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Exhibit (h)
COLONIAL INTERMEDIATE HIGH INCOME FUND
__________ Shares of Beneficial Interest
Issuable Upon Exercise of Transferable Rights
to Subscribe for such Shares
DEALER MANAGER AGREEMENT
New York, New York
________ __, 1998
PaineWebber Incorporated
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Ladies and Gentlemen:
Each of Colonial Intermediate High Income Fund, a Massachusetts
business trust (the "Fund"), and Colonial Management Associates, Inc., a
Massachusetts corporation (the "Investment Adviser"), hereby confirms the
agreement with and appointment 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") of
transferable rights entitling such Holders to subscribe for up to ________
shares (each a "Share" and, collectively, the "Shares") of the Fund's shares of
beneficial interest, without par value (the "Common Shares"), of the Fund (the
"Offer"). Pursuant to the terms of the Offer, the Fund is issuing each Holder
one transfer able 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 _____ Rights exercised (except that
any Holder who is issued fewer than _____ 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
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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
"CIF.RT".
The Fund has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form N-2 (Nos. 333-50141 and
811-05567) 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.
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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 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. Each of the Fund and the Investment Adviser 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 furnished to the Fund in writing by the
Dealer Manager expressly for use in the Registration
Statement, Prospectus or Offering Materials.
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ii. the Fund has been duly organized and is validly
existing as a Massachusetts business trust in good
standing under the laws of the Commonwealth of
Massachusetts, has full power and authority (corporate
and other) to conduct its business as described in the
Registration Statement and the Prospectus, currently
maintains all 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 therefor initiated or, to the knowledge of
the Fund or the Investment Adviser, 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 Investment
Company Act and the rules and regulations thereunder.
iv. Price Waterhouse 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.
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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 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 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; 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 presently outstanding debt
leverage set forth in the Prospectus; the outstanding
Term Note with Bank of America Illinois, due June 14,
1999 (the "Note"), has been duly authorized and
conforms in all material respects to the description
thereof in the Prospectus under the heading
"Description of Term Note".
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 course of
business, that
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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 May __, 1998 between the Fund
and First Data Investor Services Group, Inc. (the
"Subscription Agent"), the Information Agent Agreement
(the "Information Agent Agreement") dated as of May __,
1998 between the Fund and Shareholder Communications
Corporation (the "Information Agent"), the Management
Agreement dated as of March 27, 1995 between the Fund
and the Investment Adviser (the "Management
Agreement"), the Pricing and Bookkeeping Agreement
dated as of November 1, 1991 between the Fund and the
Investment Adviser (the "Bookkeeping Agreement"), the
Global Custody Agreement dated as of August 17, 1997
between the Fund, The Chase Manhattan Bank and the
other parties thereto (the "Custodian Agreement"), the
Transfer Agency and Registrar Agreement dated as of
July 18, 1988 between the Fund and First Data Investor
Services Group, Inc., as successor to Boston Safe
Deposit and Trust Company (the "Transfer Agency
Agreement"), the Credit Agreement dated as of June 12,
1996 between the Fund and Bank of America Illinois (the
"Credit Agreement") and the Note dated as of June 14,
1996 between the Fund and Bank of America Illinois
(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, the Investment Advisers Act of
1940, as amended (the "Advisers Act") and the rules and
regulations under such Acts; and, assuming due
authorization, execution and delivery by the other
parties thereto, each of the Fund Agreements
constitutes a legal, valid,
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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
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, delivery,
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 nor the fulfillment of
the terms thereof will conflict with or violate the
declaration of trust, by-laws or similar organizational
documents of the Fund, or 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, by-laws or similar organizational documents
of the Fund, or the terms and provisions of any
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. except as set forth in the Registration Statement and
the Prospectus, there is no pending or, to the
knowledge of the Fund or the Investment Adviser,
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
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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
Investment Company Act or the Rules and Regulations.
xiii. 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, or (b) 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, or (c)
where the failure to obtain such consent, approval,
authorization, notification, or order or to make such
filing would not have a material adverse effect upon
the Fund's business, properties, financial position or
operations.
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
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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 plan
will not be deemed to be within the terms of this
Section 1.a.xv.
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, liquidity, investment
guidelines and asset coverage requirements, if any, of
the Credit Agreement (for so long as any guidelines or
requirements of such Credit Agreement remain in effect)
and the Investment Company Act.
b. The Investment Adviser 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 Investment Adviser has been duly incorporated and
is validly existing as a corporation in good standing
under the laws of the Commonwealth of Massachusetts,
has full power and authority (corporate and other) to
own its properties and conduct its busi-
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ness as described in the Registration Statement and
the Prospectus, currently maintains all governmental
licenses, permits, consents, orders, approvals and
other authorizations to conduct its business and to
enable the Investment Adviser to continue to
supervise investments in securities as contemplated
in the Prospectus and is duly qualified to do
business as a foreign corporation 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 Investment Adviser's business, properties,
financial position or operations.
ii. the Investment Adviser 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 an investment adviser for the Fund
as contemplated in the Prospectus and the Investment
Management Agreement.
iii. each of this Agreement, the Management Agreement and
any other Fund Agreement to which the Investment
Adviser is a party has been duly authorized, executed
and delivered by the Investment Adviser, and complies
with all applicable provisions of the Investment
Company Act, the Advisers Act and the rules and
regulations under such Acts, and is, assuming due
authorization, execution and delivery by the other
parties thereto, a legal, valid, binding and
enforceable obligation of the Investment Adviser,
subject to the qualification that the enforceability of
the Investment Adviser'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
enforceability is considered in a proceeding in equity
or at law).
iv. neither the execution, delivery, performance and
consummation by the Investment Adviser of its
obligations under this Agreement, the Management
Agreement or any other Fund Agreement to which the
Investment Adviser is a party nor the
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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, by-laws or similar organizational
documents of the Investment Adviser, or 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 Investment Adviser under the charter, bylaws
or similar organizational document, the terms and
provisions of any agreement, indenture, mortgage,
loan agreement, note, insurance or surety agreement,
lease or other instrument to which the Investment
Adviser is a party or by which it may be bound or to
which any of the property or assets of the Investment
Adviser 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 Investment Adviser or any of
its properties.
v. except as set forth in the Registration Statement and
Prospectus, there is no pending or, to the knowledge of
the Investment Adviser, threatened action, suit or
proceeding affecting the Investment Adviser or to which
the Investment Adviser 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 Investment Adviser's condition (financial
or other), business prospects, net worth or operations,
or which might materially and adversely affect the
properties or assets thereof of a character required to
be disclosed in the Registration Statement or
Prospectus.
vi. 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
Investment Adviser of the transactions contemplated by
this Agreement, the Management Agreement or any other
Fund Agreement to which the Investment Adviser is a
party, except where the failure to obtain such consent,
approval, authorization, notification, or order, or
make such filing would not have a material adverse
effect on the
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Investment Adviser's business, properties, financial
position, or operations.
vii. the Investment Adviser (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
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 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 Investment Adviser and
delivered to the Dealer Manager or counsel for the Dealer
Manager shall be deemed a representation and warranty by the
Fund or the Investment Adviser, 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
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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 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.
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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 addresses 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 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 Investment Adviser 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 the reckless disregard of 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
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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 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 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
15
16
amendments thereto (including any post-effective
amendment) becomes so effective.
ii. The Fund will notify 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
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 Rule 497(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
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17
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 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 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
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18
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 there by, 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
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, 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
Shares 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, liquidity, investment guidelines and
asset coverage requirements, if any, of the
Prospectus, Credit Agreement (for so long as any
guidelines or requirements of such Credit Agreement
remains in effect) and the Investment Company Act.
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19
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 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 Investment Adviser will take,
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 or
the Shares; provided that any action in connection with the
Fund's dividend rein-
19
20
vestment 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
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 reason able 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
20
21
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 Investment Adviser
contained herein, to the performance by the Fund and the Investment
Adviser of their respective obligations hereunder, and to the
following further conditions:
a. The Registration Statement shall have become effective not
later than 5:30 P.M., New York City time, on the 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 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 issued, and no proceedings for that purpose shall
have been instituted or threatened or, to the knowledge of the
Fund, the Investment Adviser 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 other wise).
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 Ropes & Gray, 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 as a Massachusetts business trust in
good standing under the laws of the Commonwealth
of Massachusetts, has full power and authority
(corporate and other) to conduct its business as
described in the Registration Statement
21
22
and the Prospectus, and to the knowledge of such
counsel, is duly qualified to do business under
the laws of each jurisdiction in which the Fund
has informed such counsel that it owns or leases
real property or in which it conducts material
operations.
(2) the Fund is duly registered with the Commission
under the Investment Company Act as a closed-end,
diversified management investment company and, to
the knowledge of such counsel after due inquiry,
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 (except as described in
the Prospectus under the caption "Shareholder
Liability") non-assessable 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 (except as described in the
Prospectus under the caption "Shareholder
Liability");
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23
the Shares and the Rights conform in all material
respects to all statements relating thereto
contained in the Registration Statement and the
Prospectus; and the issuance of each of the
Rights and the Shares is not subject to any
preemptive rights.
(4) the Fund has authorized the presently outstanding
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 "Description of Term Note".
(5) each of this Agreement, the Management Agreement,
the Custody Agreement and the Credit Agreement
complies with all applicable provisions of the
Investment Company Act, the Advisers Act and the
rules and regulations under such Acts; (except
that such counsel need express no opinion as to
the reasonableness or fairness of compensation
paid under such agreements) and, assuming due
authorization, execution and delivery by the
other parties thereto, each of this Agreement,
the Subscription Agent Agreement and the
Information Agent Agreement (except as to the
indemnification obligations contained in this
Agreement) 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 enforceability 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, delivery, performance and
consummation by the Fund of any other of the
transactions contemplated in this Agreement, the
Subscription Agent Agreement and the Information
Agent Agreement, nor the consummation of the
trans-
23
24
actions contemplated therein or in the
Registration Statement nor the fulfillment of
the terms thereof will violate the declaration of
trust, bylaws or similar organizational documents
of the Fund, or will 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 trust, by-laws or similar organizational
documents of the Fund, or the terms and
provisions of any agreement or other instrument
listed as an exhibit to the Registration
Statement, nor, to the knowledge of such counsel
after due inquiry, will such action result in any
violation of any order, law, rule or regulation
of any United States federal or Massachusetts
state court or governmental agency or body having
jurisdiction over the Fund or any of its
properties (except that such counsel need express
no opinion as to state securities or "blue sky"
laws of or as to compliance with the antifraud
provisions of federal and state securities laws).
(7) except as set forth in the Registration Statement
and Prospectus, to the knowledge of such counsel,
there is no pending or 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.
(8) to the knowledge of such counsel after due
inquiry, 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
24
25
Securities Act, the Investment Company Act or the
Rules and Regulations.
(9) no consent, approval, authorization, notification
or order of, or filing with, any United States
federal or Massachusetts state court or
governmental agency or body is required for the
issuance of the Rights or the issuance and sale
of the Shares or performance by the Fund of this
Agreement and the Subscription Agent Agreement,
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 Exchange, 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 period required by
Rule 497(c), (e), (h) or (j), as the case may be;
to the knowledge of such counsel after due
inquiry 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
omitted therefrom, as to which such counsel need
express no opinion) as of their respective
effective or issue date 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.
25
26
(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 became
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 Representation
Date or the Expiration Date, as the case may be,
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
therein, in the light of the circumstances under which
they were made, not misleading. Such counsel need not
express any opinion as to the financial statements,
including the notes and schedules thereto, or any other
financial or accounting information set forth or
referred to in the Registration Statement or the
Prospectus.
ii. The favorable opinions, dated the Representation Date
and the Expiration Date, of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior
Vice President and General Counsel for the Investment
Adviser, in form and sub stance satisfactory to counsel
for the Dealer Manager to the effect that:
26
27
(1) the Investment Adviser has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of The Commonwealth of
Massachusetts, has full power and authority
(corporate and other) to own its properties and
conduct its business as described in the
Registration Statement and the Prospectus, to
such counsel's knowledge, currently maintains all
govern mental licenses, permits, consents,
orders, approvals, and other authorizations to
conduct its business and to enable the Investment
Adviser to continue to supervise investment in
securities as contemplated in the Prospectus, and
to such counsel's knowledge is duly qualified to
do business as a foreign corporation 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 ad verse effect upon the Investment
Adviser's business, properties, financial
position or operations.
(2) the Investment Adviser 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 an
investment adviser for the Fund as contemplated
in the Prospectus and the Investment Management
Agreement.
(3) each of this Agreement, the Investment Management
Agreement and any other Fund Agreement to which
the Investment Adviser is a party has been duly
authorized, executed and delivered by the
Investment Adviser, and is, assuming due
authorization, execution and delivery by the
other parties thereto, a legal, valid, binding
and enforceable obligation of the Investment
Adviser, subject to the qualification that the
enforceability of the Investment Adviser'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
27
28
(regardless of whether enforceability is
considered in a proceeding in equity or at law).
(4) neither the execution, delivery, performance and
consummation by the Investment Adviser of its
obligations under this Agreement, the Investment
Management Agreement or any other Fund Agreement
to which the Investment Adviser is a party 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, by-laws or similar
organizational documents of the Investment
Adviser, or to the knowledge of such counsel,
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 Investment
Adviser under the charter, by-laws or similar
organizational documents of the Investment
Adviser, the terms and provisions of any material
agreement, indenture, mortgage, loan agreement,
note, insurance or surety agreement, lease or
other instrument to which the Investment Adviser
is a party or by which it may be bound or to
which any of the property or assets of the
Investment Adviser is subject, nor will such
action result in any violation of any material
order, law, rule or regulation of any court or
govern mental agency or body, having jurisdiction
over the Investment Adviser or any of its
properties (except that such counsel need express
no opinion as to state securities or "blue sky"
laws).
(5) except as set forth in the Registration Statement
and Prospectus, there is no pending or, to the
knowledge of such counsel, threatened action,
suit or proceeding affecting the Investment
Adviser or to which the Investment Adviser is a
party before or by any United States federal or
Massachusetts state court or governmental agency,
authority or body or any arbitrator which might
result in any material adverse change in the
Investment
28
29
Adviser's condition (financial or other),
business prospects, net worth or operations or
which might materially and adversely affect the
properties or assets thereof of a character
required to be disclosed in the Registration
Statement or Prospectus.
(6) no consent, approval, authorization, notification
or order of, or filing with any United States
federal or Massachusetts state court or
governmental agency or body is required for the
consummation by the Investment Adviser of the
transactions contemplated by this Agreement or
the Investment Management Agreement.
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 Investment Adviser 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 complete ness 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 Investment Adviser, no facts
have come to her attention which has led her to
believe that the Registration Statement, on the
date it became 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 Representation Date or
the Expiration Date, as the case may be,
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 therein, in the light of the
circumstances under which they were made, not
misleading. Such counsel need not express
29
30
any opinion as to the financial statements,
including the notes and schedules thereto, or any
other financial or accounting information set
forth or referred to the Registration Statement
or the Prospectus.
c. The Dealer Manager shall have received from ▇▇▇▇▇▇▇, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (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 reasonably 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 Assistant Treasurer, the Secretary, the
Assistant 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 carefully 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 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;
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
30
31
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; and
iv. as of the most recent calculation dates as required by
each of the Credit Agreement, the Fund complied with
the diversification, liquidity, investment guidelines
and asset coverage requirements, if any, of the Credit
Agreement and the Investment Company Act.
e. The Investment Adviser shall have furnished to the Dealer
Manager certificates of the Investment Adviser, signed by the
President, Treasurer, Secretary or Vice President, dated the
Representation Date and the Expiration Date, to the effect
that the signer of such certificate has read the Registration
Statement, the Prospectus, any supplement to the Prospectus
and this Agreement and, to the best knowledge of such signer,
the representations and warranties of the Investment Adviser
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.
f. Price Waterhouse 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 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,
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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
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.
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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. Each of the Fund and the Investment Adviser, jointly and
severally, 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), to which the Dealer Manager or any such
person, or any of them, may become subject under the
Securities Act, the Exchange Act, the Investment Company Act,
the Advisers Act or other U.S. 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 documents deemed
to be incorporated by reference into the Registration
Statement or the Prospectus, (ii) the omission or alleged
omission to state, in any or all such documents, a material
fact required to be stated therein or necessary to make the
statements therein not misleading (in the case of the
Prospectus, in light of the circumstances under which such
statements were made) or (iii) any act or failure to act or
any alleged act or
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34
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, however, that neither the Fund
nor the Investment Adviser shall be liable under this clause
(iii) to the extent 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 neither the Fund nor the Investment Adviser will be
liable to the extent that such losses, claims, liabilities,
expenses or damages (A) are based on an untrue statement or
omission or alleged 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 or the
Prospectus or (B) if it is proved by the Fund and the
Investment Adviser a copy of the Prospectus was not delivered
to the purchaser of Shares or Rights at or before the written
confirmation of the sale to such person in any case where such
delivery is required by the Securities Act, the Investment
Company Act or the Rules and Regulations. This indemnity
agreement will be in addition to any liability that the Fund
or the Investment Adviser might otherwise have.
b. The Dealer Manager will indemnify and hold harmless the Fund
and the Investment Adviser, each person, if any, who controls
the Fund or the Investment Adviser 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 to
the same extent as the foregoing indemnity from the Fund or
the Investment Adviser 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 or Prospectus.
This indemnity will be in addition to any liability that the
Dealer Manager might otherwise have.
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35
c. 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 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 reasonably
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
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36
or parties. All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly as they
are incurred. 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. An indemnifying 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.
d. 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 Investment Adviser or the
Dealer Manager, the Fund, the Investment Adviser 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
Investment
36
37
Adviser from persons other than the Dealer Manager, such as
persons who control the Fund or the Investment Adviser 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 Investment Adviser and the Dealer
Manager may be subject in such proportion as shall be
appropriate to reflect the relative benefits received by the
Fund and the Investment Adviser on the one hand and the Dealer
Manager on the other. The relative benefits received by the
Fund and the Investment Adviser (treated jointly for this
purpose as one person) 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 by the Fund bear to the total fees received
by the Dealer Manager. 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 and the Investment Adviser
(treated jointly for this purpose as one person) on the one
hand and the Dealer Manager on the other hand in connection
with respect to the statements or omissions or alleged
statements or omissions that resulted in the losses, claims,
liabilities, expenses or damages (including any
investigative, legal or other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claim asserted), 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 Investment Adviser 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
Investment Adviser and the Dealer Manager agree that it would
not be just and equitable if contributions pursuant to this
Section 7.d. 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.d. shall
be deemed to include, for purposes of
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38
this Section 7.d. any legal or other expenses reasonably
incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding any other provisions of this Section 7.d. 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.d., 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 will, promptly after receipt of notice of
commencement of any action against such party in respect of
which a claim for contribution may be made under this Section
7.d., 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.d,
unless such omission results in the forfeiture of substantive
rights or defenses by, or otherwise materially prejudices the
interests of, the party or parties from whom contribution is
being sought. Except for a settlement entered into pursuant to
the last sentence of Section 7.c. 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).
e. The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Fund
and the Investment Adviser 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 or (ii) any termination of this Agreement.
f. 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 in the performance
of its duties hereunder, or by reason of such person's
reckless disregard of such person's obligations and duties
hereunder.
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39
g. The Fund and the Investment Adviser agree to indemnify each
Selling Group Member and Soliciting Dealer and controlling
persons to the same extent and subject to the same conditions
and to the same agreements, including with respect to
contribution, provided for in subsections 7.a., 7.b., 7.c.,
7.d. and 7.e.
h. The Fund and the Investment Adviser 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 Investment Adviser
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.
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
39
40
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: ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇;
or if sent to the Fund or the Investment Adviser will be mailed, or
delivered or telegraphed and con firmed to them at: Colonial
Intermediate High Income Fund, Attn: ____________________, One
Financial Center, Boston, Massachusetts 02111.
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.
13. 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.
14. Disclaimer. A copy of the document establishing the Fund is filed with
the Secretary of The Commonwealth of Massachusetts. This Agreement is
executed by officers not as individuals and is not binding upon any of
the Trustees, officers, or shareholders of the Fund individually but
only upon the assets of the Fund.
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41
If the foregoing is in accordance with your understanding of our
agreement, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among the Fund, the
Investment Adviser and the Dealer Manager.
Very truly yours,
Colonial Intermediate High Income Fund
By:___________________________________
Name:________________________________
Title:_______________________________
Colonial Management Associates Inc.
By:___________________________________
Name:________________________________
Title:_______________________________
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
PaineWebber Incorporated
By:___________________________________
Name:________________________________
Title:_______________________________
42
EXHIBIT A
COLONIAL INTERMEDIATE HIGH INCOME FUND
__________ 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
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We understand that Colonial Intermediate High Income Fund, 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 __________ shares (each a "Share"
and, collectively, the "Shares") of the Fund's common shares of beneficial
interest, without par value (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 _____ Rights (except that any Holder
who is issued fewer than _____ 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.
43
COLONIAL INTERMEDIATE HIGH INCOME FUND
Selling Group Agreement - Page 2
Transferable Rights Offer Expiring ________ __, 1998, unless extended
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") 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 ________
__ (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 ________ __, 1998 and ending at 5:00 p.m., New York
City time, on the Expiration Date (the term "Expiration Date"
means ________ __, 1998, 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
44
COLONIAL INTERMEDIATE HIGH INCOME FUND
Selling Group Agreement - Page 3
Transferable Rights Offer Expiring ________ __, 1998, unless extended
Section 4 of this Agreement with respect to Shares purchased
pursuant to the exercise of Rights and with respect to which
_____________________ (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 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- _____ and 811-_____), 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
45
COLONIAL INTERMEDIATE HIGH INCOME FUND
Selling Group Agreement - Page 4
Transferable Rights Offer Expiring ________ __, 1998, unless extended
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
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
46
COLONIAL INTERMEDIATE HIGH INCOME FUND
Selling Group Agreement - Page 5
Transferable Rights Offer Expiring ________ __, 1998, unless extended
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. 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
47
COLONIAL INTERMEDIATE HIGH INCOME FUND
Selling Group Agreement - Page 6
Transferable Rights Offer Expiring ________ __, 1998, unless extended
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: PaineWebber Incorporated, Attn: ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇.
10. This Agreement will be governed by the internal laws of the State
of New York.
48
COLONIAL INTERMEDIATE HIGH INCOME FUND
Selling Group Agreement - Page 7
Transferable Rights Offer Expiring ________ __, 1998, 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:
_____________________________________
_____________________________________
49
COLONIAL INTERMEDIATE HIGH INCOME FUND
Selling Group Agreement - Page 8
Transferable Rights Offer Expiring ________ __, 1998, unless extended
_____________________________________
50
EXHIBIT B
COLONIAL INTERMEDIATE HIGH INCOME FUND
Rights Offering for Common Shares of Beneficial Interest
SOLICITING DEALER AGREEMENT
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
________ __, 1998, UNLESS EXTENDED
To Securities Dealers and Brokers:
Colonial Intermediate High Income Fund (the "Fund") is issuing to
its shareholders of record ("Record Date Shareholders") as of the close of
business on ________ __, 1998 (the "Record Date") transferable rights ("Rights")
to subscribe for an aggregate of up to _________ 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 ________ __, 1998 (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 _____ Rights (except that any Record
Date Shareholder who is issued fewer than _____ 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 Sub-
51
COLONIAL INTERMEDIATE HIGH INCOME FUND
Soliciting Dealer Agreement - Page 2
Transferable Rights Offer Expiring January 23, 1998
scription Price will be $____. The Subscription Period will commence on ________
__, 1998 and end at 5:00 p.m., New York City time on the Expiration Date (the
term "Expiration Date" means ________ __, 1998, 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 Over- Subscription Privilege in connection with the Offer and who
complies with the procedures described below (a "Soliciting Dealer"). Upon
timely delivery to _________________, 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 ____% 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 there
of, 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 and to
indemnify such Soliciting Dealer on the terms set forth in the Dealer Manager
Agreement, dated ________ __, 1997, 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
52
COLONIAL INTERMEDIATE HIGH INCOME FUND
Soliciting Dealer Agreement - Page 3
Transferable Rights Offer Expiring January 23, 1998
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 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
53
COLONIAL INTERMEDIATE HIGH INCOME FUND
Soliciting Dealer Agreement - Page 4
Transferable Rights Offer Expiring January 23, 1998
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 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
54
COLONIAL INTERMEDIATE HIGH INCOME FUND
Soliciting Dealer Agreement - Page 5
Transferable Rights Offer Expiring January 23, 1998
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 ▇▇▇▇▇▇ 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.
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: ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇; Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ and Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇.
55
COLONIAL INTERMEDIATE HIGH INCOME FUND
Soliciting Dealer Agreement - Page 6
Transferable Rights Offer Expiring January 23, 1998
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:
56
COLONIAL INTERMEDIATE HIGH INCOME FUND
Soliciting Dealer Agreement - Page 7
Transferable Rights Offer Expiring January 23, 1998
_____________________________________
_____________________________________
_____________________________________
