18,950,000 Shares
Corporate High Yield Fund, Inc.
(a Maryland corporation)
Common Stock
(Par Value $0.10 Per Share)
PURCHASE AGREEMENT
June 18, 1993
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
Xxxxxxx Xxxxx World Headquarters
World Xxxxxxxxx Xxxxxx
Xxxxx Xxxxx
Xxx Xxxx, XX 00000-0000
Dear Sirs:
Corporate High Yield Fund, Inc., a Maryland corporation (the "Fund"),
and Fund Asset Management, Inc., a Delaware corporation (the "Adviser"), each
confirms its agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated (the "Underwriter"), with respect to the sale by the Fund and
the purchase by the Underwriter of 18,950,000 shares of common stock, par value
$.10 per share, of the Fund (the "Common Stock") and, with respect to the grant
by the Fund to the Underwriter of the option described in Section 2 hereof to
purchase all or any part of 800,000 additional shares of Common Stock to cover
over-allotments. The aforesaid 18,950,000 shares (the "Initial Shares"),
together with all or any part of the 800,000 additional shares of Common Stock
subject to the option described in Section 2 hereof (the "Option Shares"),
hereinafter are referred to collectively as 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 registration statement on Form N-2 (No. 33-61030) and a related
preliminary prospectus for the registration of the Shares under the Securities
Act of 1933, as amended (the "1933 Act"), and a notification on Form N-8A of
registration of the Fund as an investment company under the Investment Company
Act of 1940, as amended (the "1940 Act"), and the rules and regulations of the
Commission under the 1940 Act (together with the rules and regulations under the
1933 Act, the "Rules and Regulations") and has filed such amendments to such
registration statement on Form N-2, if any, and such amended preliminary
prospectuses as may have been required to the date hereof. The Fund will prepare
and file such additional amendments thereto and such amended prospectuses as may
hereafter be required. Such registration statement (as amended, if applicable)
and the prospectus constituting a part thereof (including in each case the
information, if any, deemed to be a part thereof pursuant to Rule 430A(b) of the
Rules and Regulations), as from time to time amended or supplemented pursuant to
the 1933 Act, hereinafter are referred to as the "Registration Statement" and
the "Prospectus", respectively, except that if any revised prospectus 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 from and after the time it first is provided to the
Underwriter for such use.
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.
SECTION 1. Representations and Warranties. (a) The Fund and the Adviser
each severally represents and warrants to the Underwriter as of the date hereof
and as of the date of the Pricing Agreement (such later date being hereinafter
referred to as the "Representation Date") 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 1933 Act, the 1940 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, the Prospectus (unless
the term "Prospectus" refers to a prospectus 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 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 Prospectus made in reliance upon and in
conformity with information
2
furnished to the Fund in writing by the Underwriter expressly for use in
the Registration Statement or Prospectus.
(ii) The accountants who certified the statement of assets,
liabilities and capital included in the Registration Statement are
independent public accountants as required by the 1933 Act and the Rules
and Regulations.
(iii) The statement of assets, liabilities and capital included in
the Registration Statement presents fairly the financial position of the
Fund as at the date indicated and said statement has been prepared in
conformity with generally accepted accounting principles.
(iv) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, and 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, (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) 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;
and the Fund has no subsidiaries.
(vi) The Fund is registered with the Commission under the 1940 Act as
a closed-end, diversified, management investment company, and no order of
suspension or revocation of such registration has been issued or
proceedings therefor initiated or threatened by the Commission.
(vii) The authorized, issued and outstanding capital stock of the
Fund is as set forth in the Prospectus under the caption "Description of
Shares"; 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 Shares conform in all material respects to all
statements relating thereto contained in the Registration Statement; and
the issuance of the Shares is not subject to preemptive rights.
(viii) The Fund is not in violation of its articles of incorporation,
as amended (the "Charter") 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
3
Agreement, the Pricing Agreement and the Investment Advisory Agreement and
the Custodial Agreement referred to in the Registration Statement (as used
herein, the "Advisory Agreement" and the "Custody Agreement", 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 by-laws, as amended,
of the Fund (the "By-Laws") or, to the best knowledge of the Fund and the
Adviser, any law, administrative regulation or administrative or court
decree; and 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 and the Custody Agreement, except such as
has been obtained under the 1940 Act or as may be required under the 1933
Act, state securities or Blue Sky laws or foreign securities 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.
(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, threatened against or affecting, the Fund, which
might result in any material adverse change in the condition, financial or
otherwise, business affairs or business prospects of the Fund, or which
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 1933
Act, the 1940 Act or by the Rules and Regulations which have not been so
filed.
(xi) 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.
(b) The Adviser represents and warrants to the Underwriter as of the date
hereof and as of the Representation Date as follows:
(i) The Adviser has been duly incorporated as a corporation under the
laws of the State of Delaware with corporate power and authority to conduct
its business as described in the Prospectus.
4
(ii) The Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended (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 Advisory Agreement for
the Fund as contemplated by the Prospectus.
(iii) This Agreement has been duly authorized, executed and delivered
by the Adviser; the Advisory Agreement has been duly authorized, executed
and delivered by the Adviser and 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 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 it is bound, or any
law, order, 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 respective properties or operations.
(iv) The Adviser has the financial resources available to it
necessary for the performance of its services and obligations as
contemplated in the Prospectus.
(v) Any advertisement approved by the Adviser for use in the public
offering of the Shares pursuant to Rule 482 under the Rules and Regulations
(an "Omitting Prospectus") complies with the requirements of such Rule 482.
(c) Any certificate signed by any officer of the Fund or the Adviser and
delivered 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. 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 Initial Shares to the
Underwriter, and the Underwriter agrees to purchase the Initial Shares from the
Fund, at the price per share set forth in the Pricing Agreement.
(a) 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 has 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.
(b) 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 applicable initial public offering price per
5
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 prices 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 4, unless otherwise agreed to by the Fund, the Adviser
and the Underwriter.
In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Fund
hereby grants an option to the Underwriter to purchase all or any part of the
Option Shares at the price per share set forth above. The option hereby granted
will expire 45 days after the date hereof (or, if the Fund has elected to rely
upon Rule 430A under the Rules and Regulations, 45 days after the execution of
the Pricing Agreement) and may be exercised only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Shares upon notice by the Underwriter to the Fund
setting forth the number of Option Shares as to which the Underwriter is then
exercising the option and the time, date and place of payment and delivery for
such Option Shares. Any such time and date of delivery (a "Date of Delivery")
shall be determined by the Underwriter but shall not be later than seven full
business days after the exercise of said option, nor in any event prior to
Closing Time, as hereinafter defined, unless otherwise agreed upon by the
Underwriter and the Fund.
Payment of the purchase price for, and delivery of certificates for,
the Initial Shares shall be made at the office of Xxxxx & Xxxx, Xxx Xxxxx Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, or at such other place as shall be agreed
upon by the Underwriter and the Fund, at 10:00 A.M. on the fifth business day
(unless postponed in accordance with the provisions of Section 10) 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 fifth business day
after execution of the Pricing Agreement), 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 being herein called "Closing
Time"). In addition, in the event that any or all of the Option Shares are
purchased by the Underwriter, payment of the purchase price for, and delivery of
certificates for, such Option Shares shall be made at the above-mentioned office
of Xxxxx & Wood, or at such other place as shall be agreed upon mutually by the
Fund and the Underwriter, on each Date of Delivery as specified in the notice
from the Underwriter to the Fund. Payment shall be made to the Fund by check or
checks drawn in New York Clearing House or similar next day funds and payable to
the order of the Fund, against delivery to the Underwriter of certificates for
the Shares to be purchased by it. Certificates for the Initial Shares and Option
Shares shall be in such denominations and registered in such names as the
Underwriter may request in writing at least two business days before Closing
Time or the Date of Delivery, as the case may be. The certificates for the
Initial Shares and the Option Shares will be made available by the Fund for
examination and packaging by the Underwriter not later than 10:00 A.M. on the
last business day prior to Closing Time or the Date of Delivery, as the case may
be.
6
SECTION 3. Covenants of the Fund. The Fund covenants with the Underwriter
as follows:
(a) The Fund will use its best efforts to cause the Registration
Statement to become effective under the 1933 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, if required, to cause the issuance of any orders exempting
the Fund from any provisions of the 1940 Act and 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 confirm the
notice in writing, (i) of the effectiveness of the Registration Statement
and any amendment 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 1940 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.
(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 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 is required to
be filed pursuant to Rule 497(c) or Rule 497 (h) of the Rules and
Regulations), whether pursuant to the 1940 Act, the 1933 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 shall reasonably 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, and will also deliver to the
Underwriter a conformed copy of the registration statement as originally
filed and of each amendment thereto (but without exhibits to the
registration statement or any such amendment) for the Underwriter.
(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
1933 Act, such number
7
of copies of the Prospectus (as amended or supplemented) as the Underwriter
reasonably may request for the purposes contemplated by the 1933 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 for 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 will forthwith 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 for 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 Funds's
fiscal quarter next following the "effective" date (as defined in said Rule
158) of the Registration Statement.
(i) Between the date of this Agreement and the termination of any
trading restrictions or Closing Time, whichever is later, the Fund will
not, without your prior consent, offer or sell, or enter into any agreement
to sell, any equity or equity-related securities of the Fund other than the
Shares and shares of Common Stock issued in reinvestment of dividends or
distributions.
(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 an 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 effect the listing of the
Shares on the New York Stock Exchange so that trading on such Exchange will
begin no later than three weeks from the date of the Prospectus.
8
SECTION 4. 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 printing
of this Agreement and the Pricing Agreement, (iii) the preparation, issuance and
delivery of the certificates for the Shares to the Underwriter, (iv) the fees
and disbursements of the Fund's counsel and accountants, (v) the qualification
of the Shares under securities laws in accordance with the provisions of Section
3(g) of this Agreement, including filing fees and any reasonable fees or
disbursements of counsel for the Underwriter in connection therewith and in
connection with the preparation of the Blue Sky Survey, (vi) 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, (vii) the
printing and delivery to the Underwriter of copies of the Blue Sky Survey,
(viii) the fees and expenses incurred with respect to the filing with the
National Association of Securities Dealers, Inc. and (ix) the fees and expenses
incurred with respect to the listing of the Shares on the New York Stock
Exchange.
If this Agreement is terminated by the Underwriter in accordance with the
provisions of Section 5 or Section 9 (a) (i) , the Fund or the Adviser shall
reimburse the Underwriter for all of their reasonable out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the Underwriter.
In the event the transactions contemplated hereunder are not consummated, the
Adviser agrees to pay all of the costs and expenses set forth in the first
paragraph of this Section 4 which the Fund would have paid if such transactions
were consummated.
SECTION 5. 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 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 1933 Act or
proceedings therefor initiated or threatened by the Commission. If the Fund has
elected to rely upon Rule 430A of the Rules and Regulations, the prices 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 Xxxxx & Xxxx,
counsel for the Fund and the Underwriter, to the effect that:
9
(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 the Prospectus.
(iii) 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.
(iv) 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 preemptive
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 caption "Description of Shares".
(v) This Agreement and the Pricing Agreement each has been duly
authorized, executed and delivered by the Fund and each complies with all
applicable provisions of the 1940 Act.
(vi) The Registration Statement is effective under the 1933 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
1933 Act or proceedings therefor initiated or threatened by the Commission.
(vii) 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 1933 Act and the 1940 Act and the Rules and
Regulations.
(viii) To the best of their knowledge and information, there are no
legal or governmental proceedings pending or threatened against the Fund
which are required to be disclosed in the Registration Statement, other
than those disclosed therein.
(ix) 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
10
condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other instrument so described, referred to or filed.
(x) 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
1933 Act, the 1940 Act or the Rules and Regulations or such as may be
required under state or foreign securities laws; and to the best of their
knowledge and information, the execution and delivery of this Agreement,
the Pricing Agreement, the Advisory Agreement and the Custody Agreement 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 By-Laws of the Fund, or any law or
administrative regulation, or, to the best of their knowledge and
information, any administrative or court decree.
(xi) The Advisory Agreement and the Custody Agreement each has been
duly authorized and approved by the Fund, each complies as to form in all
material respects with all applicable provisions of the 1940 Act, and each
has been duly executed by the Fund.
(xii) The Fund is registered with the Commission under the 1940 Act
as a closed-end, diversified, management investment company, and all
required action has been taken by the Fund under the 1933 Act, the 1940 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 By-Laws of the Fund comply as to form in all material respects
with the requirements of the 1940 Act; and, to the best of their knowledge
and information, no order of suspension or revocation of such registration
under the 1940 Act, pursuant to Section 8(e) of the 1940 Act, has been
issued or proceedings therefor initiated or threatened by the Commission.
(xiii) The information in the Prospectus under the caption "Taxes",
to the extent that it constitutes matters of law or legal conclusions, has
been reviewed by them and is correct in all material respects.
(2) The favorable opinion, dated as of Closing Time, of Xxxxxx X.
Xxxxxxxx, Esq., General Counsel to the Adviser, in form and substance
satisfactory to counsel for the Underwriter, to the effect that:
(i) The Adviser has been duly organized as a corporation under the
laws of the State of Delaware, with corporate power and authority to
conduct its business as described in the Registration Statement and the
Prospectus.
11
(ii) The Adviser is duly registered 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
Advisory Agreement for the Fund as contemplated by the Prospectus.
(iii) This Agreement and the Advisory Agreement each has 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 equitable 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 will result in a breach of, any of the terms and provisions of, or
constitute, with or without giving 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) To the best of his knowledge and information, the description of
the Adviser in the Registration Statement and 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, in the light of the circumstances under which they were
made, not misleading.
(3) In giving their opinion required by sub-section (b)(1) of this Section,
Xxxxx & Wood additionally shall state that nothing has come to their attention
that would lead them to believe that the Registration Statement, at the time it
became effective or at the Representation Date, 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, at the Representation Date (unless the term "Prospectus" refers to a
prospectus 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 they first are provided to the Underwriter for such
use) or at Closing Time, included an 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 their opinion, Xxxxx & Xxxx may rely as to matters
involving the laws of the State of Maryland upon the opinion of Xxxxxxxx,
Xxxxxxx and Xxxxx, Chartered. Xxxxxxxx, Xxxxxxx and Xxxxx, Chartered and Xxxxx &
Wood 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.
12
(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 1933 Act, the 1940 Act and the Rules and
Regulations and in all material respects shall conform to the requirements
of the 1933 Act, the 1940 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 required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and 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, (ii) there shall not have been, since the date
as of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, of the Fund or in its
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 and (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 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; and 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 the appropriate provisions of this subsection (c). As used in this
subsection (c), the term "Prospectus" means the Prospectus in the form
first used to confirm sales of the Shares.
(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) 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 Sections
1(a) and (b) 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 Deloitte & Touche 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 1933 Act and the Rules and Regulations;
(ii) in their opinion, the statement of assets, liabilities and
capital examined by them and included in the Registration Statement
complies as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1940 Act and the Rules
and Regulations; and
(iii) they have performed specified procedures, not constituting
an audit, including a reading of the latest available interim
financial statements of the Fund, a
13
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 at the date of the latest
available statement of assets, liabilities and capital read by such
accountants, or at a subsequent specified date not more than five days
prior to the date of this Agreement, there was any change in the
capital stock or net assets of the Fund as compared with amounts shown
on the statement of assets, liabilities and capital included in the
Prospectus.
(f) At Closing Time, the Underwriter shall have received from
Deloitte & Touche 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 five days prior to Closing Time.
(g) At Closing Time, all proceedings taken by the Fund and the
Adviser in connection with the organization and registration of the Fund
under the 1940 Act and the issuance and sale of the Shares as herein and
therein contemplated shall be satisfactory in form and substance to the
Underwriter.
(h) In the event the Underwriter exercises its option provided in
Section 2 hereof to purchase all or any portion of the Option Shares, the
representations and warranties of the Fund and the Adviser contained herein
and the statements in any certificate furnished by the Fund and the Adviser
hereunder shall be true and correct as of each Date of Delivery, and the
Underwriter shall have received:
(1) Certificates, dated the Date of Delivery, of the President or
the Treasurer of the Fund and of the President or a Vice President of
the Adviser confirming that the information contained in the
certificate delivered by each of them at Closing Time pursuant to
Section 5 (c) or 5 (d) , as the case may be, remains true as of such
Date of Delivery.
(2) The favorable opinions of Xxxxx & Xxxx, counsel for the Fund,
and Xxxxxx X. Xxxxxxxx, Esq., General Counsel to the Adviser, each in
form and substance satisfactory to the Underwriter, dated such Date of
Delivery, relating to the Option Shares and otherwise to the same
effect as the opinions required by Sections 5(b)(1) and (2),
respectively.
(3) A letter from Deloitte & Touche, in form and substance
satisfactory to the Underwriter and dated such Date of Delivery,
substantially the same in scope and substance as the letter furnished
to the Underwriter pursuant to Section 5(e), except that the
"specified date" in the letter furnished pursuant to this Section
5(h)(3) shall be a date not more than five days prior to such Date of
Delivery.
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 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 4.
14
SECTION 6. Indemnification. (a) The Fund and the Adviser, jointly and
severally, agree to indemnify and hold harmless the Underwriter and each
person, if any, who controls the Underwriter within the meaning of Section
15 of the 1933 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 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 the Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever as incurred to the extent of the aggregate amount
paid in settlement of any litigation, or 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, if such settlement is
effected with the written consent of the indemnifying party; and
(iii) against any and all expense whatsoever (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 expressly for use in the Registration Statement
(or any amendment thereto) or any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto).
(b) The Underwriter agrees, severally and not jointly, 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 1933 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) 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 by the Underwriter expressly for use in the
15
Registration Statement (or any amendment thereto) or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) In addition to the foregoing indemnification, the Adviser also
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
1933 Act, against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section,
with respect to any Omitting Prospectus or any advertising materials
approved by the Adviser for use in connection with the public offering of
the Shares.
(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 it from any
liability which it may have otherwise than on account of this indemnity
agreement. An indemnifying party may participate at its own expense in the
defense of any such action. 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.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for
in Section 6 for any reason is held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Fund, the
Adviser and the Underwriter shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by
said indemnity agreement as incurred by the Fund, the Adviser and the
Underwriter, as incurred, in such proportion that the Underwriter is
responsible for that portion represented by the percentage that the
aggregate underwriting compensation payable pursuant to Section 2 hereof
bears to the aggregate initial public offering price of the Shares sold
under this Agreement and the Fund and the Adviser are responsible for the
balance; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section, each
person, if any, who controls the Underwriter within the meaning of Section
15 of the 1933 Act shall have the same rights to contribution as the
Underwriter, and each director of the Fund and the Adviser, respectively,
each officer of the Fund 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 1933 Act, shall have the same rights to contribution as
the Fund and the Adviser, respectively.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or the Pricing Agreement, or contained in certificates of
officers of the Fund or the Adviser submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation
made by or on behalf of the 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.
16
SECTION 9. Termination of Agreement. (a) The Underwriter, by notice
to the Fund, may terminate this Agreement at any time at or prior to
Closing Time (i) if there has been, since the date of this Agreement or
since the date as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund or the
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 elsewhere or any outbreak of hostilities or other
calamity or crisis or any escalation of existing hostilities the effect of
which is such as to make it, in the Underwriter's judgment, 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 by the Commission
or if trading generally on either the American Stock Exchange or the New
York Stock Exchange has been suspended, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have
been required, by either of said exchanges or by order of the Commission or
any other governmental authority, or if a banking moratorium has been
declared by Federal or New York authorities. As used in this subsection
(a), the term "Prospectus" means the Prospectus in the form first used to
confirm sales of the Shares.
(b) 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.
SECTION 10. 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 World Headquarters,
Xxxxx Xxxxx, Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxxx X. Xxxxx, Vice President; notices to the Fund or to the Adviser
shall be directed to each of them at 000 Xxxxxxxx Xxxx Xxxx, Xxxxxxxxxx,
Xxx Xxxxxx 00000, Attention: Xxxxxx Xxxxxx, President.
SECTION 11. 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 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 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 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.
17
SECTION 12. Governing Law and Time. This Agreement and the Pricing
Agreement shall be governed by 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.
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 among the Underwriter, the Fund and the Adviser in accordance
with its terms.
Very truly yours,
CORPORATE HIGH YIELD FUND, INC.
By:____________________________
Authorized Officer
FUND ASSET MANAGEMENT, INC.
By: ___________________________
Authorized Officer
Confirmed and Accepted, as of the
Date first above written:
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:________________________________
Authorized Officer
18
Exhibit A
18,950,000 Shares
Corporate High Yield Fund, Inc.
(a Maryland corporation)
Common Stock
(Par Value $.10 Per Share)
PRICING AGREEMENT
June 18, 1993
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
Xxxxxxx Xxxxx World Headquarters
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Dear Sirs:
Reference is made to the Purchase Agreement, dated June 18, 1993 (the
"Purchase Agreement"), relating to the purchase by Xxxxxxx Xxxxx & Co., Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated (the "Underwriter"), of the above
shares of common stock, par value $.10 per share (the "Initial Shares"), of
Corporate High Yield Fund, Inc. (the "Fund") and relating to the option granted
to the Underwriter to purchase up to an additional 800,000 shares of common
stock, par value $.10 per share, of the Fund to cover over-allotments in
connection with the sale of the Initial Shares (the "Option Shares"). The
Initial Shares and all or any part of the Option Shares collectively are
referred to herein as the "Shares".
Pursuant to Section 2 of the Purchase Agreement, the Fund agrees with
the Underwriter as follows:
1. The applicable initial public offering price per share for the
Shares, determined as provided in said Section 2, shall be as follows:
(a) $15.00 for purchases in single transactions of less than
3,500 Shares;
(b) $14.85 for purchases in single transactions of 3,500 or more
Shares but less than 7,000 Shares; and
19
(c) $14.70 for purchases in single transactions of 7,000 or more
Shares.
2. The purchase price per Share for the Shares to be paid by the
Underwriter shall be an amount equal to the applicable initial public
offering price set forth above less (i) $.825 per Share for purchases in
single transactions of less than 3,500 Shares; (ii) $.675 per Share for
purchases in single transactions of 3,500 or more Shares but less than
7,000 Shares and (iii) $.525 per Share for purchases in single transactions
of 7,000 or more Shares.
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 binding agreement
between the Underwriter and the Fund in accordance with its terms.
Very truly yours,
CORPORATE HIGH YIELD FUND, INC.
By:______________________________
Authorized Officer
Confirmed and Accepted, as of the
Date first above written:
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:___________________________________
Authorized Officer
20
