underwriters for their
commitment hereunder of $[250].
3. The initial dividend rate of the AMPS, Series [ ] shall be [ ]% per
annum.
Sch B-1
Exhibit A-1
FORM OF OPINION OF FUND'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(A) With respect to the Fund:
We have acted as special counsel to Dreman/Claymore Dividend & Income
Fund, a statutory trust (the "Trust") created under the Delaware Statutory Trust
Act (the "Delaware Statutory Trust Act"), in connection with the issuance and
sale by the Trust of of up to 3,400 shares of the Trust's Series M7 Auction
Market Preferred Shares of Beneficial Interest, liquidation preference $25,000
per share; 3,400 shares of the Trust's Series T28 Auction Market Preferred
Shares of Beneficial Interest, liquidation preference $25,000 per share; 3,400
shares of the Trust's Series W7 Auction Market Preferred Shares of Beneficial
Interest, liquidation preference $25,000 per share; 3,400 shares of the Trust's
Series TH28 Auction Market Preferred Shares of Beneficial Interest, liquidation
preference $25,000 per share; and up to 3,400 shares of the Trust's Series F7
Auction Market Preferred Shares of Beneficial Interest, liquidation preference
$25,000 per share (collectively, the "AMPS").
This opinion is being furnished pursuant to Section 5(b) of the Purchase
Agreement, dated March __, 2004 (the "Purchase Agreement"), among you, as
Representative of the several Underwriters named therein (the "Underwriters"),
the Trust, Claymore Advisors, LLC (the "Adviser") and Dreman Value Management,
LLC (the "Investment Manager"). Capitalized terms used and not otherwise defined
herein shall have the respective meanings set forth in the Purchase Agreement.
In rendering the opinions set forth herein, we have examined and relied
on originals or copies of the following:
(a) the notification of registration of the Trust on Form N-8A, dated
October 23, 2003 (the "1940 Act Notification"), as filed with the Securities and
Exchange Commission (the "Commission") on October 23, 2003 under the Investment
Company Act of 1940, as amended (the "1940 Act");
(b) the registration statement of the Trust on Form N-2 (File Nos.
333-_______ and 811-21455), as filed with the Commission on February 2, 2004
under the Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act,
[Pre-Effective Amendment No. 1, filed with the Commission on March __, 2004,
Pre-Effective Amendment No. 2, filed with the Commission on March ___, 2004 and
Pre-Effective Amendment No. 3, filed with the Commission on March __, 2004] (as
so amended and in the form declared effective by the Commission, including the
information deemed to be a part thereof pursuant to Rule 430A of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Rules and
Regulations"), the "Registration Statement");
(c) the registration statement of the Trust on Form 8-A (File No.
001-31967), dated January 27, 2004, as filed with the Commission on January 27,
2004, relating to the registration of the Common Shares under the Securities
Exchange Act of 1934, as amended (the "1934 Act");
(d) the final Prospectus and Statement of Additional Information of the
Trust, each dated March [17], 2004 and as filed with the Commission on March
[18], 2004 pursuant to Rule
A-1
497(h) of the 1933 Act Rules and Regulations (collectively, the "Prospectus");
(e) the certificate of Xxxxxxxx Xxxxxxx, Trustee and Chief Legal and
Executive Officer of the Trust and Senior Managing Director and General Counsel
of the Adviser, dated the date hereof, a copy of which is attached as Exhibit A
hereto (the "Officer's Certificate");
(f) certified copies of the Certificate of Trust of the Trust, as filed
with the Secretary of the State of Delaware on October 20, 2003, and the
Agreement and Declaration of Trust of the Trust, as in effect on the date hereof
(collectively, the "Declaration"), and the By-Laws of the Trust, as in effect on
the date hereof (the "By-Laws");
(g) the documentation related to the closing of the initial public
offering of the Trust, which closed on January 30, 2004, and documentation
related to the closings with respect to the exercises of the over-allotment
option granted to the underwriters in connection with the initial public
offering of the Trust, closings of which occurred on February __, 2004 and March
16, 2004 (collectively, the "Closing Papers")
(h) a certified copy of (i) certain resolutions adopted on October 20,
2003 and December 7, 2003 by the Sole Trustee of the Trust; (ii) certain
resolutions adopted on December 9, 2003, December 15, 2003 and January 23, 2004
by the Board of Trustees of the Trust;
(i) a certified copy of certain resolutions adopted on January 16, 2004
by the sole beneficial owner of the Trust;
(j) a draft of the minutes of the meeting of the Board of Trustees of
the Trust held on February 6, 2004, dated February 6, 2004 (the "Minutes")
(k) a certificate, dated March __, 2004, and a bring-down certificate,
dated March __, 2004, from the Secretary of State of the State of Delaware as to
the Trust's creation, good standing and legal existence in the State of Delaware
(collectively, the "Delaware Good Standing Certificate");
(l) the Investment Advisory Agreement between the Trust and the Adviser,
dated as of January 27, 2004 (the "Investment Advisory Agreement");
(m) the Investment Sub-Advisory Agreement among the Trust, the Adviser
and the Investment Manager, dated as of January 27, 2004 (the "Investment
Sub-Advisory Agreement");
(n) the Purchase Agreement;
(o) the Custodian Contract between the Trust and The Bank of New York,
dated as of January 27, 2004 (the "Custodian Contract");
(p) the Transfer Agency and Service Agreement between the Trust and The
Bank of New York, dated as of January 27, 2004 (the "Transfer Agency
Agreement");
(q) the Administration Agreement between the Trust and The Bank of New
York, dated as of January 27, 2004 (the "Administration Agreement");
(r) the Fund Accounting Agreement between the Trust and The Bank of New
York, dated as of January 27, 2004 (the "Fund Accounting Agreement");
A-2
(s) the Subscription Agreement between the Trust and the Adviser, dated
January 15, 2004 (the "Subscription Agreement");
(t) the Auction Agency Agreement between the Trust and the Auction
Agent, dated as of March __, 2003 (the "Auction Agency Agreement");
(u) the Broker-Dealer Agreement between the Auction Agent and each of
the Broker-Dealers, dated as of March __, 2004 (the "Broker-Dealer Agreement");
(v) specimen certificates representing the AMPS; and
(w) a specimen certificate representing the Common Shares.
We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Trust and such
agreements, certificates and receipts of public officials, certificates of
officers or other representatives of the Trust and others, and such other
documents as we have deemed necessary or appropriate as a basis for the opinions
set forth below.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as facsimile, electronic, certified or photostatic
copies, and the authenticity of the originals of such copies. In making our
examination of executed documents, we have assumed that the parties thereto,
other than the Trust, had the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and the execution and delivery by
such parties of such documents and the validity and binding effect thereof on
such parties. As to any facts material to the opinions expressed herein that we
did not independently establish or verify, we have relied upon statements and
representations of officers and other representatives of the Trust, the Adviser,
the Investment Manager and others and of public officials, including the facts
set forth in the Officer's Certificate described above.
The Investment Advisory Agreement, Investment Sub-Advisory Agreement,
Custodian Contract, Administration Agreement, Fund Accounting Agreement,
Subscription Agreement, Transfer Agency Agreement, Auction Agency Agreement and
Broker-Dealer Agreement are hereinafter referred to collectively as the
"Transaction Documents." "Applicable Contracts" means those agreements or
instruments identified to us in the Officer's Certificate as all the agreements
and instruments which are material to the business or financial condition of the
Trust. "Applicable Laws" means the Delaware Statutory Trust Act and those laws,
rules and regulations of the State of Delaware and of the State of New York and
the federal laws of the United States of America, in each case, which, in our
experience, are normally applicable to transactions of the type contemplated by
the Purchase Agreement (other than the United States federal securities laws,
state securities or blue sky laws, antifraud laws and the rules and regulations
of the NASD), without our having made any special investigation as to the
applicability of any specific law, rule or regulation. "Governmental
Authorities" means any court, regulatory body, administrative agency or
governmental body of the State of Delaware, the State of New York or the United
States of America having jurisdiction over the Trust under Applicable Laws.
"Governmental Approval" means any consent, approval, license, authorization,
validation, filing, qualification or registration with any Governmental
Authority required to be made or obtained by the Trust pursuant to any
Applicable Laws, other than any consent, approval, license, authorization,
validation, filing, qualification or registration which may have become
applicable as a result of
A-3
the involvement of any party (other than the Trust) to the transactions
contemplated by the Purchase Agreement and the Transaction Documents or because
of such parties' legal or regulatory status or because of any other facts
specifically pertaining to such parties. "Applicable Orders" means those
judgments, orders or decrees of Governmental Authorities identified to us in the
Officer's Certificate.
The opinions set forth below are subject to the following
qualifications, further assumptions and limitations:
(a) the opinion set forth in paragraph 1 below with respect to
the status of the Trust as a statutory trust under the laws of the State of
Delaware is based solely upon our review of the Delaware Good Standing
Certificate;
(b) we do not express any opinion as to the effect on the opinions
expressed herein of (i) the compliance or noncompliance of any party to the
Purchase Agreement or any of the Transaction Documents (other than the Trust)
with any state, federal or other laws or regulations applicable to it or them or
(ii) the legal or regulatory status or the nature of the business of any such
party;
(c) the validity or enforcement of any agreements or instruments may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in equity or
at law);
(d) we do not express any opinion as to the applicability or affect of
any fraudulent transfer, preference or similar law on each of the Transaction
Documents or any transactions contemplated thereby;
(e) we do not express any opinion as to the enforceability of any rights
to contribution or indemnification which may be violative of the public policy
underlying any law, rule or regulation (including any federal or state
securities law, rule or regulation);
(f) we express no opinion as to any provision with respect to the
enforceability of the choice of law of the parties;
(g) we express no opinion on the enforceability of any provision in the
Purchase Agreement or in a Transaction Document purporting to prohibit, restrict
or condition assignability to the extent such restriction on assignability is
governed by sections 9-406 through 9-409 of the Uniform Commercial Code; and
(h) in rendering the opinion set forth in paragraph 13 below, we have
relied solely on the Officer's Certificate; we have made no other inquiries or
investigations or any search of the public docket records of any court,
governmental agency or body or administrative agency.
In rendering the opinions set forth below, we have also assumed, with
your consent, that:
(a) the execution, delivery and performance by the Trust of any of its
obligations under the Transaction Documents does not and will not conflict with,
contravene, violate or constitute a default under (i) any lease, indenture,
instrument or other agreement to which the Trust or its property is subject
(other than Applicable Contracts as to which we express our opinion in paragraph
4 herein), (ii) any rule, law or regulation to which the Trust is subject (other
than
A-4
Applicable Laws, the 1940 Act and the rules and regulations of the Commission
under the 1940 Act (the "1940 Act Rules and Regulations") as to which we express
our opinion in paragraph 5 herein) or (iii) any judicial or administrative order
or decree of any governmental authority (other than Applicable Orders as to
which we express our opinion in paragraph 7 herein); and
(b) no authorization, consent or other approval of, notice to or filing
with any court, governmental authority or regulatory body (other than
Governmental Approvals as to which we express our opinion in paragraph 6 herein)
is required to authorize or is required in connection with the execution,
delivery or performance by the Trust of the Purchase Agreement or any
Transaction Document to which it is a party or the transactions contemplated
thereby.
We do not express any opinion as to the laws of any jurisdiction other
than the Applicable Laws and the federal securities laws of the United States of
America to the extent specifically referred to herein. Insofar as the opinions
expressed herein relate to matters governed by laws other than those set forth
in the preceding sentence, we have assumed, without having made any independent
investigation, that such laws do not affect any of the opinions set forth
herein. The opinions expressed herein are based on laws in effect on the date
hereof, which laws are subject to change with possible retroactive effect.
Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that:
1. The Trust is in good standing and has a legal existence as a statutory
trust under the Delaware Statutory Trust Act.
2. The Trust has the necessary power and authority under the Delaware
Statutory Trust Act as a statutory trust to execute, deliver and perform
all of its obligations under the Purchase Agreement and the Transaction
Documents. The execution and delivery by the Trust of the Purchase
Agreement and the Transaction Documents and the consummation by the
Trust of the transactions contemplated thereby have been duly authorized
by all requisite action on the part of the Trust under the Delaware
Statutory Trust Act. Each of the Purchase Agreement nad the Transaction
Documents has been duly executed and delivered by the Trust under the
Applicable Laws of the State of Delaware.
3. Each of the Transaction Documents (other than the Investment Advisory
Agreement and the Investment Sub-Advisory Agreement) constitutes the
valid and binding obligation of the Trust enforceable against the Trust
in accordance with its terms under the Applicable Laws of the State of
New York. Each of the Investment Advisory Agreement and the Investment
Sub-Advisory Agreement constitutes the valid and binding obligation of
the Trust enforceable against the Trust in accordance with its terms
under the Applicable Laws of the State of Delaware.
4. The execution and delivery by the Trust of the Purchase Agreement and
each of the Transaction Documents and the performance by the Trust of
its obligations under the Purchase Agreement and each of the Transaction
Documents, each in accordance with its terms, do not (i) conflict with
the Declaration or By-Laws of the Trust, (ii) constitute a violation of,
or a default under, any Applicable Contract or (iii) cause the creation
of any security interest or lien upon any of the property of the Trust
pursuant to any Applicable Contract. We do not express any opinion,
however, as to whether the execution, delivery or performance by the
Trust of the Purchase Agreement or the Transaction Documents will
constitute a violation of, or a default under, any covenant, restriction
or provision
A-5
with respect to financial ratios or tests or any aspect of the financial
condition or results of operations of the Trust.
5. Neither the execution, delivery or performance by the Trust of its
obligations under the Purchase Agreement or the Transaction Documents
nor the compliance by the Trust with the terms and provisions thereof
will contravene any provision of Applicable Law or the 1940 Act or the
1940 Act Rules and Regulations in any material respect.
6. No Governmental Approval, which has not been obtained or taken and is
not in full force and effect, is required to authorize, or is required
in connection with, the execution, delivery or performance of the
Purchase Agreement or any of the Transaction Documents.
7. Neither the execution, delivery or performance by the Trust of its
obligations under the Purchase Agreement or the Transaction Documents
nor compliance by the Trust with the terms and provisions thereof will
contravene any Applicable Order.
8. The Trust is registered with the Commission pursuant to Section 8 of the
1940 Act as a diversified, closed-end management investment company; and
the Declaration and By-Laws comply in all material respects with the
1940 Act and the 1940 Act Rules and Regulations.
9. The Trust has an authorized capitalization as set forth in the
Prospectus (without giving effect to the issuance and sale of the AMPS
to you pursuant to the Purchase Agreement); all of the outstanding
Common Shares have been duly authorized and validly issued, and are
fully paid and non-assessable (except as provided in the last sentence
of Section 3.8 of the Declaration) representing undivided beneficial
ownership interests in the assets of the Trust. Our opinion in this
paragraph 9 is based solely on our review of the Closing Papers and the
representations of the Trust set forth in the Officer's Certificate, and
we have assumed that the Common Shares have been properly recorded on
the books and records of the Trust. In rendering the opinion set forth
in this paragraph 9, we have further assumed that if a holder of Common
Shares requests a certificate representing such holder's Common Shares,
that such certificate will conform to the specimen examined by us and
will have been signed by an authorized officer of the transfer agent and
registrar for the Common Shares and registered by such transfer agent
and registrar.
10. The AMPS have been duly authorized by all necessary action of the Trust
under the Delaware Statutory Trust Act and, when issued to and paid for
by the Underwriters pursuant to the Purchase Agreement, will be validly
issued, fully paid and non-assessable (except as provided in the last
sentence of Section 3.8 of the Declaration) representing undivided
beneficial ownership interests in the assets of the Trust. In rendering
the opinion set forth in this paragraph 10, we have assumed that if a
holder of AMPS requests a certificate representing such holder's AMPS
that such certificate will conform to the specimen examined by us and
will have been signed by an authorized officer of the transfer agent and
registrar for the AMPS and registered by such transfer agent and
registrar.
11. No holders of outstanding Common Shares are entitled as such to any
preemptive or other rights to subscribe for any AMPS under any
Applicable Contract, under the Declaration or By-Laws or under the
Delaware Statutory Trust Act.
A-6
12. The statements set forth under the heading "Description of the AMPS",
"The Auction" and "Description of Common Shares" in the Prospectus,
insofar as such statements purport to summarize certain provisions of
the 1940 Act, the Delaware Statutory Trust Act, the Common Shares or the
Declaration, fairly summarize such provisions in all material respects.
13. To our knowledge, no legal or governmental proceedings are pending to
which the Trust is a party that are required to be described in the
Registration Statement or the Prospectus and are not so described
therein, and, to our knowledge, no contract or other document of the
Trust is required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement
that is not described therein or filed as required.
14. The Registration Statement, the Prospectus and the 1940 Act Notification
(in each case, other than the financial statements and other financial
information contained therein or incorporated therein by reference and
other than any exhibits, schedules or appendices included or
incorporated by reference therein, as to which we express no opinion)
comply as to form in all material respects with the applicable
requirements of the 1933 Act, the 1933 Act Rules and Regulations, the
1940 Act and the 1940 Act Rules and Regulations. Except to the extent
set forth in paragraph 11 above and in our tax opinion dated even
herewith, we do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus.
We have been orally advised by the staff of the Commission that the
Registration Statement was declared effective on March 17, 2004, and that no
stop order suspending the effectiveness of the Registration Statement or the
1940 Act Notification's has been issued and, to our knowledge, no proceedings
for that purpose have been instituted or are pending or threatened by the
Commission.
The filing of the Prospectus pursuant to Rule 497(h) under the 1933 Act
Rules and Regulations has been made in the manner and within the time period
required by Rule 497(h) of the 1933 Act Rules and Regulations.
This letter is furnished only to you and is solely for your benefit in
connection with the closing under the Purchase Agreement occurring today. Except
as noted in the next sentence, without our prior written consent, this letter
may not be used, circulated, quoted or otherwise referred to for any other
purpose or relied upon by, or assigned to, any other person for any purpose,
including any other person that acquires Shares or that seeks to assert your
rights in respect of this letter (other than your successor in interest by means
of merger, consolidation, transfer of a business or other similar transaction).
Clifford Chance US LLP may rely upon paragraphs 1, 2, 9, 11 and 12 of this
letter to the extent that such paragraphs cover matters governed by the Delaware
Statutory Trust Act as though this letter had been addressed to them, but only
in connection with any opinion delivered to the Underwriters on the date hereof
required pursuant to Section 5 of the Purchase Agreement.
We advise you that the Firm has rendered legal advice to the Adviser and
other investment funds advised by the Adviser in connection with various
matters.
A-7
Exhibit A-2
FORM OF LETTER OF FUND'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(A) With respect to the Fund:
We have acted as special counsel to Dreman/Claymore Dividend & Income Fund,
a statutory trust (the "Trust") created under the Delaware Statutory Trust Act
(the "Delaware Statutory Trust Act"), in connection with the issuance and sale
by the Trust of of up to 3,400 shares of the Trust's Series M7 Auction Market
Preferred Shares of Beneficial Interest, liquidation preference $25,000 per
share; 3,400 shares of the Trust's Series T28 Auction Market Preferred Shares of
Beneficial Interest, liquidation preference $25,000 per share; 3,400 shares of
the Trust's Series W7 Auction Market Preferred Shares of Beneficial Interest,
liquidation preference $25,000 per share; 3,400 shares of the Trust's Series
TH28 Auction Market Preferred Shares of Beneficial Interest, liquidation
preference $25,000 per share; and up to 3,400 shares of the Trust's Series F7
Auction Market Preferred Shares of Beneficial Interest, liquidation preference
$25,000 per share (collectively, the "AMPS").
This letter is being furnished pursuant to Section 5(b) of the Purchase
Agreement, dated March [17], 2004 (the "Purchase Agreement"), among you, as
Representative of the several Underwriters named therein (the "Underwriters"),
the Trust, Claymore Advisors, LLC (the "Adviser") and Dreman Value Management,
LLC (the "Investment Manager"). Capitalized terms used and not otherwise defined
herein shall have the respective meanings set forth in the Purchase Agreement.
In the above capacity, we have examined and relied on originals or copies
of the registration statement of the Trust on Form N-2 (File Nos. 333-_______
and 811-21455), as filed with the Commission on February 2, 2004 under the
Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act,
[Pre-Effective Amendment No. 1, filed with the Commission on March __, 2004,
Pre-Effective Amendment No. 2, filed with the Commission on March ___, 2004 and
Pre-Effective Amendment No. 3, filed with the Commission on March __, 2004] (as
so amended and in the form declared effective by the Commission, including the
information deemed to be a part thereof pursuant to Rule 430A of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Rules and
Regulations"), the "Registration Statement"); and the final Prospectus and
Statement of Additional Information of the Trust, each dated March [17], 2004
and as filed with the Commission on March [18], 2004 pursuant to Rule 497(h) of
the 1933 Act Rules and Regulations (collectively, the "Prospectus").
In addition, we have participated in conferences with officers and other
representatives of the Trust, the Adviser, the Investment Manager, counsel for
the Adviser, the Investment Manager, representatives of the independent public
accountants of the Trust and representatives of the Underwriters and their
counsel at which the contents of the Registration Statement and the Prospectus
and related matters were discussed. Except to the extent set forth in paragraph
12 of our opinion to you dated the date hereof and in the seventh paragraph of
our tax opinion to you dated the date hereof, we do not pass upon, or assume any
responsibility for, the accuracy, completeness or
A-8
fairness of the statements contained in the Registration Statement or the
Prospectus, and we have made no independent check or verification thereof.
Subject to the foregoing, we confirm to you that, on the basis of the
information we gained in the course of performing the services referred to
above, no facts have come to our attention that have caused us to believe that
the Registration Statement, at the time it became effective, contained an untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading or
that the Prospectus, as of its date and as of the date hereof, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (except that in each
case we do not express any view as to the financial statements, schedules and
other financial data and financial projections included or incorporated by
reference therein or excluded therefrom or the exhibits to the Registration
Statement).
This letter is furnished only to you and is solely for your benefit in
connection with the closing under the Purchase Agreement occurring today.
Without our prior written consent, this letter may not be used, circulated,
quoted or otherwise referred to for any other purpose or relied upon by, or
assigned to, any other person for any purpose, including any other person that
acquires Common Shares or that seeks to assert your rights in respect of this
letter (other than your successor in interest by means of merger, consolidation,
transfer of a business or other similar transaction).
We advise you that the Firm has rendered legal advice to the Adviser and
other investment funds advised by the Adviser in connection with various
matters.
A-9
Exhibit A-3
FORM OF TAX OPINION OF FUND'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(A) With respect to the Fund:
We have acted as special counsel to Dreman/Claymore Dividend & Income Fund,
a statutory trust (the "Trust") created under the Delaware Statutory Trust Act
(the "Delaware Statutory Trust Act"), in connection with the issuance and sale
by the Trust of of up to 3,400 shares of the Trust's Series M7 Auction Market
Preferred Shares of Beneficial Interest, liquidation preference $25,000 per
share; 3,400 shares of the Trust's Series T28 Auction Market Preferred Shares of
Beneficial Interest, liquidation preference $25,000 per share; 3,400 shares of
the Trust's Series W7 Auction Market Preferred Shares of Beneficial Interest,
liquidation preference $25,000 per share; 3,400 shares of the Trust's Series
TH28 Auction Market Preferred Shares of Beneficial Interest, liquidation
preference $25,000 per share; and up to 3,400 shares of the Trust's Series F7
Auction Market Preferred Shares of Beneficial Interest, liquidation preference
$25,000 per share (collectively, the "AMPS").
This opinion is being furnished pursuant to Section 5(b) of the Purchase
Agreement, dated March __, 2004 (the "Purchase Agreement"), among you, as
Representative of the several Underwriters named therein (the "Underwriters"),
the Trust, Claymore Advisors, LLC (the "Adviser") and Dreman Value Management,
LLC (the "Investment Manager"). Capitalized terms used and not otherwise defined
herein shall have the respective meanings set forth in the Purchase Agreement.
In connection with our opinion, we have examined and relied on originals
or copies, certified or otherwise identified to our satisfaction, of the final
Prospectus and Statement of Additional Information of the Trust, each dated
March [17], 2004 and as filed with the Commission on March [18], 2004 pursuant
to Rule 497(h) of the 1933 Act Rules and Regulations (the "Prospectus and
Statement of Additional Information") and such other documents, certificates and
records as we have deemed necessary or appropriate as a basis for the opinion
set forth below.
For purposes of our opinion, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or photostatic copies and
the authenticity of the originals of such latter documents.
In rendering our opinion, we have relied upon statements and
representations of officers and other representatives of the Trust, the Adviser,
the Investment Manager and others and have assumed that such statements and
representations are and will continue to be correct without regard to any
qualification as to knowledge or belief.
Our opinion is based on the Internal Revenue Code of 1986, as amended,
Treasury Regulations, judicial authorities, published positions of the Internal
Revenue Service (the "Service"), and such other authorities as we have
considered relevant, all as in effect on the date of this opinion and all of
which are subject to change or differing interpretations (possibly on a
retroactive basis). A change in the authorities upon which our opinion is based
could affect our
A-10
conclusions. An opinion of counsel is not binding on the Service or any court.
No assurance can be given that the Service would not assert, or that a court
would not sustain, any position contrary to this opinion.
Based upon and subject to the foregoing, although the discussion in the
Prospectus and Statement of Additional Information under the headings "Taxation"
does not purport to discuss all possible United States federal income tax
consequences relating to the taxation of the Trust and the purchase, ownership
and disposition of the common shares of the Trust, such discussion constitutes,
in all material respects, a fair summary of the law and is based on our
understanding of the proposed operations of the Trust as disclosed in the
Prospectus and Statement of Additional Information.
Except as set forth above, we express no other opinion. This opinion is
furnished only to you and is solely for your benefit in connection with the
closing under the Purchase Agreement occurring today. This opinion may not be
used, circulated, quoted or otherwise referred to for any other purpose or
relied upon by, or assigned to, any other person for any purpose, including any
other person that acquires common shares or that seeks to assert your rights in
respect of this letter (other than your successor in interest by means of
merger, consolidation, transfer of a business or other similar transaction).
This opinion is expressed as of the date hereof, and we disclaim any undertaking
to advise you of any subsequent changes in respect of the matters stated or
assumed herein or any subsequent changes in applicable law.
We advise you that the Firm has rendered legal advice to the Adviser and
other investment funds advised by the Adviser in connection with various
matters.
A-11
Exhibit B-1
FORM OF OPINION OF INVESTMENT ADVISER'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(A) With respect to the Investment Adviser:
I am General Counsel of Claymore Advisors, LLC ("Claymore" or the
"Adviser") and am rendering my opinion in such capacity. I have represented the
Adviser in connection with the formation of Dreman/Claymore Dividend & Income
Fund (the "Trust"), a statutory trust formed under the Delaware Statutory Trust
Act (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Section 3801 et
seq.), in connection with the issuance and sale by the Trust of of up to 3,400
shares of the Trust's Series M7 Auction Market Preferred Shares of Beneficial
Interest, liquidation preference $25,000 per share; 3,400 shares of the Trust's
Series T28 Auction Market Preferred Shares of Beneficial Interest, liquidation
preference $25,000 per share; 3,400 shares of the Trust's Series W7 Auction
Market Preferred Shares of Beneficial Interest, liquidation preference $25,000
per share; 3,400 shares of the Trust's Series TH28 Auction Market Preferred
Shares of Beneficial Interest, liquidation preference $25,000 per share; and up
to 3,400 shares of the Trust's Series F7 Auction Market Preferred Shares of
Beneficial Interest, liquidation preference $25,000 per share (collectively, the
"AMPS").
This opinion is being furnished pursuant to Section 5(b) of the
Purchase Agreement, dated March __, 2004 (the "Purchase Agreement"), among you,
as Representative of the several Underwriters named therein (the
"Underwriters"), the Trust, the Adviser and Dreman Value Management, LLC (the
"Investment Manager"). Capitalized terms used and not otherwise defined herein
shall have the respective meanings set forth in the Purchase Agreement.
In my examination, I have assumed the genuineness of all signatures,
including endorsements, the legal capacity of natural persons, the authenticity
of all documents submitted to me as originals, the conformity to original
documents of all documents submitted to me as certified or photostatic copies,
and the authenticity of the originals of such copies. As to any facts material
to this opinion which I did not independently establish or verify, I have relied
upon statements and representations of the Adviser, its officers and other
representatives and of public officials, including the facts set forth in the
Certificate of the Adviser described below.
In rendering the opinions set forth herein, I have examined and relied on
originals or copies of the following:
(a) the notification of registration of the Trust on Form N-8A, dated
October 23, 2003 (the "1940 Act Notification"), as filed with the Securities and
Exchange Commission (the "Commission") on October 23, 2003 under the Investment
Company Act of 1940, as amended (the "1940 Act");
(b) the registration statement of the Trust on Form N-2 (File Nos.
333-_______ and 811-21455), as filed with the Commission on February 2, 2004
under the Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act,
[Pre-Effective Amendment No. 1, filed with the Commission on March __, 2004,
Pre-Effective Amendment No. 2, filed with the Commission on March ___, 2004 and
Pre-Effective Amendment No. 3, filed with the Commission on March __, 2004] (as
so amended and in the form declared effective by the Commission, including the
information deemed to be a part thereof pursuant to Rule 430A of the rules and
regulations of the
A-12
Commission under the 1933 Act (the "1933 Act Rules and Regulations"), the
"Registration Statement");
(c) the registration statement of the Trust on Form 8-A (File No.
001-31967), dated January 27, 2004, as filed with the Commission on January 27,
2004, relating to the registration of the Common Shares under the Securities
Exchange Act of 1934, as amended (the "1934 Act");
(d) the final Prospectus and Statement of Additional Information of the
Trust, each dated March [17], 2004 and as filed with the Commission on March
[18], 2004 pursuant to Rule 497(h) of the 1933 Act Rules and Regulations
(collectively, the "Prospectus");
(e) a certificate, dated March [], 2004, and a bring-down certificate,
dated March [], 2004, from the Secretary of the State of Delaware as to the
Trust's creation, good standing and legal existence in the State of Delaware;
(f) a certificate, dated March [], 2004, and a bring-down certificate,
dated March [], 2004, from the Secretary of the State of Delaware as to the
existence and good standing of the Adviser;
(g) a certificate, dated March [], 2004, from the Secretary of the State
of New Jersey as to the existence and good standing of the Adviser, or a letter,
or other evidence, dated March [], 2004, from CT Corporation stating that the
Adviser is in good standing in the state of New Jersey;
(h) a certificate, dated February March [], from the Secretary of the
State of Illinois as to the existence and good standing of the Adviser, or a
letter, or other evidence, dated March [], from CT Corporation stating that the
Adviser is in good standing in the state of Illinois;
(i) the Investment Advisory Agreement between the Trust and the Adviser,
dated January 27, 2004 (the "Investment Advisory Agreement");
(j) the Investment Sub-Advisory Agreement among the Trust, the Adviser and
the Investment Manager, dated as of January 27, 2004 (the "Investment
Sub-Advisory Agreement"); and
(k) the Purchase Agreement; and
(l) such other documents as I have deemed necessary or appropriate as a
basis for the opinions set forth below.
Terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Purchase Agreement.
I express no opinion as to the laws of any jurisdiction other than the
(i) the applicable laws of the State of New York, (ii) the Delaware General
Corporation Law and (iii) the laws of the United States of America to the extent
specifically referred to herein. I express no opinion with respect to the
securities or "blue sky" laws of any state or with respect to the rules and
regulations of NASD.
Based on the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, I am of the opinion that:
A-13
1. Based on certificates of the Secretary of State of the State of
Delaware, the Adviser is a limited liability company duly organized and validly
existing in good standing under the laws of the State of Delaware, with all
necessary limited liability company power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus (and any amendment or supplement to
either of them). Based on a certificates of the Secretaries of the States of New
Jersey and Illinois, the Adviser is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where the nature
of its properties or the conduct of its business requires such registration or
qualification, except where the failure to so register and qualify does not have
a material adverse effect on the ability of the Adviser to perform its
obligations under the Purchase Agreement, the Investment Advisory Agreement and
the Investment Sub-Advisory Agreement to which it is a party (the Purchase
Agreement, the Investment Advisory Agreement and the Investment Sub-Advisory
Agreement collectively referred to herein as the "Transaction Documents");
2. The Adviser is duly registered with the Commission as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and is not prohibited by the Advisers Act, the rules and regulations of
the Commission under the Advisers Act, the 1940 Act or the rules and regulations
of the Commission under the 1940 Act from acting under the Investment Advisory
Agreement as contemplated by the Prospectus (or any amendment or supplement
thereto); and, to the best of my knowledge after reasonable inquiry, there does
not exist any proceeding which should reasonably be expected to adversely affect
the registration of the Adviser with the Commission;
3. The Adviser has corporate power and authority to enter into the
Transaction Documents to which it is a party, and the Transaction Documents to
which the Adviser is a party have been duly authorized, executed and delivered
by the Adviser and the Investment Advisory Agreement is a valid and legally
binding agreement of the Adviser, enforceable against the Adviser in accordance
with its terms except as rights to indemnity and contribution in the Transaction
Documents may be limited by federal or state securities laws or principles of
public policy and subject to the qualification that the enforceability of the
Adviser's obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles
whether enforcement is considered in a proceeding in equity or at law;
4. Neither the execution, delivery or performance of the Transaction
Documents by the Adviser, nor the consummation by the Adviser of the
transactions contemplated thereby (A) conflicts or will conflict with, or
constitutes or will constitute a breach of or default under, the certificate of
incorporation or bylaws, or other organizational documents, of the Adviser or
(B) conflicts or will conflict with, or constitutes or will constitute a
material breach of or material default under any material agreement, indenture,
lease or other instrument to which the Adviser is a party, or will result in the
creation or imposition of any material lien, charge or encumbrance upon any
material property or material assets of the Adviser, nor will any such action
result in any material violation of any law of the State of New York, the
Delaware Limited Liability Company Act, the 1940 Act, the Advisers Act or any
regulation or judgment, injunction, order or decree applicable to the Adviser or
any of its properties;
5. No consent, approval, authorization or other order of, or registration
or filing with, the Commission, any arbitrator, any court, regulatory body,
administrative agency or other governmental body, agency, or official of the
State of New York is required on the part of the Adviser for the execution,
delivery and performance of the Transaction Documents, or the consummation by
the Adviser of the transactions contemplated hereby and thereby;
A-14
6. To the best of my knowledge after reasonable inquiry, there is not
pending or, to the best of my knowledge, after due inquiry, threatened any
action, suit, proceeding, inquiry or investigation, to which the Adviser is a
party, or to which the property of the Adviser is subject, before or brought by
any court or governmental agency or body, domestic or foreign, which might
reasonably be expected to result in any material adverse change in the
condition, financial or otherwise, in the earnings, business affairs or business
prospects of the Adviser, materially and adversely affect the properties or
assets of the Adviser or materially impair or adversely affect the ability of
the Adviser to function as an investment adviser or perform its obligations
under the Investment Advisory Agreement, or which is required to be disclosed in
the Registration Statement or the Prospectus (or any amendment or supplemental
to either of them) but are not described as required; and
7. To the best of my knowledge, after due inquiry, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the Registration
Statement, or to be filed as exhibits thereto, other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto,
and the descriptions thereof or references thereto are correct in all respects.
In addition, I have participated in conferences with officers and
other representatives of, and counsel for, the Trust, representatives of the
independent public accountants of the Trust, counsel for the Underwriters and
the Underwriters at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although I am not passing
upon, and do not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus and have made no independent check or verification thereof, on the
basis of the foregoing, no facts have come to my attention that have led me to
believe that the Registration Statement, at the time it became effective,
contained an untrue statement of a material fact concerning the Adviser or
omitted to state any material fact concerning the Adviser required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus, as of its date and as of the date hereof, contained or contains an
untrue statement of a material fact concerning the Adviser or omitted or omits
to state a material fact concerning the Adviser necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
My opinions are subject to the following assumptions and
qualifications:
(i) enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in equity or at law);
(ii) I have assumed that each of the Transaction Documents constitutes
the valid and binding obligation of each party to such agreement
(other than the Adviser) enforceable against such other party or
parties in accordance with its terms;
(iii) I express no opinion as to the effect on the opinions expressed
herein of (A) the compliance or non-compliance of any party (other
than the Adviser) to the Transaction Documents with any state,
federal or other laws or regulations applicable to them or (B) the
legal or regulatory status or the nature of the business of any of
them;
A-15
(iv) I express no opinion as to the enforceability of any rights to
contribution or indemnification provided for in the Transaction
Documents which are violative of the public policy underlying any
law, rule or regulation (including any federal or state securities
law, rule or regulation);
(v) I express no opinion as to the applicability or effect of any
fraudulent transfer or similar law on the Transaction Documents or
any transactions contemplated thereby;
(vi) I express no opinion as to the applicability or effect of any
preference or similar law on the Transaction Documents or any
transaction contemplated thereby;
(vii) I note that under applicable law, for various reasons, including
the public policy of the applicable jurisdiction, certain claims may
not be found to be legally arbitrable. Accordingly, for purposes of
this opinion, I have assumed (A) that any claim sought to be
arbitrated does not involve either (x) a matter of statutory
interpretation or (y) a matter of public policy or illegality, which
would preclude the arbitrability of such claim, and (B) that the
public policy of the applicable jurisdiction is to favor compelling
the parties to arbitrate, provided that based upon the Federal
Arbitration Act, 9 U.S.C. Section 1, et seq. and its interpretation
in Allied Xxxxx Terminix Companies, Inc. x. Xxxxxx, 115 S. Ct. 834
(1995), such assumption is not being made with respect to any
agreement to arbitrate sought to be enforced in a federal court or
in the courts of the State of New York. I have based my opinion upon
an assessment of legal authorities which would be applicable to
judicial proceedings, and I call to your attention the existence of
differences between arbitral and judicial processes; and
(viii) I express no opinion as to any provision with respect to the
enforceability of the choice of law of the parties.
This opinion is being furnished only to you in connection with the Purchase
Agreement and is solely for your benefit and is not to be used, circulated,
quoted or otherwise referred to for any other purpose or relied upon by any
other person for any other purpose without my prior written consent in each
instance.
A-16
Exhibit B-2
FORM OF OPINION OF INVESTMENT MANAGER'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(A) With respect to the Investment Manager:
(i) The Investment Manager has been duly organized and is validly
existing as a limited liability company in good standing under the laws of
the state of Delaware.
The Investment Manager 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.
The Investment Manager 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.
The Investment Manager 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 Sub-Advisory Agreement
for the Fund to which it is a party as contemplated by the Prospectus.
The Purchase Agreement and the Sub-Advisory Agreement to which it is a
party have been duly authorized, executed and delivered by the
Investment Manager, and the Management Agreement and the Sub-Advisory
Agreement to which it is a party constitute valid and binding
obligations of the Investment Manager, 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).
To the best of our knowledge, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the
Investment Manager is a party, or to which the property of the
Investment Manager is subject, before or brought by any court or
governmental agency or body, domestic or foreign, which might
reasonably be expected to result in any material adverse change in the
condition, financial or otherwise, in the earnings, business affairs
or business prospects of the Investment Manager, materially and
adversely affect the properties or assets of the Investment Manager or
materially impair or adversely affect the ability of the Investment
Manager to function as an investment adviser or perform its
obligations under the Sub-Advisory Agreement to which it is a party,
or which is required to be disclosed in the Registration Statement or
the Prospectus.
To the best of our knowledge, there are no franchises, contracts,
indentures, mortgages, loan agreements, notes, leases or other
instruments required to be
B-1
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.
To the best of our knowledge, the Investment Manager is not in violation
of its certificate of incorporation, by-laws or other organizational
documents and no default by the Investment Manager 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.
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.
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
Investment Manager 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
Investment Manager 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 Investment Manager is a party
or by which it may be bound, or to which any of the property or assets
of the Investment Manager 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
Investment Manager, 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 Investment Manager or any of its properties,
assets or operations.
In addition, we have participated in the preparation of the sections entitled
["Prospectus Summary--Investment Adviser and Investment Manager," "Investment
Strategy," "Management of the Fund--The Investment Adviser," "Management of the
Fund--The Sub-Adviser" in the Prospectus and "Management of the Fund--Investment
Advisory Agreement, "Management of the Fund--The Sub-Advisory Agreement" and
"Management of the Fund--Approval of Advisory Agreement and Sub-Advisory
Agreement" in the Statement of Additional Information] and participated in
discussions with certain officers, trustees and employees of the Fund,
representatives of Xxxxx & Young LLP, the independent accountants who examined
the statement of assets and
B-2
liabilities of the Fund included or incorporated by reference in the
Registration Statement and the Prospectus, and you and your representatives and
we have reviewed certain Fund records and documents. While we have not
independently verified and are not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the information
contained in the Registration Statement and the Prospectus, nothing has come to
our attention that would lead us to believe that the Registration Statement
(except for financial statements, supporting schedules and other financial data
included therein or omitted therefrom, 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, 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.
B-3
