Exhibit No. 7(a)
26,700,000 SHARES*
OF COMMON STOCK
MANAGED HIGH YIELD PLUS FUND INC.
UNDERWRITING AGREEMENT
June 24, 1998
PAINEWEBBER INCORPORATED
as Representative of the Several Underwriters
named in Schedule 1 hereto
c/o PaineWebber Incorporated
1285 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Managed High Yield Plus Fund Inc., a Maryland corporation (the
"Fund"), proposes to issue and sell to you and the other underwriters named in
Schedule 1 hereto (the "Underwriters"), for whom you are acting as
representative (the "Representative"), up to 26,700,000 shares of its common
stock (the "Firm Shares"), par value $.001 per share (the "Common Shares"). In
-----------------------
* Plus an optin to purchase, in the aggregate, up to 4,005,000 additional
Commmon Shares to cover over-allotments.
addition, the Fund hereby grants to the Underwriters an option (the "Option") to
purchase up to an additional 4,005,000 of its Common Shares (the "Option
Shares") solely for the purpose of covering over-allotments. The Firm Shares and
the Option Shares are referred to collectively herein as the "Shares."
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Asset Management Inc., a Delaware corporation (the
"Investment Adviser"), will act as the Fund's investment adviser and
administrator pursuant to an Investment Advisory and Administration Agreement by
and between the Fund and the Investment Adviser, dated as of June 22, 1998 (the
"Investment Advisory Agreement"). State Street Bank and Trust Company ("State
Street") will act as the custodian (the "Custodian") of the Fund's cash and
portfolio assets pursuant to a custody agreement, dated as of June 22, 1998 (the
"Custody Agreement"). PNC Bank, National Association, will act as the Fund's
dividend disbursing agent, transfer agent and registrar (the "Transfer Agent")
pursuant to a transfer agency agreement, dated June 22, 1998 (the "Transfer
Agency Agreement").
The Fund and the Investment Adviser each hereby confirms as follows
their agreements with the Representative and the several other Underwriters.
1. SALE AND PURCHASE; COMPENSATION
-------------------------------
(a) The Fund will issue and sell to each Underwriter, and each
Underwriter will purchase from the Fund, the number of Firm Shares opposite such
Underwriter's name in Schedule 1 hereto, at the purchase price of $15.00 per
share of Common Shares.
(b) The Fund grants to the Underwriters the Option to purchase
all or any part of the Option Shares for the same consideration per share as for
the Firm Shares. The Option may be exercised only to cover over-allotments in
the sales of the Firm Shares by the Underwriters. The number of Option Shares
(adjusted by the Representative to eliminate fractions) to be purchased by each
Underwriter will be the same percentage of the aggregate number of Option Shares
being sold as such Underwriter is obligated to purchase of the Firm Shares. Such
Option may be exercised in whole or in part, only to cover over-allotments, at
any time or from time to time on or before the 45th day after the date of this
Underwriting Agreement, upon written or telefacsimile notice (the "Option Shares
Notice") from the Representative to the Fund no later than 12:00 noon, New York
City time, at least two and not more than five business days before the date
2
specified for closing in the Option Shares Notice (the "Option Shares Closing
Date"), setting forth the number of Option Shares to be purchased and the time
and date of such purchase. Upon delivery and receipt of the Option Shares
Notice, the Fund will issue and sell to each Underwriter, and each Underwriter
will purchase from the Fund, on the Option Shares Closing Date, its portion of
the number of Option Shares set forth in the Option Shares Notice.
(c) The obligations of the Underwriters under this
Underwriting Agreement are several and not joint and are undertaken on the basis
of the representations and are subject to the conditions set forth in this
Underwriting Agreement.
(d) The Investment Adviser agrees to make the payments to the
Underwriters when and as required by Section 2 hereof.
2. PAYMENT AND DELIVERY. Delivery by the Fund of the Firm Shares
(the "Firm Shares Closing") to the Representative for the accounts of the
Underwriters against payment of the purchase price by wire transfer of Federal
Funds or similar same day funds to the Fund for the Firm Shares, will take place
at the offices of PaineWebber Incorporated, 1285 Avenue of the Americas, New
York, New York, or through the facilities of the Depository Trust Company or
another mutually agreeable facility, at 9:00 a.m., New York City time, on the
third business day following the date of this Underwriting Agreement, or at such
time on such other date, not later than ten business days after the date of this
Underwriting Agreement, as may be agreed on by the Fund and the Representative
(the "Firm Shares Closing Date").
If and to the extent that the Option is exercised, delivery of the
Option Shares and payment by the Underwriters (in the manner specified above)
will take place at the offices or through the facilities specified above for the
Firm Shares Closing at the time and date (which may be the Firm Shares Closing
Date) specified in the Option Shares Notice. Any Option Shares Closing Date may
not be later than three business days following the exercise of the related
Option. The Firm Shares Closing Date and any Option Shares Closing Date are
called the "Closing Dates."
Certificates evidencing Common Shares will be in definitive form (or
temporary form acceptable to the New York Stock Exchange), registered in such
names and in such denominations as the Representative requests at least three
full business days before the Firm Shares Closing Date or, in the case of Option
Shares, on the day of notice of exercise of the Option as described in Section
3
1(b), and will be made available to the Representative for checking and
packaging, at a place in New York City designated by the Representative, at
least one full business day before the relevant Closing Date.
Simultaneous with delivery to the Underwriters of and payment by the
Underwriters for (i) Firm Shares on the Firm Shares Closing Date and (ii) Option
Shares on the Option Shares Closing Date, PaineWebber Incorporated
("PaineWebber") will pay to the Underwriters an amount equal to 5% of the
purchase price per Share for each Share to be purchased by the Underwriters on
such date by wire transfer of Federal Funds or similar same-day funds on such
Firm Shares Closing Date or Option Shares Closing Date, as the case may be, to
the order of PaineWebber Incorporated.
3. REGISTRATION STATEMENT AND PROSPECTUS; PUBLIC OFFERING. The Fund
has filed with the Securities and Exchange Commission (the "Commission"),
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), the
Investment Company Act of 1940, as amended (the "Investment Company Act"), and
the published rules and regulations adopted by the Commission under the
Securities Act (the "Securities Act Rules") and the Investment Company Act (the
"Investment Company Act Rules"), a Notification of Registration on Form N-8A
(the "Notification" pursuant to Section 8 of the Investment Company Act and a
registration statement on Form N-2 (File Nos. 333-51017 and 811-08765) relating
to the Shares (the "registration statement"), including a preliminary prospectus
(including any preliminary statement of additional information), and such
amendments to such registration statement as may have been required to the date
of this Underwriting Agreement. The preliminary prospectus (including any
preliminary statement of additional information) is to be used in connection
with the offering and sale of the Shares. The term "Preliminary Prospectus" as
used herein means any preliminary prospectus (including any preliminary
statement of additional information) included at any time as a part of the
registration statement and any preliminary prospectus (including any preliminary
statement of additional information) omitted therefrom pursuant to the
Securities Act Rules.
The Fund has furnished the Representative copies of such
registration statement, each amendment to such registration statement filed by
the Fund with the Commission and the Preliminary Prospectus filed by the Fund
with the Commission or used by the Fund. If the registration statement has not
become effective, a further amendment (the "Final Amendment") to such
registration statement, including the forms of final prospectus (including any
4
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 such registration statement has become effective and any
prospectus (including any statement of additional information) contained therein
omits certain information at the time of effectiveness pursuant to Rule 430A of
the Securities Act Rules, a final prospectus (the "Rule 430A Prospectus")
containing such omitted information will be filed by the Fund with the
Commission in accordance with Rule 497(h) of the Securities Act Rules. The
registration statement as amended at the time it becomes or became effective
(the "Effective Date"), including financial statements and all exhibits, and any
information deemed to be included by Rule 430A, is called the "Registration
Statement." The term "Prospectus" means the prospectus (including any statement
of additional information) in the form in which it is first filed with the
Commission pursuant to Rule 497(b), (h) or (j) of the Securities Act Rules, as
the case may be.
The Fund and the Investment Adviser understand that the Underwriters
propose to make a public offering of the Firm Shares, as described in the
Prospectus, as soon after the Effective Date (or, if later, after the date this
Underwriting Agreement is signed) as the Representative deems advisable. The
Fund and the Investment Adviser confirm that the Underwriters and dealers have
been authorized to distribute the Preliminary Prospectus relating to the Shares
included in Pre-Effective Amendment No. 1 to the registration statement and are
authorized to distribute the Prospectus and any amendments or supplements
thereto.
4. REPRESENTATIONS.
---------------
(a) Each of the Fund and the Investment Adviser jointly and
severally represents to each Underwriter as follows:
(i) On (A) the Effective Date and the date on which the
Prospectus is first filed with the Commission pursuant to Rule 497(b), (h)
or (j) of the Securities Act Rules, as the case may be, (B) the date on
which any post-effective amendment to the Registration Statement (except
any post-effective amendment which is filed with the Commission after the
later of (x) one year from the date of this Underwriting Agreement or (y)
the date on which the distribution of the Shares is completed) became or
becomes effective or any amendment or supplement to the Prospectus was or
is filed with the Commission and (C) the Closing Dates, the Registration
Statement, the Prospectus and any such amendment or supplement thereto and
the Notification complied or will comply in all material respects with the
5
requirements of the Securities Act, the Investment Company Act, the
Securities Act Rules and the Investment Company Act Rules, as the case may
be. On the Effective Date and on the date that any post-effective
amendment to the Registration Statement (except any post-effective
amendment which is filed with the Commission after the later of (x) one
year from the date of this Underwriting Agreement or (y) the date on which
the distribution of the Shares is completed) became or becomes effective,
neither the Registration Statement nor any such amendment did or will
contain any untrue statement of a material fact or omit to state a
material fact required to be stated in it or necessary to make the
statements in it not misleading. At the Effective Date and, if applicable,
the date the Prospectus or any amendment or supplement to the Prospectus
was or is filed with the Commission and at the Closing Dates, the
Prospectus did not or will not, as the case may be, contain any untrue
statement of a material fact or omit to state a material fact required to
be stated in it or necessary to make the statements in it, in light of the
circumstances under which they were made, not misleading. The foregoing
representations in this Section 4(a)(i) do not apply to statements or
omissions relating to the Underwriters made in reliance on and in
conformity with information furnished in writing to the Fund by the
Representative expressly for use in the Registration Statement, the
Prospectus, or any amendments or supplements thereto.
(ii) The Fund has been duly organized, is validly
existing and in good standing as a corporation under the laws of the State
of Maryland, with full power and authority to conduct all the activities
conducted by it, to own or lease all assets owned or leased by it and to
conduct its business as described in the Registration Statement and
Prospectus, and the Fund is duly licensed and qualified to do business and
in good standing as a foreign corporation or otherwise in each
jurisdiction in which its ownership or leasing of property or its
conducting of business requires such qualification, except where the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Fund, and the Fund owns, possesses or has
obtained and currently maintains all governmental licenses, permits,
consents, orders, approvals and other authorizations, whether foreign or
domestic, necessary to carry on its business as contemplated in the
6
Prospectus. The Fund has no subsidiaries.
(iii) The capitalization of the Fund is as set forth in
the Registration Statement and the Prospectus. The Common Shares of the
Fund conform in all material respects to the description of them in the
Prospectus. All the outstanding Common Shares have been duly authorized
and are validly issued, fully paid and nonassessable. The Shares to be
issued and delivered to and paid for by the Underwriters in accordance
with this Underwriting Agreement against payment therefor as provided by
this Underwriting Agreement have been duly authorized and when issued and
delivered to the Underwriters will have been validly issued and will be
fully paid and nonassessable. No person is entitled to any preemptive or
other similar rights with respect to the Shares.
(iv) The Fund is duly registered with the Commission
under the Investment Company Act as a diversified, closed-end management
investment company, and, subject to the filing of the Final Amendment, if
not already filed, all action under the Securities Act, the Investment
Company Act, the Securities Act Rules and the Investment Company Act
Rules, as the case may be, necessary to make the public offering and
consummate the sale of the Shares as provided in this Underwriting
Agreement has or will have been taken by the Fund.
(v) The Fund has full power and authority to enter into
each of the Underwriting Agreement, the Investment Advisory Agreement, the
Custody Agreement and the Transfer Agency Agreement (collectively, the
"Fund Agreements") and to perform all of the terms and provisions hereof
and thereof to be carried out by it and (A) each Fund Agreement has been
duly and validly authorized, executed and delivered by the Fund, (B) each
Fund Agreement does not violate in any material respect any of the
applicable provisions of the Investment Company Act, the Investment
Advisers Act of 1940 (the "Advisers Act"), the Investment Company Act
Rules and the rules and regulations adopted by the Commission under the
Advisers Act (the "Advisers Act Rules"), as the case may be, and (C)
assuming due authorization, execution and delivery by the other parties
thereto, each Fund Agreement constitutes the legal, valid and binding
7
obligation of the Fund enforceable in accordance with its terms, (1)
subject, as to enforcement, to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and to general
equitable principles (regardless of whether enforcement is sought in a
proceeding in equity or at law) and (2) except as rights to indemnity
thereunder may be limited by federal or state securities laws.
(vi) None of (A) the execution and delivery by the Fund
of the Fund Agreements, (B) the issue and sale by the Fund of the Shares
as contemplated by this Underwriting Agreement and (C) the performance by
the Fund of its obligations under the Fund Agreements or consummation by
the Fund of the other transactions contemplated by the Fund Agreements
conflicts with or will conflict with, or results or will result in a
breach of, the Articles of Incorporation or the By-laws of the Fund or any
agreement or instrument to which the Fund is a party or by which the Fund
is bound, or any law, rule or regulation, or order of any court,
governmental instrumentality, securities exchange or association or
arbitrator, whether foreign or domestic, applicable to the Fund, other
than state or foreign securities or "blue sky" laws applicable in
connection with the purchase and distribution of the Shares by the
Underwriters pursuant to this Underwriting Agreement.
(vii) The Fund is not currently in breach of, or in
default under, any written agreement or instrument to which it is a party
or by which it or its property is bound or affected.
(viii) No person has any right to the registration of
any securities of the Fund because of the filing of the registration
statement.
(ix) No consent, approval, authorization or order of any
court or governmental agency or body or securities exchange or
association, whether foreign or domestic, is required by the Fund for the
consummation by the Fund of the transactions to be performed by the Fund
or the performance by the Fund of all the terms and provisions to be
performed by or on behalf of it in each case as contemplated in the Fund
Agreements, except such as (A) have been obtained under the Securities
8
Act, the Investment Company Act, the Advisers Act, the Securities Act
Rules, the Investment Company Act Rules, and the Advisers Act Rules, and
(B) may be required by the New York Stock Exchange or under state or
foreign securities or "blue sky" laws, in connection with the purchase and
distribution of the Shares by the Underwriters pursuant to this
Underwriting Agreement.
(x) The Shares are duly authorized for listing, subject
to official notice of issuance, on the New York Stock Exchange and the
Fund's Registration Statement on Form 8-A, under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), has become effective.
(xi) Ernst & Young LLP, whose report appears in the
Prospectus, are independent public accountants with respect to the Fund as
required by the Securities Act, the Investment Company Act, the Securities
Act Rules and the Investment Company Act Rules.
(xii) The statement of assets and liabilities included
in the Registration Statement and the Prospectus presents fairly in all
material respects, in accordance with generally accepted accounting
principles in the United States applied on a consistent basis, the
financial position of the Fund as at the date indicated.
(xiii) The Fund will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or
specific authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(C) access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xiv) Since the date as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
9
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, 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 other than those in the
ordinary course of its business and (C) there has been no dividend or
distribution of any kind declared, paid or made on any class of its
capital shares.
(xv) There is no action, suit or proceeding before or by
any court, commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending, or, to the
knowledge of the Fund, threatened against or affecting the Fund, which (A)
might result in any material adverse change in the condition, financial or
otherwise, business affairs or business prospects of the Fund or might
materially adversely affect the properties or assets of the Fund or (B) is
of a character required to be described in the Registration Statement or
the Prospectus; and there are no contracts, franchises or other documents
that are of a character required to be described in, or that are required
to be filed as exhibits to, the Registration Statement that have not been
described or filed as required.
(xvi) Except for stabilization transactions conducted by
the Underwriters, and except for tender offers, Share repurchases and the
issuance or purchase of Shares pursuant to the Fund's dividend
reinvestment plan ("DRP") effected following the date on which the
distribution of the Shares is completed in accordance with the policies of
the Fund as set forth in the Prospectus, the Fund has not taken and will
not take, directly or indirectly, any action designed or which might be
reasonably expected to cause or result in, or which will constitute,
stabilization or manipulation of the price of the Common Shares.
(xvii) The Fund intends to direct the investment of the
proceeds of the offering of the Shares in such a manner as to comply with
the requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code").
10
(xviii) To the knowledge of the Fund after due inquiry,
no advertising, sales literature or other promotional materials (excluding
broker kits, which include the broker fact sheet, road show slides or road
show tapes) were authorized or prepared by or on behalf of the Fund and
the Investment Adviser or any representative thereof for use in connection
with the public offering or sale of the Shares other than the definitive
client brochure, a draft of which was filed with the NASD on May 19, 1998,
and final investor prospecting letters, drafts of which were filed with
the NASD on June 8, 1998 (collectively, the "sales materials"); the sales
materials complied and comply in all material respects with the applicable
requirements of the Securities Act, the Securities Act Rules and the rules
and interpretations of the NASD; and no broker kits, road show slides,
road show tapes or sales materials authorized or prepared by the Fund or
authorized or prepared on behalf of the Fund by the Investment Adviser or
any representative thereof for use in connection with the public offering
or sale of the Shares contained or contains any untrue statement of a
material fact or omitted or omits to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading.
(b) The Investment Adviser represents to each Underwriter as
follows:
(i) The Investment Adviser has been duly organized, is
validly existing and in good standing as a corporation under the laws of
the State of Delaware with full power and authority to conduct all of the
activities conducted by it, to own or lease all of the assets owned or
leased by it and to conduct its business as described in the Registration
Statement and Prospectus, and the Investment Adviser is duly licensed and
qualified as a foreign corporation and in good standing in each
jurisdiction in which it is required to be so qualified, except to the
extent that failure to be so qualified or be in good standing would not
have a material adverse affect on the Investment Adviser; and the
Investment Adviser owns, possesses or has obtained and currently maintains
all governmental licenses, permits, consents, orders, approvals and other
authorizations, whether foreign or domestic, necessary to carry on its
business as contemplated in the Registration Statement and the Prospectus.
11
(ii) The Investment Adviser is (A) duly registered as an
investment adviser under the Advisers Act and (B) not prohibited by the
Advisers Act, the Investment Company Act, the Advisers Act Rules or the
Investment Company Act Rules from acting as the investment adviser for the
Fund as contemplated by the Investment Advisory Agreement, the
Registration Statement and the Prospectus.
(iii) The Investment Adviser has full power and
authority to enter into each of this Underwriting Agreement and the
Investment Advisory Agreement and to carry out all the terms and
provisions hereof and thereof to be carried out by it, and each such
agreement has been duly and validly authorized, executed and delivered by
the Investment Adviser; each of the Investment Advisory Agreement and this
Underwriting Agreement does not violate in any material respect any of the
applicable provisions of the Investment Company Act, the Advisers Act, the
Investment Company Act Rules and the Advisers Act Rules; and assuming due
authorization, execution and delivery by the other parties thereto, each
of this Underwriting Agreement and the Investment Advisory Agreement
constitutes a legal, valid and binding obligation of the Investment
Adviser, enforceable in accordance with its terms, (1) subject, as to
enforcement, to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general equitable principles
(regardless of whether enforcement is sought in a proceeding in equity or
at law) and (2) except as rights to indemnity thereunder may be limited by
federal or state securities laws.
(iv) Neither (A) the execution and delivery by the
Investment Adviser of the Underwriting Agreement or the Investment
Advisory Agreement by the Investment Adviser nor (B) the consummation by
the Investment Adviser of the transactions contemplated by, or the
performance of its obligations under such agreements conflicts or will
conflict with, or results or will result in a breach of, the Articles of
Incorporation or By-Laws of the Investment Adviser or any agreement or
instrument to which the Investment Adviser is a party or by which the
Investment Adviser is bound, or any law, rule or regulation, or order of
any court, governmental instrumentality, securities exchange or
12
association or arbitrator, whether foreign or domestic, applicable to the
Investment Adviser.
(v) No consent, approval, authorization or order of any
court, governmental agency or body or securities exchange or association,
whether foreign or domestic, is required for the consummation of the
transactions contemplated in, or the performance by the Investment Adviser
of its obligations under, the Underwriting Agreement or the Investment
Advisory Agreement, as the case may be, except such as (A) have been
obtained under the Investment Company Act, the Advisers Act, the
Securities Act, the Investment Company Act Rules, the Advisers Act Rules
and the Securities Act Rules, and (B) may be required by the New York
Stock Exchange or under state or foreign securities or "blue sky" laws, in
connection with the purchase and distribution of the Shares by the
Underwriters pursuant to this Underwriting Agreement.
(vi) The description of the Investment Adviser and its
business in the Registration Statement and the Prospectus complies with
the requirements of the Securities Act, the Investment Company Act, the
Securities Act Rules and the Investment Company Act Rules and does not
contain any 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 not misleading.
(vii) There is no action, suit or proceeding before or
by any court, commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending or, to the
knowledge of the Investment Adviser, threatened against or affecting the
Investment Adviser of a nature required to be disclosed in the
Registration Statement or Prospectus or that might result in any material
adverse change in the condition, financial or otherwise, business affairs
or business prospects of the Investment Adviser or the ability of the
Investment Adviser to fulfill its respective obligations under the
Underwriting Agreement or under the Investment Advisory Agreement.
(viii) Except for stabilization activities conducted by
the Underwriters and except for tender offers, Share repurchases and the
issuance or purchase of Shares pursuant to the Fund's dividend
13
reinvestment plan ("DRP") effected following the date on which the
distribution of the Shares is completed in accordance with the policies of
the Fund as set forth in the Prospectus, the Investment Adviser has not
taken and will not take, directly or indirectly, any action designed, or
which might reasonably be expected to cause or result in, or which will
constitute, stabilization or manipulation of the price of the Common
Shares.
5. AGREEMENTS OF THE PARTIES.
-------------------------
(a) If the registration statement relating to the Shares has
not yet become effective, the Fund will promptly file the Final Amendment, if
not previously filed, with the Commission, and will use its best efforts to
cause such registration statement to become effective and, as soon as the Fund
is advised, will advise the Representative when the Registration Statement or
any amendment thereto has become effective. If the Registration Statement has
become effective and the Prospectus contained therein omits certain information
at the time of effectiveness pursuant to Rule 430A of the Securities Act Rules,
the Fund will file a 430A Prospectus pursuant to Rule 497(h) of the Securities
Act Rules as promptly as practicable, but no later than the second business day
following the earlier of the date of the determination of the offering price of
the Shares or the date the Prospectus is first used after the Effective Date. If
the Registration Statement has become effective and the Prospectus contained
therein does not so omit such information, the Fund will file a Prospectus
pursuant to Rule 497(b) or (j) of the Securities Act Rules as promptly as
practicable, but no later than the fifth business day following the date of the
later of the Effective Date or the commencement of the public offering of the
Shares after the Effective Date. In either case, the Fund will provide the
Representative satisfactory evidence of the filing. The Fund will not file with
the Commission any Prospectus or any other amendment (except any post-effective
amendment which is filed with the Commission after the later of (x) one year
from the date of this Underwriting Agreement or (y) the date on which
distribution of the Shares is completed) or supplement to the Registration
Statement or the Prospectus unless a copy has first been submitted to the
Representative a reasonable time before its filing and the Representative has
not objected to it in writing within a reasonable time after receiving the copy.
(b) For the period of three years from the date hereof, the
Fund will advise the Representative promptly (1) of the issuance by the
Commission of any order in respect of the Fund or the Investment Adviser which
14
relates to the Fund, or which relates to any arrangements or proposed
arrangements involving the Fund or the Investment Adviser, (2) of the initiation
or threatening of any proceedings for, or receipt by the Fund of any notice with
respect to, the suspension of the qualification of the Shares for sale in any
jurisdiction or the issuance of any order by the Commission suspending the
effectiveness of the Registration Statement, (3) of receipt by the Fund, or any
representative or attorney of the Fund, of any other communication from the
Commission relating to the Fund, the Registration Statement, the Notification,
any Preliminary Prospectus, the Prospectus or to the transactions contemplated
by this Underwriting Agreement and (4) the issuance by any court, regulatory
body, administrative agency or other governmental agency or body, whether
foreign or domestic, of any order, ruling or decree, or the threat to initiate
any proceedings with respect thereto, regarding the Fund, which relates to the
Fund or any arrangements or proposed arrangements involving the Fund. The Fund
will make every reasonable effort to prevent the issuance of any order
suspending the effectiveness of the Registration Statement and, if any such
order is issued, to obtain its lifting as soon as possible.
(c) If not delivered prior to the date of this Underwriting
Agreement, the Fund will deliver to the Representative, without charge, a signed
copy of the registration statement and the Notification and of any amendments
(except any post-effective amendment which is filed with the Commission after
the later of (x) one year from the date of this Underwriting Agreement or (y)
the date on which the distribution of the Shares is completed) to either the
Registration Statement or the Notification (including all exhibits filed with
any such document) and as many conformed copies of the registration statement
and any amendments thereto (except any post-effective amendment which is filed
with the Commission after the later of (x) one year from the date of this
Underwriting Agreement or (y) the date on which the distribution of the Shares
is completed) (excluding exhibits) as the Representative may reasonably request.
(d) During such period as a prospectus is required by law to
be delivered by an underwriter or a dealer, the Fund will deliver, without
charge, to the Representative, the Underwriters and any dealers, at such office
or offices as the Representative may designate, as many copies of the Prospectus
as the Representative may reasonably request, and, if any event occurs during
such period as a result of which it is necessary to amend or supplement the
Prospectus, in order to make the statements therein, in light of the
circumstances existing when such prospectus is delivered to a purchaser of
Shares, not misleading in any material respect, or if during such period it is
15
necessary to amend or supplement the prospectus to comply with the Securities
Act, the Investment Company Act, the Securities Act Rules or the Investment
Company Act Rules, the Fund promptly will prepare, submit to the Representative,
file with the Commission and deliver, without charge, to the Underwriters and to
dealers (whose names and addresses the Representative will furnish to the Fund)
to whom Shares may have been sold by the Underwriters, and to other dealers on
request, amendments or supplements to the Prospectus so that the statements in
such Prospectus, as so amended or supplemented, will not, in light of the
circumstances existing when such Prospectus is delivered to a purchaser, be
misleading in any material respect and will comply with the Securities Act, the
Investment Company Act, the Securities Act Rules and the Investment Company Act
Rules. Delivery by the Underwriters of any such amendments or supplements to the
Prospectus will not constitute a waiver of any of the conditions in Section 6
hereof.
(e) The Fund will make generally available to holders of the
Fund's securities, as soon as practicable but in no event later than the last
day of the 18th full calendar month following the calendar quarter in which the
Effective Date falls, an earnings statement, if applicable, satisfying the
provisions of Section 11(a) of the Securities Act and, at the option of the
Fund, Rule 158 of the Securities Act Rules.
(f) The Fund will take such actions as the Representative
reasonably requests in order to qualify the Shares for offer and sale under the
securities or "blue sky" laws of such jurisdictions as the Representative
reasonably designates; provided that the Fund shall not be required in
connection therewith or as a condition thereof to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction.
(g) If the transactions contemplated by this Underwriting
Agreement are consummated, PaineWebber will pay all costs and expenses incident
to the performance of the obligations of the Fund under this Underwriting
Agreement, including but not limited to costs and expenses of or relating to (1)
the preparation, printing and filing of the registration statement and exhibits
to it, each Preliminary Prospectus, the Prospectus and all amendments and
supplements thereto, (2) the issuance of the Shares and the preparation and
delivery of certificates for the Shares, (3) the registration or qualification
of the Shares for offer and sale under the securities or "blue sky" laws of the
jurisdictions referred to in the foregoing paragraph, including the fees and
disbursements of counsel for the Underwriters in that connection, and the
preparation and printing of preliminary and supplemental "blue sky" memoranda,
16
(4) the furnishing (including costs of design, production, shipping and mailing)
to the Underwriters and dealers of copies of each Preliminary Prospectus
relating to the Shares, the sales materials, the Prospectus, and all amendments
or supplements to the Prospectus, and of the other documents required by this
Section to be so furnished, (5) the filing requirements of the National
Association of Securities Dealers, Inc., in connection with its review of the
financing, including filing fees and the fees, disbursements and other charges
of counsel for the Underwriters in that connection, (6) all transfer taxes, if
any, with respect to the sale and delivery of the Shares to the Underwriters,
(7) the listing of the Shares on the New York Stock Exchange, and (8) the
transfer agent for the Shares.
(h) If the transactions contemplated by this Underwriting
Agreement are not consummated, except as otherwise provided herein, no party
will be under any liability to any other party, except that (1) if this
Underwriting Agreement is terminated by (x) the Fund or the Investment Adviser
pursuant to any of the provisions hereof (otherwise than pursuant to Section 9
hereof) or (y) by the Representative or the Underwriters because of any
inability, failure or refusal on the part of the Fund or the Investment Adviser
to comply with its terms or because any of the conditions in Section 6 are not
satisfied, PaineWebber and the Investment Adviser, jointly and severally, will
reimburse the Underwriters for all out-of-pocket expenses (including the
reasonable fees, disbursements and other charges of their counsel) reasonably
incurred by them in connection with the proposed purchase and sale of the Shares
and (2) no Underwriter who has failed or refused to purchase the Shares agreed
to be purchased by it under this Underwriting Agreement, in breach of its
obligations pursuant to this Underwriting Agreement, will be relieved of
liability to the Fund and the Investment Adviser and the other Underwriters for
damages occasioned by its default.
(i) Without the prior written consent of the Representative,
the Fund will not offer, sell or register with the Commission, or announce an
offering of, any equity securities of the Fund, within 180 days after the
Effective Date, except for the Shares as described in the Prospectus and any
issuances of Common Shares pursuant to the dividend reinvestment plan
established by the Fund.
(j) The Fund will use its best efforts to list the Shares on
the New York Stock Exchange and comply with the rules and regulations of such
exchange.
(k) The Fund will direct the investment of the net proceeds of
the offering of the Shares in such a manner as to comply with the investment
17
objective and policies of the Fund as described in the Prospectus.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters to purchase the Shares are subject to the accuracy on the date
of this Underwriting Agreement, and on the Closing Dates, of the representations
of the Fund and the Investment Adviser in this Underwriting Agreement, to the
accuracy and completeness of all statements made by the Fund or the Investment
Adviser or any of their respective officers in any certificate delivered to the
Representative or their counsel pursuant to this Underwriting Agreement, to
performance by the Fund and the Investment Adviser of their respective
obligations under this Underwriting Agreement and to each of the following
additional conditions:
(a) The registration statement must have become effective by
5:30 p.m., New York City time, on the date of this Underwriting Agreement or
such later date and time as the Representative consents to in writing. The
Prospectus must have been filed in accordance with Rule 497(b), (h) or (j), as
the case may be, of the Securities Act Rules.
(b) No order suspending the effectiveness of the Registration
Statement may be in effect and no proceedings for such purpose may be pending
before or, to the knowledge of counsel to the Underwriters, threatened by the
Commission, and any requests for additional information on the part of the
Commission (to be included in the Registration Statement or the Prospectus or
otherwise) must be complied with or waived to the reasonable satisfaction of the
Representative.
(c) Since the dates as of which information is given in the
Registration Statement and the Prospectus, (1) there must not have been any
material change in the Common Shares or liabilities of the Fund except as set
forth in or contemplated by the Prospectus; (2) there must not have been any
material adverse change in the general affairs, prospects, management, business,
financial condition or results of operations of the Fund or the Investment
Adviser whether or not arising from transactions in the ordinary course of
business as set forth in or contemplated by the Prospectus; (3) the Fund must
not have sustained any material loss or interference with its business from any
court or from legislative or other governmental action, order or decree, whether
foreign or domestic, or from any other occurrence not described in the
Registration Statement and Prospectus; and (4) there must not have occurred any
event that makes untrue or incorrect in any material respect any statement or
information contained in the Registration Statement or Prospectus or that is not
18
reflected in the Registration Statement or Prospectus but should be reflected
therein in order to make the statements or information therein (in the case of
the Prospectus, in light of the circumstances in which they were made) not
misleading in any material respect; if, in the judgment of the Representative,
any such development referred to in clause (1), (2), (3) or (4) of this
paragraph (c) makes it impracticable or inadvisable to consummate the sale and
delivery of the Shares pursuant to the Underwriting Agreement by the
Underwriters, at the initial public offering price of the Shares.
(d) The Representative must have received on each Closing Date
a certificate, dated such date, of a President or Vice-President and the chief
financial or accounting officer of each of the Fund and the Investment Adviser
certifying that (1) the signers have carefully examined the Registration
Statement, the Prospectus, and this Underwriting Agreement, (2) the
representations of the Fund (with respect to the certificates from such Fund
officers) and the representations of the Investment Adviser (with respect to the
certificates from such officers of the Investment Adviser) in this Underwriting
Agreement are accurate on and as of the date of the certificate, (3) there has
not been any material adverse change in the general affairs, prospects,
management, business, financial condition or results of operations of the Fund
(with respect to the certificates from such Fund officers) or the Investment
Adviser (with respect to the certificates from such officers of the Investment
Adviser), which change would materially and adversely affect the ability of the
Fund or the Investment Adviser, as the case may be, to fulfill its obligations
under this Underwriting Agreement or the Investment Advisory Agreement, whether
or not arising from transactions in the ordinary course of business, (4) with
respect to the Fund only, to the knowledge of such officers after reasonable
investigation, no order suspending the effectiveness of the Registration
Statement, prohibiting the sale of any of the Shares or having a material
adverse effect on the Fund has been issued and no proceedings for any such
purpose are pending before or threatened by the Commission or any other
regulatory body, whether foreign or domestic, (5) to the knowledge of the
officers of the Investment Adviser, after reasonable investigation, no order
having an adverse effect on the ability of the Investment Adviser to fulfill its
obligations under this Underwriting Agreement or the Investment Advisory
Agreement, as the case may be, has been issued and no proceedings for any such
purpose are pending before or threatened by the Commission or any other
regulatory body, whether foreign or domestic, and (6) each of the Fund (with
respect to the certificates from such Fund officers) and the Investment Adviser
(with respect to the certificates from such officers of the Investment Adviser)
has performed all of its respective agreements that this Underwriting Agreement
requires it to perform by such Closing Date.
19
(e) The Representative must receive on each Closing Date the
opinions dated such Closing Date substantially in the form of Annexes A and B to
this Underwriting Agreement from the counsel identified in each such Annex.
(f) The Representative must receive on each Closing Date from
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP or its affiliates, their counsel, an
opinion dated such Closing Date with respect to the Fund, the Shares, the
Registration Statement and the Prospectus, this Underwriting Agreement and the
form and sufficiency of all proceedings taken in connection with the sale and
delivery of the Shares. Such opinion and proceedings shall fulfill the
requirements of this Section 6(f) only if such opinion and proceedings are
satisfactory in all respects to the Representative. The Fund and the Investment
Adviser must have furnished to such counsel such documents as counsel may
reasonably request for the purpose of enabling them to render such opinion.
(g) The Representative must receive on the date this
Underwriting Agreement is signed and delivered by the Representative a signed
letter, dated such date, substantially in the form of Annex C to this
Underwriting Agreement from the firm of accountants designated in such Annex.
The Representative also must receive on each Closing Date a signed letter from
such accountants, dated such Closing Date, confirming on the basis of a review
in accordance with the procedures set forth in their earlier letter that nothing
has come to their attention during the period from a date not more than five
business days before the date of this Underwriting Agreement, specified in the
letter, to a date not more than five business days before such Closing Date,
that would require any change in their letter referred to in the foregoing
sentence.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Underwriting Agreement will comply only if they are
in form and scope reasonably satisfactory to counsel for the Representative,
provided that any such documents, forms of which are annexed hereto, shall be
deemed satisfactory to such counsel if substantially in such form.
7. INDEMNIFICATION AND CONTRIBUTION.
--------------------------------
(a) Each of the Fund and the Investment Adviser, jointly and
severally, will indemnify and hold harmless each Underwriter, the directors,
officers, employees and agents of such Underwriter and each person, if any, who
controls such Underwriter 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,
20
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 such Underwriter 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 federal or state statutory law or regulation, at common
law or otherwise, whether foreign or domestic, 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 Preliminary Prospectus, the Prospectus, the sales
materials, or any amendment or supplement to the Registration Statement, the
Preliminary Prospectus, the Prospectus, the sales materials or in any documents
filed under the Exchange Act and deemed to be incorporated by reference into the
Registration Statement, the Preliminary Prospectus, the Prospectus, or in any
application or other document executed by or on behalf of the Fund or based on
written information furnished by or on behalf of the Fund filed in any
jurisdiction in order to qualify the Shares under the securities laws thereof or
filed with the Commission, (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 or (iii) any act or
failure to act or any alleged act or failure to act by such Underwriter in
connection with, or relating in any manner to, 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
it is finally judicially determined by a court of competent jurisdiction that
such loss, claim, liability, expense or damage resulted directly from any such
acts or failures to act undertaken or omitted to be taken by such Underwriter
through its gross negligence, bad faith 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 are based on an untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information furnished in writing to the Fund by the
Representative on behalf of Underwriters expressly for inclusion in the
Registration Statement, the Preliminary Prospectus or the Prospectus. This
indemnity agreement will be in addition to any liability that the Fund or the
Investment Adviser might otherwise have.
21
(b) Each Underwriter 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 director of the Fund and each officer of
the Fund who signs the Registration Statement to the same extent as the
foregoing indemnity from the Fund or the Investment Adviser to the Underwriter,
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
such Underwriter furnished in writing to the Fund by such Underwriter expressly
for use in the Registration Statement, the Preliminary Prospectus or Prospectus.
This indemnity will be in addition to any liability that such Underwriter might
otherwise have; provided, however, that in no case shall such Underwriter be
liable or responsible for any amount in excess of the fees and commissions
received by the Underwriter.
(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 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
22
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based on the advice of counsel) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party (3) a
conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. Subject to
the requirements of Investment Company Act Release No. 11330, 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.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in 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 Underwriters, the Fund,
the Investment Adviser and the Underwriters 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 Adviser
from persons other than the Underwriter, 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 directors of
the Fund, who may also be liable for contribution) to which the Fund, the
23
Investment Adviser and the Underwriters 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 Underwriters 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 Underwriters 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 and commissions received by the Underwriters. 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
Underwriters 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 appropriate in the circumstances.
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 Underwriters, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission and any other equitable considerations
appropriate in the circumstances. The Fund, the Investment Adviser and the
Underwriters 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 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 Underwriters shall not be required to contribute any
amount in excess of the fees and commissions 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
24
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). 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) 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.
(f) The Fund and the Investment Adviser acknowledge that the
statements with respect to stabilization on the second page of and under the
caption "Underwriting" in the Preliminary Prospectus and in the Prospectus
constitute the only information furnished in writing to the Fund by the
Representative on behalf of the Underwriters expressly for use in such document.
8. TERMINATION. This Underwriting Agreement may be terminated by the
Representative by notifying the Fund at any time:
(a) before the later of the effectiveness of the Registration
Statement and the time when any of the Shares are first generally offered
pursuant to the Underwriting Agreement by the Representative to dealers by
letter or telegram;
(b) at or before any Closing Date if, in the sole judgment of
the Representative, payment for and delivery of any Shares is rendered
impracticable or inadvisable because (1) trading in the equity securities of the
Fund is suspended by the Commission or by the principal exchange that lists the
Shares, (2) additional material governmental restrictions, not in force on the
date of this Underwriting Agreement, have been imposed upon trading in
securities or trading has been suspended on any U.S. securities exchange, (3) a
general banking moratorium has been established by U.S. federal or New York
25
authorities or (4) any outbreak or material escalation of hostilities or other
calamity or crisis occurs, the effect of which is such as to make it
impracticable to market any of the Shares; or
(c) at or before any Closing Date, if any of the conditions
specified in Section 6 have not been fulfilled when and as required by this
Underwriting Agreement.
9. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters
fails (other than for a reason sufficient to justify the termination of this
Underwriting Agreement) to purchase on any Closing Date the Shares agreed to be
purchased on such Closing Date by such Underwriter or Underwriters, the
Representative may find one or more substitute underwriters to purchase such
Shares or make such other arrangements as the Representative deems advisable, or
one or more of the remaining Underwriters may agree to purchase such Shares in
such proportions as may be approved by the Representative, in each case upon the
terms set forth in this Underwriting Agreement. If no such arrangements have
been made within 36 hours after such Closing Date, and
(a) the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date does not exceed 10% of the Shares that the
Underwriters are obligated to purchase on such Closing Date, each of the
nondefaulting Underwriters will be obligated to purchase such Shares on the
terms set forth in this Underwriting Agreement in proportion to their respective
obligations under this Underwriting Agreement, or
(b) the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date exceeds 10% of the Shares to be purchased by
all the Underwriters on such Closing Date, the Fund will be entitled to an
additional period of 24 hours within which to find one or more substitute
underwriters reasonably satisfactory to the Representative to purchase such
Shares on the terms set forth in this Underwriting Agreement.
In any such case, either the Representative or the Fund will have
the right to postpone the applicable Closing Date for not more than five
business days in order that necessary changes and arrangements (including any
necessary amendments or supplements to the Registration Statement or the
Prospectus) may be effected by the Representative and the Fund. If the number of
Shares to be purchased on such Closing Date by such defaulting Underwriter or
Underwriters exceeds 10% of the Shares that the Underwriters are obligated to
26
purchase on such Closing Date, and none of the nondefaulting Underwriters or the
Fund makes arrangements pursuant to this Section within the period stated for
the purchase of the Shares that the defaulting Underwriters agreed to purchase,
this Underwriting Agreement will terminate without liability on the part of any
nondefaulting Underwriter, the Fund or the Investment Adviser, except as
provided in Sections 5(g) and 7 hereof. This Section will not affect the
liability of any defaulting Underwriter to the Fund or the nondefaulting
Underwriters arising out of such default. A substitute underwriter will become a
Underwriter for all purposes of this Underwriting Agreement.
10. MISCELLANEOUS.
-------------
(a) The reimbursement, indemnification and contribution
agreements in Sections 5(g) and 7 hereof and the representations of the Fund,
the Investment Adviser and the Underwriters in this Underwriting Agreement will
remain in full force and effect regardless of any termination of this
Underwriting Agreement. The reimbursement, indemnification and contribution
agreements in Sections 5(g) and 7 hereof and the representations and agreements
of the Fund, the Investment Adviser and the Underwriters in this Underwriting
Agreement shall survive the Closing Dates and shall remain in full force and
effect regardless of any investigation made by or on behalf of any Underwriter,
the Fund, the Investment Adviser or any controlling person and delivery of and
payment for the Shares.
(b) This Underwriting Agreement is for the benefit of the
Underwriters, the Fund, the Investment Adviser and their successors and assigns,
and, to the extent expressed in this Underwriting Agreement, for the benefit of
persons controlling any of the Underwriters, the Fund, the Investment Adviser
and directors and officers of the Fund and the Investment Adviser, and their
respective successors and assigns, and no other person, partnership, association
or corporation will acquire or have any right under or by virtue of this
Underwriting Agreement. The term "successors and assigns" does not include any
purchaser of the Shares from any Underwriter merely because of such purchase.
(c) All notices and communications under this Underwriting
Agreement will be in writing, effective only on receipt and mailed or delivered,
by messenger, facsimile transmission or otherwise, to the Representative in care
of PaineWebber Incorporated, Attn: Financial Institutions Group, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, to the Fund at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and to the Investment Adviser at ▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
27
(d) Any action required or permitted to be taken by the
Representative under this Underwriting Agreement may be taken by them jointly
through PaineWebber Incorporated.
(e) This Underwriting Agreement may be signed in multiple
counterparts that taken as a whole constitute one agreement.
(f) This Underwriting Agreement will be governed by and
construed in accordance with the laws of the State of New York without reference
to choice of law principles thereof.
28
Please confirm that the foregoing correctly sets forth the
agreement between us.
Very truly yours,
Managed High Yield Plus Fund Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Asset Management Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Senior Vice President
Confirmed:
PaineWebber Incorporated
As Representative of the Underwriters
c/o PaineWebber Incorporated
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
By: PaineWebber Incorporated
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
Acting on behalf of itself
and the Underwriters
named in Schedule 1
29
SCHEDULE 1
NAME NUMBER OF FIRM SHARES
TO BE PURCHASED
PaineWebber Incorporated.................... 19,150,000
ABN AMRO Chicago Corporation................ 350,000
BT Alex. ▇▇▇▇▇ Incorporated................. 350,000
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp....................... 350,000
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.................... 350,000
Advest, Inc................................. 175,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated.......... 175,000
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co........................ 175,000
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇....................... 175,000
Everen Securities, Inc...................... 175,000
▇▇▇▇▇▇▇▇▇▇ & Co. Inc........................ 175,000
First Albany Corporation.................... 175,000
Fifth Third/The Ohio Company................ 175,000
First of Michigan Corporation............... 175,000
Interstate/▇▇▇▇▇▇▇ Lane Corporation......... 175,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc................. 175,000
Josephthal & Co. Inc........................ 175,000
▇▇▇▇▇▇▇▇ & Company Securities, Inc.......... 175,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc................ 175,000
Pacific Growth Equities, Inc................ 175,000
▇▇▇▇▇▇/Hunter Incorporated.................. 175,000
Pennsylvania Merchant Group................. 175,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc........................... 175,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Incorporated................ 175,000
The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, LLC.......... 175,000
▇▇▇▇▇ Capital Markets....................... 175,000
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated.... 175,000
Sutro & Co. Incorporated.................... 175,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated................. 175,000
▇.▇. ▇▇▇▇▇▇▇▇▇, Towbin...................... 175,000
30
Wedbush ▇▇▇▇▇▇ Securities, Inc.............. 175,000
▇▇▇▇▇ & Company of Florida, Inc............. 100,000
▇▇▇▇▇▇ ▇. ▇▇▇▇ & Company.................... 100,000
Huntleigh Securities Corporation............ 100,000
▇.▇. ▇▇▇▇ & Associates, Inc................. 100,000
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ & Company, Incorporated..... 100,000
Mesirow Financial, Inc...................... 100,000
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc................ 100,000
Moors & Cabot, Inc.......................... 100,000
North Coast Securities Corporation.......... 100,000
▇▇▇▇▇ ▇. ▇▇▇▇▇ & Company.................... 100,000
▇▇▇▇▇▇▇ Investment Company, Incorporated.... 100,000
The ▇▇▇▇▇▇▇ Companies Incorporated.......... 100,000
Southwest Securities, Inc................... 100,000
▇.▇. ▇▇▇▇▇ & Co., Inc....................... 100,000
TD Securities (USA) Inc..................... 100,000
▇▇▇▇▇▇ ▇▇▇▇▇ Securities, Inc................ 100,000
-------
Total 26,700,000
==========
31
ANNEX A
FORM OF OPINION OF
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP REGARDING THE FUND
1. The Registration Statement and all post-effective amendments,
if any, are effective under the Securities Act and no stop order with respect
thereto has been issued and no proceeding for that purpose has been instituted
or, to the best of our knowledge, is threatened by the Commission. Any filing of
the Prospectus or any supplements thereto required under Rule 497 of the
Securities Act Rules prior to the date hereof have been made in the manner and
within the time required by such rule.
2. The Fund has been duly organized, is validly existing and in
good standing as a corporation under the laws of the State of Maryland, with
full power and authority to conduct all the activities conducted by it, to own
or lease all assets owned or leased by it and to conduct its business as
described in the Registration Statement and Prospectus, and the Fund is duly
licensed and qualified to do business and in good standing as a foreign
corporation or otherwise in each jurisdiction in which its ownership or leasing
of property or its conducting of business requires such qualification, except
where the failure to be so qualified or be in good standing would not have a
material adverse effect on the Fund, and the Fund owns, possesses or has
obtained and currently maintains all governmental licenses, permits, consents,
orders, approvals and other authorizations necessary to carry on its business as
contemplated in the Prospectus. The Fund has no subsidiaries.
3. The Common Shares of the Fund conform in all respects to the
description of them in the Prospectus. All the outstanding Common Shares have
been duly authorized and are validly issued, fully paid and nonassessable. The
Common Shares to be issued and delivered to and paid for by the Underwriters in
accordance with the Underwriting Agreement against payment therefor as provided
by the Underwriting Agreement have been duly authorized and when issued and
delivered to the Underwriters will have been validly issued and will be fully
paid and nonassessable. No person is entitled to any preemptive or other similar
rights with respect to the Common Shares.
4. The Fund is duly registered with the Commission under the
Investment Company Act as a diversified, closed-end management investment
company and all action under the Securities Act, the Investment Company Act, the
Securities Act Rules and the Investment Company Act Rules, as the case may be,
necessary to make the public offering and consummate the sale of the Common
Shares as provided in the Underwriting Agreement has or will have been taken by
the Fund.
5. The Fund has full power and authority to enter into each of
the Underwriting Agreement, the Investment Advisory Agreement, the Custody
Agreement, and the Transfer Agency Agreement (collectively, the "Fund
Agreements") and to perform all of the terms and provisions thereof to be
carried out by it and (A) each Fund Agreement has been duly and validly
authorized, executed and delivered by the Fund, (B) each Fund Agreement does not
violate in any material respect any of the applicable provisions of the
Investment Company Act, the Advisers Act , the Investment Company Act Rules and
the Advisers Act Rules, as the case may be, and (C) assuming due authorization,
execution and delivery by the other parties thereto, each Fund Agreement
constitutes the legal, valid and binding obligation of the Fund enforceable in
accordance with its terms, (1) subject, as to enforcement, to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and to general equitable principles (regardless of whether enforcement is sought
in a proceeding in equity or at law) and (2) as rights to indemnity thereunder
may be limited by federal or state securities laws.
6. None of (A) the execution and delivery by the Fund of the Fund
Agreements, (B) the issue and sale by the Fund of the Common Shares as
contemplated by the Underwriting Agreement and (C) the performance by the Fund
of its obligations under the Fund Agreements or consummation by the Fund of the
other transactions contemplated by the Fund Agreements conflicts with or will
conflict with, or results or will result in a breach of, the Articles of
Incorporation or the By-laws of the Fund or any agreement or instrument to which
the Fund is a party or by which the Fund is bound, or any law, rule or
regulation, or order of any court, governmental instrumentality, securities
exchange or association or arbitrator, whether foreign or domestic, applicable
to the Fund, except that we express no opinion as to the securities or "blue
sky" laws applicable in connection with the purchase and distribution of the
Common Shares by the Underwriters pursuant to the Underwriting Agreement.
7. The Fund is not currently in breach of, or in default under,
any written agreement or instrument to which it is a party or by which it or its
property is bound or affected.
A-2
8. No consent, approval, authorization or order of any court or
governmental agency or body or securities exchange or association is required by
the Fund for the consummation by the Fund of the transactions to be performed by
the Fund or the performance by the Fund of all the terms and provisions to be
performed by or on behalf of it in each case as contemplated in the Fund
Agreements, except such as (A) have been obtained under the Securities Act, the
Investment Company Act, the Advisers Act, the Securities Act Rules, the
Investment Company Act Rules and the Advisers Act Rules and (B) may be required
by the New York Stock Exchange or under state securities or "blue sky" laws in
connection with the purchase and distribution of the Common Shares by the
Underwriters pursuant to the Underwriting Agreement.
9. The Common Shares have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance, and the Fund's
Registration Statement on Form 8-A under the 1934 Act is effective.
10. The form of the certificates for the Common Shares conform to
the requirements of Maryland law.
11. There is no action, suit or proceeding before or by any
court, commission, regulatory body, administrative agency or other governmental
agency or body, foreign or domestic, now pending or, to our knowledge,
threatened against or affecting the Fund, which is required to be disclosed in
the Prospectus that is not disclosed in the Prospectus, and there are no
contracts, franchises or other documents that are of a character required to be
described in, or that are required to be filed as exhibits to, the Registration
Statement that have not been described or filed as required.
12. The Fund does not require any tax or other rulings to enable
it to qualify as a regulated investment company under Subchapter M of the Code.
13. The section in the Prospectus entitled "Taxation" is a fair
summary of the principal United States federal income tax rules applicable to
the Fund and to the purchase, ownership and disposition of the Common Shares.
14. The Registration Statement (except the financial statements
and schedules and other financial data included therein as to which we express
no view), at the time it became effective, and the Prospectus (except as
aforesaid), as of the date thereof, complied as to form in all material respects
A-3
to the requirements of the Securities Act, the Investment Company Act and the
rules and regulations of the Commission thereunder.
In rendering our opinion, we have relied, as to factual matters,
upon the attached written certificates and statements of officers of the Fund.
In connection with the registration of the Common Shares, we have
advised the Fund as to the requirements of the Securities Act, the Investment
Company Act and the applicable rules and regulations of the Commission
thereunder and have rendered other legal advice and assistance to the Fund in
the course of its preparation of the Registration Statement, the Prospectus and
sales materials. Rendering such assistance involved, among other things,
discussions and inquiries concerning various legal and related subjects and
reviews of certain corporate records, documents and proceedings. We also
participated in conferences with representatives of the Fund and its accountants
at which the contents of the Registration Statement, Prospectus, sales materials
and related matters were discussed. With your permission, we have not
undertaken, except as otherwise indicated herein, to determine independently,
and do not assume any responsibility for, the accuracy, completeness or fairness
of the statements in the Registration Statement, Prospectus or sales materials.
On the basis of the information which was developed in the course of the
performance of the services referred to above, no information has come to our
attention that would lead us to believe that the Registration Statement, at the
time it became effective, contained any 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, as of its
date and as of such Closing Date, or the sales materials, as of its date and of
such Closing Date, contained or contains an untrue statement of a material fact
or omitted or omits 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, or that any amendment or supplement to the Prospectus, as
of its date, and as of such Closing Date, contained any untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements in the Prospectus, in the light of the circumstances under
which they were made, not misleading (except the financial statements, schedules
and other financial data included therein, as to which we express no view).
▇-▇
▇▇▇▇▇ ▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ REGARDING INVESTMENT ADVISER
1. The Investment Adviser has been duly organized, is validly
existing and in good standing as a corporation under the laws of the State of
Delaware incorporation with full power and authority to conduct all of the
activities conducted by it, to own or lease all of the assets owned or leased by
it and to conduct its business as described in the Registration Statement and
Prospectus, and the Investment Adviser is duly licensed and qualified as a
foreign corporation and in good standing in each other jurisdiction in which it
is required to be so qualified, except where the failure to be so qualified or
be in good standing would not have a material adverse effect on the Investment
Adviser, and the Investment Adviser owns, possesses or has obtained and
currently maintains all governmental licenses, permits, consents, orders,
approvals and other authorizations, whether foreign or domestic, necessary for
the Investment Adviser to carry on its business as contemplated in the
Registration Statement and the Prospectus.
2. The Investment Adviser is duly registered as an investment
adviser under the Advisers Act and is not prohibited by the Advisers Act, the
Investment Company Act, the Advisers Act Rules or the Investment Company Act
Rules from acting as investment adviser for the Fund as contemplated by the
Investment Advisory Agreement, the Registration Statement and the Prospectus.
3. The Investment Adviser has full power and authority to enter
into each of the Underwriting Agreement and the Investment Advisory Agreement
and to carry out all the terms and provisions thereof to be carried out by it,
and each such agreement has been duly and validly authorized, executed and
delivered by the Investment Adviser; each of the Investment Advisory Agreement
and the Underwriting Agreement does not violate in any material respect any of
the applicable provisions of the Investment Company Act, the Advisers Act, the
Investment Company Act Rules and the Advisers Act Rules; and assuming due
authorization, execution and delivery by the other parties thereto, each of the
Underwriting Agreement and the Investment Advisory Agreement constitutes a
legal, valid and binding obligation of the Investment Adviser, enforceable in
accordance with its terms, (1) subject, as to enforcement, to applicable
B-1
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and to general equitable principles (regardless of whether enforcement is sought
in a proceeding in equity or at law) and (2) as rights to indemnity thereunder
may be limited by federal or state securities laws.
4. Neither (A) the execution and delivery by the Investment
Adviser of the Underwriting Agreement or the Investment Advisory Agreement nor
(B) the consummation by the Investment Adviser of the transactions contemplated
by, or the performance of its obligations under such agreements conflicts or
will conflict with, or results or will result in a breach of, the Articles of
Incorporation or By-Laws of the Investment Adviser or any agreement or
instrument to which the Investment Adviser is a party or by which the Investment
Adviser is bound, or any law, rule or regulation, or order of any court,
governmental instrumentality, securities exchange or association or arbitrator,
whether foreign or domestic, applicable to the Investment Adviser.
5. No consent, approval, authorization or order of any court,
governmental agency or body or securities exchange or association is required
for the consummation of the transactions contemplated in, or the performance by
the Investment Adviser of its obligations under, the Underwriting Agreement or
the Investment Advisory Agreement, as the case may be, except such as (A) have
been obtained under the Investment Company Act, the Advisers Act, the Securities
Act, the Investment Company Act Rules, the Advisers Act Rules and the Securities
Act Rules and (B) may be required by the New York Stock Exchange or under state
securities or "blue sky" laws in connection with the purchase and distribution
of the Common Shares by the Underwriters pursuant to the Underwriting Agreement.
6. The description of the Investment Adviser and its business in
the Registration Statement and the Prospectus complies with the requirements of
the Securities Act, the Investment Company Act, the Securities Act Rules and the
Investment Company Act Rules and does not contain any 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 not misleading.
7. There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other governmental agency
or body, foreign or domestic, now pending or, to our knowledge, threatened
against or affecting the Investment Adviser of a nature required to be disclosed
in the Registration Statement or Prospectus or that might result in any material
adverse change in the condition, financial or otherwise, business affairs or
B-2
business prospects of the Investment Adviser or the ability of the Investment
Adviser to fulfill its respective obligations under the Underwriting Agreement
or under the Investment Advisory Agreement.
8. The Registration Statement (except the financial statements
and schedules and other financial data included therein as to which we express
no view), at the time it became effective, and the Prospectus (except as
aforesaid), as of the date thereof, appeared on their face to be appropriately
responsive in all material respects to the requirements of the Securities Act,
the Investment Company Act and the rules and regulations of the Commission
thereunder.
In rendering our opinion, we have relied, as to factual matters,
upon the attached written certificates and statements of officers of the
Investment Adviser.
In connection with the registration of the Common Shares, we have
advised the Investment Adviser as to the requirements of the Securities Act, the
Investment Company Act and the applicable rules and regulations of the
Commission thereunder and have rendered other legal advice and assistance to the
Investment Adviser in the course of the preparation of the Registration
Statement, the Prospectus and the sales materials. Rendering such assistance
involved, among other things, discussions and inquiries concerning various legal
and related subjects and reviews of certain corporate records, documents and
proceedings. We also participated in conferences with representatives of the
Fund and its accountants and the Investment Adviser at which the contents of the
Registration Statement, Prospectus, sales materials and related matters were
discussed. With your permission, we have not undertaken, except as otherwise
indicated herein, to determine independently, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements in
the Registration Statement, Prospectus or sales materials. On the basis of the
information which was developed in the course of the performance of the services
referred to above, no information has come to our attention that would lead us
to believe that the Registration Statement, at the time it became effective,
contained any 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, as of its date and as of such Closing
Date, or the sales materials, as of its date and as of such Closing Date,
contained or contains an untrue statement of a material fact or omitted or omits
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, or
that any amendment or supplement to the Prospectus, as of its date, and as of
such Closing Date, contained any untrue statement of a material fact or omitted
B-3
or omits to state a material fact necessary in order to make the statements in
the Prospectus, in the light of the circumstances under which they were made,
not misleading (except the financial statements, schedules and other financial
data included therein, as to which we express no view).
B-4
ANNEX C
FORM OF ACCOUNTANT'S LETTER
June _, 1998
Ladies and Gentlemen:
We have audited the statement of assets, liabilities and capital
of Managed High Yield Plus Fund Inc. (the "Fund") as of June _, 1998 included in
the Registration Statement on Form N-2 filed by the Fund under the Securities
Act of 1933 (the "Act") (File No. 333-51017) and under the Investment Company
Act of 1940 (the "1940 Act") (File No. 811-08765); such statement and our report
with respect to such statement are included in the Registration Statement; we
are independent public accountants with respect to the Fund within the meaning
of the Act and the applicable rules and regulations thereunder.
1. In our opinion, the statement of assets, liabilities and
capital included in the Registration Statement and audited by us complies as to
form in all respects with the applicable accounting requirements of the Act, the
1940 Act and the respective rules and regulations thereunder.
2. For purposes of this letter we have read the minutes of all
meetings of the Shareholders, the Board of Directors and all Committees of the
Board of Directors of the Fund as set forth in the minute books at the offices
of the Fund, officials of the Fund having advised us that the minutes of all
such meetings through __________ ___, 1998, were set forth therein.
3. Fund officials have advised us that no financial statements as
of any date subsequent to ___________ ___, 1998, are available. We have made
inquiries of certain officials of the Fund who have responsibility for financial
and accounting matters regarding whether there was any change at __________ ___,
1998, in the capital shares or net assets of the Fund as compared with amounts
shown in the __________ ___, 1998 statement of assets, liabilities and capital
included in the Registration Statement, except for changes that the Registration
C-1
Statement discloses have occurred or may occur. On the basis of our inquiries
and our reading of the minutes as described in Paragraph 3, nothing came to our
attention that caused us to believe that there were any such changes.
The foregoing procedures do not constitute an audit made in
accordance with generally accepted auditing standards. Accordingly, we make no
representations as to the sufficiency of the foregoing procedures for your
purposes.
4. This letter is solely for the information of the addressees
and to assist the underwriters in conducting and documenting their investigation
of the affairs of the Fund in connection with the offering of the securities
covered by the Registration Statement, and is not to be used, circulated, quoted
or otherwise referred to within or without the underwriting group for any other
purpose, including but not limited to the registration, purchase or sale of
securities, nor is it to be filed with or referred to in whole or in part in the
Registration Statement or any other document, except that reference may be made
to it in the underwriting agreement or in any list of closing documents
pertaining to the offering of the securities covered by the Registration
Statement.
Very truly yours,
-----------------------------
C-2