$60,000,000
THE NEW AMERICA HIGH INCOME FUND, INC.
(a Maryland corporation)
AUCTION TERM PREFERRED STOCK
2,400 Series D Shares
Liquidation Preference $25,000 Per Share
PURCHASE AGREEMENT
May __, 1998
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
Xxxxxxx Xxxxx World Headquarters
World Financial Center
North Tower
New York, New York 10281-1305
Dear Sirs and Mesdames:
The New America High Income Fund, Inc., a Maryland corporation (the
"Fund"), and Wellington Management Company, LLP, a Massachusetts limited
liability partnership, (the "Adviser"), each confirms its agreement with Xxxxxxx
Xxxxx & Co., Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated (the
"Underwriter"), with respect to the sale by the Fund and the purchase by the
Underwriter of 2,400 shares of Auction Term Preferred Stock, Series D, with a
par value of $1.00 per share and a liquidation preference of $25,000 per share
plus an amount equal to accumulated but unpaid dividends (whether or not earned
or declared) (the "Shares").
Prior to the purchase and public offering of the Shares by the
Underwriter, the Fund and the Underwriter shall enter into an agreement
substantially in the form of Exhibit A hereto (the "Pricing Agreement"). The
Pricing Agreement may take the form of an exchange of any standard form of
written telecommunication between the Fund and the Underwriter and shall specify
such applicable information as is indicated in Exhibit A hereto. The offering of
the Shares will be governed by this Agreement, as supplemented by the Pricing
Agreement. From and after the date of the execution and delivery of the Pricing
Agreement, this Agreement shall be deemed to incorporate the Pricing Agreement.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a notification on Form N-8A of registration of the Fund as an
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), a registration statement on Form N-2 (No. 333-49043),
and a related preliminary prospectus and preliminary statement of additional
information for the registration of the Shares under the Securities Act of 1933,
as amended (the "Securities Act"), the Investment Company Act, and the rules and
regulations of the Commission under the Securities Act and the Investment
Company Act (together, the "Rules and Regulations"), and the Fund has filed such
amendments to such registration statement on Form N-2, if any, and such amended
preliminary prospectuses and preliminary statements of additional information as
may have been required to the date hereof. The Fund will prepare and file such
additional amendments thereto and such amended prospectuses and statements of
additional information as hereafter may be required. Such registration statement
(as amended at the time it becomes effective, if applicable) and the prospectus
and statement of additional information constituting a part thereof (including
in each case the information, if any, deemed to be a part thereof pursuant to
Rule 430A(b) or Rule 434 of the Rules and Regulations), as from time to time
amended or supplemented pursuant to the Securities Act, are referred to
hereinafter as the "Registration Statement" and the "Prospectus", respectively;
except that if any revised prospectus and statement of additional information
shall be provided to the Underwriter by the Fund for use in connection with the
offering of the Shares which differs from the Prospectus on file at the
Commission at the time the Registration Statement becomes effective (whether
such revised prospectus is required to be filed by the Fund pursuant to Rule
497(c) or Rule 497(h) of the Rules and Regulations), the term "Prospectus" shall
refer to each such revised prospectus and statement of additional information
from and after the time it is first provided to the Underwriter for such use. If
the Fund elects to rely on Rule 434 under the Rules and Regulations, all
references to the Prospectus shall be deemed to include, without limitation, the
form of prospectus, statement of additional information and the term sheet,
taken together, provided to the Underwriter by the Fund in reliance on Rule 434
under the Securities Act (the "Rule 434 Prospectus"). If the Fund files a
registration statement to register a portion of the Shares and relies on Rule
462(b) for such registration statement to become effective upon filing with the
Commission (the "Rule 462 Registration Statement"), then any reference to
"Registration Statement" herein shall be deemed to include both the registration
statement referred to above (No. 333-49043) and the Rule 462 Registration
Statement, as each such registration statement may be amended pursuant to the
Securities Act.
The Fund understands that the Underwriter proposes to make a public
offering of the Shares as soon as the Underwriter deems advisable after the
Registration Statement becomes effective and the Pricing Agreement has been
executed and delivered.
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SECTION 1. Representations and Warranties. (a) The Fund represents and
warrants to the Underwriter as of the date hereof, as of the date of the Pricing
Agreement (such later date hereinafter being referred to as the "Representation
Date") and as of the Closing Time referred to in Section 2 hereof, as follows:
(i) At the time the Registration Statement becomes effective and at the
Representation Date, the Registration Statement will comply in all material
respects with the requirements of the Securities Act, the Investment Company Act
and the Rules and Regulations 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. At the time the
Registration Statement becomes effective, at the Representation Date and at
Closing Time referred to in Section 2 hereof, the Prospectus (unless the term
"Prospectus" refers to a prospectus and statement of additional information
which has been provided to the Underwriter by the Fund for use in connection
with the offering of the Shares which differs from the Prospectus on file with
the Commission at the time the Registration Statement becomes effective, in
which case at the time such prospectus and statement of additional information
first is provided to the Underwriter for such use) will not contain an untrue
statement of a material fact or 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; provided, however, that the representations and
warranties in this subsection shall not apply to statements in or omissions from
the Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Fund in writing by the Underwriter
or the Adviser expressly for use in the Registration Statement or in the
Prospectus.
(ii) The accountants who certified the financial statement included or
incorporated by reference in the Registration Statement are independent public
accountants as required by the Securities Act and the Rules and Regulations.
(iii) The financial statements included or incorporated by reference in
the Registration Statement present fairly the financial position of the Fund as
at the date indicated and the results of its operations for the period
specified; such financial statements have been prepared in conformity with
generally accepted accounting principles; and the information in the Prospectus
under the heading "Capitalization and Information Regarding Senior Securities"
sets forth the capitalization of the Fund as of its date and after giving effect
to the sale of the Shares as if they were sold as of such date and the
information under the heading "Portfolio Composition" sets forth the composition
of the investment portfolio of the Fund as of its date.
(iv) Since the respective dates as of which information is given in the
Registration Statement and in the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, of the Fund, 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 which are material to the Fund other than those in the
ordinary course of business and (C) except for (i) regular monthly dividends and
special year end distributions related to the Fund's qualification as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended ("Subchapter M of the Code"), on the outstanding shares of
common
3
stock, par value $1.00 per share (the "Common Stock") of the Fund, and
(ii) dividends paid on the Fund's outstanding shares of Auction Term Preferred
Stock Series A, B and C (the "Other ATP") in accordance with the terms thereof,
there has been no dividend or distribution of any kind declared, paid or made by
the Fund on any class of its capital stock.
(v) The Fund has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland with
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement; the Fund is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, except
where the failure to so qualify would not have a Material Adverse Effect on the
Fund; and the Fund has no subsidiaries.
(vi) The Fund is registered with the Commission under the Investment
Company 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 threatened by the Commission.
(vii) The authorized, issued and outstanding capital stock of the Fund
is as set forth in the Prospectus under the captions "Description of ATP" and
"Description of Common Stock"; the outstanding Common Stock and the Other ATP
have been duly authorized and validly issued and are fully paid and
nonassessable; the Shares have been duly authorized for issuance and sale to the
Underwriter pursuant to this Agreement and, when issued and delivered by the
Fund pursuant to this Agreement against payment of the consideration set forth
in the Pricing Agreement, will be validly issued and fully paid and
nonassessable; the Common Stock, the Other ATP and the Shares conform in all
material respects to all statements relating thereto contained in the
Registration Statement; and the issuance of the Shares to be purchased by the
Underwriter is not subject to pre-emptive rights.
(viii) The Fund is not in violation of its articles of incorporation,
as amended (the "Charter"), or its by-laws, as amended (the "By-Laws"), or in
default in the performance or observance of any material obligation, agreement,
covenant or condition contained in any material contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which it is a party or by
which it or its properties may be bound; and the execution and delivery of this
Agreement, the Pricing Agreement and the Investment Advisory Agreement, the
Custodian Agreement, the Auction Agent Agreement and the Letter of
Representations referred to in the Registration Statement (as used herein, the
"Advisory Agreement," the "Auction Agreement," the "Custodian Agreement" and the
"Letter of Representations," respectively), and the consummation of the
transactions contemplated herein and therein, have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach of,
or a default under, or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Fund pursuant to any material
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which the Fund is a party or by which it may be bound or to which any of the
property or assets of the Fund is subject, nor will such action result in any
violation of the provisions of the Charter or the By-Laws of the Fund, or, to
the best knowledge of the Fund, any law, administrative regulation or
administrative or court decree; and
4
no consent, approval, authorization or order of any court or governmental
authority or agency is required for the consummation by the Fund of the
transactions contemplated by this Agreement, the Pricing Agreement, the Advisory
Agreement, the Custodian Agreement, the Auction Agreement and the Letter of
Representations, except such as has been obtained under the Investment Company
Act or as may be required under the Securities Act or state securities or Blue
Sky laws in connection with the purchase and distribution of the Shares by the
Underwriter.
(ix) The Fund owns or possesses or has obtained all material
governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to lease or own, as the case may be, and to operate its
properties and to carry on its businesses as contemplated in the Prospectus and
the Fund has not received any notice of proceedings relating to the revocation
or modification of any such licenses, permits, covenants, orders, approvals or
authorizations.
(x) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Fund or the Adviser, threatened against or affecting the Fund,
which might result in any Material Adverse Effect in the condition, financial or
otherwise, business affairs or business prospects of the Fund, or might
materially and adversely affect the properties or assets of the Fund; and there
are no material contracts or documents of the Fund which are required to be
filed as exhibits to the Registration Statement by the Securities Act, the
Investment Company Act or the Rules and Regulations which have not been so
filed.
(xi) There are no contracts or documents which are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits thereto which have not been so described and filed as required.
(xii) The Fund owns or possesses, or can acquire on reasonable terms,
adequate trademarks, service marks and trade names necessary to conduct its
business as described in the Registration Statement, and the Fund has not
received any notice of infringement of or conflict with asserted rights of
others with respect to any trademarks, service marks or trade names which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially adversely affect the conduct of the business,
operations, financial condition or income of the Fund.
(xiii) The Fund intends to, and will, 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 Code, and
intends to qualify as a regulated investment company under Subchapter M of the
Code.
(xiv) Each of this Agreement, the Advisory Agreement and the Custodian
Agreement has been duly authorized, executed and delivered by the Fund, and each
complies with all applicable provisions of the Investment Company Act.
(xv) Each of the Auction Agreement and the Letter of Representations
has been duly authorized for execution and delivery by the Fund and, when
executed and delivered by the Fund, will constitute a valid and binding
obligation of the Fund, enforceable in accordance with its
5
terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization or
other laws relating to or affecting creditors' rights and to general equitable
principles.
(b) The Adviser represents and warrants to the Underwriter as of the
date hereof, as of the Representation Date and as of the Closing Time referred
to in Section 2 hereof, as follows:
(i) The Adviser has been duly organized as a limited liability
partnership under the laws of the Commonwealth of Massachusetts with power and
authority to conduct its business as described in the Registration Statement and
in the Prospectus.
(ii) The Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"), and
is not prohibited by the Investment Advisers Act or the Investment Company Act,
or the rules and regulations under such acts, from acting under the Advisory
Agreement for the Fund as contemplated by the Prospectus.
(iii) The Adviser has the financial resources available to it necessary
for the performance of its services and obligations as contemplated in the
Prospectus.
(iv) The description of the Adviser in the Registration Statement and
the Prospectus is true and correct in all material respects 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 to make the statements therein not
misleading.
(v) This Agreement and the Advisory Agreement each have been duly
authorized, executed and delivered by the Adviser. The Advisory Agreement
constitutes the valid and binding obligation of the Adviser enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing. The execution, delivery and
performance of this Agreement and the Advisory Agreement by the Adviser and the
consummation by the Adviser of the transactions contemplated hereby and thereby
will not result in a breach or violation by the Adviser of any of the terms or
provisions of, or constitute a default by the Adviser under, any material
indenture, mortgage, deed of trust, loan agreement of the Adviser, other
agreement or instrument to which the Adviser is a party or by which the Adviser
is bound or to which any of the properties or assets of the Adviser is subject,
nor will such actions result in a violation of the provisions of the partnership
agreement of the Adviser (the "Partnership Agreement"), any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Adviser or any of its properties or assets; and except for
registration of the Shares under the Acts and such consents, approvals,
authorizations, registrations or qualifications as may be required under
applicable state securities laws, no consent, approval, authorization or order
of, or filing or registration with, any such court or governmental agency or
body is required for the execution, delivery and performance of this Agreement
or the Advisory Agreement by the Adviser and the consummation by the Adviser of
the transactions contemplated hereby and thereby.
6
(vi) There are no legal or governmental proceedings pending to which
the Adviser is a party or of which any property or asset of the Adviser is
subject, which are likely to have a Material Adverse Effect on the financial
position, results of operations, business or prospects of the Adviser; and to
the best of the Adviser's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(vii) The Adviser is not in violation of the Partnership Agreement or
in default under any agreement, indenture or instrument.
(c) Any certificate signed by any officer of the Fund or the Adviser
and delivered to the Underwriter or to counsel to the Underwriter shall be
deemed a representation and warranty by the Fund or the Adviser, as the case may
be, to the Underwriter, as to the matters covered thereby.
SECTION 2. Sale and Delivery to the Underwriter; Closing.
(a) 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 the Shares to the Underwriter, and the Underwriter agrees to
purchase the Shares from the Fund, at the price per share set forth in the
Pricing Agreement.
(i) If the Fund has elected not to rely upon Rule 430A under the Rules
and Regulations, the initial public offering prices and the purchase price per
share to be paid by the Underwriter for the Shares have been determined and set
forth in the Pricing Agreement, dated the date hereof, and an amendment to the
Registration Statement and the Prospectus will be filed before the Registration
Statement becomes effective.
(ii) If the Fund has elected to rely upon Rule 430A under the Rules and
Regulations, the purchase price per share to be paid by the Underwriter for the
Shares shall be an amount equal to the applicable initial public offering price,
less an amount per share to be determined by agreement between the Underwriter
and the Fund. The initial public offering price per share shall be a fixed price
based upon the number of shares purchased in a single transaction to be
determined by agreement between the Underwriter and the Fund. The initial public
offering price and the purchase price, when so determined, shall be set forth in
the Pricing Agreement. In the event that such prices have not been agreed upon
and the Pricing Agreement has not been executed and delivered by all parties
thereto by the close of business on the fourth business day following the date
of this Agreement, this Agreement shall terminate forthwith, without liability
of any party to any other party, except as provided in Section 5 hereof, unless
otherwise agreed to by the Fund, the Adviser and the Underwriter.
(b) Payment of the purchase price for, and delivery of certificates
for, the Shares shall be made at the office of Brown & Wood LLP, One World Trade
Center, New York, New York 10048-0557, or at such other place as shall be agreed
upon by the Underwriter and the Fund, at 9:00 A.M. on the third business day
following the date the Registration Statement becomes effective or, if the Fund
has elected to rely upon Rule 430A under the Rules and Regulations, the third
business day after execution of the Pricing Agreement (or, if pricing takes
place after 4:30
7
P.M. on either the date the Registration Statement becomes effective or the date
of execution of the Pricing Agreement, as applicable, the fourth business day
after such applicable date), or such other time not later than ten business days
after such date as shall be agreed upon by the Underwriter and the Fund (such
time and date of payment and delivery herein being referred to as "Closing
Time"). Payment shall be made to the Fund by a Federal Funds wire transfer or
similar same-day funds, against delivery to the Underwriter of the certificates
for the Shares to be purchased by it. The Shares shall be represented by a
certificate registered in the name of Cede & Co., as nominee for The Depository
Trust Company. The certificate for the Shares will be made available for
examination by the Underwriter not later than 10:00 A.M. on the last business
day prior to Closing Time.
SECTION 3. Covenants of the Fund. The Fund covenants with the
Underwriter as follows:
(a) The Fund will use its best efforts (i) to cause the Registration
Statement to become effective under the Securities Act, and will advise the
Underwriter promptly as to the time at which the Registration Statement and any
amendments thereto (including any post-effective amendment) becomes so effective
and (ii) if required, to cause the issuance of any orders exempting the Fund
from any provisions of the Investment Company Act, and the Fund will advise the
Underwriter promptly as to the time at which any such orders are granted.
(b) The Fund will notify the Underwriter immediately, and will confirm
the notice in writing, (i) of the effectiveness of the Registration Statement
and any amendments thereto (including any post-effective amendment), (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, (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose,
and (v) of the issuance by the Commission of an order of suspension or
revocation of the notification on Form N-8A of registration of the Fund as an
investment company under the Investment Company Act or the initiation of any
proceeding for that purpose. The Fund will make every reasonable effort to
prevent the issuance of any stop order described in subsection (iv) hereunder or
any order of suspension or revocation described in subsection (v) hereunder and,
if any such stop order or order of suspension or revocation is issued, to obtain
the lifting thereof at the earliest possible moment. If the Fund elects to rely
on Rule 434 under the Rules and Regulations, the Fund will prepare a term sheet
that complies with the requirements of Rule 434 under the Rules and Regulations
and the Fund will provide the Underwriter with copies of the form of Rule 434
Prospectus, in such number as the Underwriter may reasonably request by the
close of business in New York on the business day immediately succeeding the
date of the Pricing Agreement.
(c) The Fund will give the Underwriter notice of its intention to file
any amendment to the Registration Statement (including any post-effective
amendment) or any amendment or supplement to the Prospectus (including any
revised prospectus or statement of
8
additional information which the Fund proposes for use by the Underwriter in
connection with the offering of the Shares, which differs from the prospectus on
file at the Commission at the time the Registration Statement becomes effective,
whether such revised prospectus or statement of additional information is
required to be filed pursuant to Rule 497(c) or Rule 497(h) of the Rules and
Regulations or any term sheet prepared in reliance on Rule 434 of the Rules and
Regulations), whether pursuant to the Investment Company Act, the Securities
Act, or otherwise, and will furnish the Underwriter with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement to which the Underwriter reasonably shall object.
(d) The Fund will deliver to the Underwriter, as soon as practicable,
two signed copies of the notification of registration and registration statement
as originally filed and of each amendment thereto, in each case with two sets of
the exhibits filed therewith.
(e) The Fund will furnish to the Underwriter, from time to time during
the period when the Prospectus is required to be delivered under the Securities
Act, such number of copies of the Prospectus (as amended or supplemented) as the
Underwriter reasonably may request for the purposes contemplated by the
Securities Act, or the Rules and Regulations.
(f) If any event shall occur as a result of which it is necessary, in
the opinion of counsel to the Fund and the Underwriter, to amend or supplement
the Prospectus in order to make the Prospectus not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, the Fund
forthwith will amend or supplement the Prospectus by preparing and furnishing to
the Underwriter a reasonable number of copies of an amendment or amendments of
or a supplement or supplements to, the Prospectus (in form and substance
satisfactory to counsel to the Fund and the Underwriter), so that, as so amended
or supplemented, the Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading.
(g) The Fund will endeavor, in cooperation with the Underwriter, to
qualify the Shares for offering and sale under the applicable securities laws of
such states and other jurisdictions of the United States as the Underwriter may
designate, and will maintain such qualifications in effect for a period of not
less than one year after the date hereof. The Fund will file such statements and
reports as may be required by the laws of each jurisdiction in which the Shares
have been qualified as above provided.
(h) The Fund will make generally available to its security holders as
soon as practicable, but no later than 60 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the Rules and Regulations) covering a twelve-month period beginning
not later than the first day of the Fund's fiscal quarter next following the
"effective" date (as defined in said Rule 158) of the Registration Statement.
(i) During a period of 90 days from the date of the Prospectus, the
Fund will not, without the prior written consent of Xxxxxxx Xxxxx, (i) directly
or indirectly, offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of any senior
security of the Fund, as defined in Section 18 of the Investment Company Act, or
file any registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into
9
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 senior
securities, whether any such swap or transaction described in clause (i) or (ii)
above is to be settled by delivery of senior securities, cash or otherwise. The
foregoing sentence shall not apply to (A) the Shares to be sold hereunder and
(B) swap arrangements with respect to the Shares and the Other ATP as
contemplated by the Registration Statement.
(j) If, at the time that the Registration Statement becomes effective,
any information shall have been omitted therefrom in reliance upon Rule 430A of
the Rules and Regulations, then immediately following the execution of the
Pricing Agreement, the Fund will prepare, and file or transmit for filing with
the Commission in accordance with such Rule 430A and Rule 497(h) of the Rules
and Regulations, copies of the amended Prospectus, or, if required by such Rule
430A, a post-effective amendment to the Registration Statement (including an
amended Prospectus), containing all information so omitted.
(k) The Fund will use its best efforts to maintain its qualification as
a regulated investment company under Subchapter M of the Code.
SECTION 4. Covenants of the Underwriter. The Underwriter covenants and
agrees with the Fund that no later than the second business day succeeding
Closing Time, it will provide the Fund and the Auction Agent (as defined in the
Prospectus) with a list of Existing Holders (as defined in the Prospectus) of
Shares or their Broker-Dealers (as defined in the Prospectus), the number of
Shares held by each such Existing Holder or Broker-Dealer and the number of
Shares it is holding as Underwriter as of the date of such notice.
SECTION 5. Payment of Expenses. The Fund will pay all expenses incident
to the performance of its obligations under this Agreement, including, but not
limited to, expenses relating to (i) the printing and filing of the registration
statement as originally filed and of each amendment thereto, (ii) the
preparation, issuance and delivery of the certificate for the Shares to the
Underwriter, (iii) the fees and disbursements of the Fund's counsel and
accountants, (iv) the printing and delivery to the Underwriter of copies of the
registration statement as originally filed and of each amendment thereto, of the
preliminary prospectus, and of the Prospectus and any amendments or supplements
thereto, (v) the fees charged by rating agencies for the rating of the Shares.
If this Agreement is terminated by the Underwriter in accordance with
the provisions of Section 6 or Section 10(a)(i) hereof, the Fund shall reimburse
the Underwriter for all of its reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of counsel to the Underwriter, except if
termination results from (a) inaccuracy of the Adviser's representations and
warranties, (b) failure of the Adviser to perform its obligations hereunder, (c)
failure of the condition set forth in Section 6(b)(2), (d) any Material Adverse
Effect in the condition, financial or otherwise, of the Advisers or in its
earnings, business affairs or business prospects, whether or not arising in the
ordinary course of business, (e) failure of the condition set forth in Section
6(c)(iii), (f) failure of the condition set forth in Section 6(c)(iv) because of
proceedings pending or threatened against the Adviser, (g) failure of the
condition set forth in Section 6(c)(i) relating to disclosure in the
Registration Statement and Prospectus of any suit or proceeding at law or in
10
equity pending or, to the knowledge of the Adviser, threatened against Adviser
because Adviser failed to disclose accurately and completely such suit or
proceeding to the Fund and the Underwriter and their respective counsel during
the preparation of the Registration Statement and Prospectus, (h) failure of the
Adviser to provide the certificate referred to in Section 6(c)(vi), or (i)
failure of the Adviser to provide the certificate required by Section 6(d), then
the Adviser shall reimburse the Underwriter for all of its reasonable
out-of-pocket expenses, including reasonable fees and disbursements of counsel
to the Underwriter. In the event the transactions contemplated hereunder are not
consummated, the Fund agrees to pay all of the costs and expenses set forth in
the first paragraph of this Section 5 which the Fund would have paid if such
transactions had been consummated.
SECTION 6. Conditions of Underwriter's Obligations. The obligations of
the Underwriter hereunder are subject to the accuracy of the representations and
warranties of the Fund and the Adviser herein contained, to the performance by
the Fund and the Adviser of their respective obligations hereunder, and to the
following further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M., New York City time, on the date of this Agreement, or with the
consent of the Underwriter, at a later time and date not later, however, than
5:30 p.m. on the first business day following the date hereof, or at such later
time and date as may be approved by the Underwriter, and at Closing Time no stop
order suspending the effectiveness of the Registration Statement shall have been
issued under the Securities Act, and no order of suspension or revocation of the
Fund's notification of registration shall have been issued under the Investment
Company Act and no proceedings for either such purpose shall have been initiated
or threatened by the Commission. If the Fund has elected to rely upon Rule 430A
of the Rules and Regulations, the price of the Shares and any price-related
information previously omitted from the effective Registration Statement
pursuant to such Rule 430A shall have been transmitted to the Commission for
filing pursuant to Rule 497(h) of the Rules and Regulations within the
prescribed time period, and prior to Closing Time the Fund shall have provided
evidence satisfactory to the Underwriter of such timely filing, or a
post-effective amendment providing such information shall have been filed
promptly and declared effective in accordance with the requirements of Rule 430A
of the Rules and Regulations.
(b) At Closing Time, the Underwriter shall have received:
(1) The favorable opinion, dated as of Closing Time, of
Xxxxxxx, Procter & Xxxx LLP, counsel to the Fund, in form and
substance satisfactory to counsel to the Underwriter, to the
effect that:
(i) The Fund has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Maryland.
(ii) The Fund has corporate power and authority to
own, lease and operate its properties and conduct its business
as described in the Registration Statement and in the
Prospectus.
11
(iii) The Fund is duly qualified as a foreign
corporation to transact business and is in good standing under
the laws of the Commonwealth of Massachusetts.
(iv) The outstanding shares of Common Stock and
Outstanding ATP have been duly authorized and validly issued
and are fully paid and nonassessable.
(v) The Shares have been duly authorized for issuance
and sale to the Underwriter pursuant to this Agreement and,
when issued and delivered by the Fund pursuant to this
Agreement against payment of the consideration set forth in
the Pricing Agreement, will be validly issued and fully paid
and nonassessable; the issuance of the Shares is not subject
to pre-emptive or other similar rights; and the authorized
capital stock conforms as to legal matters in all material
respects to the description thereof in the Registration
Statement under the captions "Description of ATP" and
"Description of Common Stock".
(vi) Each of this Agreement and the Pricing Agreement
has been duly authorized, executed and delivered by the Fund
and each complies with all applicable provisions of the
Investment Company Act.
(vii) The Registration Statement is effective under
the Securities Act and, to the best of their knowledge and
information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities
Act or proceedings therefor initiated or threatened by the
Commission.
(viii) At the time the Registration Statement became
effective and at the Representation Date, the Registration
Statement (other than the financial statements included
therein, as to which no opinion need be rendered) complied as
to form in all material respects with the requirements of the
Securities Act and the Investment Company Act and the Rules
and Regulations. The Rule 434 Prospectus conforms to the
requirements of Rule 434 in all material respects.
(ix) There are no legal or governmental proceedings
pending or, to the best of their knowledge and information,
threatened against the Fund which are required to be disclosed
in the Registration Statement, other than those disclosed
therein.
(x) To the best of their knowledge and information,
there are no contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments of the Fund
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 as exhibits thereto,
the descriptions thereof are correct in all material respects,
references thereto are correct, and no default 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
instrument so described, referred to or filed.
12
(xi) No consent, approval, authorization or order of
any court or governmental authority or agency is required in
connection with the sale of the Shares to the Underwriter,
except such as has been obtained under the Securities Act, the
Investment Company Act or the Rules and Regulations or such as
may be required under state securities laws and, the execution
and delivery of this Agreement, the Pricing Agreement, the
Advisory Agreement, the Custodian Agreement, the Auction
Agreement and the Letter of Representations and the
consummation of the transactions contemplated herein and
therein will not conflict with or constitute a breach of, or a
default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Fund pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Fund
is a party or by which it may be bound or to which any of the
property or assets of the Fund is subject, nor will such
action result in any violation of the provisions of the
Charter or the By-Laws of the Fund, or any law or
administrative regulation, or, to the best of their knowledge
and information, administrative or court decree.
(xii) Each of the Advisory Agreement and the
Custodian Agreement has been duly authorized and approved by
the Fund and complies as to form in all material respects with
all applicable provisions of the Investment Company Act, and
each has been duly executed by the Fund.
(xiii) The Fund is registered with the Commission
under the Investment Company Act as a closed-end, diversified,
management investment company, and all required action has
been taken by the Fund under the Securities Act, the
Investment Company Act and the Rules and Regulations to make
the public offering and consummate the sale of the Shares
pursuant to this Agreement; the provisions of the Charter and
the By-Laws of the Fund comply as to form in all material
respects with the requirements of the Investment Company Act;
and, to the best of their knowledge and information, no order
of suspension or revocation of such registration under the
Investment Company Act, pursuant to Section 8(e) of the
Investment Company Act, has been issued or proceedings
therefor initiated or threatened by the Commission.
(xiv) The information in the Prospectus under the
captions "Taxation", to the extent that it constitutes matters
of law or legal conclusions, has been reviewed by them and is
correct in all material respects.
(xv) Each of the Auction Agreement and the Letter of
Representations has been duly authorized, executed and
delivered by the Fund, and each constitutes a valid and
binding obligation of the Fund, enforceable in accordance with
its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization or other laws relating to or
affecting creditors' rights and to general equitable
principles.
13
(2) The favorable opinion, dated as of Closing Time, of Xxxxx
X. Xxxxx, Esq. General Xxxxxxx of the Adviser, in form and substance
satisfactory to counsel to the Underwriters, to the effect that:
(i) The Adviser has been duly organized as a limited
liability partnership under the laws of the Commonwealth of
Massachusetts, with power and authority to conduct its
business as described in the Registration Statement and in the
Prospectus.
(ii) The Adviser is duly registered as an investment
adviser under the Investment Advisers Act and is not
prohibited by the Investment Advisers Act or the Investment
Company Act, or the rules and regulations under such Acts,
from acting under the Advisory Agreement for the Fund as
contemplated by the Prospectus.
(iii) This Agreement and the Advisory Agreement have
been duly authorized, executed and delivered by the Adviser,
and the Advisory Agreement constitutes a valid and binding
obligation of the Adviser, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization or other laws relating to or affecting
creditors' rights and to general equity principles; and, to
the best of his knowledge and information, neither the
execution and delivery of this Agreement or the Advisory
Agreement nor the performance by the 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 the lapse
of time or both, a default under, any agreement or instrument
to which the Adviser is a party or by which the Adviser is
bound, or any law, order, rule or regulation applicable to the
Adviser 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.
(iv) The description of the Adviser in the
Registration Statement and in the Prospectus does not contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading.
(3) The favorable opinion, dated as of Closing Time, of Xxxxx
& Wood LLP, counsel to the Underwriter, with respect to the matters set
forth in (i), (v) to (viii) inclusive, and (xiii) of subsection (b)(1)
of this Section 6.
(4) In giving their opinions required by subsections (b)(1)
and (3) of this Section 6, Xxxxxxx, Procter & Xxxx LLP and Brown & Wood
LLP additionally shall state that nothing has come to their attention
that would lead them to believe that the Registration Statement (other
than the financial statements included therein, as to which no opinion
need be rendered), at the time it became effective or at the
Representation Date, contained any untrue statement of a material fact
or omitted to state a material fact
14
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus (other than the financial
statements included therein, as to which no opinion need be rendered),
at the Representation Date (unless the term "Prospectus" refers to a
prospectus and statement of additional information which has been
provided to the Underwriter by the Fund for use in connection with the
offering of the Shares which differs from the Prospectus on file at the
Commission at the time the Registration Statement becomes effective, in
which case at the time it first is provided to the Underwriter for such
use) or at Closing Time, contained any untrue statement of a material
fact or omitted 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. In giving its opinion, Xxxxxxx, Procter &
Xxxx LLP may state that its opinion is limited to matters governed by
the Federal laws of the United States of America, the laws of the
Commonwealth of Massachusetts and the General Corporation Law of the
State of Maryland and that such counsel is not admitted in the State of
Maryland. In giving their opinions, Xxxxxxx, Xxxxxxx & Xxxx LLP and
Brown & Wood LLP may rely as to matters of Maryland law, on the opinion
of Venable, Xxxxxx and Xxxxxx LLP, dated Closing Time, provided that
Xxxxxxx, Procter & Xxxx LLP and Brown & Wood LLP each shall state that
such opinion is satisfactory in form and substance to such counsel.
Xxxxxxx, Xxxxxxx & Xxxx XXX, Xxxxx X. Xxxxx, Esq. and Xxxxx & Wood LLP
may rely, as to matters of fact, upon certificates and written
statements of officers and employees of and accountants for the Fund
and the Adviser and of public officials.
(c) At Closing Time, (i) the Registration Statement and the Prospectus
shall contain all statements which are required to be stated therein in
accordance with the Securities Act, the Investment Company Act and the Rules and
Regulations and in all material respects shall conform to the requirements of
the Securities Act, the Investment Company Act and the Rules and Regulations,
and neither the Registration Statement nor the Prospectus shall contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that this Section 6(c)(i) shall not apply
to statements in or omissions from the Registration Statement or the Prospectus
made in reliance upon and in conformity with information furnished to the Fund
in writing by the Underwriter expressly for use in the Registration Statement or
in the Prospectus; no action, suit or proceeding at law or in equity shall be
pending or, to the knowledge of the Fund or the Adviser, threatened against the
Fund or the Adviser which would be required to be set forth in the Prospectus
other than as set forth therein; and no stop order suspending the effectiveness
of the Registration Statement has been issued under the Securities Act, and no
proceedings therefor have been initiated or are threatened by the Commission,
(ii) there shall not have been, since the date as of which information is given
in the Prospectus, any Material Adverse Effect in the condition, financial or
otherwise, of the Fund, the Adviser or in their earnings, business affairs or
business prospects, whether or not arising in the ordinary course of business,
from that set forth in the Prospectus, (iii) the Adviser shall have the
financial resources available to it necessary for the performance of its
services and obligations as contemplated in the Registration Statement and the
Prospectus, (iv) no proceedings shall be pending or, to the knowledge of the
Fund or the Adviser, threatened against the Fund or the Adviser before or by any
Federal, state or other commission, board or administrative agency wherein an
unfavorable
15
decision, ruling or finding would materially and adversely affect the business,
property, financial condition or income of either the Fund or the Adviser other
than as set forth in the Prospectus, (v) Xxxxx'x Investors Service, Inc.
("Moody's") and Standard & Poor's ("S&P") shall have confirmed that the Shares
have been rated "aaa" and AAA, respectively, by such agencies, and since the
date of this Agreement, there shall not have occurred a downgrading in the
rating assigned to the Shares or any of the Fund's other securities; and (vi)
the Underwriter shall have received, at Closing Time, a certificate of the
President or the Treasurer of the Fund and of the President or a Vice President
of the Adviser dated as of Closing Time, evidencing compliance with this
subsection (c) except that the Fund's certificate need not address compliance
with respect to (A) actions, suits or proceedings at law or in equity pending or
threatened against the Adviser, (B) Section 6(c)(ii) as it concerns the Adviser,
(C) Section 6(c)(iii) or (D) statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity with information
furnished to the Fund by the Underwriter or the Adviser expressly for use in the
Registration Statement or Prospectus, together with true and correct copies of
letters from Moody's and S&P confirming their rating.
(d) At Closing Time, the Underwriter shall have received certificates,
dated as of Closing Time, (i) of the President or the Treasurer of the Fund to
the effect that the representations and warranties of the Fund contained in
Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time and, (ii) of the President or a
Vice President of the Adviser to the effect that the representations and
warranties of the Adviser contained in Section 1(b) hereof are true and correct
with the same force and effect as though expressly made at and as of Closing
Time.
(e) At the time of execution of this Agreement, the Underwriter shall
have received from Xxxxxx Xxxxxxxx LLP a letter, dated such date in form and
substance satisfactory to the Underwriter, to the effect that:
(i) they are independent accountants with respect to the Fund
within the meaning of the Securities Act and the Rules and Regulations;
(ii) in their opinion, the financial statements included or
incorporated by reference in the Registration Statement and audited by
them comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Investment
Company Act and the Rules and Regulations;
(iii) they have performed specified procedures, not constituting an
audit, including a reading of the latest available interim financial
statements of the Fund, a reading of the minute books of the Fund,
inquiries of officials of the Fund responsible for financial accounting
matters and such other inquiries and procedures as may be specified in
such letter, and on the basis of such inquiries and procedures nothing
came to their attention that caused them to believe that during the
period from December 31 1997 to a specified date not more than three
days prior to the date of this Agreement, there was any change in the
capital stock or net assets of the Fund (other than by reason of the
issuance of Common Stock in connection with the Fund's dividend
reinvestment plan, as specified in such letter) or any increase in the
long-term debt of the Fund, as compared with amounts
16
shown on the unaudited financial statements included in the
Registration Statement, except for changes which the Registration
Statement discloses have occurred or may occur; and
(iv) in addition to the procedures referred to in clause (iii)
above, they have performed other specified procedures, not constituting
an audit, with respect to certain amounts, percentages, numerical data,
financial information and financial statements appearing in the
Registration Statement, which previously have been specified by such
accountants and which shall be specified in such letter, and have
compared certain of such items with, and have found such items to be in
agreement with, the accounting and financial records of the Fund.
(f) At Closing Time, the Underwriter shall have received from Xxxxxx
Xxxxxxxx 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 6, except that the "specified date" referred to shall be a date
not more than three days prior to Closing Time.
(g) At Closing Time, counsel to the Underwriter shall have been
furnished with such documents and opinions as they reasonably may require for
the purpose of enabling them to pass upon the issuance and sale of the Shares as
herein contemplated and to pass upon related proceedings, 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 Adviser in connection with the organization and
registration of the Fund under the Investment Company Act and the issuance and
sale of the Shares as herein contemplated shall be satisfactory in form and
substance to counsel to the Underwriter.
If any condition specified in this Section 6 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriter by notice to the Fund at any time at or prior to Closing
Time, and such termination shall be without liability of any party to any other
party, except as provided in Section 5 hereof and except that Sections 1, 7, 8
and 9 hereof shall survive any such termination and remain in full force and
effect.
SECTION 7. Indemnification. (a) The Fund agrees to indemnify and hold
harmless the Underwriter and each person, if any, who controls the Underwriter
within the meaning of Section 15 of the Securities Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), including the information deemed to be part of the
Registration Statement pursuant to Rule 430A or Rule 434 of the Rules and
Regulations, 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 contained in any preliminary prospectus or
preliminary statement of additional information or the Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission therefrom
of a material fact necessary in
17
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, provided that (subject to
Section 7(d) below) any such settlement is effected with the written consent of
the indemnifying party; and
(iii) against any and all expenses whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Underwriter) reasonably
incurred in investigating, preparing or defending against any litigation, or
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 does 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 by the
Underwriter or the Adviser expressly for use in the Registration Statement (or
any amendment thereto), including the information deemed to be a part of the
Registration Statement pursuant to Rule 430A or Rule 434 of the Rules and
Regulations, or any preliminary prospectus or in the Prospectus (or any
amendment or supplement thereto).
(b) The Adviser agrees to indemnify and hold harmless the Underwriter
and each person, if any, who controls the Underwriter within the meaning of
Section 15 of the Securities Act, against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a) of
this Section 7, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or in any amendment or supplement thereto) or in any preliminary
prospectus or statement of additional information or in the Prospectus (or in
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Fund by the Adviser expressly for use in
the Registration Statement (or in any amendment or supplement thereto),
including the information deemed to be a part of the Registration Statement
pursuant to Rule 430A or Rule 434 of the Rules and Regulations, or any
preliminary prospectus or preliminary statement of additional information or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Fund by the Adviser
expressly for use in the Registration Statement (or any amendment thereto) or
any preliminary prospectus or preliminary statement of additional information or
the Prospectus (or any amendment or supplement thereto).
(c) The Underwriter agrees to indemnify and hold harmless the Fund and
the Adviser, their respective directors, each of the Fund's officers who signed
the Registration Statement, and each person, if any, who controls the Fund or
the Adviser within the meaning of Section 15 of the Securities Act, against any
and all loss, liability, claim, damage and expense described in the
18
indemnity contained in subsection (a) of this Section 7, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or in any amendment or supplement
thereto) or in any preliminary prospectus or preliminary statement of additional
information or in the Prospectus (or in any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the Fund
by the Underwriter expressly for use in the Registration Statement (or in any
amendment or supplement thereto), including the information deemed to be a part
of the Registration Statement pursuant to Rule 430A or Rule 434 of the Rules and
Regulations, or any preliminary prospectus or preliminary statement of
additional information or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Fund by the Underwriter expressly for use in the Registration Statement
(or any amendment thereto) or any preliminary prospectus or preliminary
statement of additional information or the Prospectus (or any amendment or
supplement thereto).
(d) 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 prejudicial as a result thereof and
in no event shall 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 Sections 7(a) and 7(b) above, counsel to the indemnified parties
shall be selected by the Underwriter, and, in the case of parties indemnified
pursuant to Section 7(c) above, counsel to the indemnified parties shall be
selected by the Fund and the Adviser. 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 the 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 7 or Section 8 hereof (whether
or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(e) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 7 (a)(ii) hereof effected
without its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement
19
being entered into and (iii) such indemnifying party shall not have reimbursed
such indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 8. Contribution. If the indemnification provided for in Section
7 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 incurred by such indemnified party, as incurred, (i) in such proportion
as is appropriate to reflect the relative benefits received by the Fund, the
Adviser and the Underwriter from the offering of the Shares 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, the Adviser and of the Underwriter 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, the Adviser and the
Underwriter in connection with the offering of the Shares pursuant to this
Agreement shall be deemed to be in the same respective proportions as (x) the
total net proceeds from the offering of the Shares pursuant to this Agreement (
net of underwriting discounts and commissions but before deducting expenses)
received by the Fund, (y) the investment advisory fee payable to the Adviser
during the 12 month period preceding the date of this Agreement, and (z) the
total underwriting discount received by the Underwriter, in the case of (x) and
(z) 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 Shares as set forth on such cover plus (y) above.
The relative fault of the Fund, the Adviser and the Underwriter 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, the Adviser
or the Underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Fund, the Adviser and the Underwriter agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 8. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 8 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 8, the Underwriter shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which the
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
20
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls the
Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Securities Exchange Act of 1934, as amended shall have the same rights to
contribution as the Underwriter, and each officer or director of the Fund and
the Adviser, respectively, each director of the Fund who signed the Registration
Statement, and each person, if any, who controls the Fund and the Adviser within
the meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as amended shall have the same rights to contribution as
the Fund and the Adviser, respectively.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in the Pricing Agreement, or contained in certificates of officers
of the Fund or of the Adviser 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 Adviser and shall survive delivery of the Shares to the Underwriter.
SECTION 10. Termination of Agreement. (a) The Underwriter may terminate
this Agreement by written 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 Effect in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund or the Adviser,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any Material Adverse Effect in the financial markets in the United
States or elsewhere, 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
Underwriter impracticable to market the Shares or enforce contracts for the sale
of the Shares, or (iii) if trading in the Common Stock has been suspended or
materially limited by the Commission or if trading generally on either the New
York Stock Exchange or the American Stock Exchange or in the NASDAQ National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices for securities have
been required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) if a banking moratorium has been declared by
Federal, New York, Maryland or Massachusetts authorities.
(b) If this Agreement is terminated pursuant to this Section 10, such
termination shall be without liability of any party to any other party except as
provided in Section 5 hereof, and provided further that Sections 1, 7, 8 and 9
hereof shall survive such termination and remain in full force and effect.
21
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of written telecommunication. Notices to the
Underwriter shall be directed to Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated at Xxxxxxx Xxxxx World Headquarters, World Financial
Center, North Tower, New York, New York 10281-1201, Attention: Xxx Xxxxxxx, Vice
President; notices to the Fund shall be directed to The New America High Income
Fund, Inc. at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000. Attention: Xxxxx X.
Xxxxx; and notices to the Adviser shall be directed to Wellington Management
Company, LLP at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxx
Xxx Xxxxx.
SECTION 12. Parties. This Agreement and the Pricing Agreement shall
inure to the benefit of and be binding upon the Underwriter, the Fund, the
Adviser and their respective successors. Nothing expressed or mentioned in this
Agreement or in the Pricing Agreement is intended or shall be construed to give
any person, firm or corporation, other than the parties hereto and their
respective successors and the controlling persons and officers and directors
referred to in Sections 7 and 8 hereof 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
the Pricing Agreement and all conditions and provisions hereof are intended to
be for the sole and exclusive benefit of the parties hereto and thereto and
their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Shares from the Underwriter
shall be deemed to be a successor merely by reason of such purchase.
SECTION 13. Governing Law and Time. This Agreement and the Pricing
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. Specified times of day refer to New York City time.
22
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 single binding agreement
between the Underwriter and the Fund and the Adviser in accordance with its
terms.
Very truly yours,
THE NEW AMERICA HIGH INCOME FUND, INC.
By:
-------------------------------
Name:
Title:
WELLINGTON MANAGEMENT COMPANY, LLP
By:
-------------------------------
Name:
Title:
Confirmed and Accepted,
as of the date
first above written:
XXXXXXX LYNCH, XXXXXX, XXXXXX & XXXXX
INCORPORATED
By:
----------------------------
Authorized Signatory
23
Exhibit A
$60,000,000
THE NEW AMERICA HIGH INCOME FUND, INC.
(a Maryland corporation)
AUCTION TERM PREFERRED STOCK
2,400 Series D Shares
Liquidation Preference $ 25,000 Per Share
PRICING AGREEMENT
May __, 1998
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxxx Xxxxx World Headquarters
World Financial Center
North Tower
New York, New York 10281-1201
Dear Sirs and Mesdames:
Reference is made to the Purchase Agreement, dated May _, 1998
(the "Purchase Agreement"), relating to the purchase by Xxxxxxx Xxxxx & Co.,
Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated (the "Underwriter") of 2,400
shares of Auction Term Preferred Stock, Series D, with a par value of $1.00 per
share and a liquidation preference of $25,000 per share plus an amount equal to
accumulated but unpaid dividends (whether or not earned or declared) (the
"Shares") of The New America High Income Fund, Inc. (the "Fund").
Pursuant to Section 2 of the Purchase Agreement, the Fund
agrees with the Underwriter as follows:
1. The initial public offering price per share for the Shares,
determined as provided in said Section 2, shall be $25,000
plus accumulated dividends, if any, from the date of original
issue.
2. The purchase price per share for the Shares to be paid by
the Underwriter shall be $______ plus accumulated dividends,
if any, from the date of original issue, being an amount equal
to the initial public offering price set forth above less $___
per share.
3. The dividend rate for the Shares for the initial dividend
period ending __________, 1998 will be __%.
2
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Fund a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a single
binding agreement between the Underwriter and the Fund in accordance with its
terms.
Very truly yours,
THE NEW AMERICA HIGH INCOME FUND, INC.
By:
-------------------------------
Name:
Title:
Confirmed and Accepted,
as of the date
first above written:
XXXXXXX LYNCH, XXXXXX, XXXXXX & XXXXX
INCORPORATED
By:
----------------------------
Authorized Signatory
3
