EXHIBIT H(1)
[ ] Shares
Salomon Brothers Capital and Income Fund Inc.
Common Stock
UNDERWRITING AGREEMENT
February [ ], 2004
Citigroup Global Markets Inc.
As Representatives of the Several Underwriters
c/o Citigroup Global Markets Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned, Salomon Brothers Capital and Income Fund Inc., a Maryland
corporation (the "Fund") and Salomon Brothers Asset Management Inc, a Delaware
corporation (the "Investment Manager"), address you as the underwriters and as
the representatives ("Representatives") of each of the other persons, firms and
corporations, if any, listed in Schedule I hereto (the "Underwriters"). The Fund
proposes to issue and sell an aggregate of [ ] shares of its common stock,
$0.001 par value per share, to the several Underwriters (the "Firm Shares"). The
Fund also proposes to sell upon the terms and conditions contained in Section 2
hereof, up to [ ] additional common shares (the "Additional Shares," which
together with the Firm Shares are hereinafter collectively referred to as the
"Shares"). The Fund and the Investment Manager wish to confirm as follows their
agreements with you and the other several Underwriters, in connection with the
several purchases of the Shares by the Underwriters.
Collectively, the Investment Management Agreement dated as of February
[ ], 2004 between the Fund and the Investment Manager (the "Investment
Management Agreement"); the Master Custodian Agreement dated as of June 29, 2001
among certain management investment companies and State Street Bank and Trust
Company (the "Custodian Agreement"); and the Transfer Agency and Services
Agreement dated as of February [ ], 2004 between the Fund and American Stock
Transfer and Trust Company are hereinafter referred to as the "Fund Agreements."
The Investment Management Agreement and the Additional Compensation Agreement to
be dated as of February [ ], 2004 are collectively referred to as the "Manager
Agreements." This Underwriting Agreement is hereinafter referred to as the
"Agreement."
1. REGISTRATION STATEMENT AND PROSPECTUS. The Fund has prepared and filed with
the Securities and Exchange Commission (the "Commission") in
conformity with the provisions of the Securities Act of 1933, as amended (the
"1933 Act"), the Investment Company Act of 1940, as amended (the "1940 Act"),
and the published rules and regulations of the Commission promulgated under the
1933 Act (the "1933 Act Rules and Regulations") and the 1940 Act (the "1940 Act
Rules and Regulations" and, together with the 1933 Act Rules and Regulations,
the "Rules and Regulations") a registration statement on Form N-2 (File Nos.
333-110512 and 811-21467), under the 1933 Act and the 1940 Act (the
"Registration Statement"), including a prospectus relating to the Shares. The
Fund also has filed a notification of registration of the Fund as an investment
company under the 1940 Act on Form N-8A (the "1940 Act Notification"). The term
"Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended at the
time it becomes effective under the 1933 Act or, if the registration statement
became effective under the 1933 Act prior to the execution of this Agreement, as
amended or supplemented at the time it became effective prior to the execution
of this Agreement, and includes any information deemed to be included by Rule
430A under the 1933 Act Rules and Regulations. If it is contemplated, at the
time this Agreement is executed, that a post-effective amendment to the
registration statement will be filed under the 1933 Act and must be declared
effective before the offering of the Shares may commence, the term "Registration
Statement" as used in this Agreement means the registration statement as amended
by said post-effective amendment. If the Fund has filed an abbreviated
registration statement to register an additional amount of Shares pursuant to
Rule 462(b) under the 1933 Act (the "Rule 462 Registration Statement"), then any
reference herein to the term "Registration Statement" shall include such Rule
462 Registration Statement. The term "Prospectus" as used in this Agreement
means the prospectus and statement of additional information in the forms
included in the Registration Statement or, if the prospectus and statement of
additional information included in the Registration Statement omit information
in reliance on Rule 430A under the 1933 Act Rules and Regulations and such
information is included in a prospectus and statement of additional information
filed with the Commission pursuant to Rule 497(h) under the 1933 Act Rules and
Regulations, the term "Prospectus" as used in this Agreement means the
prospectus and statement of additional information in the forms included in the
Registration Statement as supplemented by the addition of the information
contained in the prospectus and the statement of additional information filed
with the Commission pursuant to Rule 497(h). The term "Prepricing Prospectus" as
used in this Agreement means the prospectus and statement of additional
information subject to completion in the forms included in the Registration
Statement at the time of the filing of Pre-Effective Amendment No. 1 to the
Registration Statement with the Commission on December 22, 2003 and
Pre-Effective Amendment No. 2 to the Registration Statement with the Commission
on January 23, 2004 and as such prospectus and statement of additional
information shall have been amended from time to time prior to the date of the
Prospectus, together with any other prospectus and statement of additional
information relating to the Fund other than the Prospectus approved in writing
by or directly or indirectly prepared by the Fund or the Investment Manager; it
being understood that the definition of Prepricing Prospectus above shall not
include any Prepricing Prospectus prepared by the Underwriters unless approved
in writing by the Fund or the Investment Manager. The terms "Registration
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Statement," "Prospectus" and "Prepricing Prospectus" shall also include any
financial statements incorporated by reference therein.
The Fund has furnished Citigroup Global Markets Inc., on behalf of the
Representatives, with copies of such registration statement, each amendment to
such registration statement filed with the Commission and each Prepricing
Prospectus, and the Representatives have provided the same to the other
Underwriters.
2. AGREEMENTS TO SELL AND PURCHASE. The Fund hereby agrees, subject to all the
terms and conditions set forth herein, to issue and to sell to each Underwriter
and, upon the basis of the representations, warranties and agreements of the
Fund and the Investment Manager herein contained and subject to all the terms
and conditions set forth herein, each Underwriter agrees, severally and not
jointly, to purchase from the Fund, at a purchase price of $19.10 per Share, the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto.
The Fund also agrees, subject to all the terms and conditions set forth
herein, to issue and to sell to the Underwriters and, upon the basis of the
representations, warranties and agreements of the Fund and the Investment
Manager herein contained and subject to all the terms and conditions set forth
herein, the Underwriters shall have the right to purchase from the Fund, at a
purchase price of $19.10 per Share, pursuant to an option (the "over-allotment
option") which may be exercised at any time and from time to time prior to 9:00
A.M., New York City time, on the 45/th/ day after the date of the Prospectus (or
if such 45/th/ day shall be a Saturday or a Sunday or a holiday, on the next
business day thereafter when the New York Stock Exchange (the "NYSE") is open
for trading), up to an aggregate of [ ] Additional Shares. Additional Shares
may be purchased solely for the purpose of covering over-allotments made in
connection with the offering of the Firm Shares. Upon any exercise of the
over-allotment option, upon the basis of the representations, warranties and
agreements of the Fund and the Investment Manager herein contained and subject
to all of the other terms and conditions set forth herein, each Underwriter
agrees, severally and not jointly, to purchase from the Fund the number of
Additional Shares (subject to such adjustments as you may determine to avoid
fractional shares) which bears approximately the same proportion to the total
number of Additional Shares to be purchased by the Underwriters as the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule I (or
such number of Firm Shares increased as set forth in Section 11 hereof) bears to
the aggregate number of Firm Shares.
3. TERMS OF PUBLIC OFFERING. The Fund and the Investment Manager have been
advised by you that the Underwriters propose to make a public offering of the
Shares as soon after the Registration Statement and this Agreement have become
effective as in your judgment is advisable and initially to offer the Shares
upon the terms set forth in the Prospectus.
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4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR.
(a) Delivery to the Underwriters of and payment to the Fund for the Firm
Shares shall be made at the office of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or through the facilities of the
Depository Trust Company or at another mutually agreeable facility, at 9:30
A.M., New York City time, on February [ ], 2004 (the "Closing Date"). The place
of closing for the Firm Shares and the Closing Date may be varied by agreement
between you and the Fund.
(b) Delivery to the Underwriters of, and payment to the Fund for, any
Additional Shares to be purchased by the Underwriters shall be made at the
aforementioned office of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP or through the
facilities of the Depository Trust Company or another mutually agreeable
facility at such time on such date (an "Option Closing Date"), which may be the
same as the Closing Date, but shall in no event be earlier than the Closing Date
nor earlier than two nor later than three business days after the giving of the
notice hereinafter referred to, as shall be specified in a written notice from
you on behalf of the Underwriters to the Fund of the Underwriters' determination
to purchase a number, specified in said notice, of Additional Shares. The place
of closing for any Additional Shares and the Option Closing Date for such
Additional Shares may be varied by agreement between you and the Fund.
(c) Certificates for the Firm Shares and for any Additional Shares shall be
registered in such names and in such denominations as you shall request prior to
1:00 P.M., New York City time, (i) in respect of the Firm Shares, on the second
business day preceding the Closing Date and (ii) in respect of Additional
Shares, on the day of the giving of the written notice in respect of such
Additional Shares. Such certificates will be made available to you in New York
City for inspection and packaging not later than 9:00 A.M., New York City time,
on the business day next preceding the Closing Date or any Option Closing Date,
as the case may be. The certificates evidencing the Firm Shares and any
Additional Shares to be purchased hereunder shall be delivered to you on the
Closing Date or the Option Closing Date, as the case may be, through the
facilities of the Depository Trust Company or another mutually agreeable
facility against payment of the purchase price therefor in immediately available
funds to the order of the Fund.
5. AGREEMENTS OF THE FUND AND THE INVESTMENT MANAGER. The Fund and the
Investment Manager, jointly and severally, agree with the Underwriters as
follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective under the 1933 Act before the offering of the Firm
Shares may commence, the Fund will use its best efforts to cause the
Registration Statement or such post-effective amendment to become effective
under the 1933 Act as soon as possible. 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 1933 Act Rules and
Regulations, the Fund will file a prospectus including such information pursuant
to Rule 497(h) of the 1933 Act Rules and Regulations, as promptly as
practicable, but no later than the second
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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 of the Registration Statement. 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(c) or (j) of
the 1933 Act Rules and Regulations as promptly as practicable, but no later than
the fifth business day following the date of the later of the effective date of
the Registration Statement or the commencement of the public offering of the
Shares after the effective date of the Registration Statement. The Fund will
advise the Underwriters promptly and, if requested by the Underwriters, will
confirm such advice in writing (i) when the Registration Statement or such
post-effective amendment has become effective and (ii) when the Prospectus has
been timely filed pursuant to Rule 497(c) or Rule 497(h) of the 1933 Act Rules
and Regulations or the certification permitted pursuant to Rule 497(j) of the
1933 Act Rules and Regulations has been timely filed, whichever is applicable.
(b) For a period of three years from the date hereof, unless otherwise
provided herein, the Fund will advise you promptly and, if requested by you,
will confirm such advice in writing:
(i) of any request made by the Commission for amendment of or a
supplement to the Registration Statement, any Prepricing Prospectus or the
Prospectus (or any amendment or supplement to any of the foregoing) or for
additional information,
(ii) of the issuance by the Commission, the National Association of
Securities Dealers, Inc. (the "NASD"), any state securities commission, any
national securities exchange, any arbitrator, any court or any other
governmental, regulatory, self-regulatory or administrative agency or any
official of any order suspending the effectiveness of the Registration
Statement, prohibiting or suspending the use of the Prospectus or any Prepricing
Prospectus, or any sales material (as hereinafter defined), of any notice
pursuant to Section 8(e) of the 1940 Act, of the suspension of qualification of
the Shares for offering or sale in any jurisdiction, or the initiation of any
proceeding for any such purposes,
(iii) of receipt by the Fund, the Investment Manager, any affiliate of
the Fund or the Investment Manager or any representative or attorney of the Fund
or the Investment Manager of any other material communication from the
Commission, the NASD, any state securities commission, any national securities
exchange, any arbitrator, any court or any other governmental, regulatory,
self-regulatory or administrative agency or any official relating to the Fund,
the Registration Statement, the 1940 Act Notification, the Prospectus, any
Prepricing Prospectus, any sales material (as herein defined) (or any amendment
or supplement to any of the foregoing) or this Agreement or any of the Fund
Agreements, and
(iv) within the period of time referred to in paragraph (f) below, of
any material adverse change in the condition (financial or other), assets or
results of operations of the Fund or any event which should reasonably be
expected to have a material adverse effect on the ability of the Investment
Manager to perform its
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obligations under this Agreement and the Manager Agreements (in either case,
other than as a result of changes in market conditions generally) or of the
happening of any other event which makes any statement of a material fact made
in the Registration Statement or the Prospectus, or any Prepricing Prospectus or
any sales material (as hereinafter defined) (or any amendment or supplement to
any of the foregoing) untrue or which requires the making of any additions to or
changes in the Registration Statement or the Prospectus, or any Prepricing
Prospectus or any sales material (as herein defined) (or any amendment or
supplement to any of the foregoing) in order to state a material fact required
by the 1933 Act, the 1940 Act or the Rules and Regulations to be stated therein
or necessary in order to make the statements therein (in the case of the
Prospectus, in the light of the circumstances under which they were made), not
misleading or of the necessity to amend or supplement the Registration
Statement, the Prospectus, or any Prepricing Prospectus or any sales material
(as herein defined) (or any amendment or supplement to any of the foregoing) to
comply with the 1933 Act, the 1940 Act, the Rules and Regulations or any other
law or order of any court or regulatory body. If at any time the Commission, the
NASD, any state securities commission, any national securities exchange, any
arbitrator, any court or any other governmental, regulatory, self-regulatory or
administrative agency or any official shall issue any order suspending the
effectiveness of the Registration Statement, prohibiting or suspending the use
of the Prospectus or any sales material (as herein defined) (or any amendment or
supplement to any of the foregoing) or suspending the qualification of the
Shares for offering or sale in any jurisdiction, the Fund will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible time.
(c) The Fund will furnish to you, without charge, one signed copy of the
Registration Statement and the 1940 Act Notification as originally filed with
the Commission and of each amendment thereto, including financial statements and
all exhibits thereto, and will also furnish to you, without charge, such number
of conformed copies of the Registration Statement as originally filed and of
each amendment thereto, but without exhibits, as you may reasonably request.
(d) Within five years from the date hereof, the Fund will not (i) file any
amendment to the Registration Statement or make any amendment or supplement to
the Prospectus, any Prepricing Prospectus, or any sales material (as herein
defined), of which you shall not previously have been advised or to which you
shall reasonably object after being so advised or (ii) so long as, in the
opinion of counsel for the Underwriters, a Prospectus is required by the 1933
Act to be delivered in connection with sales by the Underwriters or any dealer,
file any information, documents or reports pursuant to the Securities Exchange
Act of 1934, as amended (the "1934 Act"), without delivering a copy of such
information, documents or reports to you prior to or concurrently with such
filing.
(e) Prior to the execution and delivery of this Agreement, the Fund has
delivered to you, without charge, in such quantities as you have requested,
copies of each form of the Prepricing Prospectus. The Fund consents to the use,
in accordance with the provisions of the 1933 Act and with the state securities
or blue sky laws of the jurisdictions in which the Shares are offered by the
Underwriters and by dealers, prior to
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the date of the Prospectus, of the Prepricing Prospectus contained in
Pre-Effective Amendment No. 1 and Pre-Effective Amendment No. 2 to the
Registration Statement so furnished by the Fund.
(f) (i) As soon after the execution and delivery of this Agreement as
practicable and thereafter from time to time for such period as in the opinion
of counsel for the Underwriters a prospectus is required by the 1933 Act to be
delivered in connection with sales of Shares by the Underwriters or any dealer,
the Fund will, as promptly as practicable, deliver to the Underwriters and each
dealer, without charge, as many copies of the Prospectus (and of any amendment
or supplement thereto) as the Underwriters may reasonably request. The Fund
consents to the use of the Prospectus (and of any amendment or supplement
thereto) in accordance with the provisions of the 1933 Act and with the state
securities or blue sky laws of the jurisdictions in which the Shares are offered
by the Underwriters and by all dealers to whom Shares may be sold, both in
connection with the offering and sale of the Shares and for such period of time
thereafter as the Prospectus is required by the 1933 Act to be delivered in
connection with sales by the Underwriters or any dealer.
(ii) If during such period of time any event shall occur that in the
judgment of the Fund or in the opinion of counsel for the Underwriters is
required to be set forth in the Registration Statement or the Prospectus (as
then amended or supplemented) or should be set forth therein in order to make
the statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading, or if it is necessary
to supplement or amend the Registration Statement or the Prospectus to comply
with the 1933 Act, the 1940 Act, the Rules and Regulations or any other federal
law, rule or regulation, or any state securities or blue sky disclosure laws,
rules or regulations, the Fund will forthwith prepare and, subject to the
provisions of paragraph (d) above, promptly file with the Commission an
appropriate supplement or amendment thereto, and will, as promptly as
practicable, furnish to the Underwriters and dealers, without charge, a
reasonable number of copies thereof; provided, if the amendment or supplement is
required solely as a result of a misstatement in or omission from any
information provided to the Fund by the Underwriters, the Fund may deliver such
amendment or supplement at cost.
(iii) In the event that the Fund and the Underwriters agree that the
Registration Statement or the Prospectus should be amended or supplemented, the
Fund, if in the opinion of counsel to the Underwriters it is required by law or
any national securities exchange on which the Shares are listed, will promptly
issue a press release announcing or disclosing the matters to be covered by the
proposed amendment or supplement or will otherwise appropriately disseminate the
required information.
(g) The Fund will cooperate with you and with counsel for the Underwriters
in connection with the registration or qualification of the Shares for offering
and sale by the several Underwriters and by dealers under the securities or blue
sky laws of such jurisdictions as you may designate and will file such consents
to service of process or other documents necessary or appropriate in order to
effect such registration or qualification; provided that in no event shall the
Fund be obligated to qualify to do
7
business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to service of process in suits, other than those
arising out of the offering or sale of the Shares, in any jurisdiction where it
is not now so subject.
(h) No later than the last day of the 18/th/ full calendar month following
the calendar quarter in which the effective date of the Registration Statement
falls, the Fund will make generally available to its security holders an
earnings statement (which need not be audited) satisfying the provisions of
Section 11(a) of the 1933 Act and Rule 158 of the 1933 Act Rules and
Regulations.
(i) During the period of three years after the date of this Agreement, the
Fund will furnish to you (i) as soon as available, a copy of each report of the
Fund mailed to stockholders or filed with the Commission or furnished to the
NYSE other than reports on Form N-SAR, and (ii) from time to time such other
information concerning the Fund as you as Representatives of the Underwriters
may reasonably request.
(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
third paragraph of Section 11(b) hereof or by notice given by the Underwriters
terminating this Agreement pursuant to Section 11 or Section 12 hereof) or if
this Agreement shall be terminated by the Underwriters because of any failure or
refusal on the part of the Fund or the Investment Manager to comply with any
material term or fulfill any material condition of this Agreement required to be
complied with or fulfilled by them, the Fund and the Investment Manager, jointly
and severally, agree to reimburse the Underwriters for all out-of-pocket
expenses (including reasonable fees and expenses of counsel for the
Underwriters) incurred by the Underwriters in connection herewith.
(k) The Fund will apply the net proceeds from the sale of the Shares in
accordance with the description set forth in the Prospectus and in such a manner
as to comply with the investment objective, policies and restrictions of the
Fund as described in the Prospectus.
(l) Except as stated in this Agreement and in the Prepricing Prospectus and
the Prospectus, neither the Fund nor the Investment Manager have taken, nor will
they take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of any securities issued by the Fund to facilitate the sale or resale
of the Shares.
(m) The Fund and the Investment Manager will use commercially reasonable
efforts to perform all of the agreements required of them and discharge all
conditions to closing as set forth in this Agreement.
(n) The Fund will comply with the undertaking set forth in paragraph 6 of
Item 33 of Part C of the Registration Statement.
(o) The Fund will use its reasonable best efforts to have the Shares
listed, subject to notice of issuance, on the NYSE concurrently with the
effectiveness of the Registration Statement and to comply with the rules and
regulations of such exchange.
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(p) Except as provided in this Agreement or pursuant to any dividend
reinvestment plan of the Fund in effect on the date hereof, the Fund and the
Investment Manager will not sell, contract to sell or otherwise dispose of, any
Common Shares, as defined below, or any securities convertible into or
exercisable or exchangeable for shares of common stock of the Fund, par value
$0.001 per share (the "Common Shares"), or grant any options or warrants to
purchase Common Shares, for a period of 180 days after the date of the
Prospectus, without the prior written consent of Citigroup Global Markets Inc.
(q) The Fund will comply in all material respects with all applicable
securities and other applicable laws, rules and regulations, including, without
limitation, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations
promulgated in connection therewith (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act"), and will use its
best efforts to cause the Fund's directors and officers, in their capacities as
such, to comply in all material respects with such laws, rules and regulations,
including, without limitation, the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
6. REPRESENTATIONS AND WARRANTIES OF THE FUND AND THE INVESTMENT MANAGER. The
Fund and the Investment Manager, jointly and severally, represent and warrant to
the Underwriters that:
(a) Each Prepricing Prospectus included as part of Pre-Effective Amendment
No. 1 and Pre-Effective Amendment No. 2 to the Registration Statement or as part
of any amendment or supplement thereto complied when so filed with the
Commission in all material respects with the applicable provisions of the 1933
Act, the 1940 Act and the Rules and Regulations, except that this representation
and warranty does not apply to statements in or omissions from a Prepricing
Prospectus made in reliance upon and in conformity with information relating to
the Underwriters furnished to the Fund in writing by or on behalf of the
Underwriters expressly for use therein. The Commission has not issued any order
preventing or suspending the use of any Prepricing Prospectus.
(b) The Registration Statement in the form in which it became or becomes
effective and also in such form as it may be when any post-effective amendment
thereto shall become effective and the Prospectus and any supplement or
amendment thereto when filed with the Commission under Rule 497 of the 1933 Act
Rules and Regulations and the 1940 Act Notification when originally filed with
the Commission and any amendment or supplement thereto when filed with the
Commission, complied or will comply in all material respects with the provisions
of the 1933 Act, the 1940 Act and the Rules and Regulations and did not or will
not at any such times contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading, except that this
representation and warranty does not apply to statements in or omissions from
the Registration Statement or the Prospectus made in reliance upon and in
conformity with information relating to the Underwriters furnished to the Fund
in writing by or on behalf of the Underwriters expressly for use therein.
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(c) All the outstanding Common Shares have been duly authorized and validly
issued by the Fund, are fully paid and nonassessable and are free of any
preemptive or similar rights; the Shares have been duly authorized and, when
issued and delivered to the Underwriters against payment therefor in accordance
with the terms hereof, will be validly issued by the Fund, fully paid and
nonassessable and free of any preemptive or similar rights and will conform in
all material respects to the description thereof in the Registration Statement
and the Prospectus (and any amendment or supplement to either of them); and the
capitalization of the Fund conforms in all material respects to the description
thereof in the Registration Statement and the Prospectus (and any amendment or
supplement to either of them). The authorized capital stock of the Fund consists
of 100,000,000 Common Shares, of which 5,246.590 shares are outstanding.
(d) The Fund is a corporation duly incorporated and validly existing under
the laws of the State of Maryland with full corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Registration Statement and the Prospectus (and any amendment or
supplement to either of them), and is duly registered and qualified to conduct
its business and is in good standing in each jurisdiction or place where the
nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not have a material adverse effect on the condition (financial or
other), assets or results of operations, whether or not arising in the ordinary
course of business (a "Material Adverse Effect") of the Fund; and the Fund has
no subsidiaries.
(e) There are no legal or governmental proceedings pending or, to the
knowledge of the Fund, threatened, against the Fund, or to which the Fund or any
of its properties is subject, that are required to be described in the
Registration Statement or the Prospectus (and any amendment or supplement to
either of them) but are not described as required, and there are no agreements,
contracts, indentures, leases or other instruments that are required to be
described in the Registration Statement or the Prospectus (and any amendment or
supplement to either of them) or to be filed as an exhibit to the Registration
Statement that are not described or filed as required by the 1933 Act, the 1940
Act or the Rules and Regulations.
(f) The Fund is not in violation of its Charter (the "Charter") or Bylaws
(the "Bylaws"), or other organizational documents or of any law, ordinance,
administrative or governmental rule or regulation applicable to the Fund, or of
any decree of the Commission, the NASD, any state securities commission, any
national securities exchange, any arbitrator, any court or governmental agency,
body or official having jurisdiction over the Fund, or in default in any respect
in the performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any material
agreement, indenture, lease or other instrument to which the Fund is a party or
by which it or any of its properties may be bound, except where such violation
or default does not have a Material Adverse Effect.
(g) Neither the issuance and sale of the Shares, the execution, delivery or
performance of this Agreement or any of the Fund Agreements by the Fund, nor the
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consummation by the Fund of the transactions contemplated hereby or thereby (1)
requires any consent, approval, authorization or other order of, or registration
or filing with, the Commission, the NASD, any state securities commission, any
national securities exchange, any arbitrator, any court, regulatory body,
administrative agency or other governmental body, agency or official having
jurisdiction over the Fund (except such as may have been obtained or made prior
to the date hereof and such as may be required for compliance with the state
securities or blue sky laws of various jurisdictions which have been or will be
effected in accordance with this Agreement, and except for compliance with the
filing requirements of the NASD Division of Corporate Finance) or conflicts or
will conflict with or constitutes or will constitute a breach of, or a default
under, the Charter, the Bylaws or other organizational documents of the Fund or
(2) conflicts or will conflict with or constitutes or will constitute a material
breach of, or a default under, any material agreement, indenture, lease or other
instrument to which the Fund is a party or by which it or any of its properties
may be bound, or violates or will violate any material statute, law, regulation
or judgment, injunction, order or decree applicable to the Fund or any of its
properties, or will result in the creation or imposition of any material lien,
charge or encumbrance upon any property or assets of the Fund pursuant to the
terms of any agreement or instrument to which it is a party or by which it may
be bound or to which any of its property or assets is subject. The Fund is not
subject to any order of any court or of any arbitrator, governmental authority
or administrative agency.
(h) The accountants, PricewaterhouseCoopers LLP, who have certified or
shall certify the audited financial statements included or incorporated by
reference in the Registration Statement and the Prospectus (or any amendment or
supplement to either of them) have represented to the Fund that they are
independent public accountants as required by the 1933 Act, the 1940 Act and the
Rules and Regulations.
(i) The financial statements, together with related schedules and notes,
included or incorporated by reference in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them), present fairly
in all material respects the financial position of the Fund on the basis stated
or incorporated by reference in the Registration Statement and the Prospectus at
the respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; and the other financial and
statistical information and data included in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them) in all material
respects are accurately presented.
(j) The Fund, subject to the Registration Statement having been declared
effective and the filing of the Prospectus under Rule 497 under the 1933 Act
Rules and Regulations, has taken all required action under the 1933 Act, the
1940 Act and the Rules and Regulations to make the public offering and
consummate the sale of the Shares as contemplated by this Agreement.
11
(k) The execution and delivery of, and the performance by the Fund of its
obligations under, this Agreement and the Fund Agreements have been duly and
validly authorized by the Fund, and this Agreement and the Fund Agreements have
been duly executed and delivered by the Fund and, assuming due authorization,
execution and delivery by the other parties thereto, constitute the valid and
legally binding agreements of the Fund, enforceable against the Fund in
accordance with their terms, except as enforcement of rights to indemnity and
contribution hereunder and thereunder may be limited by considerations of public
policy and subject to the qualification that the enforceability of the Fund's
obligations hereunder and thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, liquidation, receivership, conservatorship,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and by general equitable principles (regardless of
whether enforcement is sought in a proceeding in equity or at law) and fair
dealing.
(l) Except as disclosed in or contemplated by the Registration Statement
and the Prospectus (or any amendment or supplement to either of them),
subsequent to the respective dates as of which such information is given in the
Registration Statement and the Prospectus (or any amendment or supplement to
either of them), the Fund has not entered into any transaction, incurred any
liability or obligation, direct or contingent, that is material to the Fund, and
there has not been any change in the capital stock, or material increase in the
short-term debt or long-term debt, of the Fund, or any material adverse change,
or any development involving or which may reasonably be expected to involve a
Material Adverse Effect.
(m) The Fund has not distributed and, prior to the later to occur of (1)
the Closing Date and (2) completion of the distribution of the Shares, will not
distribute any offering material in connection with the offering and sale of the
Shares other than the Registration Statement, the Prepricing Prospectus, the
Prospectus or other materials permitted by the 1933 Act, the 1940 Act or the
Rules and Regulations.
(n) (i) The Fund has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("Permits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus (and any amendment or supplement thereto), subject
to such qualifications as may be set forth in the Prospectus;
(ii) the Fund has fulfilled and performed all its material obligations
with respect to such Permits and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the Fund under any
such Permit, subject in each case to such qualification as may be set forth in
the Prospectus (and any amendment or supplement thereto); and
(iii) except as described in the Prospectus (and any amendment or
supplement thereto), none of such Permits contains any restriction that is
materially burdensome to the Fund, except where the failure of (i), (ii) or
(iii) to be accurate would not, individually or in the aggregate, have a
Material Adverse Effect.
12
(o) The Fund maintains a system of internal accounting controls sufficient
to provide reasonable assurances that:
(i) transactions in portfolio securities are executed in accordance
with management's general or specific authorization and with the applicable
requirements of the 1940 Act, the 1940 Act Rules and Regulations and the
Internal Revenue Code of 1986, as amended (the "Code");
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles
and to maintain accountability for assets and to maintain compliance with the
books and records requirements under the 1940 Act and the 1940 Act Rules and
Regulations;
(iii) access to assets is permitted only in accordance with
management's general or specific authorization; and
(iv) the recorded account for assets is compared with existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(p) To the Fund's knowledge, neither the Fund nor any employee or agent of
the Fund has made any payment of funds of the Fund or received or retained any
funds, which payment, receipt or retention of such funds is of a character
required to be disclosed in the Prospectus and that is not so disclosed.
(q) The Fund has not, and has not been required to, file any tax returns.
(r) No holder of any security of the Fund has any right to require
registration of Common Shares or any other security of the Fund because of the
filing of the registration statement or consummation of the transactions
contemplated by this Agreement.
(s) Except for the Additional Shares, Common Shares to be issued pursuant
to the Fund's dividend reinvestment plan and as otherwise described in the
Prospectus, there are no outstanding options, warrants or other rights calling
for the issuance of, and the Fund has no agreement to issue, any shares of
capital stock of the Fund or any security convertible into or exchangeable or
exercisable for shares of capital stock of the Fund.
(t) The conduct by the Fund of its business (as described in the
Prospectus) does not require the Fund to be the owner, possessor or licensee of
any patents, patent licenses, trademarks, service marks or trade names
(collectively, "Intellectual Property") which it does not own, possess or
license, except where the failure to own, possess or license such Intellectual
Property should not reasonably be expected to have a Material Adverse Effect.
(u) The Fund is duly registered under the 1940 Act as a closed-end,
non-diversified management investment company and the 1940 Act Notification has
been duly filed with the Commission and, at the time of filing, and at the time
of filing of any amendment or supplement thereto, conformed in all material
respects with all applicable
13
provisions of the 1940 Act and the 1940 Act Rules and Regulations. The Fund is,
and at all times through the completion of the transactions contemplated hereby,
will be, in compliance in all material respects with the terms and conditions of
the 1933 Act and the 1940 Act. No person is serving or acting as an officer,
director or investment adviser of the Fund except in accordance with the
provisions of the 1940 Act and the 1940 Act Rules and Regulations and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and the rules
and regulations of the Commission promulgated under the Advisers Act (the
"Advisers Act Rules and Regulations"). The Fund has not received any notice from
the Commission pursuant to Section 8(e) of the 1940 Act with respect to the 1940
Act Notification or the Registration Statement (or any amendment or supplement
to either of them).
(v) Except as stated in this Agreement and in the Prospectus (and any
amendment or supplement thereto), the Fund has not taken, nor will it take,
directly or indirectly, any action designed to or which might reasonably be
expected to cause or result in stabilization or manipulation of the price of any
securities issued by the Fund to facilitate the sale or resale of the Shares,
and the Fund is not aware of any such action taken or to be taken by any
affiliates of the Fund.
(w) The Fund has filed in a timely manner each document or report required
to be filed by it pursuant to the 1934 Act and the rules and regulations of the
Commission promulgated thereunder (the "1934 Act Rules and Regulations"); each
such document or report at the time it was filed conformed to the requirements
of the 1934 Act and the 1934 Act Rules and Regulations; and none of such
documents or reports when filed contained an untrue statement of any material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(x) All advertising, sales literature or other promotional material
(including "prospectus wrappers") intended for public distribution and
authorized in writing by or prepared by the Fund or the Investment Manager for
use in connection with the offering and sale of the Shares (collectively, "sales
material") complied and comply in all material respects with the applicable
requirements of the 1933 Act, the 1940 Act, the Rules and Regulations and the
rules and interpretations of the NASD and no such sales material, when read
together with the Prospectus, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. No advertising, sales
literature or other promotional material (including "broker kits," "road show
slides" and "road show scripts") not intended for public distribution and
authorized in writing by or prepared by the Fund or the Investment Manager for
use in connection with the offering and sale of the Shares was or is, when read
together with the Prospectus, materially false or misleading.
(y) Each of this Agreement and each Fund Agreement complies in all material
respects with all applicable provisions of the 1940 Act, the 1940 Act Rules and
Regulations, the Advisers Act and the Advisers Act Rules and Regulations.
14
(z) The Fund intends to direct the investment of the proceeds of the
offering in such a manner as to comply with the requirements of Subchapter M of
the Code.
(aa) Except as disclosed in the Registration Statement and the Prospectus
(or any amendment or supplement to either of them), no director of the Fund is
an "interested person" (as defined in the ▇▇▇▇ ▇▇▇) of the Fund or an
"affiliated person" (as defined in the ▇▇▇▇ ▇▇▇) of any Underwriter listed in
Schedule I hereto.
(bb) The Shares have been duly approved for listing upon notice of issuance
on the NYSE and the Fund's Registration Statement on Form 8-A under the 1934 Act
has become effective. The form of the certificate for the Shares conforms to the
requirements of the NYSE.
(cc) The Fund and, to the best of the Fund's knowledge, each of the Fund's
directors and officers, in their capacities as such, are not in material
violation of the applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, including
Sections 302 and 906 related to certifications.
(dd) Neither the Fund nor, to the knowledge of the Fund, any director,
officer, agent, employee or affiliate of the Fund is aware of or has taken any
action, directly or indirectly, that would result in a material violation by
such Persons of the FCPA (as defined below), including, without limitation,
making use of the mails or any means or instrumentality of interstate commerce
corruptly in furtherance of an offer, payment, promise to pay or authorization
of the payment of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any "foreign official" (as
such term is defined in the FCPA) or any foreign political party or official
thereof or any candidate for foreign political office, in contravention of the
FCPA and the Fund and, to the knowledge of the Fund, its affiliates have
conducted their businesses in compliance with the FCPA and have instituted and
maintain policies and procedures designed to ensure, and which are reasonably
expected to continue to ensure, continued compliance therewith.
"FCPA" means Foreign Corrupt Practices Act of 1977, as amended, and
the rules and regulations thereunder.
(ee) To the best of the Fund's knowledge, the operations of the Fund are
and have been conducted at all times in compliance with applicable financial
record keeping and reporting requirements of The Bank Secrecy Act of 1970, as
amended, the money laundering statutes of all jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the "Money Laundering Laws") and no action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator
involving the Fund with respect to the Money Laundering Laws is pending or, to
the best knowledge of the Fund, threatened.
(ff) Neither the Fund nor, to the knowledge of the Fund, any director,
officer, agent, employee or affiliate of the Fund is currently subject to any
U.S. sanctions
15
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department ("OFAC"); and the Fund will not directly or indirectly use the
proceeds of the offering, or lend, contribute or otherwise make available such
proceeds to any other person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered by
OFAC.
7. REPRESENTATIONS AND WARRANTIES OF THE INVESTMENT MANAGER. The Investment
Manager represents and warrants to the Underwriters as follows:
(a) The Investment Manager is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them), and is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
to so register or to qualify does not have a material adverse effect on the
condition (financial or other), assets or results of operations of the
Investment Manager or on the ability of the Investment Manager to perform its
obligations under this Agreement and the Manager Agreements.
(b) The Investment Manager is duly registered with the Commission as an
investment adviser under the Advisers Act and is not prohibited by the Advisers
Act, the Advisers Act Rules and Regulations, the 1940 Act or the 1940 Act Rules
and Regulations from acting under the Manager Agreements for the Fund as
contemplated by the Prospectus (or any amendment or supplement thereto). There
does not exist any proceeding which should reasonably be expected to have a
material adverse effect on the registration of the Investment Manager with the
Commission.
(c) There are no legal or governmental proceedings pending or, to the
knowledge of the Investment Manager, threatened against the Investment Manager,
or to which the Investment Manager or any of its properties is subject, that are
required to be described in the Registration Statement or the Prospectus (or any
amendment or supplement to either of them) but are not described as required or
that should reasonably be expected to have a material adverse effect on the
condition (financial or other), assets or results of operations of the
Investment Manager or on the ability of the Investment Manager to perform its
obligations under this Agreement and the Manager Agreements.
(d) Neither the execution, delivery or performance of this Agreement or the
Manager Agreements by the Investment Manager, nor the consummation by the
Investment Manager of the transactions contemplated hereby or thereby:
(i) requires the Investment Manager to obtain any consent, approval,
authorization or other order of, or registration or filing with, the Commission,
the ▇▇▇▇,
▇▇
any state securities commission, any national securities exchange, any
arbitrator, any court, regulatory body, administrative agency or other
governmental body, agency or official having jurisdiction over the Investment
Manager or conflicts or will conflict with or constitutes or will constitute a
material breach of or a default under the articles of incorporation, bylaws, or
other organizational documents, of the Investment Manager; or
(ii) conflicts or will conflict with or constitutes or will constitute
a breach of or a default under, any material agreement, indenture, lease or
other instrument to which the Investment Manager is a party or by which it or
any of its properties may be bound, or violates or will violate any statute,
law, regulation or judgment, injunction, order or decree applicable to the
Investment Manager or any of its properties or will result in the creation or
imposition of any material lien, charge or encumbrance upon any property or
assets of the Investment Manager pursuant to the terms of any agreement or
instrument to which it is a party or by which it may be bound or to which any of
the property or assets of the Investment Manager is subject,
except in any case under clause (i) or (ii) as should not reasonably be expected
to have a material adverse effect on the ability of the Investment Manger to
perform its obligations under the Manager Agreements. The Investment Manager is
not subject to any order of any court or of any arbitrator, governmental
authority or administrative agency.
(e) The Investment Manager has full power and authority to enter into this
Agreement and the Manager Agreements; the execution and delivery of, and the
performance by the Investment Manager of its obligations under, this Agreement
and the Manager Agreements have been duly and validly authorized by the
Investment Manager; and this Agreement and the Manager Agreements have been duly
executed and delivered by the Investment Manager and, assuming due
authorization, execution and delivery by the other parties thereto, constitute
the valid and legally binding agreements of the Investment Manager, enforceable
against the Investment Manager in accordance with their terms, except as
enforcement of rights to indemnity and contribution hereunder may be limited by
considerations of public policy and subject to the qualification that the
enforceability of the Investment Manager's obligations hereunder and thereunder
may be limited by bankruptcy, insolvency, liquidation, receivership,
conservatorship, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally and by general equitable principles
(regardless of whether enforcement is sought in a proceeding in equity or at
law) and fair dealing.
(f) The Investment Manager has the financial resources available to it
necessary for the performance of its services and obligations as contemplated in
the Prospectus (or any amendment or supplement thereto) and under this Agreement
and the Manager Agreements.
(g) The description of the Investment Manager in the Registration Statement
and the Prospectus (and any amendment or supplement thereto) complied and
complies in all material respects with the provisions of the 1933 Act, the 1940
Act, the Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations and does not contain an untrue statement of a material fact or omit
to state a material fact required to
17
be stated therein or necessary to make the statements therein (in the case of
the Prospectus, in the light of the circumstances under which they were made)
not misleading.
(h) Except as disclosed in the Registration Statement and the Prospectus
(or any amendment or supplement to either of them), subsequent to the respective
dates as of which such information is given in the Registration Statement and
the Prospectus (or any amendment or supplement to either of them), there has not
occurred any event that should reasonably be expected to have a material adverse
effect on the ability of the Investment Manager to perform its obligations under
this Agreement and the Manager Agreements.
(i) The Investment Manager has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("Investment Manager
Permits") as are necessary to own its properties and to conduct its business in
the manner described in the Prospectus (and any amendment or supplement thereto)
except to the extent that the failure to so have should not reasonably be
expected to have a material adverse effect on the ability of the Investment
Manager to perform its obligation under the Manager Agreements.
(j) The Investment Manager has fulfilled and performed all its material
obligations with respect to such Investment Manager Permits and no event has
occurred which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of the rights
of the Investment Manager under any such Investment Manager Permit, except where
the revocation, termination or impairment of the Investment Manager's rights
under such Investment Manager Permits should not reasonably be expected to have
a material adverse effect on the ability of the Investment Manager to perform
its obligations under the Manager Agreements.
(k) Except as stated in this Agreement and in the Prospectus (and in any
amendment or supplement thereto), the Investment Manager has not taken, nor will
it take, directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, stabilization or manipulation of
the price of any securities issued by the Fund to facilitate the sale or resale
of the Shares, and the Investment Manager is not aware of any such action taken
or to be taken by any affiliates of the Investment Manager.
(l) In the event that the Fund or the Investment Manager makes available
any promotional materials regarding the Fund intended for use only by qualified
broker-dealers and registered representatives thereof by means of an Internet
web site or similar electronic means, the Investment Manager will install and
maintain pre-qualification and password-protection or similar procedures which
are reasonably designed to effectively prohibit access to such promotional
materials by persons other than qualified broker-dealers and registered
representatives thereof.
18
(m) This Agreement and the Manager Agreements comply in all material
respects with all applicable provisions of the 1940 Act, the 1940 Act Rules and
Regulations, the Advisers Act and the Advisers Act Rules and Regulations.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Fund and the Investment Manager, jointly and severally, agree to
indemnify and hold harmless each of you and each of the Underwriters and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation), joint or several, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any sales
material, Prepricing Prospectus or in the Registration Statement or the
Prospectus or in any amendment or supplement thereto, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein (in the case of
the Prospectus, in the light of the circumstances under which they were made)
not misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information furnished in
writing to the Fund by or on behalf of any Underwriter through you expressly for
use in connection therewith; provided, however, that the indemnification
contained in this paragraph (a)(i) with respect to any Prepricing Prospectus
shall not inure to the benefit of any Underwriter (or to the benefit of any
person controlling such Underwriter) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Shares by such Underwriter to
any person if a copy of the Prospectus shall not have been delivered or sent by
the Underwriters as required to such person within the time required by the 1933
Act and the 1933 Act Rules and Regulations, and the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact contained in
such Prepricing Prospectus was corrected in such Prospectus, provided that the
Fund has delivered such Prospectus to the several Underwriters in requisite
quantity on a timely basis to permit such delivery or sending. The foregoing
indemnity agreement shall be in addition to any liability which the Fund or the
Investment Manager may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Fund or the Investment Manager, such
Underwriter or such controlling person shall promptly notify the Fund or the
Investment Manager, and the Fund or the Investment Manager shall assume the
defense thereof, including the employment of counsel and payment of all
reasonable fees and expenses. Such Underwriter or any such controlling person
shall have the right to employ separate counsel in any such action, suit or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Underwriter or such controlling
person unless (i) the Fund or the Investment Manager has agreed in writing to
pay such fees and expenses,
19
(ii) the Fund and the Investment Manager have failed to assume the defense and
employ counsel, or (iii) the named parties to any such action, suit or
proceeding (including any impleaded parties) include both such Underwriter or
such controlling person and the Fund or the Investment Manager and such
Underwriter or such controlling person shall have been advised by its counsel
that representation of such indemnified party and the Fund or the Investment
Manager by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the Fund and the Investment Manager shall not have the right to
assume the defense of such action, suit or proceeding on behalf of such
Underwriter or such controlling person).
It is understood, however, that the Fund and the Investment Manager
shall, in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Underwriters and controlling persons not having actual or potential differing
interests with you or among themselves, which firm shall be designated in
writing by the Underwriters, and that all such fees and expenses shall be
reimbursed as they are incurred. The Fund and the Investment Manager shall not
be liable for any settlement of any such action, suit or proceeding effected
without their written consent, but if settled with such written consent, or if
there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Fund and the Investment Manager agree to indemnify and hold
harmless any Underwriter, to the extent provided in the preceding paragraph, and
any such controlling person from and against any loss, claim, damage, liability
or expense by reason of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Fund and the Investment Manager, their directors, their
partners, any officers who sign the Registration Statement, and any person who
controls the Fund or the Investment Manager within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, to the same extent as the foregoing
indemnity from the Fund and the Investment Manager to each Underwriter, but only
with respect to information relating to such Underwriter furnished in writing by
or on behalf of such Underwriter expressly for use in the Registration
Statement, the Prospectus or any Prepricing Prospectus, or any amendment or
supplement thereto. If any action, suit or proceeding shall be brought against
the Fund or the Investment Manager, any of their directors, any of their
partners, any such officer, or any such controlling person based on the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto, and in respect of which indemnity may be sought
against any Underwriter pursuant to this paragraph (c), such Underwriter shall
have the rights and duties given to the Fund and the Investment Manager by
paragraph (b) above (except that if the Fund or the Investment Manager shall
have assumed the defense thereof such Underwriter shall not be required to do
so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such
Underwriter's expense), and the Fund or the Investment Manager, their directors,
their partners, any such officer, and any
20
such controlling person shall have the rights and duties given to the
Underwriters by paragraph (b) above. The foregoing indemnity agreement shall be
in addition to any liability which the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 8 is unavailable
to an indemnified party under paragraphs (a) or (c) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then an
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses
(i) in such proportion as is appropriate to reflect the relative
benefits received by the Fund and the Investment Manager on the one hand
(treated jointly for this purpose as one person) and the Underwriters on the
other from the offering of the Shares, or
(ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Fund and the Investment Manager on the one hand (treated jointly for this
purpose as one person) and the Underwriters on the other in connection with the
statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Fund and the Investment
Manager on the one hand (treated jointly for this purpose as one person) and the
Underwriters on the other 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 underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Fund and the Investment Manager on the one
hand (treated jointly for this purpose as one person) and the Underwriters on
the other shall be determined by reference to, among other things, 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
and the Investment Manager on the one hand (treated jointly for this purpose as
one person) or by the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(e) The Fund, the Investment Manager and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 8 were
determined by a pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 8, no Underwriter
shall be required to contribute any amount in excess of the amount by which
21
the total price of the Shares underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 8 are several
in proportion to the respective numbers of Shares set forth opposite their names
in Schedule I hereto (or such numbers of Shares increased as set forth in
Section 11 hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action,
suit or proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Fund and the Investment Manager set forth
in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Fund, the Investment Manager, their
directors, partners or officers, or any person controlling the Fund or the
Investment Manager, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement.
A successor to any Underwriter or any person controlling any Underwriter, or to
the Fund, the Investment Manager, their directors, partners or officers, or any
person controlling the Fund or the Investment Manager shall be entitled to the
benefits of the indemnity, contribution, and reimbursement agreements contained
in this Section 8.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of the
Underwriters to purchase the Shares hereunder are subject to the accuracy of and
compliance with the representations, warranties and agreements of and by the
Fund and the Investment Manager contained herein on and as of the date hereof,
the date on which the Registration Statement becomes or became effective, the
date of the Prospectus (and of any amendment or supplement thereto), the Closing
Date and, with respect to any Additional Shares, any Option Closing Date; to the
accuracy and completeness of all statements made by the Fund, the Investment
Manager or any of their officers in any certificate delivered to the
Representatives or their counsel pursuant to this Agreement; and to the
following conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective
22
before the offering of the Shares may commence, the Registration Statement or
such post-effective amendment shall have become effective not later than 5:30
P.M., New York City time, on the date hereof, or at such later date and time as
shall be consented to in writing by the Underwriters, and all filings, if any,
required by Rules 497 and 430A under the 1933 Act and the 1933 Act Rules and
Regulations shall have been timely made; no stop order suspending the
effectiveness of the Registration Statement or order pursuant to Section 8(e) of
the 1940 Act shall have been issued and no proceeding for those purposes shall
have been instituted or, to the knowledge of the Fund or the Investment Manager
or any Underwriter, threatened by the Commission, and any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to your
reasonable satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall not
have occurred (i) any change or any development involving a prospective change
in or affecting the condition (financial or other), assets, or results of
operations of the Fund or the Investment Manager not contemplated by the
Prospectus (or any amendment or supplement thereto), which in the Underwriters'
opinion would materially adversely affect the market for the Shares, or (ii) any
event or development relating to or involving the Fund or the Investment Manager
or any officer, partner or director of the Fund or the Investment Manager which
makes any statement made in the Prospectus (or any amendment or supplement
thereto) untrue or which, in the opinion of the Fund and its counsel or the
Underwriters and their counsel, requires the making of any addition to or change
in the Prospectus (or any amendment or supplement thereto) in order to state a
material fact required by the 1933 Act, the 1940 Act or the Rules and
Regulations or any other law to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, if amending or supplementing the Prospectus (or any
amendment or supplement thereto) to reflect such event or development would, in
the Underwriters' opinion, materially adversely affect the market for the
Shares.
(c) (i) You shall have received on the Closing Date an opinion and a
letter of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Fund, dated the
Closing Date and addressed to you as Representatives of the several
Underwriters, substantially to the effect set forth in Exhibits A1 and A2,
respectively, hereto. Insofar as the opinion and letter contained therein relate
to or are dependent upon matters governed by Maryland law, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP will be permitted to rely on the opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP.
(ii) You shall have received on the Closing Date an opinion of ▇▇▇▇▇
▇▇▇▇▇▇▇ LLP, special Maryland counsel for the Fund, dated the Closing Date and
addressed to you as Representatives of the several Underwriters, substantially
to the effect set forth in Exhibit B hereto.
(iii) You shall have received on the Closing Date an opinion of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Counsel for Citigroup Asset Management Inc., counsel
to the
23
Investment Manager, dated the Closing Date and addressed to you as
Representatives of the several Underwriters, substantially to the effect set
forth in Exhibit C hereto.
(d) You shall have received on the Closing Date an opinion of Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ and ▇▇▇▇ LLP, counsel for the Underwriters, dated the
Closing Date and addressed to you as Representatives of the several
Underwriters, with respect to such matters as the Underwriters may reasonably
request and the Fund and the Investment Manager and their respective counsels
shall have furnished to such counsel such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters. It is agreed
that Skadden, Arps, Slate, ▇▇▇▇▇▇▇ and ▇▇▇▇ LLP may rely on the opinions of
▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP to the extent those opinions relate to or are dependent upon
matters governed by the laws of the State of Maryland.
(e) You shall have received letters addressed to you, as Representatives
of the several Underwriters, dated the date hereof and the Closing Date, from
PricewaterhouseCoopers LLP, independent certified public accountants,
substantially in the forms heretofore approved by you.
(f) (i) All the representations and warranties of the Fund and the
Investment Manager in this Agreement that are qualified by a materiality
standard are true and correct, and all the representations and warranties of the
Fund and the Investment Manager contained in this Agreement that are not so
qualified shall be true and correct in all material respects, on and as of the
date hereof and on and as of the Closing Date as if made on and as of the
Closing Date, and the Underwriters shall have received a certificate from each
of the Fund and the Investment Manager, dated the Closing Date and signed by the
chief executive officer and the chief financial officer of each of the Fund and
the Investment Manager (or such other officers as are acceptable to you), to the
effect set forth in Section 9(h), as the case may be, hereof;
(ii) there shall not have been, subsequent to the respective dates
as of which information is given in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), except as may otherwise be
stated in the Registration Statement and Prospectus (or any amendment or
supplement thereto), any material adverse change (other than as a result of
changes in market conditions generally or the market for equity or fixed income
securities generally) in the condition (financial or other), assets or results
of operations of the Fund or the Investment Manager;
(iii) no order suspending the effectiveness of the Registration
Statement or prohibiting or suspending the use of the Prospectus (or any
amendment or supplement thereto), any Prepricing Prospectus, any sales material
or the sale of any of the Shares or having a material adverse effect on the Fund
or the Investment Manager shall have been issued and no proceedings for such
purpose or for the purpose of commencing an enforcement action against the Fund,
the Investment Manager or, with respect to the transactions contemplated by the
Prospectus (or any amendment or supplement thereto) and this Agreement, the
Underwriters, may be pending before or, to the knowledge of the Fund, the
Investment Manager or the Underwriters or in the reasonable view of counsel to
the Underwriters, shall be threatened by the Commission or any court or other
24
regulatory body, the NASD, any state securities commission, any national
securities exchange, any arbitrator, any court or any other governmental,
regulatory, self-regulatory or administrative agency or any official at or prior
to the Closing Date and that any request for additional information on the part
of the Commission or such court or other body (to be included in the
Registration Statement, the Prospectus or otherwise) be complied with to the
reasonable satisfaction of the Underwriters;
(iv) neither the Fund nor the Investment Manager shall have sustained
any material loss or interference with their respective businesses from any
court or from legislative or other governmental action, order or decree or from
any other occurrence not described in the Registration Statement and the
Prospectus and any amendment or supplement to either of them;
(v) there shall not have been any change in the capital stock of the
Fund nor any material increase in the short-term or long-term debt of the Fund
from that set forth or contemplated in the Registration Statement or the
Prospectus (or any amendment or supplement thereto);
(vi) the Fund shall not have any liabilities or obligations, direct
or contingent (whether or not in the ordinary course of business), that are
material to the Fund, other than those reflected in or contemplated by the
Registration Statement or the Prospectus (or any amendment or supplement to
either of them); and
(vii) to the knowledge of the Investment Manager, no order having any
material adverse effect on the ability of the Investment Manager to fulfill its
obligations under this Agreement or the Manager Agreements has been issued and
no proceedings for any such purpose are pending before or reasonably believed to
be threatened by the Commission or any regulatory body, whether foreign or
domestic.
(g) Neither the Fund nor the Investment Manager shall have failed at or
prior to the Closing Date to have performed or complied in all material respects
with any of its agreements herein contained and required to be performed or
complied with by it hereunder at or prior to the Closing Date.
(h) You shall have received on the Closing Date a certificate, dated such
date, of the chief executive officer and the chief financial officer of each of
the Fund and the Investment Manager (or such other officers as are acceptable to
you) certifying that:
(i) the signers have carefully examined the Registration Statement,
the Prospectus (and any amendments or supplements to either of them) and this
Agreement;
(ii) all the representations and warranties of the Fund (with respect
to the certificate from such Fund officers) and the representations and
warranties of the Investment Manager (with respect to the certificate from such
officers of the Investment Manager) in the Agreement that are qualified by a
materiality standard are true and correct, and all the representations and
warranties of the Fund (with respect to the certificate from such Fund officers)
and the representations and warranties of the Investment Manager (with respect
to the certificate from such officers of the Investment
25
Manager) in the Agreement that are not so qualified shall be true and correct in
all material respects, on and as of the date of the certificate as if made on
such date;
(iii) since the date of the Prospectus (and any amendment or
supplement thereto), except as otherwise stated in the Prospectus (or any
amendment or supplement thereto), there has not been any material adverse change
(other than as a result of changes in market conditions generally or the market
for equity or fixed income securities generally) in the condition (financial or
other), assets or results of operations of the Fund (with respect to the
certificate from such Fund officers) or the Investment Manager (with respect to
the certificate from such officers of the Investment Manager);
(iv) to the knowledge of such officers after reasonable
investigation, no order suspending the effectiveness of the Registration
Statement or prohibiting or suspending the use of the Prospectus (or any
amendment or supplement thereto), any Prepricing Prospectus, any sales material
or the sale of any of the Shares or having a Material Adverse Effect on the Fund
(with respect to the certificate from such Fund officers) or the Investment
Manager (with respect to the certificate from such officers of the Investment
Manager) has been issued and no proceedings for any such purpose or for the
purpose of commencing an enforcement action against the Fund (with respect to
the certificate from such Fund officers) or the Investment Manager (with respect
to the certificate from such officers of the Investment Manager) are pending
before or threatened by the Commission or any court or other regulatory body,
the NASD, any state securities commission, any national securities exchange, any
arbitrator, any court or any other governmental, regulatory, self-regulatory or
administrative agency or any official and any request for additional information
on the part of the Commission or such court or other body (to be included in the
Registration Statement, the Prospectus or otherwise) have been complied with to
the reasonable satisfaction of the Underwriters;
(v) each of the Fund (with respect to the certificate from such Fund
officers) and the Investment Manager (with respect to the certificate from such
officers of the Investment Manager) has performed and complied in all material
respects with all agreements that this Agreement requires it to perform by such
Closing Date;
(vi) none of the Fund (with respect to the certificate from such
officers of the Fund) or the Investment Manager (with respect to the certificate
from such officers of the Investment Manager) has sustained any material loss or
interference with its business from any court or from legislative or other
governmental action, order or decree or from any other occurrence not described
in the Registration Statement and the Prospectus and any amendment or supplement
to either of them;
(vii) with respect to the certificate from such officers of the Fund,
there has not been any change in the capital stock of the Fund nor any material
increase in the debt of the Fund from that set forth or contemplated in the
Prospectus (and any amendment or supplement thereto) and the Fund has not
sustained any material liabilities or obligations, direct or contingent, other
than those reflected in or contemplated by the Registration Statement or the
Prospectus (or any amendment or supplement thereto); and
26
(viii) with respect to the certificate from such officers of the
Investment Manager, to the knowledge of such officers, no order having any
Material Adverse Effect on the ability of the Investment Manager to fulfill its
obligations under this Agreement or the Manager Agreements has been issued and
no proceedings for any such purpose are pending before or reasonably believed to
be threatened by the Commission or any regulatory body, whether foreign or
domestic.
(i) The Fund and the Investment Manager shall have furnished or caused to
be furnished to you such further certificates and documents as you shall have
reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.
Any certificate or document signed by any officer of the Fund or the
Investment Manager and delivered to you as Representatives of the Underwriters,
or to counsel for the Underwriters, shall be deemed a representation and
warranty by the Fund or the Investment Manager to the Underwriters as to the
statements made therein.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to (i) the accuracy of and compliance with the
representations and warranties of the Fund and the Investment Manager contained
herein on and as of the Option Closing Date as though made on any Option Closing
Date, (ii) satisfaction on and as of any Option Closing Date of the conditions
set forth in this Section 9 except that, if any Option Closing Date is other
than the Closing Date, the certificates, opinions and letters referred to in
paragraphs 9(c), 9(d), 9(e), 9(h), 9(i) and this paragraph shall be dated the
Option Closing Date in question and the opinions called for by paragraphs 9(c),
9(d), and 9(e) shall be revised to reflect the sale of Additional Shares and
(iii) the absence of circumstances on or prior to the Option Closing Date which
would permit termination of this Agreement pursuant to Section 12 hereof if they
existed on or prior to the Closing Date.
10. EXPENSES. The Fund agrees to pay the following costs and expenses and all
other costs and expenses incident to the performance by it of its obligations
hereunder (to the extent that such costs and expenses do not, in the aggregate,
exceed $0.04 per Share): (a) the preparation, printing or reproduction, and
filing with the Commission of the Registration Statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the Prospectus and
each amendment or supplement to any of them (including, without limitation, the
filing fees prescribed by the 1933 Act, the 1940 Act and the Rules and
Regulations); (b) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of such
copies of the Registration Statement, each Prepricing Prospectus, the
Prospectus, any sales material and all amendments or supplements to any of them
as may be reasonably requested for use in connection with the offering and sale
of the Shares; (c) the preparation, printing, authentication, issuance and
delivery of certificates for the Shares, including any stamp taxes in connection
with the original issuance and sale of the Shares; (d) the reproduction
27
and delivery of this Agreement, any dealer agreements, the preliminary blue sky
memorandum, if any, and all other agreements or documents reproduced and
delivered in connection with the offering of the Shares; (e) the reasonable
fees, expenses and disbursements of counsel for the Underwriters relating to
blue sky matters, not to exceed $3,000.00; (f) the transportation and other
expenses incurred by or on behalf of Fund representatives in connection with
presentations to prospective purchasers of the Shares; (g) the fees and expenses
of the Fund's accountants and the fees and expenses of counsel (including local
and special counsel) for the Fund; (h) the filing fees and the reasonable fees
and expenses of counsel for the Underwriters in connection with any filings
required to be made with the NASD and incurred with respect to the review of the
offering of the Shares by the NASD, which fees and expenses of counsel will not
exceed $9,500.00; and (i) the registration of the shares under the 1934 Act and
the listing of the Shares on the NYSE. The Investment Manager has agreed to pay
(x) all of the Fund's organizational costs and (y) offering costs of the Fund
(other than sales load) that exceed $0.04 per Share.
11. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective:
(a) upon the execution and delivery hereof by the parties hereto; or
(b) if, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, when
notification of the effectiveness of the registration statement or such
post-effective amendment has been released by the Commission.
Until such time as this Agreement shall have become effective, it may
be terminated by the Fund, by notifying the Underwriters, or by you, as
Representatives of the several Underwriters, by notifying the Fund.
If any one or more of the Underwriters shall fail or refuse to
purchase Firm Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase is not
more than one-tenth of the aggregate number of Firm Shares which the
Underwriters are obligated to purchase on the Closing Date, each non-defaulting
Underwriter shall be obligated, severally, in the proportion which the number of
Shares set forth opposite its name in Schedule I hereto bears to the aggregate
number of Shares set forth opposite the names of all non-defaulting Underwriters
or in such other proportion as you may specify, to purchase the Shares which
such defaulting Underwriter or Underwriters are obligated, but fail or refuse,
to purchase. If any one or more of the Underwriters shall fail or refuse to
purchase Firm Shares which it or they are obligated to purchase on the Closing
Date and the aggregate number of Firm Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Firm Shares which the
Underwriters are obligated to purchase on the Closing Date and arrangements
satisfactory to you and the Fund for the purchase of such Firm Shares by one or
more non-defaulting Underwriters or other party or parties approved by you and
the Fund are not made within 36 hours after such default, this
28
Agreement will terminate without liability on the part of any non-defaulting
Underwriter, the Fund or the Investment Manager. In any such case which does not
result in termination of this Agreement, either you or the Fund shall have the
right to postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Registration Statement and
the Prospectus or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any such default of any such Underwriter under this
Agreement. The term "Underwriter" as used in this Agreement includes, for all
purposes of this Agreement, any party not listed in Schedule I hereto who, with
your approval and the approval of the Fund, purchases Shares which a defaulting
Underwriter is obligated, but fails or refuses, to purchase.
Any notice under this Section 11 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
12. TERMINATION OF AGREEMENT. This Agreement shall be subject to termination in
your absolute discretion, without liability on the part of any Underwriter to
the Fund or the Investment Manager by notice to the Fund or the Investment
Manager if prior to the Closing Date or any Option Closing Date (if different
from the Closing Date and then only as to the Additional Shares), as the case
may be, (a) trading in the Shares shall have been suspended by the Commission on
the NYSE or securities generally on the NYSE shall have been suspended or
limited or minimum prices shall have been established on the NYSE, (b)
additional material governmental restrictions not in force on the date of this
Agreement have been imposed upon trading in securities in general or a general
moratorium on commercial banking activities in New York shall have been declared
by either Federal or state authorities or (c) any outbreak or material
escalation of hostilities, declaration by the United States of a national
emergency or war, or other international or domestic calamity, crisis or change
in political, financial or economic conditions, occurs, the effect of which on
the financial markets is such as to make it, in your sole judgment,
impracticable or inadvisable to commence or continue the offering or delivery of
the Shares as contemplated by the Prospectus (exclusive of any supplement
thereto) or to enforce contracts for the resale of the Shares by the
Underwriters.
Notice of such termination may be given to the Fund or the Investment
Manager by telegram, telecopy or telephone but shall be subsequently confirmed
by letter.
13. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements set forth in the
last sentence of the last paragraph of the cover page in the Prospectus, as well
as, under the caption "Underwriting," the names of the underwriters and numbers
of Shares listed opposite such names following the first paragraph, the first,
third, fourth and last sentence of the third paragraph, the first sentence of
the eleventh paragraph, the twelth paragraph, the seventeeth paragraph and the
eighteenth paragraph constitute the only information furnished by or on behalf
of the Underwriters through you or your counsel as such information is referred
to herein, expressly for use in the Prospectus.
29
14. MISCELLANEOUS. Except as otherwise provided in Sections 5, 11 and 12
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered:
(a) if to the Fund, at the office of the Fund at:
Salomon Brothers Capital and Income Fund Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(b) if to the Investment Manager, at the office of the Investment Manager
at:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(c) or if to you as Representatives of the Underwriters, to:
Citigroup Global Markets Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Fund, the Investment Manager, their directors, partners and
officers, and the other controlling persons referred to in Section 8 hereof and
their respective successors and assigns, to the extent provided herein, and no
other person shall acquire or have any right under or by virtue of this
Agreement. Neither the term "successor" nor the term "successors and assigns" as
used in this Agreement shall include a purchaser from the Underwriters of any of
the Shares in his status as such purchaser.
15. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
This Agreement may be signed in various counterparts, which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
30
Please confirm that the foregoing correctly sets forth the agreement among the
Fund, the Investment Manager and the several Underwriters.
Very truly yours,
SALOMON BROTHERS CAPITAL
AND INCOME FUND INC.
By: _______________________________
Name:
Title:
SALOMON BROTHERS ASSET MANAGEMENT INC
By: _______________________________
Name:
Title:
Confirmed as of the date first above
mentioned on behalf of themselves
and the other several Underwriters
named in Schedule I hereto.
CITIGROUP GLOBAL MARKETS INC.
As Representatives of the Several Underwriters
By: CITIGROUP GLOBAL MARKETS INC.
By: __________________________________
Name:
Title:
31
SCHEDULE I
Salomon Brothers Capital and Income Fund Inc.
Underwriter Number of Shares
----------- ----------------
Citigroup Global Markets Inc. ............................
Total ....................................................
S-1
EXHIBIT A1
FORM OF OPINION OF
FUND COUNSEL
A1-1
EXHIBIT A2
FORM OF NEGATIVE ASSURANCE LETTER OF
FUND COUNSEL
A2-1
EXHIBIT B
FORM OF OPINION OF
▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
B-1
EXHIBIT C
FORM OF OPINION OF COUNSEL TO
INVESTMENT MANAGER
C-1