__________ Shares
CORPORATE HIGH YIELD FUND III, INC.
(a Maryland corporation)
Common Stock
(Par Value $0.10 Per Share)
PURCHASE AGREEMENT
January 27, 1998
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
Xxxxxxx Xxxxx World Headquarters
World Financial Center
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Dear Sirs and Mesdames:
Corporate High Yield Fund III, Inc., a Maryland corporation (the
"Fund"), and Fund Asset Management, L.P., a Delaware limited partnership (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 __________ 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 _________ additional shares
of Common Stock to cover over-allotments. The aforesaid __________ shares (the
"Initial Shares"), together with all or any part of the _________ 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 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"), and a registration statement on Form N-2 (No.
333-40419) and a related preliminary prospectus for the registration of the
Shares under the Securities Act of 1933, as amended (the "1933 Act"), the
Investment Company Act, and the rules and regulations of the Commission under
the 1933 Act and the Investment Company Act (together, 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 hereafter may be required.
Such registration statement (as amended at the time it becomes effective, 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) or Rule 434 of the Rules and Regulations), as from time to time amended
or supplemented pursuant to the 1933 Act, are referred to hereinafter 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 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 and the term
sheet, taken together, provided to the Underwriter by the Fund in reliance on
Rule 434 under the 1933 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. 333-40419) and the Rule 462 Registration
Statement, as each such registration statement may be amended pursuant to the
1933 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.
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 hereinafter being
referred to as the "Representation Date") as follows:
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(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
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, 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 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.
(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 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, (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.
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(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 caption
"Description of Capital Stock"; 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 to be purchased by the Underwriter is not subject to
preemptive 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
and the Custody 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 the ByLaws of the Fund, 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
Investment Company Act or as may be required under the 1933 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
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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, 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 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 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.
(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 organized as a limited
partnership under the laws of the State of Delaware, with power and
authority to conduct its business as described 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) 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
5
to general equitable 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 or to counsel to the Fund and 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 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.
(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
6
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.
(b) Payment of the purchase price for, and delivery of certificates
for, the Initial Shares shall be made at the office of Xxxxx & Xxxx LLP, 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 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 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"). 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 LLP, 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 a Federal Funds check or checks or similar same-day
funds 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 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.
7
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 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 (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 (vi) hereunder or any order of
suspension or revocation described in subsection (vii) 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 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 or any term sheet prepared in
reliance on Rule 434 of the Rules and Regulations), whether pursuant to
the Investment Company 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
8
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,
and also will 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 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 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.
9
(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 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 effect the listing
of the Shares on the New York Stock Exchange so that trading on such
Exchange will begin no later than four weeks from the date of the
Prospectus.
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 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 its reasonable out-of-pocket expenses,
including the reasonable fees and disbursements of counsel to the Fund and 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 had been consummated.
10
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., 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 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 Xxxxx & Xxxx LLP, counsel to the Fund and 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.
(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
11
conforms as to legal matters in all material respects
to the description thereof in the Registration
Statement under the caption "Description of Capital
Stock".
(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 Investment Company 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 Investment Company Act and the Rules and
Regulations. The Rule 434 Prospectus conforms to the
requirements of Rule 434 in all material respects.
(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
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 Investment Company Act or
the Rules and Regulations or such as may be required
under state securities laws; and
12
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 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.
(xi) The Advisory Agreement and the Custody
Agreement have each been duly authorized and approved
by the Fund and comply 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.
(xii) The Fund is registered with the Commission
under the Investment Company Act as a closed-end,
non-diversified management investment company, and
all required action has been taken by the Fund under
the 1933 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.
(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 to the
Underwriter, to the effect that:
13
(i) The Adviser has been duly organized as a
limited partnership under the laws of the State of
Delaware, 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) To the best of his knowledge and
information, 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) In giving their opinion required by subsection (b)(1) of
this Section, Xxxxx & Xxxx 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 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 (other than the financial
statements included therein, as to which no opinion need be
14
rendered), 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 it
first is 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.
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 1933 Act, the Investment Company Act and
the Rules and Regulations and in all material respects shall conform to
the requirements of the 1933 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, 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 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).
(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
15
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 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 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 Investment Company 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 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 three 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 llp a letter, dated as of Closing Time, to the effect
that they reaffirm the statements made in the letter furnished pursuant
to subsection (e) of this Section, except that the "specified date"
referred to shall be a date not more than three days prior to Closing
Time.
(g) At Closing Time, counsel to the Underwriter shall have
been furnished with such documents and opinions as they may reasonably
require for the purpose of enabling them to pass upon the issuance and
sale of the 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 and therein contemplated shall be satisfactory in form
and substance to the Underwriter.
16
(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:
(i) 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.
(ii) The favorable opinions of Xxxxx & Xxxx LLP,
counsel to the Fund and the Underwriter and Xxxxxx X.
Xxxxxxxx, Esq., General Counsel of 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.
(iii) A letter from Deloitte & Touche llp, 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) shall be a date
not more than three 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 and except that Sections 1, 6, 7 and 8
hereof shall survive any such termination and remain in full force and effect.
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 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
17
prospectus or the Prospectus (or any amendment or supplement thereto)
or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, provided
that (subject to Section 6(d) below) any 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), including the information deemed to be 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).
Insofar as this indemnity agreement may permit indemnification for
liabilities under the 1933 Act of any person who is a partner of the Underwriter
or who controls the Underwriter within the meaning of Section 15 of the 1933 Act
and who, at the date of this Agreement, is a director, officer or controlling
person of the Fund, such indemnity agreement is subject to the undertaking of
the Fund in the Registration Statement.
(b) 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 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 in any
preliminary prospectus or in 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), including the
18
information deemed to be part of the Registration Statement pursuant to Rule
430A or Rule 434 of the Rules and Regulations, 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 Registration Statement (or any amendment thereto) or
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) 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 any event 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; 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 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) 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 6 (a)(ii) 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 being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses incurred by such indemnified party, as incurred, (i) in such proportion
as is appropriate to reflect the relative benefits received by the Fund and the
Adviser on the one hand and the Underwriter on the other hand from the
19
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 and the Adviser on the one
hand and of the Underwriter on the other hand in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Fund and the Adviser on the one
hand and the Underwriter on the other hand in connection with the offering of
the Shares pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the Shares
pursuant to this Agreement (before deducting expenses) received by the Fund less
the total underwriting commission received by the Underwriter, and the total
underwriting commission received by the Underwriter, in each case as set forth
on the cover of the Prospectus, or, if Rule 434 is used, the corresponding
location on the term sheet, bear to the aggregate initial public offering price
of the Shares as set forth on such cover.
The relative fault of the Fund and the Adviser on the one hand and the
Underwriter on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Fund and the Adviser or by 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 7 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 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, 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.
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.
20
For purposes of this Section 7, 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 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 1933 Act shall have the same
rights to contribution as the Fund.
SECTION 8. 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 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.
SECTION 9. 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 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, 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 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 hereof, and provided further that Sections 1, 6, 7 and 8
shall survive such termination and remain in full force and effect.
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 Merrill
21
Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated at Xxxxxxx Xxxxx
World Headquarters, World Financial Center, Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000, Attention: [Xxxxxxx 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 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 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.
SECTION 12. 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,
CORPORATE HIGH YIELD FUND III, INC.
By:
---------------------------
Authorized Officer
FUND ASSET MANAGEMENT, L.P.
By:
---------------------------
Authorized Officer
Confirmed and Accepted, as of the date first above written:
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:
-----------------------
Authorized Officer
23
Exhibit A
__________ Shares
Corporate High Yield Fund III, Inc.
(a Maryland corporation)
Common Stock
(Par Value $.10 Per Share)
PRICING AGREEMENT
-----------------
January 27, 1998
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
Xxxxxxx Xxxxx World Headquarters
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Dear Sirs and Mesdames:
Reference is made to the Purchase Agreement, dated January 27, 1998
(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 III, Inc. (the "Fund") and relating to the option
granted to the Underwriter to purchase up to an additional _________ 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 initial public offering price per share for the Shares,
determined as provided in said Section 2, and the purchase price per
share for the Shares to be paid by the Underwriter, shall be $15.00.
2. Fund Asset Management, L.P. will pay, or arrange for an
affiliate to pay, a commission to the Underwriter in the amount of
$0.30 per share for the Shares purchased by the Underwriter.
A-1
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 III, INC.
By:
---------------------------
Authorized Officer
FUND ASSET MANAGEMENT, L.P.
By:
---------------------------
Authorized Officer
Confirmed and Accepted, as of the
date first above written:
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:
-------------------------
Authorized Officer
A-2
