1
8,003,074 Common Shares of Beneficial Interest
Issuable Upon Exercise of Transferable Rights
to Subscribe for such Shares
DEALER MANAGER AGREEMENT
New York, New York
March 22, 1999
PaineWebber Incorporated
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Each of Xxxxxx High Income Trust, a Massachusetts business
trust (the "Fund"), and Xxxxxxx Xxxxxx Investments, Inc., a Delaware corporation
(the "Manager"), hereby confirms the agreement with and appointment by the Fund
of PaineWebber Incorporated to act as dealer manager (the "Dealer Manager") in
connection with the issuance by the Fund to the holders of record (the
"Holders") at the close of business on the record date set forth in the
Prospectus (as defined herein) (the "Record Date") transferable rights entitling
such Holders to subscribe for up to 8,003,074 shares (each a "Share" and,
collectively, the "Shares") of the Fund's common shares of beneficial interest,
par value $0.01 per share (the "Common Shares"), of the Fund (the "Offer").
Pursuant to the terms of the Offer, the Fund is issuing each Holder one
transferable right (each a "Right" and, collectively, the "Rights") for each
Common Share held by such Holder on the Record Date. Such Rights entitle holders
to acquire during the subscription period set forth in the Prospectus (the
"Subscription Period"), at the price set forth in such Prospectus (the
"Subscription Price"), one Share for each three Rights exercised (except that
any Holder who is issued fewer than three Rights will be able to subscribe for
one full Share pursuant to the primary subscription), on the terms and
conditions set forth in
1
2
such Prospectus. No fractional shares will be issued. Any Holder who fully
exercises all Rights initially issued to such Holder (other than those Rights
that cannot be exercised because they represent the right to acquire less than
one Share) will be entitled to subscribe for, subject to allocation, additional
Shares (the "Over-Subscription Privilege") on the terms and conditions set forth
in the Prospectus. The Rights are transferable and are expected to be listed on
the New York Stock Exchange, Inc. under the symbol "KHI.RT".
The Fund has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form N-2 (Nos. 333-72341 and
811-5482) and a related preliminary prospectus and preliminary statement of
additional information under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations of the Commission under the
Investment Company Act and the Securities 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 and preliminary statements of
additional information as may have been required to the date hereof. If the
registration statement has not become effective, a further amendment to such
registration statement, including forms of a final prospectus and final
statement of additional information necessary to permit such registration
statement to become effective will promptly be filed by the Fund with the
Commission. If the registration statement has become effective and any
prospectus or statement of additional information contained therein omits
certain information at the time of effectiveness pursuant to Rule 430A of the
Rules and Regulations, a final prospectus and final statement of additional
information containing such omitted information will promptly be filed by the
Fund with the Commission in accordance with Rule 497(h) of the Rules and
Regulations. The term "Registration Statement" means the registration statement,
as amended, at the time it becomes or became effective, including financial
statements and all exhibits and all documents, if any, incorporated therein by
reference, and any information deemed to be included by Rule 430A. The term
"Prospectus" means the final prospectus and final statement of additional
information in the forms filed with the Commission pursuant to Rule 497(c), (e),
(h) or (j) of the Rules and Regulations, as the case may be, as from time to
time amended or supplemented pursuant to the Securities Act.
The Prospectus and letters to beneficial owners of Common
Shares of the Fund, subscription certificates and other forms used to exercise
rights, brochures, wrappers, any letters from the Fund to securities dealers,
commercial banks and other
2
3
nominees and any newspaper announcements, press releases and other offering
materials and information that the Fund may use, approve, prepare or authorize
for use in connection with the Offer, are collectively referred to hereinafter
as the "Offering Materials".
1. Representations and Warranties.
a. The Fund represents and warrants to, and agrees with, the
Dealer Manager as of the date hereof, as of the date of the
commencement of the Offer (such later date being hereinafter
referred to as the "Representation Date") and as of the
Expiration Date (as defined below) that:
i. the Fund meets the requirements for use of Form N-2
under the Securities Act and the Investment Company
Act and the Rules and Regulations. At the time the
Registration Statement became or becomes effective,
the Registration Statement did or will contain all
statements required to be stated therein in
accordance with and did or will comply in all
material respects with the requirements of the
Securities Act, the Investment Company Act and the
Rules and Regulations and did not or will not contain
an 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. From the time the Registration Statement
became or becomes effective through the expiration
date of the Offer set forth in the Prospectus (the
"Expiration Date"), the Prospectus and the other
Offering Materials will not contain an untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary in order to make the statements therein, in
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, Prospectus or Offering
Materials made in reliance upon and in conformity
with information relating to the Dealer Manager
furnished to the Fund in writing by the Dealer
Manager expressly for use in the Registration
Statement, Prospectus or Offering Materials.
3
4
ii. the Fund has been duly organized and is validly
existing under the laws of the Commonwealth of
Massachusetts as a voluntary organization with
transferable shares of beneficial interest commonly
referred to as a Massachusetts business trust, has
full power and authority (corporate and other) to
conduct its business as described in the Registration
Statement and the Prospectus, currently maintains all
material governmental licenses, permits, consents,
orders, approvals, and other authorizations
(collectively, the "Licenses and Permits") necessary
to carry on its business as contemplated in the
Prospectus, and is duly qualified to do business in
each jurisdiction wherein it owns or leases real
property or in which the conduct of its business
requires such qualification, except where the failure
to be so qualified does not involve a material
adverse effect upon the Fund's business, properties,
financial position or results of operations. The Fund
has no subsidiaries.
iii. the Fund is duly registered with the Commission under
the Investment Company Act as a closed-end,
diversified management investment company, no order
of suspension or revocation of such registration has
been issued or proceedings there for initiated or, to
the knowledge of the Fund, threatened by the
Commission, all required action has been taken under
the Securities Act, the Investment Company Act and
any state securities laws to make the public offering
and consummate the issuance of the Rights and the
issuance and sale of the Shares by the Fund upon
exercise of the Rights, and the provisions of the
Fund's declaration of trust and by-laws comply as to
form in all material respects with the requirements
of the In vestment Company Act and the rules and
regulations thereunder.
iv. Ernst & Young LLP, the accountants who certified the
financial statements of the Fund set forth or
incorporated by reference in the Registration
Statement and the Prospectus, are independent public
accountants as required by the Investment Company Act
and the Rules and Regulations.
v. the financial statements of the Fund set forth or
incorporated by reference in the Registration
Statement and the Prospectus present fairly in all
material respects the financial condition of
4
5
the Fund as of the dates or for the periods indicated
in conformity with generally accepted accounting
principles applied on a consistent basis; and the
information set forth in the Prospectus under the
headings "Fee Table" and "Financial Highlights"
presents fairly in all material respects the
information stated therein.
vi. the Fund has an authorized capitalization as set
forth in the Prospectus; the outstanding Common
Shares have been duly authorized and are validly
issued, fully paid and non- assessable by the Fund
and conform in all material respects to the
description thereof in the Prospectus under the
heading "Description of Shares of Beneficial
Interest"; the Rights have been duly authorized by
all requisite action on the part of the Fund for
issuance pursuant to the Offer; the Shares have been
duly authorized by all requisite action on the part
of the Fund for issuance and sale pursuant to the
terms of the Offer and, when issued and delivered by
the Fund pursuant to the terms of the Offer against
payment of the consideration set forth in the
Prospectus, will be validly issued, fully paid and
non-assessable by the Fund; the Shares and the
Rights conform in all material respects to all
statements relating thereto contained in the
Registration Statement, the Prospectus and the other
Offering Materials; and the issuance of each of the
Rights and the Shares is not subject to any
preemptive rights.
vii. the Fund has authorized the debt leverage set forth
in the Prospectus; the outstanding note with Bank of
America, due June 30, 1999 (the "Note"), has been
duly authorized and conforms in all material respects
to the description thereof in the Prospectus under
the heading "Information Regarding Senior
Securities".
viii. except as set forth in the Prospectus, subsequent to
the respective dates as of which information is
given in the Registration Statement and the
Prospectus, (A) the Fund has not incurred any
liabilities or obligations, direct or contingent, or
entered into any transactions, other than in the
ordinary
5
6
course of business, that are material to the Fund,
(B) there has not been any material change in the
Common Shares or long-term debt of the Fund, or any
material adverse change, or any development involving
a prospective material adverse change, in the
condition (financial or other), business, prospects,
net worth or results of operations of the Fund
(excluding fluctuations in the Fund's net asset value
due to investment activities in the ordinary course
of business) and (C) except for the regular monthly
dividend on the outstanding Common Shares, there have
been no dividends or distributions paid or declared
in respect of the Fund's common shares.
ix. each of this agreement (the "Agreement"), the
Subscription Agency Agreement (the "Subscription
Agency Agreement") dated as of March 16, 1999 between
the Fund and BankBoston, N.A. (the "Subscription
Agent"), the Information Agent Agreement (the
"Information Agent Agreement") dated as of March 16,
1999 between the Fund and Shareholder Communications
Corporation (the "Information Agent"), the Investment
Management Agreement dated as of September 7, 1998,
as amended as of March 12, 1999, between the Fund and
the Manager (the "Investment Management Agreement"),
the Custodian Agreement dated as of March 1, 1995
between the Fund and Investors Fiduciary Trust
Company (the "Custodian Agreement"), the Agency
Agreement dated as of May 3, 1991 between the Fund
and Investors Fiduciary Trust Company (the "Transfer
Agency Agreement"), the Credit Agreement dated as of
June 20, 1996 between the Fund and Bank of America
(the "Note Agreement"), and the Note dated as of June
20, 1996 between the Fund and Bank of America
(collectively, all the foregoing are the "Fund
Agreements"), has been duly authorized, executed and
delivered by the Fund; each of the Fund Agreements
complies with all applicable provisions of the
Investment Company Act and the rules and regulations
under such Act in all material respects; and,
assuming due authorization, execution and delivery by
the other parties thereto, each of the Fund
Agreements constitutes a legal, valid, binding and
enforceable obligation of the Fund, subject to the
qualification that the enforceability of the Fund's
obligations thereunder may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar
laws of general applicability relating to or
affecting creditors' rights, and to general
principles of equity (regardless of whether
6
7
enforceability is considered in a proceeding in
equity or at law).
x. neither the issuance of the Rights, nor the issuance
and sale of the Shares, nor the execution or delivery
by the Fund of the Fund Agreements, nor the
performance and consummation by the Fund of any other
of the transactions contemplated in the Fund
Agreements, or any sub-custodial arrangements entered
into pursuant to the Custodian Agreement, nor the
consummation of the transactions contemplated
therein or in the Registration Statement conflict
with, result in a breach or violation of, or
constitute a default or an event of default under, or
result in the creation or imposition of any lien,
charge or encumbrance upon any properties or assets
of the Fund under the declaration of trust or by-laws
of the Fund, or the terms and provisions of any
material agreement, indenture, mortgage, loan
agreement, note, insurance or surety agreement, 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 any order,
law, rule or regulation of any court or governmental
agency or body having jurisdiction over the Fund or
any of its properties.
xi. there is no pending or, to the knowledge of the Fund,
threatened action, suit or proceeding affecting the
Fund or to which the Fund is a party before or by any
court or governmental agency, authority or body or
any arbitrator which might result in any material
adverse change in the condition (financial or other),
business prospects, net worth or operations of the
Fund, or which might materially and adversely affect
the properties or assets thereof of a character
required to be disclosed in the Registration
Statement or the Prospectus.
xii. there are no franchises, contracts or other documents
of the Fund required to be described in the
Registration Statement or the Prospectus, or to be
filed or incorporated by reference as exhibits which
are not described or filed or incorporated by
reference therein as permitted by the Securities Act,
the In vestment Company Act or the Rules and
Regulations.
xiii. no consent, approval, authorization, notification or
order of, or
7
8
filing with, any court or governmental agency or body
is legally required for the consummation by the Fund
of the transactions contemplated by the Fund
Agreements or the Registration Statement, except such
as have been obtained, or if the registration
statement filed with respect to the Shares is not
effective under the Securities Act as of the time of
execution hereof, such as may be required (and shall
be obtained as provided in this Agreement) under the
Investment Company Act, the Securities Act, the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and state securities laws.
xiv. the Common Shares have been duly listed on the New
York Stock Exchange, Inc. and prior to their issuance
the Shares and the Rights will have been duly
approved for listing, subject to official notice of
issuance, on the New York Stock Exchange, Inc.
xv. the Fund (A) has not taken, directly or indirectly,
any action designed to cause or to result in, or that
has constituted or which might reasonably be expected
to constitute, the stabilization or manipulation of
the price of any security of the Fund to facilitate
the issuance of the Rights or the sale or resale of
the Rights and the Shares, (B) has not since the
filing of the Registration Statement sold, bid for or
purchased, or paid anyone any compensation for
soliciting purchases of, Common Shares of the Fund
(except for the solicitation of exercises of the
Rights pursuant to this Agreement) and (C) will not,
until the later of the expiration of the Rights or
the completion of the distribution (within the
meaning of the anti- manipulation rules under the
Exchange Act) of the Shares, sell, bid for or
purchase, pay or agree to pay to any person any
compensation for soliciting another to purchase any
other securities of the Fund (except for the
solicitation of exercises of the Rights pursuant to
this Agreement); provided that any action in
connection with the Fund's dividend reinvestment and
cash purchase plan will not be deemed to be within
the terms of this Section 1.a.xv.
8
9
xvi. the Fund has complied in all previous tax years, and
intends to direct the investment of the proceeds of
the offering described in the Registration Statement
and the Prospectus in such a manner as to continue to
comply, with the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended
("Subchapter M of the Code"), and has qualified and
intends to continue to qualify as a regulated
investment company under Subchapter M of the Code.
xvii. the Fund has complied in all previous years, and
intends to direct the investment of the proceeds of
the offering described in the Registration Statement
and the Prospectus in such a manner as to continue to
comply, with the diversification and asset coverage
requirements of the Investment Company Act.
b. The Manager represents and warrants to, and agrees with, the
Dealer Manager as of the date hereof, as of the Representation
Date and as of the Expiration Date that:
i. the Manager has been duly incorporated and is validly
existing as a corporation in good standing under the
laws of the State of Delaware and has full corporate
power and authority to own its properties and conduct
its business as described in the Registration
Statement and the Prospectus.
ii. the Manager 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 Investment Company Act, or
the rules and regulations under such Acts, from
acting as investment adviser for the Fund as
contemplated in the Prospectus and the Investment
Management Agreement.
iii. each of this Agreement and the Investment Management
Agreement has been duly authorized, executed and
delivered by the Manager and is, assuming due
authorization, execution and delivery by the other
parties thereto, a legal, valid, binding and
enforceable obligation of the Manager, subject to the
qualification that the enforceability of the
Manager's
9
10
obligations thereunder may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws
relating to or affecting creditors' rights, and to
general principles of equity (regardless of whether
enforceability is considered in a proceeding in
equity or at law).
iv. neither the execution, delivery, performance and
consummation by the Manager of its obligations under
this Agreement or the Investment Management Agreement
nor the consummation of the transactions
contemplated therein or in the Registration
Statement nor the fulfillment of the terms thereof
will conflict with or violate the charter or by-laws
of the Manager, or result in a breach or violation
of, or constitute a default or an event of default
under the terms and provisions of any material
agreement, indenture, mortgage, loan agreement, note,
insurance or surety agreement, lease or other
instrument to which the Manager is a party or by
which it is bound or to which any of the property or
assets of the Manager is subject, nor will such
action result in any violation of any order, law,
rule or regulation of any United States court or
governmental agency or body having jurisdiction over
the Manager or any of its properties.
v. there is no pending action, suit or proceeding
affecting the Manager or to which the Manager is a
party that would materially affect the Manager's
ability to perform its obligations under this
Agreement or under the Investment Management
Agreement.
vi. All written information furnished by the Manager
specifically for use in the Registration Statement
and Prospectus, including, without limitation, the
description of the Manager, does not, and on the
Expiration Date will not, contain any untrue
statement of a material fact or omit to state any
material fact necessary to make the Registration
Statement and Prospectus not misleading.
vii. the Manager (A) has not taken, directly or
indirectly, any action designed to cause or to result
in, or that has constituted or which would reasonably
be expected to constitute, the stabilization or
manipulation of the price of any security of the Fund
to facilitate the issuance of the Rights or the sale
or resale of the Rights and the Shares, (B) has not
since the filing
10
11
of the Registration Statement sold, bid for or
purchased, or paid anyone any compensation for
soliciting purchases of, Common Shares of the Fund
(except for the solicitation of exercises of the
Rights pursuant to this Agreement) and (C) will not,
until the later of the expiration of the Rights or
the completion of the distribution (within the
meaning of the anti- manipulation rules under the
Exchange Act) of the Shares, sell, bid for or
purchase, pay or agree to pay any person any
compensation for soliciting another to purchase any
other securities of the Fund (except for the
solicitation of exercises of the Rights pursuant to
this Agreement); provided that any action in
connection with the Fund's dividend reinvestment and
cash purchase plan will not be deemed to be within
the terms of this Section 1.b.vii.
c. Any certificate required by this Agreement that is signed by
any officer of the Fund or the Manager and delivered to the
Dealer Manager or counsel for the Dealer Manager shall be
deemed a representation and warranty by the Fund or the
Manager, as the case may be, to the Dealer Manager, as to the
matters covered thereby.
2. Agreement to Act as Dealer Manager.
a. On the basis of the representations and warranties contained
herein, and subject to the terms and conditions of the Offer:
i. The Fund hereby appoints the Dealer Manager to
solicit the exercise of Rights and authorizes the
Dealer Manager to sell Shares purchased by the Dealer
Manager from the Fund though the exercise of Rights
as described herein; the Fund hereby authorizes the
Dealer Manager to form and manage a group of selling
broker-dealers (each a "Selling Group Member" and
collectively the "Selling Group") that enter into a
Selling Group Agreement with the Dealer Manager in
the form attached hereto as Exhibit A to solicit the
exercise of Rights and to sell Shares purchased by
the Selling Group Member from the Dealer Manager as
described herein; and the Fund hereby authorizes
other soliciting broker-dealers (each a "Soliciting
Dealer" and collectively the "Soliciting Dealers")
that enter into a Soliciting Dealer Agreement with
the Dealer Manager in the form attached hereto as
Exhibit B to solicit the exercise of Rights. The
Dealer Manager hereby agrees to solicit the exercise
of Rights in accordance with the Securities
11
12
Act, the Investment Company Act and the Exchange Act,
and its customary practice subject to the terms and
conditions of this Agreement, the procedures
described in the Registration Statement, the
Prospectus and, where applicable, the terms and
conditions of such Selling Group Agreement or
Soliciting Dealer Agreement; and the Dealer Manager
hereby agrees to form and manage the Selling Group to
solicit the exercise of Rights and to sell Shares to
the Selling Group purchased by the Dealer Manager
from the Fund through the exercise of Rights as
described herein in accordance with the Securities
Act, the Investment Company Act and the Exchange Act,
and its customary practice subject to the terms and
conditions of this Agreement, the procedures
described in the Registration Statement, the
Prospectus and, where applicable, the terms and
conditions of the Selling Group Agreement.
ii. The Fund hereby authorizes the Dealer Manager to buy
and exercise Rights, including unexercised Rights
delivered to the Subscription Agent for resale and
Rights of Foreign Record Date Shareholders (as
defined in the Prospectus) held by the Subscription
Agent for which no instructions are received, on the
terms and conditions set forth in such Prospectus,
and to sell Shares to the public or to Selling Group
Members at the offering price set by the Dealer
Manager from time to time. Sales of Shares by the
Dealer Manager or Selling Group Members shall not be
at a price higher than the offering price set by the
Dealer Manager from time to time.
b. The Fund agrees to furnish, or cause to be furnished, to the
Dealer Manager, lists, or copies of those lists, showing the
names and ad dresses of, and number of Common Shares held by,
Holders as of the Record Date, and the Dealer Manager agrees
to use such information only in connection with the Offer, and
not to furnish the information to any other person except for
securities brokers and dealers that have been requested by the
Dealer Manager to solicit exercises of Rights.
c. The Dealer Manager agrees to provide to the Fund, in addition
to the services described in paragraph 2.a., financial
advisory and marketing
12
13
services in connection with the Offer. No advisory
fee, other than the fees provided for in Section 3 of
this Agreement and the reimbursement of the Dealer
Manager's out-of-pocket expenses as described in
Section 5 of this Agreement, will be payable by the
Fund, or any other party hereto, to the Dealer
Manager in connection with the financial advisory and
marketing services provided by the Dealer Manager
pursuant to this Section 2.c.
d. The Fund and the Dealer Manager agree that the Dealer
Manager is an independent contractor with respect to
the solicitation of the exercise of Rights and the
performance of financial advisory and marketing
services for the Fund contemplated by this Agreement.
e. In rendering the services contemplated by this
Agreement, the Dealer Manager will not be subject to
any liability to the Fund or the Manager or any of
their affiliates, for any act or omission on the part
of any soliciting broker or dealer (except with
respect to the Dealer Manager acting in such
capacity) or any other person, and the Dealer Manager
will not be liable for acts or omissions in
performing its obligations under this Agreement,
except for any losses, claims, damages, liabilities
and expenses that are finally judicially determined
to have resulted primarily from the bad faith,
willful misconduct or gross negligence of the Dealer
Manager or by reason of its failure to perform the
obligations and duties of the Dealer Manager under
this Agreement.
3. Dealer Manager Fees. In full payment for the financial
advisory, marketing and soliciting services rendered and to be
rendered hereunder by the Dealer Manager, the Fund agrees to
pay the Dealer Manager a fee (the "Dealer Manager Fee") equal
to 3.75% of the aggregate Subscription Price for the Shares
issued pursuant to the exercise of Rights and the
Over-Subscription Privilege. In full payment for the
soliciting efforts to be rendered, the Dealer Manager agrees
to reallow selling fees (the "Selling Fees") to Selling Group
Members equal to 2.50% of the Subscription Price per Share for
each Share issued pursuant to either (a) the exercise of
Rights and the Over-Subscription Privilege where such Selling
Group Member is so designated on the subscription form or (b)
the purchase for resale from the Dealer Manager in accordance
with the Selling Group Agreement. In full payment for the
soliciting efforts to be rendered, the Dealer Manager agrees
to reallow soliciting fees (the "Soliciting Fees") to
Soliciting Dealers equal to 0.50% of the Subscription Price
per Share for each Share issued pursuant to the exercise of
Rights and the Over-Subscription Privilege where such
Soliciting Dealer is so designated on the subscription form,
subject to a maximum fee
13
14
based on the number of Common Shares held by such Soliciting
Dealer through The Depository Trust Company ("DTC") on the
Record Date. The Dealer Manager agrees to pay the Selling Fees
or Solicitation Fees, as the case may be, to the broker-dealer
designated on the applicable portion of the form used by the
holder to exercise Rights and the Over-Subscription Privilege,
and if no broker-dealer is so designated or a broker-dealer is
otherwise not entitled to receive compensation pursuant to the
terms of the Selling Group Agreement or Soliciting Dealer
Agreement, then the Dealer Manager shall retain such Selling
Fee or Solicitation Fee for Shares issued pursuant to the
exercise of Rights and the Over-Subscription Privilege.
Payment to the Dealer Manager by the Fund will be in the form
of a wire transfer of same day funds to an account or accounts
identified by the Dealer Manager. Such payment will be made on
each date on which the Fund issues Shares after the Expiration
Date. Payment to a Selling Group Member or Soliciting Dealer
will be made by the Dealer Manager directly to such Selling
Group Member or Soliciting Dealer by check to an address
identified by such broker-dealer. Such payments shall be made
on or before the tenth business day following the day the Fund
issues Shares after the Expiration Date.
4. Other Agreements.
a. The Fund covenants with the Dealer Manager as follows:
i. The Fund will use its best efforts to cause the
Registration Statement to become effective and
maintain its effectiveness under the Securities Act,
and will advise the Dealer Manager promptly as to the
time at which the Registration Statement and any
amendments thereto (including any post-effective
amendment) becomes so effective.
ii. The Fund will notify, and confirm the notice in
writing to, the Dealer Manager immediately (A) of the
effectiveness of the Registration Statement and any
amendment thereto (including any post-effective
amendment), (B) of the receipt of any comments from
the Commission, (C) of any request by the Commission
for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus or for
14
15
additional information, (D) 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
(E) of the suspension of the qualification of the
Shares or the Rights for offering or sale in any
jurisdiction. The Fund will make every reasonable
effort to prevent the issuance of any stop order
described in subsection (D) hereunder and, if any
such stop order is issued, to obtain the lifting
thereof at the earliest possible moment.
iii. The Fund will give the Dealer Manager 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 Dealer Manager in connection
with the Offer, which differs from the prospectus on
file at the Commission at the time the Registration
Statement becomes effective, whether or not such
revised prospectus is required to be filed pursuant
to Rule 497(c), (e) or (h) of the Rules and
Regulations), whether pursuant to the Investment
Company Act, the Securities Act, or otherwise, and
will furnish the Dealer Manager 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 Dealer Manager or counsel
for the Dealer Manager shall reasonably object.
iv. The Fund will, without charge, deliver to the Dealer
Manager, as soon as practicable, the number of copies
(one of which is manually executed) of the
Registration Statement as originally filed and of
each amendment thereto as it may reasonably request,
in each case with the exhibits filed therewith.
v. The Fund will, without charge, furnish to the Dealer
Manager, from time to time during the period when the
Prospectus is required to be delivered under the
Securities Act, such number of copies of the
Prospectus (as amended or supplemented) as the Dealer
Manager may reasonably request for the purposes
contemplated by the Securities Act or the Rules and
Regulations.
vi. If any event shall occur as a result of which it is
necessary, in
15
16
the reasonable opinion of counsel for the Dealer
Manager, to amend or supplement the Registration
Statement or 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 Holder, the Fund will forthwith amend or supplement
the Prospectus by preparing and filing with the
Commission (and furnishing to the Dealer Manager a
reasonable number of copies of) an amendment or
amendments of the Registration Statement or an
amendment or amendments of or a supplement or
supplements to the Prospectus (in form and substance
satisfactory to counsel for the Dealer Manager), at
the Fund's expense, which will amend or supplement
the Registration Statement or the Prospectus so that
the Prospectus will not contain an untrue statement
of a material fact or omit to state a material fact
required to be stated therein or necessary in order
to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is
delivered to a Holder, not misleading.
vii. The Fund will endeavor, in cooperation with the
Dealer Manager and its counsel, to assist such
counsel to qualify the Rights and the Shares for
offering and sale under the applicable securities
laws of such states and other jurisdictions of the
United States as the Dealer Manager may designate and
maintain such qualifications in effect for the
duration of the Offer; provided, however, that the
Fund will not be obligated to file any general
consent to service of process, or to qualify as a
foreign corporation or as a dealer in securities in
any jurisdiction in which it is not now so
qualified. The Fund will file such statements and
reports as may be required by the laws of each
jurisdiction in which the Rights and the Shares have
been qualified as above provided.
viii. The Fund will make generally available to its
security holders as soon as practicable, but no later
than 60 days after the end of the Fund's fiscal
semi-annual or fiscal year-end period covered
thereby, an earnings statement (which need not be
audited) (in form complying with the provisions of
Rule 158 of the Rules and Regulations of the
Securities Act) covering a
16
17
twelve-month period beginning not later than the
first day of the Fund's fiscal semi-annual period
next following the "effective" date (as defined in
said Rule 158) of the Registration Statement.
ix. For a period of 180 days from the date of this
Agreement, the Fund will not, without the prior
consent of the Dealer Manager, which consent will
not be unreasonably withheld, offer or sell, or enter
into any agreement to sell, any equity or equity
related securities of the Fund or securities
convertible into such securities, other than the
Rights and the Shares and the Common Shares issued in
reinvestment of dividends or distributions.
x. The Fund will use the net proceeds from the Offer as
set forth under "Use of Proceeds" in the Prospectus.
xi. The Fund will use its best efforts to cause the
Rights and the Shares to be duly authorized for
listing by the New York Stock Exchange, Inc. prior to
the time the Rights are issued.
xii. The Fund will use its best efforts to maintain its
qualification as a regulated investment company under
Subchapter M of the Code.
xiii. The Fund will use its best efforts to apply the net
proceeds from the Offer consistent with the
diversification and asset coverage requirements of
the Investment Company Act.
xiv. The Fund will advise or cause the Subscription Agent
(A) to advise the Dealer Manager and, only where
specifically noted, each Selling Group Member who
specifically requests, from day to day during the
period of, and promptly after the termination of,
the Offer, as to the names and addresses of all
Holders exercising Rights, the total number of Rights
exercised by each Holder during the immediately
preceding day, indicating the total number of Rights
verified to be in proper form for exercise, rejected
for exercise and being processed and, for the Dealer
Manager and each Selling Group Member, the number of
Rights exercised on subscription certificates
indicating the Dealer Manager or such Selling Group
Member, as the case may be, as the broker-dealer with
respect to such exercise, and as to such other
information as
17
18
the Dealer Manager may reasonably request; and will
notify the Dealer Manager and each Selling Group
Member, not later than 5:00 P.M., New York City time,
on the first business day following the Expiration
Date, of the total number of Rights exercised and
Shares related thereto, the total number of Rights
verified to be in proper form for exercise, rejected
for exercise and being processed and, for the Dealer
Manager and each Selling Group Member, the number of
Rights exercised on subscription certificates
indicating the Dealer Manager or such Selling Group
Member, as the case may be, as the broker-dealer with
respect to such exercise, and as to such other
information as the Dealer Manager may reasonably
request; (B) to sell any Rights received for resale
from Holders exclusively to or through the Dealer
Manager, which may, at its election, purchase such
Rights as principal or act as agent for the resale
thereof; and (C) to issue Shares upon the Dealer
Manager's exercise of Rights no later than the close
of business on the business day following the day
that full payment for such Shares has been received
by the Subscription Agent.
b. Neither the Fund nor the Manager will take, directly or
indirectly, any action designed to cause or to result in, or
that has constituted or which would reasonably be expected to
constitute, the stabilization or manipulation of the price of
any security of the Fund to facilitate the issuance of the
Rights or the sale or resale of the Rights or the Shares;
provided that any action in connection with the Fund's
dividend reinvestment and cash purchase plan will not be
deemed to be within the meaning of this Section 4.b.
5. Payment of Expenses.
a. The Fund will pay all expenses incident to the performance of
its obligations under this Agreement, including, but not
limited to, expenses relating to (i) the printing and filing
of the Registration Statement as originally filed and of each
amendment thereto, (ii) the preparation, issuance and delivery
of the certificates for the Shares and subscription
certificates relating to the Rights, (iii) the fees and
disbursements of the Fund's counsel (including the fees and
18
19
disbursements of local counsel) and accountants, (iv) the
qualification of the Rights and the Shares under securities
laws in accordance with the provisions of Section 4.a.vii. of
this Agreement, including filing fees, (v) the printing or
other production and delivery to the Dealer Manager of copies
of the Registration Statement as originally filed and of each
amendment thereto and of the Prospectus and any amendments or
supplements thereto, (vi) the fees and expenses incurred with
respect to filing with the National Association of Securities
Dealers, Inc., (vii) the fees and expenses incurred in
connection with the listing of the Shares on the New York
Stock Exchange, Inc., (viii) the printing or other
production, mailing and delivery expenses incurred in
connection with Offering Materials and (ix) the fees and
expenses incurred with respect to the Subscription Agent and
the Information Agent.
b. In addition to any fees that may be payable to the Dealer
Manager under this Agreement, the Fund agrees to reimburse the
Dealer Manager upon request made from time to time for its
reasonable expenses incurred in connection with its activities
under this Agreement, including the reasonable fees and
disbursements of its legal counsel (excluding Blue Sky filing
fees which are paid directly by the Fund), in an amount up to
$100,000.
c. If this Agreement is terminated by the Dealer Manager in
accordance with the provisions of Section 6 or Section 9.a.i.,
9.a.ii. or 9.a.iii., the Fund agrees to reimburse the Dealer
Manager for all of its reasonable out-of-pocket expenses
incurred in connection with its performance hereunder,
including the reasonable fees and disbursements of counsel for
the Dealer Manager. In the event the transactions contemplated
hereunder are not consummated, the Fund agrees to pay all of
the costs and expenses set forth in paragraphs 5.a. and 5.b.
which the Fund would have paid if such transactions had been
consummated.
6. Conditions of the Dealer Manager's Obligations. The obligations of the
Dealer Manager hereunder are subject to the accuracy of the respective
representations and warranties of the Fund and the Manager contained
herein, to the performance by the Fund and the Manager 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 Record Date,
or at such later time and date as may be approved by the
Dealer Manager; the Prospectus and any amendment or
supplement thereto shall have been
19
20
filed with the Commission in the manner and within the time
period required by Rule 497(c), (e), (h) or (j), as the case
may be, under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement or any amendment
thereto shall have been is sued, and no proceedings for that
purpose shall have been instituted or threatened or, to the
knowledge of the Fund, the Manager or the Dealer Manager,
shall be contemplated by the Commission; and the Fund shall
have complied with any request of the Commission for
additional information (to be included in the Registration
Statement, the Prospectus or otherwise).
b. On the Representation Date and the Expiration Date, the Dealer
Manager shall have received:
i. The favorable opinions, dated the Representation Date
and the Expiration Date, of Dechert, Price & Xxxxxx,
counsel for the Fund, in form and substance
satisfactory to counsel for the Dealer Manager to the
effect that:
(1) the Fund has been duly organized and is
validly existing under the laws of the
Commonwealth of Massachusetts as a
voluntary organization with transferable
shares of beneficial interest commonly
referred to as a Massachusetts business
trust, has full power and authority
(corporate and other) to conduct its
business as described in the Registration
Statement and the Prospectus, currently
maintains all material Licenses and Permits
necessary to carry on its business as
contemplated in the Prospectus (except that
counsel need express no opinion as to
securities or "blue sky" laws of any state),
and is duly qualified to do business in each
jurisdiction wherein it owns or leases real
property or in which the conduct of its
business requires such qualification,
except where the failure to be so qualified
does not involve a material adverse effect
upon the Fund's business, properties,
financial position or results of operations.
(2) the Fund is duly registered with the
Commission under
20
21
the Investment Company Act as a closed-end,
diversified management investment company,
and, to the knowledge of such counsel, no
order of suspension or revocation of such
registration has been issued or proceedings
therefor initiated or threatened by the
Commission, all required action has been
taken under the Securities Act and the
Investment Company Act to make the public
offering and consummate the issuance of the
Rights and the issuance and sale of the
Shares by the Fund upon exercise of the
Rights, and the provisions of the Fund's
declaration of trust and by-laws comply as
to form in all material respects with the
requirements of the Investment Company Act
and the rules and regulations thereunder.
(3) the Fund's authorized capitalization is as
set forth in the Prospectus; the outstanding
Common Shares have been duly authorized and
are validly issued, fully paid and
non-assessable by the Fund and conform in
all material respects to the description
thereof in the Prospectus under the heading
"Description of Shares of Beneficial
Interest"; the Rights have been duly
authorized by all requisite action on the
part of the Fund for issuance pursuant to
the Offer; the Shares have been duly
authorized by all requisite action on the
part of the Fund for issuance and sale
pursuant to the terms of the Offer and, when
issued and delivered by the Fund pursuant to
the terms of the Offer against payment of
the consideration set forth in the
Prospectus, will be validly issued, fully
paid and non-assessable by the Fund; the
Shares and the Rights conform in all
material respects to all statements relating
thereto contained in the Registration
Statement, the Prospectus and the other
Offering Materials; and the issuance of each
of the Rights and the Shares is not subject
to any preemptive rights.
(4) the Fund has authorized the debt leverage
set forth in the Prospectus; the outstanding
Note has been duly authorized and conforms
in all material respects to the description
thereof in the Prospectus under the heading
"Information Regarding Senior Securities".
21
22
(5) each of the Fund Agreements has been duly
authorized, executed and delivered by the
Fund; each of the Fund Agreements complies
with all applicable provisions of the
Investment Company Act and the rules and
regulations under such Act in all material
respects; and, assuming due authorization,
execution and delivery by the other parties
thereto, each of the Fund Agreements
constitutes a legal, valid, binding and
enforceable obligation of the Fund, subject
to the qualification that the enforceability
of the Fund's obligations thereunder may be
limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws
of general applicability relating to or
affecting creditors' rights, and to general
principles of equity (regardless of whether
enforce ability is considered in a
proceeding in equity or at law).
(6) neither the issuance of the Rights, nor the
issuance and sale of the Shares, nor the
execution and delivery by the Fund of the
Fund Agreements, nor the performance and
consummation by the Fund of any other of the
transactions contemplated in the Fund
Agreements, or any sub-custodial
arrangements entered into pursuant to the
Custodian Agreement, nor the consummation of
the transactions contemplated therein or in
the Registration Statement conflict with,
result in a breach or violation of, or
constitute a default or an event of default
under, or result in the creation or
imposition of any lien, charge or
encumbrance upon any properties or assets of
the Fund under the declaration of trust or
by-laws of the Fund, or the terms and
provisions of any material agreement,
indenture, mortgage, loan agreement, note,
insurance or surety agreement, 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, to the knowledge of
such counsel, will such action result in any
violation of any order, law, rule or
regulation of any court or governmental
agency or body having jurisdiction over
22
23
the Fund or any of its properties.
(7) to the knowledge of such counsel, there is
no pending or, to the knowledge of such
counsel, threatened action, suit or
proceeding to which the Fund is a party
before or by any court or governmental
agency, authority or body or any arbitrator
which might result in any material adverse
change in the condition (financial or
other), business prospects, net worth or
operations of the Fund, or which might
materially and adversely affect the
properties or assets thereof of a character
required to be disclosed in the Registration
Statement or the Prospectus.
(8) to the knowledge of such counsel, there are
no franchises, contracts or other documents
of the Fund required to be described in the
Registration Statement or the Prospectus, or
to be filed or incorporated by reference as
exhibits which are not described or filed or
incorporated by reference therein as
permitted by the Securities Act, the
Investment Company Act or the Rules and
Regulations.
(9) no consent, approval, authorization,
notification or order of, or filing with,
any court or governmental agency or body is
required for the consummation by the Fund of
the transactions contemplated by the Fund
Agreements or the Registration Statement,
except (A) such as have been obtained and
(B) such as may be required under the blue
sky laws of any jurisdiction in connection
with the transactions contemplated hereby.
(10) the Common Shares have been duly listed on
the New York Stock Exchange, Inc. and the
Shares and the Rights have been duly
approved for listing, subject to official
notice of issuance, on the New York Stock Ex
change, Inc.
(11) the Registration Statement is effective
under the Securities Act; any required
filing of the Prospectus or any supplement
thereto pursuant to Rule 497(c), (e), (h) or
(j) required to be made prior to the date
hereof has been made in the manner and
within the time
23
24
period required by Rule 497(c), (e), (h) or
(j), as the case may be; to the knowledge of
such counsel, no stop order suspending the
effectiveness of the Registration Statement
has been issued, and no proceedings for that
purpose have been instituted or threatened;
and the Registration Statement, the
Prospectus and each amendment thereof or
supplement thereto (other than the financial
statements, schedules, the notes thereto and
the schedules and other financial, economic
and statistical data contained or
incorporated by reference therein or omit
xxx therefrom, as to which such counsel need
express no opinion) as of their respective
effective or issue dates complied as to form
in all material respects with the applicable
requirements of the Securities Act and the
Investment Company Act and the Rules and
Regulations.
(12) the statements in the Prospectus under the
heading "Federal Taxation" fairly present
the information disclosed therein in all
material respects.
In rendering such opinion, such counsel may rely as
to matters of fact, to the extent they deem proper,
on certificates of responsible officers of the Fund
and public officials.
Such counsel shall also have stated that, while they
have not themselves checked the accuracy and
completeness of or otherwise verified, and are not
passing upon and assume no responsibility for the
accuracy or completeness of, the statements contained
in the Registration Statement or the Prospectus, in
the course of their review and discussion of the
contents of the Registration Statement and Prospectus
with certain officers and employees of the Fund and
its independent accountants, no facts have come to
their attention which cause them to believe that the
Registration Statement, on the date it be came
effective, contained any untrue statement of a
material fact or omitted to state any material fact
required to be stated therein or necessary to make
the statements contained therein not misleading or
that the Prospectus, as of its date and on the
24
25
Representation Date or the Expiration Date, as the
case may be, contained any untrue statement of a
material fact or omit xxx 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.
ii. The opinion, dated the Representation Date and the
Expiration Date, of Debevoise & Xxxxxxxx, counsel for
the Manager to the effect that:
(1) the Manager has been duly incorporated and
is validly existing as a corporation in good
standing under the laws of the State of
Delaware and has full corporate power and
authority to own its properties and conduct
its business as described in the
Registration Statement and the Prospectus.
(2) the Manager is duly registered as an
investment adviser under the Advisers Act,
and is not prohibited by the Advisers Act or
the Investment Company Act, or the rules and
regulations under such Acts, from acting as
investment adviser for the Fund as
contemplated in the Prospectus and the
Investment Management Agreement.
(3) each of this Agreement and the Investment
Management Agreement has been duly
authorized, executed and delivered by the
Manager and is, assuming due authorization,
execution and delivery by the other parties
thereto, a legal, valid, binding and
enforceable obligation of the Manager,
subject to the qualification that the
enforceability of the Manager's obligations
thereunder may be limited by bankruptcy,
insolvency, reorganization, moratorium or
other laws relating to or affecting
creditors' rights, and to general principles
of equity (regardless of whether
enforceability is considered in a
proceeding in equity or at law).
(4) neither the execution, delivery, performance
and con summation by the Manager of its
obligations under this Agreement or the
Investment Management Agreement nor the
consummation of the transactions
25
26
contemplated therein or in the Registration
Statement nor the fulfillment of the terms
thereof will conflict with or violate the
charter or by-laws of the Manager, or, to
the knowledge of such counsel, result in a
breach or violation of, or constitute a
default or an event of default under the
terms and provisions of any agreement,
indenture, mortgage, loan agreement, note,
insurance or surety agreement, lease or
other instrument to which the Manager is a
party or by which it is bound or to which
any of the property or assets of the Manager
is subject, nor will such action result in
any violation of any order, law, rule or
regulation of any United States court or
governmental agency or body having
jurisdiction over the Manager or any of its
properties.
In rendering such opinion, such counsel may rely as
to matters of fact, to the extent such counsel deems
proper, on certificates of responsible officers of
the Manager and public officials.
c. The Dealer Manager shall have received from Skadden, Arps,
Slate, Xxxxxxx & Xxxx (Illinois), counsel for the Dealer
Manager, such opinion or opinions, dated the Representation
Date and the Expiration Date, with respect to the Offer, the
Registration Statement, the Prospectus and other related
matters as the Dealer Manager may reason ably require, and the
Fund shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to
pass upon such matters.
d. The Fund shall have furnished to the Dealer Manager
certificates of the Fund, signed by the President, the
Treasurer, the Secretary or a Vice President of the Fund,
dated the Representation Date and the Expiration Date, to the
effect that the signer(s) of such certificate care fully
examined the Registration Statement, the Prospectus, any
supplement to the Prospectus and this Agreement and that, to
the best of their knowledge:
i. the representations and warranties of the Fund in
this Agreement are true and correct in all material
respects on and
26
27
as of the Representation Date or the Expiration Date,
as the case may be, with the same effect as if made
on the Representation Date or the Expiration Date, as
the case may be, and the Fund has complied with all
the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to
the Representation Date or the Expiration Date, as
the case may be;
ii. no stop order suspending the effectiveness of the
Registration Statement has been issued and no
proceedings for that purpose have been instituted or,
to the Fund's knowledge, threatened; and
iii. since the date of the most recent balance sheet
included or incorporated by reference in the
Prospectus, there has been no material adverse change
in the condition (financial or other), earnings,
business, prospects, net worth or results of
operations of the Fund (excluding fluctuations in the
Fund's net asset value due to investment activities
in the ordinary course of business), except as set
forth in or contemplated in the Prospectus.
e. The Manager shall have furnished to the Dealer Manager
certificates of the Manager, signed by the President,
Treasurer, Secretary or Vice President, dated the
Representation Date and the Expiration Date, to the effect
that to the best knowledge of such signer, the representa-
tions and warranties of the Manager in this Agreement are true
and correct in all material respects on and as of the
Representation Date or the Expiration Date, as the case may
be, with the same effect as if made on the Representation Date
or the Expiration Date, as the case may be.
x. Xxxxx & Young LLP shall have furnished to the Dealer Manager
letters, dated the Representation Date and the Expiration
Date, in form and substance satisfactory to the Dealer Manager
stating in effect that:
i. they are independent accountants with respect to the
Fund within the meaning of the Securities Act and the
applicable Rules and Regulations;
ii. in their opinion, the audited financial statements
examined by them and included or incorporated by
reference in the Registration Statement comply as to
form in all material
27
28
respects with the applicable accounting requirements
of the Securities Act and the Investment Company Act
and the respective Rules and Regulations with respect
to registration statements on Form N-2;
iii. they have performed specified procedures, not
constituting an audit in accordance with generally
accepted auditing standards, including a reading of
the latest available unaudited financial information
of the Fund, a reading of the minute books of the
Fund, and inquiries of officials of the Fund
responsible for financial and accounting matters and
on the basis of such inquiries and procedures nothing
came to their attention that caused them to believe
that at a specified date not more than five business
days prior to the Representation Date or the
Expiration Date, as the case may be, there was any
change in the common shares, any decrease in net
assets or any increase in long-term debt of the Fund
as compared with amounts shown in the most recent
statement of assets and liabilities included or
incorporated by reference in the Registration
Statement, except as the Registration Statement
discloses has occurred or may occur, or they shall
state any specific changes, increases or decreases;
iv. in addition to the procedures referred to in clause
iii. above, they have compared certain dollar amounts
(or percentages as derived from such dollar amounts)
and other financial information regarding the
operations of the Fund appearing in the Registration
Statement, which have previously been specified by
the Dealer Manager and which shall be specified in
such letter, and have found such items to be in
agreement with, the accounting and financial records
of the Fund.
g. Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there
shall not have been (i) any change, increase or decrease
specified in the letter or letters referred to in paragraph
6.f., or (ii) any change, or any development involving a
prospective change, in or affecting the business or properties
of the Fund, the effect of which, in any case referred to in
clause (i) or (ii) above, is, in the reasonable judgment of
28
29
the Dealer Manager, so material and adverse as to make it
impractical or inadvisable to proceed with the Offer as
contemplated by the Registration Statement and the Prospectus.
h. Prior to the Representation Date, the Fund shall have
furnished to the Dealer Manager such further information,
certificates and documents as the Dealer Manager may
reasonably request.
i. If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as
provided in this Agreement or waived by the Dealer Manager,
or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material
respects satisfactory in form and substance to the Dealer
Manager and its counsel, this Agreement and all obligations of
the Dealer Manager hereunder may be canceled at, or at any
time prior to, the Expiration Date by the Dealer Manager.
Notice of such cancellation shall be given to the Fund in
writing or by telephone confirmed in writing.
7. Indemnification and Contribution.
a. The Fund will indemnify and hold harmless the Dealer Manager,
the directors, officers, employees and agents of the Dealer
Manager and each person, if any, who controls the Dealer
Manager within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act from and against any and
all losses, claims, liabilities, expenses and damages
(including, but not limited to, any and all investigative,
legal and other expenses reasonably incurred in connection
with, and any and all amounts paid in settlement of, any
action, suit or proceeding between any of the indemnified
parties and any indemnifying parties or between any
indemnified party and any third party, or otherwise, or any
claim asserted), as and when incurred to which the Dealer
Manager, or any such person, may become subject under the
Securities Act, the Exchange Act, the Investment Company Act,
the Advisers Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such
losses, claims, liabilities, expenses or damages arise out of
or are based on (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement, the Prospectus or Offering Materials, or any
amendment or supplement to the Registration Statement, the
Prospectus or Offering Materials, or in any application or
other document executed by or on behalf of the Fund or based
on written information furnished by or on behalf of the Fund
filed in any
29
30
jurisdiction in order to qualify the Rights or the Shares
under the securities laws thereof or filed with the
Commission, (ii) the omission or alleged omission to state in
such document a material fact required to be stated in it or
necessary to make the statements in it not misleading or
(iii) any act or failure to act or any alleged act or failure
to act by the Dealer Manager in connection with, or relating
in any manner to, the Rights or the Shares or the offering
contemplated hereby, and which is included as part of or
referred to in any loss, claim, liability, expense or damage
arising out of or based upon matters covered by clause (i) or
(ii) above (provided that the Fund shall not be liable under
this clause (iii) to the extent it is finally judicially
determined by a court of competent jurisdiction that such
loss, claim, liability, expense or damage resulted directly
from any such acts or failures to act undertaken or omitted to
be taken by such Dealer Manager through its gross negligence
or willful misconduct); provided that the Fund will not be
liable to the extent that such loss, claim, liability, expense
or damage arises from the sale of the Shares in the public
offering to any person by the Dealer Manager and is based on
an untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with
information relating to the Dealer Manager furnished in
writing to the Fund by the Dealer Manager expressly for
inclusion in the Registration Statement, the Prospectus or
Offering Materials. This indemnity agreement will be in
addition to any liability that the Fund might otherwise have.
b. The Manager will indemnify and hold harmless the Dealer
Manager, the directors, officers, employees and agents of the
Dealer Manager and each person, if any, who controls the
Dealer Manager within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act from and
against any and all losses, claims, liabilities, expenses and
damages (including, but not limited to, any and all
investigative, legal and other expenses reasonably incurred in
connection with, and any and all amounts paid in settlement
of, any action, suit or proceeding between any of the
indemnified parties and any indemnifying parties or between
any indemnified party and any third party, or otherwise, or
any claim asserted), as and when incurred to which the Dealer
Manager, or any such person, may become subject under the
Securities Act, the Exchange Act, the Investment Company Act,
the Advisers Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such
losses, claims, liabilities, expenses or damages arise out of
or are based on any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement, the Prospectus or Offering
30
31
Materials, or any amendment or supplement to the Registration
Statement, the Prospectus or Offering Materials, or arise out
of or are based on the omission or alleged omission to state
in such document a material fact required to be stated in it
or necessary to make the statements in it not misleading, in
each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and conformity with
written information furnished to the Fund by the Manager
specifically for use therein; provided that the Manager will
not be liable to the extent that such loss, claim, liability,
expense or damage arises from the sale of the Shares in the
public offering to any person by the Dealer Manager and is
based on an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity
with information relating to the Dealer Manager furnished in
writing to the Fund by the Dealer Manager expressly for
inclusion in the Registration Statement, the Prospectus or
the Offering Materials. This indemnity agreement will be in
addition to any liability that the Manager might otherwise
have.
c. The Dealer Manager will indemnify and hold harmless the Fund
and the Manager, each person, if any, who controls the Fund or
the Manager within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each trustee
of the Fund and each officer of the Fund who signs the
Registration Statement to the same extent as the foregoing
indemnities from the Fund or the Manager to the Dealer
Manager, but only insofar as losses, claims, liabilities,
expenses or damages arise out of or are based on any untrue
statement or omission or alleged untrue statement or omission
made in reliance on and in conformity with information
relating to the Dealer Manager furnished in writing to the
Fund by the Dealer Manager expressly for use in the
Registration Statement, Prospectus or Offering Materials. This
indemnity will be in addition to any liability that the Dealer
Manager might otherwise have.
d. Any party that proposes to assert the right to be indemnified
under this Section 7 will, promptly after receipt of notice of
commencement of any action against such party in respect of
which a claim is to be made against an indemnifying party or
parties under this Section 7, notify each such indemnifying
party of the commencement of such
31
32
action, enclosing a copy of all papers served, but the
omission to so notify such indemnifying party will not relieve
it from any liability that it may have to any indemnified
party under the foregoing provision of this Section 7 unless,
and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any
indemnified party and it notifies the indemnifying party of
its commencement, the indemnifying party will be entitled to
participate in and, to the extent that it elects by delivering
written notice to the indemnified party promptly after
receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party
similarly notified, to assume the defense of the action, with
counsel satisfactory to the indemnified party, and after
notice from the indemnifying party to the indemnified party of
its election to assume the defense, the indemnifying party
will not be liable to the indemnified party for any legal or
other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the
indemnified party in connection with the defense. The
indemnified party will have the right to employ its own
counsel in any such action, but the fees, disbursements and
other charges of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the
indemnifying party, (2) the indemnified party has reasonably
concluded (based on the advice of counsel) that there may be
legal defenses available to it or other indemnified parties
that are different from or in addition to those available to
the indemnifying party (3) a conflict or potential conflict
exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to
direct the defense of such action on behalf of the indemnified
party) or (4) the indemnifying party has not in fact employed
counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of
the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood
that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm
admitted to practice in such jurisdiction at any one time for
all such indemnified party or parties. All such fees,
disbursements and other charges will be reimbursed by the
indemnifying party promptly as they are incurred. An
indemnifying
32
33
party will not be liable for any settlement of any action or
claim effected without its written consent (which consent will
not be unreasonably withheld). No indemnifying party shall,
without the prior written consent of each indemnified party,
settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding
relating to the matters contemplated by this Section 7
(whether or not any indemnified party is a party thereto),
unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all
liability arising or that may arise out of such claim, action
or proceeding. Notwithstanding any other provision of this
Section 7.c., if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified
party for fees, disbursements and other charges of counsel,
such indemnifying party agrees that it shall be liable for
any settlement 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
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.
e. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in
the foregoing paragraph of this Section 7 is applicable in
accordance with its terms but for any reason is held to be
unavailable from the Fund, the Manager or the Dealer Manager,
the Fund, the Manager and the Dealer Manager will contribute
to the total losses, claims, liabilities, expenses and
damages (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any
claim asserted, but after deducting any contribution received
by the Fund and the Manager from persons other than the Dealer
Manager, such as persons who control the Fund or the Manager
within the meaning of the Securities Act or the Exchange Act,
officers of the Fund who signed the Registration Statement and
trustees of the Fund, who may also be liable for contribution)
to which the Fund, the Manager and the Dealer Manager may be
subject in such proportion as shall be appropriate to reflect
the relative benefits received by the Fund on the one hand and
the Dealer Manager on the other. The relative benefits
received by the Fund on the one hand and the Dealer Manager on
the other hand shall be deemed to be in the same proportion as
the total net proceeds from the Offering (before deducting
expenses) received
33
34
by the Fund bear to the total fees received by the Dealer
Manager, in each case as set forth on the cover page of the
Prospectus. If, but only if, the allocation provided by the
foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as
is appropriate to reflect not only such relative benefits
referred to in the foregoing sentence but also the relative
fault of the Fund, Manager and the Dealer Manager with respect
to the statements or omissions which resulted in such loss,
claim, liability, expense or damage in respect thereof, as
well as any other relevant equitable considerations with
respect to the Offering. Such relative fault of the parties
shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to
information supplied by the Fund, the Manager or the Dealer
Manager, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Fund, the Manager and
the Dealer Manager agree that it would not be just and
equitable if contributions pursuant to this Section 7.e. were
to be determined by pro rata allocation or by any other method
of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable
by an indemnified party as a result of the loss, claim,
liability, expense or damage, or action in respect thereof,
referred to above in this Section 7.e. shall be deemed to
include, for purposes of this Section 7.e. any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 7.e.,
the Dealer Manager shall not be required to contribute any
amount in excess of the fees received by it and no person
found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this
Section 7.e., any person who controls a party to this
Agreement within the meaning of the Securities Act will have
the same rights to contribution as that party, and each
trustee of the Fund and each officer of the Fund who signed
the Registration Statement will have the same rights to
contribution as the Fund, subject in each case to the
provisions hereof. Any party entitled to contribution,
promptly after receipt of notice of commencement of any action
against such party in
34
35
respect of which a claim for contribution may be made under
this Section 7.e., will notify such party or parties from whom
contribution may be sought, but the omission so to notify will
not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have under
this Section 7.e. Except for a settlement entered into
pursuant to the last sentence of Section 7.d. hereof, no party
will be liable for contribution with respect to any action or
claim settled without its written consent (which consent shall
not be unreasonably withheld).
f. The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Fund
and the Manager contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any
investigation made by or on behalf of the Dealer Manager, (ii)
acceptance of Shares and payment therefore or (iii) any
termination of this Agreement.
g. Notwithstanding any other provisions in this Section 7, no
party shall be entitled to indemnification or contribution
under this Agreement against any loss, claim, liability,
expense or damage arising by reason of such person's willful
misfeasance, bad faith or gross negligence or by reason of
such person's failure to perform such person's obligations and
duties hereunder.
h. The Fund and the Manager acknowledge that the statements under
the caption "The Offer-Distribution Arrangements" in the
Prospectus constitute the only information furnished in
writing to the Fund by the Dealer Manager expressly for use in
such document, and the Dealer Manager confirms that such
statements are correct in all material respects.
8. Representations, Warranties and Agreements to Survive Delivery. The
respective agreements, representations, warranties, indemnities and
other statements of the Fund or its officers, of the Manager and of the
Dealer Manager set forth in or made pursuant to this Agreement shall
survive the Expiration Date and will remain in full force and effect,
regardless of any investigation made by or on behalf of Dealer Manager
or the Fund or any of the officers, directors or controlling persons
referred to in Section 7 hereof, and will survive delivery of and
payment for the Shares pursuant to the Offer. The provisions of
Sections 5 and 7 hereof shall survive the termination or cancellation
of this Agreement.
9. Termination of Agreement.
35
36
a. This Agreement shall be subject to termination in the absolute
discretion of the Dealer Manager, by notice given to the Fund
prior to the expiration of the Offer, if prior to such time
(i) financial, political, economic, currency, banking or
social conditions in the United States shall have undergone
any material change the effect of which on the financial
markets makes it, in the Dealer Manager's judgment,
impracticable or inadvisable to proceed with the Offer, (ii)
there has occurred any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on
the financial markets of the United States is such as to make
it, in the Dealer Manager's judgment, impracticable or
inadvisable to proceed with the Offer, (iii) trading in the
Common Shares shall have been suspended by the Commission or
the New York Stock Exchange, Inc., (iv) trading in securities
generally on the New York Stock Exchange, Inc. shall have
been suspended or limited or (v) a banking moratorium shall
have been declared either by Federal or New York State
authorities.
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 5.
10. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Dealer Manager, will be mailed,
delivered or telegraphed and confirmed to PaineWebber Incorporated,
Attn: Corporate Finance Department, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000; or if sent to the Fund or the Manager will be
mailed, or delivered or telegraphed and confirmed to them at: Xxxxxx
High Income Trust, Attn: Xxxxxx X. Xxxxxxx, 000 Xxxxx Xxxxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and will inure
to the benefit of the officers and directors and controlling persons
referred to in Section 7 hereof, and no other person will have any
right or obligation hereunder.
12. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York without reference to
the conflict of law principles thereof except for section 15, which
will be governed by and construed in accordance with the laws of the
36
37
Commonwealth of Massachusetts.
13. Waiver of Trial by Jury. The Fund, the Manager and the Dealer Manager
each hereby irrevocably waive any right they may have to a trial by
jury in respect of any claim based upon or arising out of this
Agreement or the transactions contemplated hereby.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
15. Limitation of Liability. Consistent with the Fund's Declaration of
Trust, notice is hereby given and the parties hereto acknowledge and
agree that this agreement is executed on behalf of the Trustees of the
Fund as Trustees and not individually and that the obligations of this
Agreement are not binding upon any of the Trustees or shareholders of
the Fund individually but are binding only against the assets and
property of the Fund.
37
38
If the foregoing is in accordance with your understanding of
our agreement, please so indicate in the space provided below for that purpose,
where upon this letter shall constitute a binding agreement among the Fund, the
Manager and the Dealer Manager.
Very truly yours,
Xxxxxx High Income Trust
By:
Name:
Title:
Xxxxxxx Xxxxxx Investments, Inc.
By:
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
PaineWebber Incorporated
By:
Name:
Title:
38
39
EXHIBIT A
XXXXXX HIGH INCOME TRUST
8,003,074 Common Shares of Beneficial Interest
Issuable Upon Exercise of Transferable Rights
to Subscribe for Such Shares
SELLING GROUP AGREEMENT
New York, New York
________ __, 199_
PaineWebber Incorporated
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
We understand that Xxxxxx High Income Trust, a Massachusetts
business trust (the "Fund"), proposes to issue to holders of record (the
"Holders") at the close of business on the record date set forth in the
Prospectus (as defined herein) (the "Record Date") transferable rights entitling
such Holders to subscribe for up to 8,003,074 shares (each a "Share" and,
collectively, the "Shares") of the Fund's common shares of beneficial interest,
par value $0.01 per share (the "Common Shares"), of the Fund (the "Offer").
Pursuant to the terms of the Offer, the Fund is issuing each Holder one
transferable right (each a "Right" and, collectively, the "Rights") for each
Common Share held by such Holder on the Record Date. Such Rights entitle holders
to acquire during the subscription period set forth in the Prospectus (the
"Subscription Period"), at the price set forth in such Prospectus (the
"Subscription Price"), one Share for each three Rights (except that any Holder
who is issued fewer than three Rights will be able to subscribe for one full
Share pursuant to the primary subscription), on the terms and conditions set
forth in such Prospectus. No fractional shares will be issued. Any Holder who
fully exercises all Rights initially issued to such Holder (other than those
Rights that cannot be exercised because they represent the right to acquire less
than one Share) will be entitled to subscribe for, subject to allocation,
additional Shares (the "Over-Subscription Privilege") on the terms and
conditions set forth in such Prospectus. The Rights are transferable and are
expected to be listed on the New York Stock Exchange, Inc.
We further understand that the Fund has appointed PaineWebber
Incorporated to act as the dealer manager (the "Dealer Manager") in connection
with the Offer and has authorized the Dealer Manager to form and manage a group
of broker-dealers (each a "Selling Group Member" and collectively the "Selling
Group")
40
XXXXXX HIGH INCOME TRUST
Selling Group Agreement - Page 40
Transferable Rights Offer Expiring April 16, 1999, unless extended
to solicit the exercise of Rights and to sell Shares purchased by the Dealer
Manager from the Fund through the exercise of Rights.
We hereby express our interest in participating in the Offer
as a Selling Group Member.
We hereby agree with you as follows:
1. We have received and reviewed the Fund's prospectus dated
March 22, 1999 (the "Prospectus") relating to the Offer and we
understand that additional copies of the Prospectus (or of the
Prospectus as it may be subsequently supplemented or amended,
if applicable) and any other solicitation materials authorized
by the Fund relating to the Offer ("Offering Materials") will
be supplied to us in reasonable quantities upon our request
therefor to you. We agree that we will not use any
solicitation material other than the Prospectus (as
supplemented or amended, if applicable) and such Offering
Materials and we agree not to make any representation, oral or
written, to any shareholders or prospective shareholders of
the Fund that are not contained in the Prospectus, unless
previously authorized to do so in writing by the Fund.
2. From time to time during the period (the "Subscription
Period") commencing on March 23, 1999 and ending at 5:00
p.m., New York City time, on the Expiration Date (the term
"Expiration Date" means April 16, 1999, unless and until the
Fund shall, in its sole discretion, have extended the period
for which the Offer is open, in which event the term
"Expiration Date" with respect to the Offer will mean the
latest time and date on which the Offer, as so extended by the
Fund, will expire), we may solicit the exercise of Rights in
connection with the Offer. We will be entitled to receive fees
in the amounts and at the times described in Section 4 of this
Agreement with respect to Shares purchased pursuant to the
exercise of Rights and with respect to which BankBoston N.A.
(the "Subscription Agent") has received, no later than 5:00
p.m., New York City time, on the Expiration Date, either (i) a
properly completed and executed Subscription Certificate
identifying us as the broker-dealer having been instrumental
in the exercise of such Rights, and full payment for such
Shares or (ii) a Notice of Guaranteed Delivery guaranteeing to
the Subscription Agent by the close of
41
XXXXXX HIGH INCOME TRUST
Selling Group Agreement - Page 41
Transferable Rights Offer Expiring April 16, 1999, unless extended
business of the third business day after the Expiration Date
of a properly completed and duly executed Subscription
Certificate, similarly identifying us, and full payment for
such Shares. We understand that we will not be paid these fees
with respect to Shares purchased pursuant to an exercise of
Rights for our own account or for the account of any of our
affiliates. We also understand and agree that we are not
entitled to receive any fees in connection with the
solicitation of the exercise of Rights other than pursuant to
the terms of this Agreement and, in particular, that we will
not be entitled to receive any fees under the Fund's
Soliciting Dealer Agreement. We agree to solicit the exercise
of Rights in accordance with the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the Investment
Company Act of 1940, as amended, and the rules and regulations
under each such Act, any applicable securities laws of any
state or jurisdiction where such solicitations may be
lawfully made, the applicable rules and regulations of any
self-regulatory organization or registered national securities
exchange and customary practice and subject to the terms of
the Subscription Agent Agreement between the Fund and the
Subscription Agent and the procedures described in the Fund's
registration statement on Form N-2 (File Nos. 333-72341 and
811-5482), as amended (the "Registration Statement").
3. From time to time during the Subscription Period, we may
indicate interest in purchasing Shares from the Dealer
Manager. We understand
that from time to time the Dealer Manager intends to offer
Shares obtained or to be obtained by the Dealer Manager
through the exercise of Rights to Selling Group Members who
have so indicated interest at prices which shall be determined
by the Dealer Manager (the "Offering Price"). We agree that
with respect to any such Shares purchased by us from the
Dealer Manager the sale of such Shares to us shall be
irrevocable and we will offer them to the public at the
Offering Price at which we purchase them from the Dealer
Manager. Shares not sold by us at such Offering Price may be
offered by us after the next succeeding Offering Price is set
at the latest Offering Price set by the Dealer Manager. The
Dealer Manager agrees that, if requested by any Selling Group
Member, and subject to applicable law, the Dealer Manager will
set a new Offering Price prior to 4:00 p.m., New York City
time, on any
42
XXXXXX HIGH INCOME TRUST
Selling Group Agreement - Page 42
Transferable Rights Offer Expiring April 16, 1999, unless extended
business day. We agree to advise the Dealer Manager from time
to time upon request, prior to the termination of this
Agreement, of the number of Shares remaining unsold which were
purchased by us from the Dealer Manager and, on the Dealer
Manager's request, we will resell to the Dealer Manager any of
such Shares remaining unsold at the purchase price thereof if
in the Dealer Manager's opinion such Shares are needed to make
delivery against sales made to other Selling Group Members.
Any shares purchased hereunder from the Dealer Manager shall
be subject to regular way settlement through the facilities of
the Depository Trust Company.
4. We understand that you will remit to us on or before the tenth
business day following the day the Fund issues Shares after
the Expiration Date, following receipt by you from the Fund of
the Dealer Manager Fee, a selling fee equal to 2.50% of the
Subscription Price per Share for (A) each Share issued
pursuant to the exercise of Rights or the Over-Subscription
Privilege pursuant to each Subscription Certificate upon which
we are designated, as certified to you by the Subscription
Agent, as a result of our solicitation efforts in accordance
with Section 2 and (B) each Share sold by the Dealer Manager
to us in accordance with Section 3 less any Shares resold to
the Dealer Manager in accordance with Section 3. Your only
obligation with respect to payment of the foregoing selling
fee to us is to remit to us amounts owing to us and actually
received by you from the Fund. Except as aforesaid, you shall
be under no liability to make any payments to us pursuant to
this Agreement.
5. We agree that you, as Dealer Manager, have full authority to
take such action as may seem advisable to you in respect of
all matters pertaining to the Offer. You are authorized to
approve on our behalf any amendments or supplements to the
Registration Statement or the Prospectus.
6. We represent that we are a member in good standing of the NASD
and, in making sales of Shares, agree to comply with all
applicable rules of the National Association of Securities
Dealers, Inc. (the "NASD") including, without limitation, the
NASD's Interpretation with Respect to Free-Riding and
Withholding, as set forth in IM 2110-1 of the NASD's Conduct
Rules, and Rule 2740 of the NASD's Conduct Rules.
43
XXXXXX HIGH INCOME TRUST
Selling Group Agreement - Page 43
Transferable Rights Offer Expiring April 16, 1999, unless extended
We understand that no action has been taken by you or the Fund
to permit the solicitation of the exercise of Rights or the
sale of Shares in any jurisdiction (other than the United
States) where action would be required for such purpose. We
agree that we will not, without your approval in advance, buy,
sell, deal or trade in, on a when-issued basis or otherwise,
the Rights or the Shares or any other option to acquire or
sell Shares for our own account or for the accounts of
customers, except as provided in Sections 2 and 3 hereof and
except that we may buy or sell Rights or Shares in brokerage
transactions on unsolicited orders which have not resulted
from activities on our part in connection with the
solicitation of the exercise of Rights and which are executed
by us in the ordinary course of our brokerage business. We
will keep an accurate record of the names and addresses of all
persons to whom we give copies of the Registration Statement,
the Prospectus, any preliminary prospectus (or any amendment
or supplement thereto) or any Offering Materials and, when
furnished with any subsequent amendment to the Registration
Statement and any subsequent prospectus, we will, upon your
request, promptly forward copies thereof to such persons.
7. Nothing contained in this Agreement will constitute the
Selling Group Members partners with the Dealer Manager or with
one another or create any association between those parties,
or will render the Dealer Manager or the Fund liable for the
obligations of any Selling Group Member. The Dealer Manager
will be under no liability to make any payment to any Selling
Group Member other than as provided in Section 4 of this
Agreement, and will be subject to no other liabilities to any
Selling Group Member, and no obligations of any sort will be
implied. We agree to indemnify and hold harmless you and each
other Selling Group Member and each person, if any, who
controls you and any such Selling Group Member within the
meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act, against loss or liability caused by
any breach by us of the terms of this Agreement.
8. We agree to pay any transfer taxes which may be assessed and
paid on account of any sales or transfers for our account.
9. All communications to you relating to the Offer will be
addressed to:
44
XXXXXX HIGH INCOME TRUST
Selling Group Agreement - Page 44
Transferable Rights Offer Expiring April 16, 1999, unless extended
PaineWebber Incorporated, Attn: Xxxxx Xxxxxxx, 0000 Xxxxxx xx
xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000; Telephone No.: (212)
713-1152 and Facsimile No.: (000) 000-0000.
10. This Agreement will be governed by the internal laws of the
State of New York.
45
XXXXXX HIGH INCOME TRUST
Selling Group Agreement - Page 45
Transferable Rights Offer Expiring April 16, 1999, unless extended
A signed copy of this Selling Group Agreement will be promptly returned
to the Selling Group Member at the address set forth below.
Very truly yours,
PaineWebber Incorporated
By:
Name:
Title:
PLEASE COMPLETE THE INFORMATION BELOW
Printed Firm Name Address
Contact at Selling Group Member
Authorized Signature Area Code and Telephone Number
Name and Title Facsimile Number
Dated:
Payment of the Selling Fee shall be mailed by check to the following address:
46
XXXXXX HIGH INCOME TRUST
Soliciting Dealer Agreement - Page 46
Transferable Rights Offer Expiring April 16, 1999
47
XXXXXX HIGH INCOME TRUST
Soliciting Dealer Agreement - Page 47
Transferable Rights Offer Expiring April 16, 1999
EXHIBIT B
XXXXXX HIGH INCOME TRUST
Rights Offering for Common Shares of Beneficial Interest
48
XXXXXX HIGH INCOME TRUST
Soliciting Dealer Agreement - Page 48
Transferable Rights Offer Expiring April 16, 1999
SOLICITING DEALER AGREEMENT
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
April 16, 1999, UNLESS EXTENDED
To Securities Dealers and Brokers:
Xxxxxx High Income Trust (the "Trust") is issuing to its
shareholders of record ("Record Date Shareholders") as of the close of business
on March 23, 1999 (the "Record Date") transferable rights ("Rights") to
subscribe for an aggregate of up to 8,003,074 shares (the "Shares") of the
Fund's common shares of beneficial interest, without par value (the "Common
Shares"), of the Fund upon the terms and subject to the conditions set forth in
the Fund's Prospectus (the "Prospectus") dated March 22, 1999 (the "Offer").
Each such Record Date Shareholder is being issued one Right for each full Common
Share owned on the Record Date. Such Rights entitle holders to acquire during
the Subscription Period (as hereinafter defined) at the Subscription Price (as
hereinafter defined), one Share for each three Rights (except that any Record
Date Shareholder who is issued fewer than three Rights will be able to subscribe
for one full Share pursuant to the primary subscription), on the terms and
conditions set forth in such Prospectus. No fractional shares will be issued.
Any Record Date Shareholder who fully exercises all Rights initially issued to
such holder (other than those Rights that cannot be exercised because they
represent the right to acquire less than one Share) will be entitled to
subscribe for, subject to allocation, additional Shares (the "Over-Subscription
Privilege") on the terms and conditions set forth in such Prospectus. The Rights
are transferable and are expected to be listed on the New York Stock Exchange,
Inc. The Subscription Price will be $8.30. The Subscription Period will commence
on March 23, 1999 and end at 5:00 p.m., New York City time on the Expiration
Date (the term "Expiration Date" means April 16, 1999, unless and until the Fund
shall, in its sole discretion, have extended the period for which the Offer is
open, in which event the term "Expiration Date" with respect to the Offer will
mean the latest time and date on which the Offer, as so extended by the Fund,
will expire).
For the duration of the Offer, the Fund has authorized and the
Dealer Manager has agreed to reallow a Solicitation Fee to any qualified broker
or dealer executing a Soliciting Dealer Agreement who solicits the exercise of
Rights and the
49
XXXXXX HIGH INCOME TRUST
Soliciting Dealer Agreement - Page 49
Transferable Rights Offer Expiring April 16, 1999
Over-Subscription Privilege in connection with the Offer and who complies with
the procedures described below (a "Soliciting Dealer"). Upon timely delivery to
BankBoston, N.A., the Fund's Subscription Agent for the Offer, of payment for
Shares purchased pursuant to the exercise of Rights and the Over-Subscription
Privilege and of properly completed and executed documentation as set forth in
this Soliciting Dealer Agreement, a Soliciting Dealer will be entitled to
receive the Solicitation Fee equal to 0.50% of the Subscription Price per Share
so purchased subject to a maximum fee based on the number of Common Shares held
by such Soliciting Dealer through The Depository Trust Company ("DTC") on the
Record Date; provided, however, that no payment shall be due with respect to the
issuance of any Shares until payment therefor is actually received. A qualified
broker or dealer is a broker or dealer which is a member of a registered
national securities exchange in the United States or the National Association of
Securities Dealers, Inc. ("NASD") or any foreign broker or dealer not eligible
for membership who agrees to conform to the Rules of Fair Practice of the NASD,
including Sections 2730, 2740, 2420 and 2750 thereof, in making solicitations in
the United States to the same extent as if it were a member thereof.
The Fund has authorized and the Dealer Manager has agreed to
pay the Solicitation Fees payable to the undersigned Soliciting Dealer on the
terms set forth in the Dealer Manager Agreement, dated March 22, 1999, among
PaineWebber Incorporated as the dealer manager (the "Dealer Manager"), the Fund
and others (the "Dealer Manager Agreement"). Solicitation and other activities
by Soliciting Dealers may be undertaken only in accordance with the applicable
rules and regulations of the Securities and Exchange Commission and only in
those states and other jurisdictions where such solicitations and other
activities may lawfully be undertaken and in accordance with the laws thereof.
Compensation will not be paid for solicitations in any state or other
jurisdiction in which the opinion of counsel to the Fund or counsel to the
Dealer Manager, such compensation may not lawfully be paid. No Soliciting Dealer
shall be paid Solicitation Fees with respect to Shares purchased pursuant to an
exercise of Rights and the Over-Subscription Privilege for its own account or
for the account of any affiliate of the Soliciting Dealer. No Soliciting Dealer
or any other person is authorized by the Fund or the Dealer Manager to give any
information or make any representations in connection with the Offer other than
those contained in the Prospectus and other authorized solicitation material
furnished by the Fund through the Dealer Manager. No Soliciting Dealer is
authorized to act as agent of the Fund or the Dealer Manager in any connection
or transaction. In addition, nothing herein contained shall constitute the
Soliciting Dealers partners with the Dealer Manager or with one another, or
agents of the Dealer Manager or of the Fund, or create any association
50
XXXXXX HIGH INCOME TRUST
Soliciting Dealer Agreement - Page 50
Transferable Rights Offer Expiring April 16, 1999
between such parties, or shall render the Dealer Manager or the Fund liable for
the obligations of any Soliciting Dealer. The Dealer Manager shall be under no
liability to make any payment to any Soliciting Dealer, and shall be subject to
no other liabilities to any Soliciting Dealer, and no obligations of any sort
shall be implied.
In order for a Soliciting Dealer to receive Solicitation Fees,
the Subscription Agent must have received from such Soliciting Dealer no later
than 5:00 p.m., New York City time, on the Expiration Date, either (i) a
properly completed and duly executed Subscription Certificate with respect to
Shares purchased pursuant to the exercise of Rights and the Over-Subscription
Privilege and full payment for such Shares; or (ii) a Notice of Guaranteed
Delivery guaranteeing delivery to the Subscription Agent by close of business on
the third business day after the Expiration Date, of (a) full payment for such
Shares and (b) a properly completed and duly executed Subscription Certificate
with respect to Shares purchased pursuant to the exercise of Rights.
Solicitation Fees will only be paid after receipt by the Subscription Agent of a
properly completed and duly executed Soliciting Dealer Agreement and a
Subscription Certificate designating the Soliciting Dealer in the applicable
portion hereof. In the case of a Notice of Guaranteed Delivery, Solicitation
Fees will only be paid after delivery in accordance with such Notice of
Guaranteed Delivery has been effected. Solicitation Fees will be paid by the
Fund (through the Subscription Agent) to the Soliciting Dealer by check to
an address designated by the Soliciting Dealer below by the tenth business day
following the day the Fund issues Shares after the Expiration Date.
All questions as to the form, validity and eligibility
(including time of receipt) of this Soliciting Dealer Agreement will be
determined by the Fund, in its sole discretion, which determination shall be
final and binding. Unless waived, any irregularities in connection with a
Soliciting Dealer Agreement or delivery thereof must be cured within such time
as the Fund shall determine. None of the Fund, the Dealer Manager, the
Subscription Agent, the Information Agent for the Offer or any other person will
be under any duty to give notification of any defects or irregularities in any
Soliciting Dealer Agreement or incur any liability for failure to give such
notification.
The acceptance of Solicitation Fees from the Fund by the
undersigned Soliciting Dealer shall constitute a representation by such
Soliciting Dealer to the Fund that: (i) it has received and reviewed the
Prospectus; (ii) in soliciting purchases of Shares pursuant to the exercise of
the Rights and the Over-Subscription Privilege, it has
51
XXXXXX HIGH INCOME TRUST
Soliciting Dealer Agreement - Page 51
Transferable Rights Offer Expiring April 16, 1999
complied with the applicable requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the applicable rules and regulations
thereunder, any applicable securities laws of any state or jurisdiction where
such solicitations were made, and the applicable rules and regulations of any
self-regulatory organization or registered national securities exchange; (iii)
in soliciting purchases of Shares pursuant to the exercise of the Rights and the
Over-Subscription Privilege, it has not published, circulated or used any
soliciting materials other than the Prospectus and any other authorized
solicitation material furnished by the Fund through the Dealer Manager; (iv) it
has not purported to act as agent of the Fund or the Dealer Manager in any
connection or transaction relating to the Offer; (v) the information contained
in this Soliciting Dealer Agreement is, to its best knowledge, true and
complete; (vi) it is not affiliated with the Fund; (vii) it will not accept
Solicitation Fees paid by the Fund pursuant to the terms hereof with respect to
Shares purchased by the Soliciting Dealer pursuant to an exercise of Rights and
the Over-Subscription Privilege for its own account; (viii) it will not remit,
directly or indirectly, any part of Solicitation Fees paid by the Fund pursuant
to the terms hereof to any beneficial owner of Shares purchased pursuant to the
Offer; and (ix) it has agreed to the amount of the Solicitation Fees and the
terms and conditions set forth herein with respect to receiving such
Solicitation Fees. By returning a Soliciting Dealer Agreement and accepting
Solicitation Fees, a Soliciting Dealer will be deemed to have agreed to
indemnify the Fund and the Dealer Manager against losses, claims, damages and
liabilities to which the Fund may become subject as a result of the breach of
such Soliciting Dealer's representations made herein and described above. In
making the foregoing representations, Soliciting Dealers are reminded of the
possible applicability of the anti-manipulation rules under the Exchange Act if
they have bought, sold, dealt in or traded in any Shares for their own account
since the commencement of the Offer.
Upon expiration of the Offer, no Solicitation Fees will be
payable to Soliciting Dealers with respect to Shares purchased thereafter.
Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Dealer Manager Agreement or, if not defined
therein, in the Prospectus.
This Soliciting Dealer Agreement will be governed by the laws
of the State of New York.
52
XXXXXX HIGH INCOME TRUST
Soliciting Dealer Agreement - Page 52
Transferable Rights Offer Expiring April 16, 1999
Please execute this Soliciting Dealer Agreement below
accepting the terms and conditions hereof and confirming that you are a member
firm of the NASD or a foreign broker or dealer not eligible for membership who
has conformed to the Rules of Fair Practice of the NASD, including Sections
2730, 2740, 2420 and 2750 thereof, in making solicitations of the type being
undertaken pursuant to the Offer in the United States to the same extent as if
you were a member thereof, and certifying that you have solicited the purchase
of the Shares pursuant to exercise of the Rights, all as described above, in
accordance with the terms and conditions set forth in this Soliciting Dealer
Agreement. Please forward two executed copies of this Soliciting Dealer
Agreement to PaineWebber Incorporated, Attn: Xxxxx Xxxxxxx, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000; Telephone No.: (000) 000-0000 and Facsimile
No.: (000) 000-0000.
53
XXXXXX HIGH INCOME TRUST
Soliciting Dealer Agreement - Page 53
Transferable Rights Offer Expiring April 16, 1999
A signed copy of this Soliciting Dealer Agreement will be promptly
returned to the Soliciting Dealer at the address set forth below.
Very truly yours,
PaineWebber Incorporated
By:
Name:
Title:
PLEASE COMPLETE THE INFORMATION BELOW
Printed Firm Name Address
Contact at Soliciting Dealer
Authorized Signature Area Code and Telephone Number
Name and Title Facsimile Number
Dated:
Payment of the Solicitation Fee shall be mailed by check to the following
address:
