DISTRIBUTION AGREEMENT
November 28, 1997
Salomon Brothers Inc
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
This is to confirm that, in consideration of the agreements
hereinafter contained, Salomon Brothers Capital Fund Inc (the "Fund"), an
open-end, professionally managed investment company organized as a corporation
under the laws of the State of Maryland, has agreed that Salomon Brothers Inc
("Salomon Brothers") shall be, for the period of this Agreement, the distributor
of shares of the Fund (the "Shares").
1. Services as Distributor
1.1 Salomon Brothers will act as agent for the distribution of
the Shares covered by the registration statement, prospectus and statement of
additional information then in effect under the Securities Act of 1933, as
amended (the "1933 Act"), and the Investment Company Act of 1940, as amended
(the "1940 Act").
1.2 Salomon Brothers agrees to use its best efforts to solicit
orders for the sale of the Shares at the public offering price, as determined in
accordance with the registration statement, and will undertake such advertising
and promotion as it believes is reasonable in connection with such solicitation.
1.3 All activities by Salomon Brothers as distributor of the
Shares shall comply with all applicable laws, rules and regulations, including,
without limitation, all rules and regulations made or adopted by the Securities
and Exchange Commission (the "SEC") or by any securities association registered
under the Securities Exchange Act of 1934, as amended.
1.4 Salomon Brothers will transmit any orders received by it
for purchase or redemption of shares of the Fund to First Data Investor Services
Group, Inc. ("First Data", formerly, The Shareholder Services Group, Inc.), the
Fund's transfer agent and dividend disbursing agent, or any successor to First
Data of which the Fund has notified Salomon Brothers in writing.
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1.5 Salomon Brothers acknowledges that, whenever in the
judgment of the Fund's officers such action is warranted for any reason,
including, without limitation, market, economic or political conditions, those
officers may decline to accept any orders for, or make any sales of, the Shares
until such time as those officers deem it advisable to accept such orders and to
make such sales.
1.6 Salomon Brothers will act only on its own behalf as
principal should it choose to enter into selling agreements in the form of
Exhibit A attached hereto with selected dealers or others.
1.7 As compensation for its services hereunder, Salomon
Brothers shall be entitled to such compensation as is described in the Fund's
current registration statement.
2. Duties of the Fund
2.1 The Fund agrees at its own expense to execute any and all
documents, to furnish any and all information and to take any other actions that
may be reasonably necessary in connection with the qualification of the Shares
for sale in those states that Salomon Brothers may designate.
2.2 The Fund shall furnish from time to time, for use in
connection with the sale of the Shares, such information reports with respect to
the Fund and its Shares as Salomon Brothers may reasonably request, all of which
shall be signed by one or more of the Fund's duly authorized officers; and the
Fund warrants that the statements contained in any such reports, when so signed
by one or more of the Fund's officers, shall be true and correct. The Fund shall
also furnish Salomon Brothers upon request with: (a) annual audits of the Fund's
books and accounts made by independent public accountants regularly retained by
the Fund, (b) semiannual unaudited financial statements pertaining to the Fund,
(c) quarterly earnings statements prepared by the Fund, (d) a monthly itemized
list of the securities in the portfolio of the Fund, (e) monthly balance sheets
as soon as practicable after the end of each month and (f) from time to time
such additional information regarding the Fund's financial condition as Salomon
Brothers may reasonably request.
3. Representations and Warranties
The Fund represents to Salomon Brothers that all registration
statements, prospectuses and statements of additional information filed by the
Fund with the SEC under the 1933 Act and the 1940 Act with respect to the shares
of the Fund have been carefully prepared in conformity with the requirements of
the 1933 Act, the 1940 Act and the rules and regulations of the SEC thereunder.
As used in this Agreement the terms "registration statement", "prospectus" and
"statement of additional information" shall mean any registration statement,
prospectus and statement of additional information filed by the Fund with the
SEC and any amendments and supplements thereto which at any time shall have been
filed with the SEC. The Fund represents and warrants to Salomon Brothers that
any registration statement, prospectus and statement of additional information,
when such registration
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statement becomes effective, will include all statements required to be
contained therein in conformity with the 1933 Act, the 1940 Act and the rules
and regulations of the SEC; that all statements of fact contained in any
registration statement, prospectus or statement of additional information will
be true and correct when such registration statement becomes effective; and that
neither any registration statement nor any prospectus or statement of additional
information when such registration statement becomes effective will include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading to
a purchaser of the Fund's shares. Salomon Brothers may, but shall not be
obligated to, propose from time to time such amendment or amendments to any
registration statement and such supplement or supplements to any prospectus or
statement of additional information as, in the light of future developments,
may, in the opinion of Salomon Brothers' counsel, be necessary or advisable. If
the Fund shall not propose such amendment or amendments and/or supplement or
supplements within fifteen days after receipt by the Fund of a written request
from Salomon Brothers to do so, Salomon Brothers may, at its option, terminate
this Agreement. The Fund shall not file any amendment to any registration
statement or supplement to any prospectus or statement of additional information
without giving Salomon Brothers reasonable notice thereof in advance; provided,
however, that nothing contained in this Agreement shall in any way limit the
Fund's right to file at any time such amendments to any registration statement
and/or supplements to any prospectus or statement of additional information, of
whatever character, as the Fund may deem advisable, such right being in all
respects absolute and unconditional.
4. Indemnification
4.1 The Fund authorizes Salomon Brothers and any dealers with
whom Salomon Brothers has entered into dealer agreements to use any prospectus
or statement of additional information furnished by the Fund from time to time,
in connection with the sale of the Fund's shares. The Fund agrees to indemnify,
defend and hold Salomon Brothers, its several officers and directors, and any
person who controls Salomon Brothers within the meaning of Section 15 of the
1933 Act, free and harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any counsel fees incurred in connection
therewith) which Salomon Brothers, its officers and directors, or any such
controlling person, may incur under the 1933 Act, the 1940 Act or common law or
otherwise, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any registration statement, any
prospectus or any statement of additional information, or arising out of or
based upon any omission or alleged omission to state a material fact required to
be stated in any registration statement, any prospectus or any statement of
additional information, or necessary to make the statements in any of them not
misleading; provided, however, that the Fund's agreement to indemnify Salomon
Brothers, its officers or directors, and any such controlling person shall not
be deemed to cover any claims, demands, liabilities or expenses arising out of
or based upon any statements or representations made by Salomon Brothers or its
representatives or agents other than such statements and representations as are
contained in any registration statement, prospectus or statement of additional
information and in such financial and other statements as are furnished to
Salomon Brothers pursuant to paragraph 2.2
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hereof; and further provided that the Fund's agreement to indemnify Salomon
Brothers and the Fund's representations and warranties hereinbefore set forth in
paragraph 3 shall not be deemed to cover any liability to the Fund or its
shareholders to which Salomon Brothers would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of Salomon Brothers' reckless disregard of its obligations
and duties under this Agreement. The Fund's agreement to indemnify Salomon
Brothers, its officers and directors, and any such controlling person, as
aforesaid, is expressly conditioned upon the Fund's being notified of any action
brought against Salomon Brothers, its officers or directors, or any such
controlling person, such notification to be given by letter or by telegram
addressed to the Fund at its principal office in New York, New York and sent to
the Fund by the person against whom such action is brought, within ten days
after the summons or other first legal process shall have been served. The
failure so to notify the Fund of any such action shall not relieve the Fund from
any liability that the Fund may have to the person against whom such action is
brought by reason of any such untrue or alleged untrue statement or omission or
alleged omission otherwise than on account of the Fund's indemnity agreement
contained in this paragraph 4.1. The Fund's indemnification agreement contained
in this paragraph 4.1 and the Fund's representations and warranties in this
Agreement shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of Salomon Brothers, its officers and
directors, or any controlling person, and shall survive the delivery of any of
the Fund's shares. This agreement of indemnity will inure exclusively to Salomon
Brothers' benefit, to the benefit of its several officers and directors, and
their respective estates, and to the benefit of the controlling persons and
their successors. The Fund agrees to notify Salomon Brothers promptly of the
commencement of any litigation or proceedings against the Fund or any of its
officers or directors in connection with the issuance and sale of any of the
Fund's shares.
4.2 Salomon Brothers agrees to indemnify, defend and hold the
Fund, its several officers and directors, and any person who controls the Fund
within the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
costs of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) that the Fund, its officers or
directors or any such controlling person may incur under the 1933 Act, the 1940
Act or common law or otherwise, but only to the extent that such liability or
expense incurred by the Fund, its officers or directors or such controlling
person resulting from such claims or demands shall arise out of or be based upon
(a) any unauthorized sales literature, advertisements, information, statements
or representations or (b) any untrue or alleged untrue statement of a material
fact contained in information, furnished in writing by Salomon Brothers to the
Fund and used in the answers to any of the items of the registration statement
or in the corresponding statements made in the prospectus or statement of
additional information, or shall arise out of or be based upon any omission or
alleged omission to state a material fact in connection with such information
furnished in writing by Salomon Brothers to the Fund and required to be stated
in such answers or necessary to make such information not misleading. Salomon
Brothers' agreement to indemnify the Fund, its officers and directors, and any
such controlling person, as aforesaid, is expressly conditioned upon Salomon
Brothers' being notified of any action brought against the Fund, its officers or
directors, or
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any such controlling person, such notification to be given by letter or telegram
addressed to Salomon Brothers at its principal office in New York, New York and
sent to Salomon Brothers by the person against whom such action is brought,
within ten days after the summons or other first legal process shall have been
served. The failure so to notify Salomon Brothers of any such action shall not
relieve Salomon Brothers from any liability that Salomon Brothers may have to
the Fund, its officers or directors, or to such controlling person by reason of
any such untrue or alleged untrue statement or omission or alleged omission
otherwise than on account of Salomon Brothers' indemnity agreement contained in
this paragraph 4.2. Salomon Brothers agrees to notify the Fund promptly of the
commencement of any litigation or proceedings against Salomon Brothers or any of
its officers or directors in connection with the issuance and sale of any of the
Fund's shares.
4.3 In case any action shall be brought against any
indemnified party under paragraph 4.1 or 4.2, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish to do so, to
assume the defense thereof with counsel satisfactory to such indemnified party.
If the indemnifying party opts to assume the defense of such action, the
indemnifying party will not be liable to the indemnified party for any legal or
other expenses subsequently incurred by the indemnified party in connection with
the defense thereof other than (a) reasonable costs of investigation or the
furnishing of documents or witnesses and (b) all reasonable fees and expenses of
separate counsel to such indemnified party if (i) the indemnifying party and the
indemnified party shall have agreed to the retention of such counsel or (ii) the
indemnified party shall have concluded reasonably that representation of the
indemnifying party and the indemnified party by the same counsel would be
inappropriate due to actual or potential differing interests between them in the
conduct of the defense of such action.
5. Effectiveness of Registration
None of the Shares shall be offered by either Salomon Brothers
or the Fund under any of the provisions of this Agreement and no orders for the
purchase or sale of the Shares hereunder shall be accepted by the Fund if and so
long as the effectiveness of the registration statement then in effect or any
necessary amendments thereto shall be suspended under any of the provisions of
the 1933 Act or if and so long as a current prospectus as required by Section
5(b)(2) of the 1933 Act is not on file with the SEC; provided, however, that
nothing contained in this paragraph 5 shall in any way restrict or have an
application to or bearing upon the Fund's obligation to repurchase its Shares
from any shareholder in accordance with the provisions of the Fund's prospectus,
statement of additional information or articles of incorporation.
6. Notice to Salomon Brothers
The Fund agrees to advise Salomon Brothers immediately in
writing:
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(a) of any request by the SEC for amendments to the
registration statement, prospectuses or statements of additional information
then in effect or for additional information;
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement, prospectus or
statement of additional information then in effect or the initiation of any
proceeding for that purpose;
(c) of the happening of any event that makes untrue any
statement of a material fact made in the registration statement, prospectus or
statement of additional information then in effect or that requires the making
of a change in such registration statement, prospectus or statement of
additional information in order to make the statements therein not misleading;
and
(d) of all actions of the SEC with respect to any amendment to
any registration statement, prospectus or statement of additional information
which may from time to time be filed with the SEC.
7. Term of Agreement
This Agreement shall continue for two years from the date
hereof and thereafter shall continue automatically for successive annual
periods, provided such continuance is specifically approved at least annually by
(i) the Fund's Board of Directors, or (ii) by a vote of a majority (as defined
in the 0000 Xxx) of the Fund's outstanding voting securities, provided that in
either event the continuance is also approved by the majority of the Directors
of the Fund who are not interested persons (as defined in the 0000 Xxx) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable, without
penalty, on 60 days' notice by the Fund's Board of Directors, by vote of the
holders of a majority of the Fund's shares, or on 90 days' notice by Salomon
Brothers. This Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act).
8. Miscellaneous
The Fund recognizes that directors, officers and
employees of Salomon Brothers may from time to time serve as directors,
trustees, officers and employees of corporations and business trusts (including
other investment companies) and that such other corporations and trusts may
include the name "Salomon" or "Salomon Brothers" as part of their names, and
that Salomon Brothers or its affiliates may enter into distribution or other
agreements with such other corporations and trusts. If Salomon Brothers, or an
affiliate, ceases to act as the distributor of the Fund's shares, the Fund
agrees that, at Salomon Brothers' request, the Fund's license to use the words
"Salomon Brothers" will terminate and that the Fund will take all necessary
action to change the name of the Fund to a name not including the words
"Salomon" or "Salomon Brothers."
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9. Termination of Prior Agreement
Upon execution of this Agreement, the Distribution Agreement
between Salomon Brothers and the Fund dated May 1, 1990 shall be deemed to have
been terminated and be of no further force or effect.
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Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance thereof at the place below
indicated, whereupon it shall become a binding agreement between us.
Very truly yours,
SALOMON BROTHERS CAPITAL FUND INC
By:_______________________________
Xxxxxxx X. Xxxxxx
President
Accepted:
SALOMON BROTHERS INC
By:________________________
Xxxxxxx X. Xxxxxx
Managing Director
