EXHIBIT (H)(1)
$
MUNIHOLDINGS FUND, INC.
(a Maryland corporation)
AUCTION MARKET PREFERRED STOCK(R) ["AMPS"(R)]
___ Series A Shares
___ Series B Shares
Liquidation Preference $25,000 Per Share
PURCHASE AGREEMENT
------------------
________, 1997
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
World Financial Center
North Tower
New York, New York 10281-1305
Dear Sirs and Mesdames:
MuniHoldings Fund, Inc., a Maryland corporation (the "Fund"), and Fund
Asset Management, L.P., a Delaware limited partnership (the "Adviser"), each
confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated (the "Underwriter"), with respect to the sale by the Fund and
the purchase by the Underwriter of ____ shares of Auction Market Preferred
Stock(R), Series A ("Series A AMPS"), and ________ shares of Auction Market
Preferred Stock(R), Series B ("Series B AMPS"), each with a par value of $.10
per share and a liquidation preference of $25,000 per share plus an amount equal
to accumulated but unpaid dividends (whether or not earned or declared). The
Series A AMPS and Series B AMPS are sometimes herein referred to together as the
"Shares".
______________________
(R) Registered trademark of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
Prior to the purchase and public offering of the Shares by the Underwriter,
the Fund and the Underwriter shall enter into an agreement substantially in the
form of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may
take the form of an exchange of any standard form of written telecommunication
between the Fund and the Underwriter and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the Shares
will be governed by this Agreement, as supplemented by the Pricing Agreement.
From and after the date of the execution and delivery of the Pricing Agreement,
this Agreement shall be deemed to incorporate the Pricing Agreement.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a notification on Form N-8A of registration of the Fund as an
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), a registration statement on Form N-2 (No. 333-_____),
and a related preliminary prospectus for the registration of the Shares under
the Securities Act of 1933, as amended (the "Securities Act"), the Investment
Company Act, and the rules and regulations of the Commission under the
Securities Act and the Investment Company Act (together, the "Rules and
Regulations"), and the Fund has filed such amendments to such registration
statement on Form N-2, if any, and such amended preliminary prospectuses as may
have been required to the date hereof. The Fund will prepare and file such
additional amendments thereto and such amended prospectuses as hereafter may be
required. Such registration statement (as amended at the time it becomes
effective, if applicable) and the prospectus constituting a part thereof
(including in each case the information, if any, deemed to be a part thereof
pursuant to Rule 430A(b) or Rule 434 of the Rules and Regulations), as from time
to time amended or supplemented pursuant to the Securities Act, are referred to
hereinafter as the "Registration Statement" and the "Prospectus", respectively;
except that if any revised prospectus shall be provided to the Underwriter by
the Fund for use in connection with the offering of the Shares which differs
from the Prospectus on file at the Commission at the time the Registration
Statement becomes effective (whether such revised prospectus is required to be
filed by the Fund pursuant to Rule 497(c) or Rule 497(h) of the Rules and
Regulations), the term "Prospectus" shall refer to each such revised prospectus
from and after the time it is first provided to the Underwriter for such use.
If the Fund elects to rely on Rule 434 under the Rules and Regulations, all
references to the Prospectus shall be deemed to include, without limitation, the
form of prospectus and the term sheet, taken together, provided to the
Underwriter by the Fund in reliance on Rule 434 under the Securities Act (the
"Rule 434 Prospectus"). If the Fund files a registration statement to register
a portion of the Shares and relies on Rule 462(b) for such registration
statement to become effective upon filing with the Commission (the "Rule 462
Registration Statement"), then any reference to "Registration Statement" herein
shall be deemed to include both the registration statement referred to above
(No. 333-______) and the
2
Rule 462 Registration Statement, as each such registration statement may be
amended pursuant to the Securities Act.
The Fund understands that the Underwriter proposes to make a public
offering of the Shares as soon as the Underwriter deems advisable after the
Registration Statement becomes effective and the Pricing Agreement has been
executed and delivered.
SECTION 1. Representations and Warranties. (a) The Fund and the Adviser
each severally represents and warrants to the Underwriter as of the date hereof
and as of the date of the Pricing Agreement (such later date hereinafter being
referred to as the "Representation Date") as follows:
(i) At the time the Registration Statement becomes effective and at
the Representation Date, the Registration Statement will comply in all
material respects with the requirements of the Securities Act, the
Investment Company Act and the Rules and Regulations and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. At the time the Registration Statement becomes effective,
at the Representation Date and at Closing Time referred to in Section 2
hereof, the Prospectus (unless the term "Prospectus" refers to a prospectus
which has been provided to the Underwriter by the Fund for use in
connection with the offering of the Shares which differs from the
Prospectus on file with the Commission at the time the Registration
Statement becomes effective, in which case at the time such prospectus
first is provided to the Underwriter for such use) will not contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection shall
not apply to statements in or omissions from the Registration Statement or
the Prospectus made in reliance upon and in conformity with information
furnished to the Fund in writing by the Underwriter expressly for use in
the Registration Statement or in the Prospectus.
(ii) The accountants who certified the statement of assets,
liabilities and capital included in the Registration Statement are
independent public accountants as required by the Securities Act and the
Rules and Regulations.
(iii) The statement of assets, liabilities and capital included in the
Registration Statement presents fairly the financial position of the Fund
as at the date indicated and said statement has been prepared in conformity
with generally accepted accounting principles; and the information in the
Prospectus under the headings "Description of Capital Stock" and "Portfolio
Composition" has been fairly presented.
3
(iv) Since the respective dates as of which information is given in the
Registration Statement and in the Prospectus, except as otherwise stated
therein,
(A) there has been no material adverse change in the condition, financial
or otherwise, of the Fund, or in the earnings, business affairs or business
prospects of the Fund, whether or not arising in the ordinary course of
business, (B) there have been no transactions entered into by the Fund
which are material to the Fund other than those in the ordinary course of
business and (C) except for regular monthly dividends on the outstanding
shares of common stock, par value $.10 per share (the "Common Shares") of
the Fund, there has been no dividend or distribution of any kind declared,
paid or made by the Fund on any class of its capital stock.
(v) The Fund has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland with
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement; the Fund
is duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is required;
and the Fund has no subsidiaries.
(vi) The Fund is registered with the Commission under the Investment
Company Act as a closed-end, non-diversified, management investment
company, and no order of suspension or revocation of such registration has
been issued or proceedings therefor initiated or threatened by the
Commission.
(vii) The authorized, issued and outstanding capital stock of the Fund
is as set forth in the Prospectus under the caption "Description of Capital
Stock"; the outstanding Common Shares have been duly authorized and validly
issued and are fully paid and nonassessable; the Shares have been duly
authorized for issuance and sale to the Underwriter pursuant to this
Agreement and, when issued and delivered by the Fund pursuant to this
Agreement against payment of the consideration set forth in the Pricing
Agreement, will be validly issued and fully paid and nonassessable; the
Common Shares and the Shares conform in all material respects to all
statements relating thereto contained in the Registration Statement; and
the issuance of the Shares to be purchased by the Underwriter is not
subject to pre-emptive rights.
(viii) The Fund is not in violation of its articles of incorporation,
as amended (the "Charter"), or its by-laws, as amended (the "By-Laws"), or
in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any material contract,
indenture, mortgage, loan agreement, note, lease or other
4
instrument to which it is a party or by which it or its properties may be
bound; and the execution and delivery of this Agreement, the Pricing
Agreement and the Investment Advisory Agreement, the Custody Agreement, the
Auction Agent Agreement and the Letter of Representations referred to in
the Registration Statement (as used herein, the "Advisory Agreement," the
"Auction Agreement," the "Custody Agreement" and the "Letter of
Representations," respectively), and the consummation of the transactions
contemplated herein and therein, have been duly authorized by all necessary
corporate action and will not conflict with or constitute a breach of, or a
default under, or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Fund pursuant to any
material contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Fund is a party or by which it may be bound
or to which any of the property or assets of the Fund is subject, nor will
such action result in any violation of the provisions of the Charter or the
By-Laws of the Fund, or, to the best knowledge of the Fund and the Adviser,
any law, administrative regulation or administrative or court decree; and
no consent, approval, authorization or order of any court or governmental
authority or agency is required for the consummation by the Fund of the
transactions contemplated by this Agreement, the Pricing Agreement, the
Advisory Agreement, the Custody Agreement, the Auction Agreement and the
Letter of Representations, except such as has been obtained under the
Investment Company Act or as may be required under the Securities Act or
state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriter.
(ix) The Fund owns or possesses or has obtained all material
governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to lease or own, as the case may be, and to
operate its properties and to carry on its businesses as contemplated in
the Prospectus and the Fund has not received any notice of proceedings
relating to the revocation or modification of any such licenses, permits,
covenants, orders, approvals or authorizations.
(x) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Fund or the Adviser, threatened against or affecting the
Fund, which might result in any material adverse change in the condition,
financial or otherwise, business affairs or business prospects of the Fund,
or might materially and adversely affect the properties or assets of the
Fund; and there are no material contracts or documents of the Fund which
are required to be filed as exhibits to the Registration Statement by the
Securities Act, the Investment
5
Company Act or the Rules and Regulations which have not been so filed.
(xi) There are no contracts or documents which are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits thereto which have not been so described and filed as required.
(xii) The Fund owns or possesses, or can acquire on reasonable terms,
adequate trademarks, service marks and trade names necessary to conduct its
business as described in the Registration Statement, and the Fund has not
received any notice of infringement of or conflict with asserted rights of
others with respect to any trademarks, service marks or trade names which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially adversely affect the conduct of the
business, operations, financial condition or income of the Fund.
(xiii) The Fund intends to, and will, direct the investment of the
proceeds of the offering described in the Registration Statement in such a
manner as to comply with the requirements of Subchapter M of the Internal
Revenue Code of 1986, as amended ("Subchapter M of the Code"), and intends
to qualify as a regulated investment company under Subchapter M of the
Code.
(xiv) Each of this Agreement, the Advisory Agreement and the Custody
Agreement has been duly authorized, executed and delivered by the Fund, and
each complies with all applicable provisions of the Investment Company Act.
(xv) Each of the Auction Agreement and the Letter of Representations
has been duly authorized for execution and delivery by the Fund and, when
executed and delivered by the Fund, will constitute a valid and binding
obligation of the Fund, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization or other laws
relating to or affecting creditors' rights and to general equitable
principles.
(b) The Adviser represents and warrants to the Underwriter as of the date
hereof and as of the Representation Date as follows:
(i) The Adviser has been duly organized as a limited partnership
under the laws of the State of Delaware with power and authority to conduct
its business as described in the Registration Statement and in the
Prospectus.
(ii) The Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Investment Advisers
Act"), and is not prohibited by the Investment Advisers Act or the
Investment
6
Company Act, or the rules and regulations under such acts, from acting
under the Advisory Agreement for the Fund as contemplated by the
Prospectus.
(iii) This Agreement has been duly authorized, executed and delivered
by the Adviser; the Advisory Agreement has been duly authorized, executed
and delivered by the Adviser and constitutes a valid and binding obligation
of the Adviser, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization or other laws
relating to or affecting creditors' rights and to general equitable
principles; and neither the execution and delivery of this Agreement or the
Advisory Agreement, nor the performance by the Adviser of its obligations
hereunder or thereunder will conflict with, or result in a breach of any of
the terms and provisions of, or constitute, with or without the giving of
notice or the lapse of time or both, a default under, any agreement or
instrument to which the Adviser is a party or by which it is bound, or any
law, order, rule or regulation applicable to it of any jurisdiction, court,
Federal or state regulatory body, administrative agency or other
governmental body, stock exchange or securities association having
jurisdiction over the Adviser or its respective properties or operations.
(iv) The Adviser has the financial resources available to it
necessary for the performance of its services and obligations as
contemplated in the Prospectus.
(c) Any certificate signed by any officer of the Fund or the Adviser and
delivered to the Underwriter or to counsel to the Underwriter shall be deemed a
representation and warranty by the Fund or the Adviser, as the case may be, to
the Underwriter, as to the matters covered thereby.
SECTION 2. Sale and Delivery to the Underwriter; Closing.
(a) On the basis of the representations and warranties herein contained,
and subject to the terms and conditions herein set forth, the Fund agrees to
sell the Shares to the Underwriter, and the Underwriter agrees to purchase the
Shares from the Fund, at the price per share set forth in the Pricing Agreement.
(i) If the Fund has elected not to rely upon Rule 430A under the
Rules and Regulations, the initial public offering prices and the purchase
price per share to be paid by the Underwriter for the Shares have been
determined and set forth in the Pricing Agreement, dated the date hereof,
and an amendment to the Registration Statement and the Prospectus will be
filed before the Registration Statement becomes effective.
(ii) If the Fund has elected to rely upon Rule 430A under the Rules
and Regulations, the purchase price per share to be paid by the Underwriter
for the Shares shall be
7
an amount equal to the applicable initial public offering price, less an
amount per share to be determined by agreement between the Underwriter and
the Fund. The initial public offering price per share shall be a fixed
price based upon the number of shares purchased in a single transaction to
be determined by agreement between the Underwriter and the Fund. The
initial public offering price and the purchase price, when so determined,
shall be set forth in the Pricing Agreement. In the event that such prices
have not been agreed upon and the Pricing Agreement has not been executed
and delivered by all parties thereto by the close of business on the fourth
business day following the date of this Agreement, this Agreement shall
terminate forthwith, without liability of any party to any other party,
except as provided in Section 5 hereof, unless otherwise agreed to by the
Fund, the Adviser and the Underwriter.
(b) Payment of the purchase price for, and delivery of certificates for,
the Shares shall be made at the office of Brown & Wood llp, One World Trade
Center, New York, New York 10048-0557, or at such other place as shall be agreed
upon by the Underwriter the Fund, at 9:00 A.M. on the third business day
following the date the Registration Statement becomes effective or, if the Fund
has elected to rely upon Rule 430A under the Rules and Regulations, the third
business day after execution of the Pricing Agreement (or, if pricing takes
place after 4:30 P.M. on either the date the Registration Statement becomes
effective or the date of execution of the Pricing Agreement, as applicable, the
fourth business day after such applicable date), or such other time not later
than ten business days after such date as shall be agreed upon by the
Underwriter and the Fund (such time and date of payment and delivery herein
being referred to as "Closing Time"). Payment shall be made to the Fund by a
Federal Funds wire transfer or similar same-day funds, against delivery to the
Underwriter of the certificates for the Shares to be purchased by it. The
Shares shall be represented by certificates registered in the name of Cede &
Co., as nominee for The Depository Trust Company. The certificates for the
Shares will be made available for examination by the Underwriter not later than
10:00 A.M. on the last business day prior to Closing Time.
SECTION 3. Covenants of the Fund. The Fund covenants with the Underwriter
as follows:
(a) The Fund will use its best efforts (i) to cause the Registration
Statement to become effective under the Securities Act, and will advise the
Underwriter promptly as to the time at which the Registration Statement and any
amendments thereto (including any post-effective amendment) becomes so effective
and (ii) if required, to cause the issuance of any orders exempting the Fund
from any provisions of the Investment Company Act, and the Fund will advise the
Underwriter promptly as to the time at which any such orders are granted.
8
(b) The Fund will notify the Underwriter immediately, and will confirm the
notice in writing, (i) of the effectiveness of the Registration Statement and
any amendments thereto (including any post-effective amendment), (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose,
and (v) of the issuance by the Commission of an order of suspension or
revocation of the notification on Form N-8A of registration of the Fund as an
investment company under the Investment Company Act or the initiation of any
proceeding for that purpose. The Fund will make every reasonable effort to
prevent the issuance of any stop order described in subsection (iv) hereunder or
any order of suspension or revocation described in subsection (v) hereunder and,
if any such stop order or order of suspension or revocation is issued, to obtain
the lifting thereof at the earliest possible moment. If the Fund elects to rely
on Rule 434 under the Rules and Regulations, the fund will prepare a term sheet
that complies with the requirements of Rule 434 under the Rules and Regulations
and the Fund will provide the Underwriter with copies of the form of Rule 434
Prospectus, in such number as the Underwriter may reasonably request by the
close of business in New York on the business day immediately succeeding the
date of the Pricing Agreement.
(c) The Fund will give the Underwriter notice of its intention to file any
amendment to the Registration Statement (including any post-effective amendment)
or any amendment or supplement to the Prospectus (including any revised
prospectus which the Fund proposes for use by the Underwriter in connection with
the offering of the Shares, which differs from the prospectus on file at the
Commission at the time the Registration Statement becomes effective, whether
such revised prospectus is required to be filed pursuant to Rule 497(c) or Rule
497(h) of the Rules and Regulations or any term sheet prepared in reliance on
Rule 434 of the Rules and Regulations), whether pursuant to the Investment
Company Act, the Securities Act, or otherwise, and will furnish the Underwriter
with copies of any such amendment or supplement a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not file any
such amendment or supplement to which the Underwriter reasonably shall object.
(d) The Fund will deliver to the Underwriter, as soon as practicable, two
signed copies of the notification of registration and registration statement as
originally filed and of each amendment thereto, in each case with two sets of
the exhibits filed therewith, and also will deliver to the Underwriter a
conformed copy of the registration statement as originally filed and of each
amendment thereto (but without exhibits to the registration statement or any
such amendment) for the Underwriter.
9
(e) The Fund will furnish to the Underwriter, from time to time during the
period when the Prospectus is required to be delivered under the Securities Act,
such number of copies of the Prospectus (as amended or supplemented) as the
Underwriter reasonably may request for the purposes contemplated by the
Securities Act, or the Rules and Regulations.
(f) If any event shall occur as a result of which it is necessary, in the
opinion of counsel to the Fund and the Underwriter, to amend or supplement the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, the Fund
forthwith will amend or supplement the Prospectus by preparing and furnishing to
the Underwriter a reasonable number of copies of an amendment or amendments of
or a supplement or supplements to, the Prospectus (in form and substance
satisfactory to counsel to the Fund and the Underwriter), so that, as so amended
or supplemented, the Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading.
(g) The Fund will endeavor, in cooperation with the Underwriter, to qualify
the Shares for offering and sale under the applicable securities laws of such
states and other jurisdictions of the United States as the Underwriter may
designate, and will maintain such qualifications in effect for a period of not
less than one year after the date hereof. The Fund will file such statements
and reports as may be required by the laws of each jurisdiction in which the
Shares have been qualified as above provided.
(h) The Fund will make generally available to its security holders as soon
as practicable, but no later than 60 days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions of Rule
158 of the Rules and Regulations) covering a twelve-month period beginning not
later than the first day of the Fund's fiscal quarter next following the
"effective" date (as defined in said Rule 158) of the Registration Statement.
(i) Between the date of this Agreement and the termination of any trading
restrictions or Closing Time, whichever is later, the Fund will not, without
your prior consent, offer or sell, or enter into any agreement to sell, any
equity or equity related securities of the Fund other than the Shares and the
Common Shares issued in reinvestment of dividends or distributions.
(j) If, at the time that the Registration Statement becomes effective, any
information shall have been omitted therefrom in reliance upon Rule 430A of the
Rules and Regulations, then immediately following the execution of the Pricing
Agreement, the Fund will prepare, and file or transmit for filing with the
10
Commission in accordance with such Rule 430A and Rule 497(h) of the Rules and
Regulations, copies of the amended Prospectus, or, if required by such Rule
430A, a post-effective amendment to the Registration Statement (including an
amended Prospectus), containing all information so omitted.
(k) The Fund will use its best efforts to maintain its qualification as a
regulated investment company under Subchapter M of the Code.
SECTION 4. Covenants of the Underwriter. The Underwriter covenants and
agrees with the Fund that no later than the second business day succeeding
Closing Time, it will provide the Fund and the Auction Agent (as defined in the
Prospectus) with a list of Existing Holders (as defined in the Prospectus) of
Shares, the number of Shares held by each such Existing Holder and the number of
Shares it is holding as Underwriter as of the date of such notice.
SECTION 5. Payment of Expenses. The Fund will pay all expenses incident
to the performance of its obligations under this Agreement, including, but not
limited to, expenses relating to (i) the printing and filing of the registration
statement as originally filed and of each amendment thereto, (ii) the
preparation of this Agreement and the Pricing Agreement,
(iii) the preparation, issuance and delivery of the certificates for the Shares
to the Underwriter, (iv) the fees and disbursements of the Fund's counsel and
accountants, (v) the qualification of the Shares under securities laws in
accordance with the provisions of Section 3(g) of this Agreement, including
filing fees and any fees or disbursements of counsel for the Underwriter in
connection therewith and in connection with the preparation of the Blue Sky
Survey, (vi) the printing and delivery to the Underwriter of copies of the
registration statement as originally filed and of each amendment thereto, of the
preliminary prospectus, and of the Prospectus and any amendments or supplements
thereto, (vii) the printing and delivery to the Underwriter of copies of the
Blue Sky Survey and (viii) the fees charged by rating agencies for the rating of
the Shares.
If this Agreement is terminated by the Underwriter in accordance with the
provisions of Section 6 or Section 10(a)(i) hereof, the Fund or the Adviser
shall reimburse the Underwriter for all of its reasonable out-of-pocket
expenses, including the reasonable fees and disbursements of counsel to the Fund
and the Underwriter. In the event the transactions contemplated hereunder are
not consummated, the Adviser agrees to pay all of the costs and expenses set
forth in the first paragraph of this Section 5 which the Fund would have paid if
such transactions had been consummated.
SECTION 6. Conditions of Underwriter's Obligations. The obligations of
the Underwriter hereunder are subject to the accuracy of the representations and
warranties of the Fund and
11
the Adviser herein contained, to the performance by the Fund and the Adviser of
their respective obligations hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective not later than
5:30 P.M., New York City time, on the date of this Agreement, or at a later time
and date not later, however, than 5:30 p.m. on the first business day following
the date hereof, or at such later time and date as may be approved by the
Underwriter, and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the Securities Act or
proceedings therefor initiated or threatened by the Commission. If the Fund has
elected to rely upon Rule 430A of the Rules and Regulations, the price of the
Shares and any price-related information previously omitted from the effective
Registration Statement pursuant to such Rule 430A shall have been transmitted to
the Commission for filing pursuant to Rule 497(h) of the Rules and Regulations
within the prescribed time period, and prior to Closing Time the Fund shall have
provided evidence satisfactory to the Underwriter of such timely filing, or a
post-effective amendment providing such information shall have been filed
promptly and declared effective in accordance with the requirements of Rule 430A
of the Rules and Regulations.
(b) At Closing Time, the Underwriter shall have received:
(1) The favorable opinion, dated as of Closing Time, of ▇▇▇▇▇ & Wood
llp, counsel to the Fund and the Underwriter, to the effect that:
(i) The Fund has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Maryland.
(ii) The Fund has corporate power and authority to own, lease
and operate its properties and conduct its business as described in
the Registration Statement and in the Prospectus.
(iii) The Fund is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required.
(iv) The outstanding Common Shares have been duly authorized and
validly issued and are fully paid and nonassessable.
(v) The Shares have been duly authorized for issuance and sale
to the Underwriter pursuant to this Agreement and, when issued and
delivered by the Fund pursuant to this Agreement against payment of
the consideration set forth in the Pricing Agreement, will be validly
issued and fully paid and nonassessable; the
12
issuance of the Shares is not subject to pre-emptive or other similar
rights; and the authorized capital stock conforms as to legal matters
in all material respects to the description thereof in the
Registration Statement under the caption "Description of Capital
Stock".
(vi) Each of this Agreement and the Pricing Agreement has been
duly authorized, executed and delivered by the Fund and each complies
with all applicable provisions of the Investment Company Act.
(vii) The Registration Statement is effective under the
Securities Act and, to the best of their knowledge and information, no
stop order suspending the effectiveness of the Registration Statement
has been issued under the Securities Act or proceedings therefor
initiated or threatened by the Commission.
(viii) At the time the Registration Statement became effective
and at the Representation Date, the Registration Statement (other than
the financial statements included therein, as to which no opinion need
be rendered) complied as to form in all material respects with the
requirements of the Securities Act and the Investment Company Act and
the Rules and Regulations. The Rule 434 Prospectus conforms to the
requirements of Rule 434 in all material respects.
(ix) To the best of their knowledge and information, there are
no legal or governmental proceedings pending or threatened against the
Fund which are required to be disclosed in the Registration Statement,
other than those disclosed therein.
(x) To the best of their knowledge and information, there are no
contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments of the Fund required to be described or referred to
in the Registration Statement or to be filed as exhibits thereto other
than those described or referred to therein or filed as exhibits
thereto, the descriptions thereof are correct in all material
respects, references thereto are correct, and no default exists in the
due performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument so described, referred
to or filed.
(xi) No consent, approval, authorization or order of any court
or governmental authority or agency is required in connection with the
sale of the Shares to the Underwriter, except such as has been
obtained under the Securities Act, the Investment Company Act or the
13
Rules and Regulations or such as may be required under state
securities laws; and to the best of their knowledge and information,
the execution and delivery of this Agreement, the Pricing Agreement,
the Advisory Agreement, the Custody Agreement, the Auction Agreement
and the Letter of Representations and the consummation of the
transactions contemplated herein and therein will not conflict with or
constitute a breach of, or a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or
assets of the Fund pursuant to, any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which the Fund is a
party or by which it may be bound or to which any of the property or
assets of the Fund is subject, nor will such action result in any
violation of the provisions of the Charter or the By-Laws of the Fund,
or any law or administrative regulation, or, to the best of their
knowledge and information, administrative or court decree.
(xii) Each of the Advisory Agreement and the Custody Agreement
has been duly authorized and approved by the Fund and complies as to
form in all material respects with all applicable provisions of the
Investment Company Act, and each has been duly executed by the Fund.
(xiii) The Fund is registered with the Commission under the
Investment Company Act as a closed-end, non-diversified, management
investment company, and all required action has been taken by the Fund
under the Securities Act, the Investment Company Act and the Rules and
Regulations to make the public offering and consummate the sale of the
Shares pursuant to this Agreement; the provisions of the Charter and
the By-Laws of the Fund comply as to form in all material respects
with the requirements of the Investment Company Act; and, to the best
of their knowledge and information, no order of suspension or
revocation of such registration under the Investment Company Act,
pursuant to Section 8(e) of the Investment Company Act, has been
issued or proceedings therefor initiated or threatened by the
Commission.
(xiv) The information in the Prospectus under the caption
"Taxes", to the extent that it constitutes matters of law or legal
conclusions, has been reviewed by them and is correct in all material
respects.
(xv) Each of the Auction Agreement and the Letter of
Representations has been duly authorized, executed and delivered by
the Fund, and each constitutes a valid and binding obligation of the
Fund, enforceable in accordance with its terms, subject, as to
enforcement,
14
to bankruptcy, insolvency, reorganization or other laws relating to or
affecting creditors' rights and to general equitable principles.
(2) The favorable opinion, dated as of Closing Time, of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Esq., General Counsel to the Adviser, in form and substance
satisfactory to counsel to the Underwriter, to the effect that:
(i) The Adviser has been duly organized as a limited partnership
under the laws of the State of Delaware, with power and authority to
conduct its business as described in the Registration Statement and in
the Prospectus.
(ii) The Adviser is duly registered as an investment adviser
under the Investment Advisers Act and is not prohibited by the
Investment Advisers Act or the Investment Company Act, or the rules
and regulations under such Acts, from acting under the Advisory
Agreement for the Fund as contemplated by the Prospectus.
(iii) This Agreement and the Advisory Agreement have been duly
authorized, executed and delivered by the Adviser, and the Advisory
Agreement constitutes a valid and binding obligation of the Adviser,
enforceable in accordance with its terms, subject, as to enforcement,
to bankruptcy, insolvency, reorganization or other laws relating to or
affecting creditors' rights and to general equity principles; and, to
the best of his knowledge and information, neither the execution and
delivery of this Agreement or the Advisory Agreement nor the
performance by the Adviser of its obligations hereunder or thereunder
will conflict with, or result in a breach of, any of the terms and
provisions of, or constitute, with or without the giving of notice or
the lapse of time or both, a default under, any agreement or
instrument to which the Adviser is a party or by which the Adviser is
bound, or any law, order, rule or regulation applicable to the Adviser
of any jurisdiction, court, Federal or state regulatory body,
administrative agency or other governmental body, stock exchange or
securities association having jurisdiction over the Adviser or its
properties or operations.
(iv) To the best of his knowledge and information, the
description of the Adviser in the Registration Statement and in the
Prospectus does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
15
(3) In giving their opinion required by subsection (b)(1) of this
Section 6, Brown & Wood llp additionally shall state that nothing has come
to their attention that would lead them to believe that the Registration
Statement (other than the financial statements included therein, as to
which no opinion need be rendered), at the time it became effective or at
the Representation Date, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus (other than the financial statements included therein, as to
which no opinion need be rendered), at the Representation Date (unless the
term "Prospectus" refers to a prospectus which has been provided to the
Underwriter by the Fund for use in connection with the offering of the
Shares which differs from the Prospectus on file at the Commission at the
time the Registration Statement becomes effective, in which case at the
time it first is provided to the Underwriter for such use) or at Closing
Time, included an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. In
giving their opinion, ▇▇▇▇▇ & Wood llp may rely as to matters involving the
laws of the State of Maryland upon the opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇. ▇▇▇▇▇ & ▇▇▇▇ llp and ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ may rely, as to
matters of fact, upon certificates and written statements of officers and
employees of and accountants for the Fund and the Adviser and of public
officials.
(c) At Closing Time, (i) the Registration Statement and the Prospectus
shall contain all statements which are required to be stated therein in
accordance with the Securities Act, the Investment Company Act and the Rules and
Regulations and in all material respects shall conform to the requirements of
the Securities Act, the Investment Company Act and the Rules and Regulations,
and neither the Registration Statement nor the Prospectus shall contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, and no action, suit or proceeding at law or in
equity shall be pending or, to the knowledge of the Fund or the Adviser,
threatened against the Fund or the Adviser which would be required to be set
forth in the Prospectus other than as set forth therein, (ii) there shall not
have been, since the date as of which information is given in the Prospectus,
any material adverse change in the condition, financial or otherwise, of the
Fund or in its earnings, business affairs or business prospects, whether or not
arising in the ordinary course of business, from that set forth in the
Prospectus, (iii) the Adviser shall have the financial resources available to it
necessary for the performance of its services and obligations as contemplated in
the Registration Statement and the Prospectus, (iv) no proceedings shall be
pending or, to the knowledge of the Fund or the Adviser, threatened against the
Fund or the Adviser
16
before or by any Federal, state or other commission, board or administrative
agency wherein an unfavorable decision, ruling or finding would materially and
adversely affect the business, property, financial condition or income of either
the Fund or the Adviser other than as set forth in the Prospectus, (v) ▇▇▇▇▇'▇
Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings Services
("S&P") shall have confirmed that the Shares have been rated "aaa" and AAA,
respectively, by such agencies; and (vi) the Distributor and the Underwriter
shall have received, at Closing Time, a certificate of the President or the
Treasurer of the Fund and of the President or a Vice President of the Adviser
dated as of Closing Time, evidencing compliance with the appropriate provisions
of this subsection (c), together with true and correct copies of letters from
▇▇▇▇▇'▇ and S&P confirming their rating.
(d) At Closing Time, the Underwriter shall have received certificates,
dated as of Closing Time, (i) of the President or the Treasurer of the Fund to
the effect that the representations and warranties of the Fund contained in
Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time and, (ii) of the President or a
Vice President of the Adviser to the effect that the representations and
warranties of the Adviser contained in Sections 1(a) and (b) hereof are true and
correct with the same force and effect as though expressly made at and as of
Closing Time.
(e) At the time of execution of this Agreement, the Underwriter shall have
received from ▇▇▇▇▇ & Young llp a letter, dated such date in form and substance
satisfactory to the Underwriter, to the effect that:
(i) they are independent accountants with respect to the Fund within
the meaning of the Securities Act and the Rules and Regulations;
(ii) in their opinion, the statement of assets, liabilities and capital
examined by them and included in the Registration Statement complies as to
form in all material respects with the applicable accounting requirements
of the Securities Act and the Investment Company Act and the Rules and
Regulations;
(iii) they have performed specified procedures, not constituting an
audit, including a reading of the latest available interim financial
statements of the Fund, a reading of the minute books of the Fund,
inquiries of officials of the Fund responsible for financial accounting
matters and such other inquiries and procedures as may be specified in such
letter, and on the basis of such inquiries and procedures nothing came to
their attention that caused them to believe that (A) the unaudited
financial statements as of ___________, 1997 included in the Registration
Statement do not comply as to form in all material respects with the
applicable accounting requirements of the
17
Securities Act and of the Rules and Regulations applicable to unaudited
interim financial statements included in registration statements or are not
in conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited financial
statements included in the Registration Statement, and (B) during the
period from ___________, 1997 to a specified date not more than three days
prior to the date of this Agreement, there was any change in the capital
stock or net assets of the Fund (other than by reason of the issuance of
Common Shares in connection with the Fund's dividend reinvestment plan, as
specified in such letter) or any increase in the long-term debt of the
Fund, as compared with amounts shown on the unaudited financial statements
included in the Registration Statement, except for changes which the
Registration Statement discloses have occurred or may occur; and
(iv) in addition to the procedures referred to in clause (iii) above, they
have performed other specified procedures, not constituting an audit, with
respect to certain amounts, percentages, numerical data, financial information
and financial statements appearing in the Registration Statement, which
previously have been specified by such accountants and which shall be specified
in such letter, and have compared certain of such items with, and have found
such items to be in agreement with, the accounting and financial records of the
Fund.
(f) At Closing Time, the Underwriter shall have received from ▇▇▇▇▇ & Young
llp a letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (e) of this
Section 6, except that the "specified date" referred to shall be a date not more
than three days prior to Closing Time.
(g) At Closing Time, counsel to the Underwriter shall have been furnished
with such documents and opinions as they reasonably may require for the purpose
of enabling them to pass upon the issuance and sale of the Shares as herein
contemplated and to pass upon related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Fund and
the Adviser in connection with the organization and registration of the Fund
under the Investment Company Act and the issuance and sale of the Shares as
herein contemplated shall be satisfactory in form and substance to counsel to
the Underwriter and counsel to the Underwriter.
If any condition specified in this Section 6 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Underwriter by notice to the Fund at any time at or prior to Closing Time, and
such termination shall be without liability of any party to any other party,
except as provided in Section 5 hereof and except that
18
Sections 1, 7, 8 and 9 hereof shall survive any such termination and remain in
full force and effect.
SECTION 7. Indemnification. (a) The Fund and the Adviser jointly and
severally agree to indemnify and hold harmless the Underwriter and each person,
if any, who controls the Underwriter within the meaning of Section 15 of the
Securities Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the information deemed to be part of
the Registration Statement pursuant to Rule 430A or Rule 434 of the Rules
and Regulations, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, provided that
(subject to Section 7(d) below) any such settlement is effected with the
written consent of the indemnifying party; and
(iii) against any and all expenses whatsoever (including the fees and
disbursements of counsel chosen by the Underwriter) reasonably incurred in
investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund by the
Underwriter expressly for use in the Registration Statement (or any amendment
thereto), including the information deemed to be a part of the Registration
Statement pursuant to Rule 430A or Rule 434 of the
19
Rules and Regulations, or any preliminary prospectus or in the Prospectus (or
any amendment or supplement thereto).
(b) The Underwriter agrees to indemnify and hold harmless the Fund and the
Adviser, their respective directors, each of the Fund's officers who signed the
Registration Statement, and each person, if any, who controls the Fund or the
Adviser within the meaning of Section 15 of the Securities Act, against any and
all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section 7, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or in any amendment or supplement
thereto) or in any preliminary prospectus or in the Prospectus (or in any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Fund by the Underwriter expressly for use in the
Registration Statement (or in any amendment or supplement thereto), including
the information deemed to be a part of the Registration Statement pursuant to
Rule 430A or Rule 434 of the Rules and Regulations, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the Fund
by the Underwriter expressly for use in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudicial as a result thereof and
in no event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for the fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 7 or Section
8 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
20
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 7 (a)(ii) hereof effected
without its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
SECTION 8. Contribution. If the indemnification provided for in Section 7
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses incurred by such indemnified party, as incurred, (i) in such proportion
as is appropriate to reflect the relative benefits received by the Fund and the
Adviser on the one hand and the Underwriter on the other hand from the offering
of the Shares pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Fund and the Adviser on the one hand
and of the Underwriter on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Fund and the Adviser on the one hand
and the Underwriter on the other hand in connection with the offering of the
Shares pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Shares pursuant
to this Agreement (before deducting expenses) received by the Fund and the total
underwriting discount received by the Underwriter, in each case as set forth on
the cover of the Prospectus, or, if Rule 434 is used, the corresponding location
on the term sheet, bear to the aggregate initial public offering price of the
Shares as set forth on such cover.
The relative fault of the Fund and the Adviser on the one hand and the
Underwriter on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Fund and the Adviser or by the Underwriter and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
21
The Fund, the Adviser and the Underwriter agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 8. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 8 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, the Underwriter shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which the Underwriter
has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls the
Underwriter within the meaning of Section 15 of the Securities Act shall have
the same rights to contribution as the Underwriter, and each officer or director
of the Fund and the Adviser, respectively, each director of the Fund who signed
the Registration Statement, and each person, if any, who controls the Fund and
the Adviser within the meaning of Section 15 of the Securities Act shall have
the same rights to contribution as the Fund and the Adviser, respectively.
SECTION 9. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
the Pricing Agreement, or contained in certificates of officers of the Fund or
of the Adviser submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Fund or the Adviser
and shall survive delivery of the Shares to the Underwriter.
SECTION 10. Termination of Agreement. (a) The Underwriter may terminate
this Agreement by written notice to the Fund, at any time at or prior to Closing
Time (i) if there has been, since the time of execution of this Agreement or
since the respective dates as of which information is given in the Prospectus,
any material adverse change in the condition, financial or otherwise,
22
or in the earnings, business affairs or business prospects of the Fund or the
Adviser, whether or not arising in the ordinary course of business, or (ii) if
there has occurred any material adverse change in the financial markets in the
United States or elsewhere, any outbreak of hostilities or escalation thereof or
other calamity or crisis or any change or development involving a prospective
change in national or international political, financial or economic conditions,
in each case the effect of which is such as to make it, in the judgment of the
Underwriter impracticable to market the Shares or enforce contracts for the sale
of the Shares, or (iii) if trading in the Common Stock has been suspended or
materially limited by the Commission or if trading generally on either the New
York Stock Exchange or the American Stock Exchange or in the NASDAQ National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices for securities have
been required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) if a banking moratorium has been declared by
Federal or New York authorities. As used in this subsection (a), the term
"Prospectus" means the Prospectus in the form first used to confirm sales of the
Shares.
(b) If this Agreement is terminated pursuant to this Section 10, such
termination shall be without liability of any party to any other party except as
provided in Section 5 hereof, and provided further that Sections 1, 7, 8 and 9
hereof shall survive such termination and remain in full force and effect.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of written telecommunication. Notices to the
Underwriter shall be directed to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated at ▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters, World Financial
Center, North Tower, New York, New York 10281-1201, Attention: ▇▇▇ ▇▇▇▇▇▇▇,
Vice President; notices to the Fund or to the Adviser shall be directed to each
of them at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇, President.
SECTION 12. Parties. This Agreement and the Pricing Agreement shall inure
to the benefit of and be binding upon the Underwriter, the Fund, the Adviser and
their respective successors. Nothing expressed or mentioned in this Agreement
or in the Pricing Agreement is intended or shall be construed to give any
person, firm or corporation, other than the parties hereto and their respective
successors and the controlling persons and officers and directors referred to in
Sections 7 and 8 hereof and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and the Pricing Agreement and all
conditions and provisions hereof are intended to be for the sole and exclusive
benefit of the
23
parties hereto and ▇▇▇▇▇▇▇ and their respective successors, and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No purchaser of
Shares from the Underwriter shall be deemed to be a successor merely by reason
of such purchase.
SECTION 13. Governing Law and Time. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
State. Specified times of day refer to New York City time.
24
If the foregoing is in accordance with your understanding of our Agreement,
please sign and return to us a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a single binding agreement between the
Underwriter and the Fund and the Adviser in accordance with its terms.
Very truly yours,
MUNIHOLDINGS FUND, INC.
By: __________________________
Authorized Officer
FUND ASSET MANAGEMENT, L.P.
By: __________________________
Authorized Officer
Confirmed and Accepted,
as of the date
first above written:
▇▇▇▇▇▇▇ LYNCH, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: ____________________________
Authorized Signatory
25
EXHIBIT A
---------
$
MUNIHOLDINGS FUND, INC.
(a Maryland corporation)
AUCTION MARKET PREFERRED STOCK(R) ["AMPS"(R)]
___ Series A Shares
___ Series B Shares
Liquidation Preference $ 25,000 Per Share
PRICING AGREEMENT
-----------------
________, 1997
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
World Financial Center
North Tower
New York, New York 10281-1201
Dear Sirs and Mesdames:
Reference is made to the Purchase Agreement, dated ____________, 1997
(the "Purchase Agreement"), relating to the purchase by ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.,
▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated (the "Underwriter") of ____
shares of Auction Market Preferred Stock(R), Series A ("Series A AMPS"), and
_____ shares of Auction Market Preferred Stock(R), Series B ("Series B AMPS"),
each with a par value of $.10 per share and a liquidation preference of $25,000
per share plus an amount equal to accumulated but unpaid dividends (whether or
not earned or declared) (collectively, the "Shares") of MuniHoldings Fund, Inc.
(the "Fund").
Pursuant to Section 2 of the Purchase Agreement, the Fund agrees with
the Underwriter as follows:
----------------------
(R) Registered trademark of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
26
1. The initial public offering price per share for the Shares,
determined as provided in said Section 2, shall be $25,000 plus
accumulated dividends, if any, from the date of original issue.
2. The purchase price per share for the Shares to be paid by the
Underwriter shall be $______ plus accumulated dividends, if any, from the
date of original issue, being an amount equal to the initial public
offering price set forth above less $___ per share.
3. The dividend rate for the Series A Amps for the Initial Dividend
Period ending __________, 1997 will be __%, and the dividend rate for the
Series B AMPS for the Initial Dividend Period ending _________, 1997 will
be __%.
27
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Fund a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a single binding
agreement between the Underwriter and the Fund in accordance with its terms.
Very truly yours,
MUNIHOLDINGS FUND, INC.
By: --------------------------------
Authorized Officer
Confirmed and Accepted, as of the date first above written:
▇▇▇▇▇▇▇ LYNCH, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
By: ---------------------------
Authorized Signatory
A-3
