Exhibit H(1)
______ SHARES
GENERAL AMERICAN INVESTORS COMPANY, INC.
____ % CUMULATIVE PREFERRED STOCK, SERIES B
LIQUIDATION PREFERENCE $25.00 PER SHARE
($1.00 par value)
UNDERWRITING AGREEMENT
New York, New York
September __, 2003
Citigroup Global Markets Inc.
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx Incorporated
As Representatives of the several Underwriters
c/o Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
c/x Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
The undersigned, General American Investors Company, Inc., a
Delaware corporation (the "Fund"), addresses you as underwriters and as the
representatives (the "Representatives") of each of the several underwriters
named on Schedule I hereto (herein collectively called "Underwriters"). The Fund
proposes to sell to the Underwriters _____ shares (the "Series B Shares") of its
___% Cumulative Preferred Stock, Series B, liquidation preference $25.00 per
share, par value $1.00 per share (the "Securities"). Unless otherwise stated,
the term "you" as used herein means Citigroup Global Markets Inc. and Xxxxxxx
Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated, each on its own behalf and on behalf
of the other Representatives. Certain terms used herein are defined in Section
17 hereof.
The Fund wishes to confirm as follows their agreements with you and
the other several Underwriters on whose behalf you are acting in connection with
the several purchases of the Securities by the Underwriters.
The Fund has entered into a Custodian Agreement with Deutsche Bank
Trust Company Americas (f/k/a Bankers Trust Company) dated as of May 14, 1997
and a Transfer Agent Agreement dated as of November 3, 2000 with Mellon Investor
Services LLC (f/k/a Xxxxx Xxxxxx Shareholder Services, L.L.C.). Such agreements
are herein collectively referred to as the "Fund Agreements."
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1. Representations and Warranties of the Fund. The Fund
represents and warrants to, and agrees with, each Underwriter as set forth below
in this Section 1.
(a) The Fund has prepared and filed with the Commission a
registration statement (file numbers 333-107615 and 811-00041) on Form
N-2, including a related preliminary prospectus (including the statement
of additional information incorporated by reference therein), for
registration under the Act and the 1940 Act of the offering and sale of
the Securities. The Fund may have filed one or more amendments thereto,
including a related preliminary prospectus (including the statement of
additional information incorporated by reference therein), each of which
has previously been furnished to you. The Fund will file with the
Commission after the Effective Date of such registration statement, a
final prospectus (including the statement of additional information
incorporated by reference therein) in accordance with Rules 430A and 497.
The Fund has included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information)
required by the Act and the 1940 Act and the Rules and Regulations to be
included in such registration statement and the Prospectus. As filed, the
final prospectus (including the statement of additional information
incorporated by reference therein), shall contain all Rule 430A
Information, together with all other such required information, and,
except as otherwise determined by the Fund in consultation with you and
its counsel, shall be in all substantive respects in the form furnished to
you prior to the Execution Time or, to the extent not completed at the
Execution Time, shall contain only such additional information and other
changes (beyond that contained in the latest Preliminary Prospectus) as
the Fund has determined in consultation with you and its counsel will be
included or made therein.
(b) Each Preliminary Prospectus and Prospectus complied when filed
with the Commission in all material respects with the provisions of the
Act, the 1940 Act and the Rules and Regulations, except that this
representation and warranty does not apply to statements in or omissions
from the registration statement, the Preliminary Prospectus or the
Prospectus made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Fund in writing by or on
behalf of any Underwriter through you expressly for use therein. The
Commission has not issued any order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus.
(c) On the Effective Date, the Registration Statement did or will,
and when the Prospectus is first filed (if required) in accordance with
Rule 497 and on the Closing Date (as defined herein), the Prospectus (and
any supplements thereto) will, and the 1940 Act Notification when
originally filed with the Commission and any amendment or supplement
thereto when filed with the Commission did or will, comply in all material
respects with the applicable requirements of the Act, the 1940 Act and the
Rules and Regulations and the Registration Statement did not or will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading; and, on the Effective Date, the
Prospectus, if not filed pursuant to Rule 497, will not, and on the date
of any filing pursuant to Rule 497 and on the Closing Date, the Prospectus
(together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
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circumstances under which they were made, not misleading; provided,
however, that the Fund makes no representation or warranties as to the
information contained in or omitted from the Registration Statement, or
the Prospectus (or any supplement thereto) in reliance upon and in
conformity with information furnished in writing to the Fund by or on
behalf of any Underwriter through the Representatives specifically for
inclusion in the Registration Statement or the Prospectus (or any
supplement thereto).
(d) The Fund has been duly incorporated and is validly existing in
good standing as a corporation 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 Prospectus, and
is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires such
qualification, except where the failure to so register or to qualify does
not have a material adverse effect on the financial condition, business,
properties, net assets or results of operations of the Fund. The Fund does
not have any "significant subsidiary" as such term is defined in Rule 1-02
of Regulation S-X.
(e) The Fund's authorized equity capitalization is as set forth in
the Prospectus; the capital stock of the Fund conforms in all material
respects to the description thereof contained in the Prospectus; all
outstanding shares of capital stock of the Fund have been duly and validly
authorized and issued and are fully paid and nonassessable; the Securities
have been duly and validly authorized, and, when issued and delivered to
and paid for by the Underwriters pursuant to this Agreement, will be fully
paid and nonassessable; the Fund has used its best efforts to have the
Securities listed on the New York Stock Exchange (the "NYSE"); the
certificates for the Securities will be in valid and sufficient form; the
holders of any outstanding shares of capital stock of the Fund are not
entitled to preemptive or other rights to subscribe for the Securities;
and, except as set forth in the Prospectus, no options, warrants or other
rights to purchase, agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities for, shares of
capital stock of or ownership interests in the Fund are outstanding.
(f) The Fund's registration statement on Form 8-A under the
Exchange Act has become effective.
(g) The Fund, subject to the Registration Statement having been
declared effective and the filing of the Prospectus under Rule 497, has
taken all required action under the Act, the 1940 Act and the Rules and
Regulations to make the public offering and consummate the sale of the
Securities as contemplated by this Agreement.
(h) There are no agreements, contracts, indentures, leases or
other instruments that are required to be described in the Registration
Statement or the Prospectus, or to be filed as an exhibit thereto, which
are not described or filed as required; and the statements in the
Prospectus under the heading "Taxation" and "Certain Provisions of the
Restated Certificate of Incorporation and By-Laws" fairly summarize the
matters therein described in all material respects.
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(i) 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
constitute the valid and legally binding agreements of the Fund,
enforceable against the Fund in accordance with their terms, except as
rights to indemnity and contribution hereunder may be limited by federal
or state securities laws and subject to the qualification that the
enforceability of the Fund's obligations hereunder and thereunder may be
limited by bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights generally and by general
equitable principles.
(j) The Fund is registered under the 1940 Act as a closed-end,
diversified management investment company, and the 1940 Act Notification
has been duly filed with the Commission. 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.
(k) No consent, approval, authorization, filing with or order of
any court or governmental agency or body is required in connection with
the transactions contemplated herein or in the Fund Agreements, except
such as have been made or obtained under the Act and the 1940 Act and such
as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities by the
Underwriters in the manner contemplated herein and in the Prospectus.
(l) Neither the issuance and sale of the Securities, the
execution, delivery or performance of this Agreement nor any of the Fund
Agreements by the Fund, nor the consummation by the Fund of the
transactions contemplated hereby or thereby (i) conflicts or will conflict
with or constitutes or will constitute a breach of the Restated
Certificate of Incorporation or by-laws of the Fund, (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 Fund is a party or by which it or any of its
properties may be bound, except where such conflict, breach, violation or
default would not have a material adverse effect on the financial
condition, business, properties, net assets or results of operations of
the Fund or on the ability of the Fund to perform its obligations under
this Agreement and the Fund Agreements or (iii) violates or will violate
any material statute, law, regulation or filing 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 the property or assets of the Fund is subject.
(m) No holders of securities of the Fund have rights to the
registration of such securities under the Registration Statement.
(n) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Prospectus and the
Registration Statement present fairly in all material respects the
financial condition, results of operations and cash flows
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of the Fund as of the dates and for the periods indicated, comply as to
form in all material respects with the applicable accounting requirements
of the Act and the 1940 Act and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein); and
the other financial and statistical information and data included in the
Registration Statement or the Prospectus are accurately derived from such
financial statements and the books and records of the Fund.
(o) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Fund or its property is pending or, to the best knowledge of the Fund,
threatened that (i) could reasonably be expected to have a material
adverse effect on the performance of this Agreement or the consummation of
any of the transactions contemplated hereby or (ii) could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Fund,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus (or any
supplement thereto).
(p) The Fund owns or leases all such properties as are necessary
to the conduct of its operations as presently conducted.
(q) The Fund is not (i) in violation of its Restated Certificate
of Incorporation or by-laws, (ii) in breach or default in the performance
of the terms of any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or bound or to which its
property is subject, except where such conflict, breach, violation or
default would not have a material adverse effect on the financial
condition, business, properties, net assets or results of operations of
the Fund or on the ability of the Fund to perform its obligations under
this Agreement and the Fund Agreements or (iii) in violation 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 any other governmental, regulatory, self-regulatory or
administrative agency or any official having jurisdiction over the Fund,
except where such conflict, breach, violation or default would not have a
material adverse effect on the financial condition, business, properties,
net assets or results of operations of the Fund or on the ability of the
Fund to perform its obligations under this Agreement and the Fund
Agreements.
(r) Since the date as of which information is given in the
Registration Statement and Prospectus (or any supplement thereto), except
as otherwise stated therein, (i) there has been no material, adverse
change in the condition (financial or other), business, properties, net
assets or results of operations of the Fund or business prospects (other
than as a result of a change in the financial markets generally) of the
Fund, whether or not arising in the ordinary course of business and (ii)
there have been no transactions entered into by the Fund which are
material to the Fund other than those in the ordinary course of its
business as described in the Prospectus (or any amendment or supplement
thereto).
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(s) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Fund, whether or not arising in the ordinary course of
business and (B) there have been no transactions entered into by the Fund,
other than those in the ordinary course of business, which are material
with respect to the Fund..
(t) Ernst & Xxxxx, LLP, who have audited the financial statements
included or incorporated by reference in the Registration Statement and
the Prospectus, are independent public accountants with respect to the
Fund within the meaning of the Act and the Act Rules and Regulations.
(u) The Fund has not distributed and, prior to the later to occur
of (i) the Closing Date and (ii) completion of the distribution of the
Securities, will not distribute any offering material in connection with
the offering and sale of the Securities other than the Registration
Statement, the Preliminary Prospectus, the Prospectus or other materials
permitted by the Act, the 1940 Act or the Rules and Regulations.
(v) There are no transfer taxes or other similar fees or charges
under Federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and delivery
of this Agreement or the issuance by the Fund or sale by the Fund of the
Securities.
(w) The Fund has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business or properties of the Fund, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (or any supplement thereto)) and has paid
all taxes required to be paid by it and any other assessment, fine or
penalty levied against it, to the extent that any of the foregoing is due
and payable, except for any such assessment, fine or penalty that is
currently being contested in good faith or as would not have a material
adverse effect on the condition (financial or otherwise), earnings,
business or properties of the Fund, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (or any supplement thereto).
(x) The Fund's directors and officers/errors and omissions
insurance policy and its fidelity bond required by Rule 17g-1 of the 1940
Act Rules and Regulations are in full force and effect; the Fund is in
compliance with the terms of such policy and fidelity bond in all material
respects; and there are no claims by the Fund under any such policy or
fidelity bond as to which any insurance company is denying liability or
defending under a reservation of rights clause; the Fund has not been
refused any insurance coverage sought or applied for; and the Fund has no
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business at a
cost that would not have a material adverse effect on the condition
(financial or
7
otherwise), prospects, earnings, business or properties of the Fund,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus (or any
supplement thereto).
(y) The Fund has such licenses, permits, and authorizations of
governmental or regulatory authorities ("permits") as are necessary to own
its property and to conduct its business in the manner described in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto); 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 Registration Statement and the
Prospectus (or any amendment or supplement thereto); and, except as
described in the Registration Statement and the Prospectus (or any
amendment or supplement thereto), none of such permits contains any
restriction that is materially burdensome to the Fund.
(z) The Fund maintains and will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization and with the investment objectives, policies and
restrictions of the Fund and 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, to calculate net asset value, to maintain
accountability for assets and to maintain material 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
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(aa) The Fund has not taken, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected
to cause or result in, under the Exchange Act or otherwise, stabilization
or manipulation of the price of any security of the Fund to facilitate the
sale or resale of the Securities, and the Fund is not aware of any such
action taken or to be taken by any affiliates of the Fund.
(bb) To the best of the Fund's knowledge, 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 violation by such persons of the FCPA,
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
8
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.
(cc) This Agreement and each of the Fund Agreements complies in all
material respects with all applicable provisions of the 1940 Act, the 1940
Act Rules and Regulations.
(dd) Except as disclosed in the Registration Statement and the
Prospectus (or any supplement thereto), no director of the Fund is an
"interested person" (as defined in the 1940 Act) of the Fund or an
"affiliated person" (as defined in the 1940 Act) of any Underwriter listed
in Schedule I hereto.
(ee) The Fund intends to direct the investment of the proceeds of
the offering of the Securities in such a manner as to comply with the
requirements of Subchapter M of the Code.
(ff) The conduct by the Fund of its business (as described in the
Prospectus) does not require it to be the owner, possessor or licensee of
any patents, patent licenses, trademarks, service marks or trade names
which it does not own, possess or license.
(gg) Except as disclosed in the Registration Statement and the
Prospectus, the Fund (i) does not have any material lending or other
relationship with any bank or lending affiliate of the Underwriters and
(ii) does not intend to use any of the proceeds from the sale of the
Securities hereunder to repay any outstanding debt owed to any affiliate
of the Underwriters.
(hh) The Fund is not in material violation of the applicable
provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations
promulgated in connection therewith (the "Xxxxxxxx-Xxxxx Act"), including
Sections 302 and 906 related to certifications.
(ii) 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 recordkeeping and reporting requirements of The Bank
Secrecy Act of 1970, as amended (including amendments pursuant to the
International Money Laundering Abatement and Anti-Terrorist Financing Act
of 2001), 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.
(jj) To the best of the Fund's knowledge, neither the Fund nor, to
the knowledge of the Fund, any director, officer, agent, employee or
affiliate of the Fund is currently
9
subject to any U.S. sanctions 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.
(kk) Xxxxxxx Xxxxxxxx is the validly appointed President and Chief
Executive Officer of the Fund and the manager of the Fund's portfolio; Xx.
Xxxxxxxx has not given notice nor made known his intention to give notice
of termination of his employment and the Fund knows of no reason why Xx.
Xxxxxxxx should be unable to manage the Fund's portfolio.
(ll) The Fund intends to satisfy all of the conditions precedent to
the redemption of the Fund's 7.20% Tax-Advantage Cumulative Preferred
Stock prior to the Closing Date (as defined in Section 3).
Any certificate signed by any officer of the Fund and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Fund, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Fund
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Fund, at a purchase price of $_____ per share,
the amount of the Underwritten Securities set forth opposite such Underwriter's
name in Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for the
Securities shall be made at 10:00 AM, New York City time, on the fifth business
day after the date hereof at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such time on such later date as
the Representatives shall designate, which date and time may be postponed by
agreement between the Representatives and the Fund or as provided in Section 9
hereof (such date and time of delivery and payment for the Securities being
herein called the "Closing Date"). In any event, the Closing Date shall not
occur until the Fund shall have redeemed a sufficient number of shares of the
Fund's 7.20% Tax-Advantage Cumulative Preferred Stock in order to permit the
Securities to be duly authorized for issuance to the Underwriters. Delivery of
the Securities shall be made to the Representatives for the respective accounts
of the several Underwriters against payment by the several Underwriters through
the Representatives of the purchase price thereof to or upon the order of the
Fund by wire transfer payable in same-day funds to an account specified by the
Fund. Delivery of the Securities shall be made through the facilities of The
Depository Trust Company unless the Representatives shall otherwise instruct.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
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5. Agreements of the Fund. The Fund agrees with the several
Underwriters as follows:
(a) The Fund will use its reasonable best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Fund will not file any amendment of the
Registration Statement or supplement to the Prospectus or any Rule 462(b)
Registration Statement unless the Fund has furnished you a copy for your
review prior to filing and will not file any such proposed amendment or
supplement to which you reasonably object promptly after you receive
copies thereof. Subject to the foregoing sentence, if the Registration
Statement has become or becomes effective pursuant to Rule 430A, or filing
of the Prospectus is otherwise required under Rule 497, the Fund will
cause the Prospectus, properly completed, and any supplement thereto to be
filed in a form determined by the Fund, in consultation with you and its
counsel with the Commission pursuant to Rule 497 within the time period
prescribed and will provide evidence satisfactory to the Representatives
of such timely filing. The Fund will promptly advise the Representatives
(1) when the Registration Statement, if not effective at the Execution
Time, shall have become effective, (2) when the Prospectus, and any
supplement thereto, shall have been filed (if required) with the
Commission pursuant to Rule 497 or when any Rule 462(b) Registration
Statement shall have been filed with the Commission, (3) when, prior to
termination of the offering of the Securities, any amendment to the
Registration Statement shall have been filed or become effective, (4) of
any request by the Commission or its staff for any amendment of the
Registration Statement, or any Rule 462(b) Registration Statement, or for
any supplement to the Prospectus or for any additional information, (5) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (6) of the receipt by
the Fund of any notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction or the
institution or threatening of any proceeding for such purpose. The Fund
will use its reasonable best efforts to prevent the issuance of any such
stop order or the suspension of any such qualification and, if issued, to
obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Securities
is required to be delivered under the Act, any event occurs as a result of
which, in the judgment of the Fund or in the reasonable opinion of counsel
for the Underwriters, the Prospectus as then supplemented would include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be necessary to
amend the Registration Statement or supplement the Prospectus to comply
with the Act, the 1940 Act and the Rules and Regulations, the Fund
promptly will (1) notify the Representatives of any such event; (2)
prepare and file with the Commission, subject to the second sentence of
paragraph (a) of this Section 5, an amendment or supplement which will
correct such statement or omission or effect such compliance; and (3)
supply any such supplement or amendment to you in such quantities as you
may reasonably request.
11
(c) The Fund will timely file such reports pursuant to the
Exchange Act as are necessary in order to make generally available to its
security holders and to the Representatives as soon as practicable an
earnings statement or statements of the Fund which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) The Fund will furnish to the Representatives and counsel for
the Underwriters signed copies of the Registration Statement (including
exhibits thereto) and to each other Underwriter a conformed copy of the
Registration Statement (without exhibits thereto) and, so long as delivery
of a prospectus by an Underwriter or dealer may be required by the Act, as
many copies of each Preliminary Prospectus and the Prospectus and any
supplement thereto as the Representatives may reasonably request.
(e) The Fund will arrange, if necessary, for the qualification of
the Securities for sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in
effect so long as required for the distribution of the Securities;
provided that in no event shall the Fund be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take
any action that would subject it to service of process in suits, other
than those arising out of the offering or sale of the Securities, in any
jurisdiction where it is not now so subject.
(f) The Fund will not, without the prior written consent of the
Representatives, offer, sell, contract to sell, pledge, or otherwise
dispose of, (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise)) by the Fund or any affiliate of the Fund or any person in
privity with the Fund, directly or indirectly, including the filing (or
participation in the filing) of a registration statement with the
Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the
meaning of Section 16 of the Exchange Act, any Securities or any
securities convertible into, or exercisable, or exchangeable for,
Securities; or publicly announce an intention to effect any such
transaction for a period of 60 days following the Execution Time. The
foregoing restriction will not apply to the Securities to be sold
hereunder.
(g) The Fund will comply in all material respects with all
applicable securities and other applicable laws, rules and regulations,
including, without limitation, the Xxxxxxxx-Xxxxx Act, and will use its
best efforts to cause the Fund's directors and officers, in their
capacities as such, to comply with such laws, rules and regulations,
including, without limitation, the provisions of the Xxxxxxxx-Xxxxx Act.
(h) The Fund will not take, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected
to cause or result in, under the Exchange Act or otherwise, stabilization
or manipulation of the price of any security of the Fund to facilitate the
sale or resale of the Securities.
(i) The Fund agrees to pay the costs and expenses relating to the
following matters: (i) the preparation, printing or reproduction and
filing with the Commission of the Registration Statement (including
financial statements and exhibits thereto), each
12
Preliminary Prospectus, the Prospectus and the 1940 Act Notification and
each amendment or supplement to any of them; (ii) 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 Preliminary Prospectus, the Prospectus, any sales material
and all amendments or supplements to any of them, as may, in each case, be
reasonably requested for use in connection with the offering and sale of
the Securities; (iii) the preparation, printing, authentication, issuance
and delivery of certificates for the Securities, including any stamp or
transfer taxes in connection with the original issuance and sale of the
Securities; (iv) the printing (or reproduction) and delivery of this
Agreement, any blue sky memorandum, dealer agreements and all other
agreements or documents printed (or reproduced) and delivered in
connection with the offering of the Securities; (v) the registration of
the Securities under the Exchange Act and the listing of the Securities on
the NYSE; (vi) any registration or qualification of the Securities for
offer and sale under the securities or blue sky laws of the several states
(including filing fees and the reasonable fees and expenses of counsel for
the Underwriters relating to such registration and qualification); (vii)
any filings required to be made with the National Association of
Securities Dealers, Inc. (including filing fees and the reasonable fees
and expenses of counsel for the Underwriters relating to such filings);
(viii) the transportation and other expenses incurred by or on behalf of
Fund representatives in connection with presentations to prospective
purchasers of the Securities; (ix) the fees and expenses of the Fund's
accountants and the fees and expenses of counsel (including local and
special counsel) for the Fund; and (x) all other costs and expenses
incident to the performance by the Fund of its obligations hereunder.
Except as provided in this Agreement, the Underwriters agree to pay their
own costs and expenses of the underwriting, including the fees and
expenses of their counsel, transfer taxes on resale of any of the
Securities, and any advertising expenses connected with any offers they
make.
(j) The Fund will direct the investment of the net proceeds of the
offering of the Securities in such a manner as to comply with the
investment objectives, policies and restrictions of the Fund as described
in the Prospectus.
(k) The Fund will comply with the requirements of Subchapter M of
the Code to qualify as a regulated investment company under the Code.
(l) The Fund will use its best efforts to effect the listing of
the Securities on the New York Stock Exchange on or before 30 days from
the date hereof.
(m) The Fund will use its best efforts to cause the Securities,
prior to the Closing Date, to be assigned a rating of Aaa from Xxxxx'x
Investors Services, Inc. ("Moodys").
(n) The Fund will use its reasonable best efforts to perform all
of the agreements required of it by this Agreement and discharge all
conditions of theirs to closing as set forth in this Agreement.
(o) The Fund will use its best efforts to redeem all of the Fund's
7.20% Tax-Advantage Cumulative Preferred Stock prior to the Closing Date.
13
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Securities shall be subject to
the accuracy of the representations and warranties on the part of the Fund
contained herein as of the Execution Time, the Closing Date and any settlement
date pursuant to Section 3 hereof, to the accuracy of the statements of the Fund
made in any certificates pursuant to the provisions hereof, to the performance
by the Fund of its obligations hereunder and to the following additional
conditions:
(a) If the Registration Statement has not become effective prior
to the Execution Time, unless the Representatives agree in writing to a
later time, the Registration Statement will become effective not later
than (i) 6:00 PM New York City time on the date of determination of the
public offering price, if such determination occurred at or prior to 3:00
PM New York City time on such date or (ii) 9:30 AM on the Business Day
following the day on which the public offering price was determined, if
such determination occurred after 3:00 PM New York City time on such date;
if filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 497, the Prospectus, and any such supplement, will be
filed in the manner and within the time period required by Rule 497; and
no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Fund shall have requested and caused Xxxxxxxx & Xxxxxxxx
LLP, counsel for the Fund, to have furnished to the Representatives their
opinion and letter dated the Closing Date and addressed to the
Representatives, to the effect that:
(i) The Fund has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware.
(ii) The Fund has corporate power and authority to own, lease
and operate its properties and to conduct its business as described
in the Prospectus and to enter into and perform its obligations
under the Underwriting Agreement.
(iii) The Fund is duly qualified as a foreign corporation to
transact business and is in good standing in the State of New York
(which is the only jurisdiction identified by management of the Fund
to such counsel in which the Fund owns property, has operations or
conducts business).
(iv) The authorized equity capitalization of the Fund is as
set forth in the Prospectus; the shares of issued and outstanding
capital stock of the Fund have been duly authorized and validly
issued and are fully paid and nonassessable. The Fund is not a party
to or otherwise subject to any agreement or arrangement pursuant to
which it is or may be obligated to issue any equity securities other
than this Agreement.
(v) The Securities have been duly authorized for issuance
and sale to the Underwriters pursuant to the Underwriting Agreement
and, when issued and delivered by the Fund pursuant to the
Underwriting Agreement against payment of the consideration set
forth in the Underwriting Agreement, will be validly
14
issued and fully paid and nonassessable; no holder of the Securities
is or will be subject to personal liability by reason of being such
a holder; the Securities conform to the provisions of the
Certificate Designations; and the relative rights, preferences,
interests and powers of the Securities are as set forth in the
Restated Certificate of Incorporation relating thereto, and all such
provisions are valid under the Delaware General Corporation Law.
(vi) The Fund is registered under the 1940 Act as a
closed-end diversified management investment company and the 1940
Act Notification has been duly filed with the Commission.
(vii) The Fund is in compliance in all material respects with
the applicable provisions of the 1940 Act and the 1940 Act Rules and
Regulations and each of the Fund Agreements and the Fund's
obligations under each Fund Agreement comply as to form in all
material respects with the applicable provisions of the 1940 Act and
the 1940 Act Rules and Regulations.
(viii) The Underwriting Agreement and each Fund Agreement has
been duly authorized, executed and delivered by the Fund..
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the Act;
any required filing of the Prospectus, and any supplements thereto,
pursuant to Rule 497 have been made in the manner and within the
time period required by Rule 497; and, to the best of our knowledge,
no stop order suspending the effectiveness of the Registration
Statement has been issued under the Act and no proceedings for that
purpose have been instituted or are pending or threatened by the
Commission.
(x) The form of certificate used to evidence the Securities
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the Restated
Certificate of Incorporation and by-laws of the Fund and the
requirements of the New York Stock Exchange.
(xi) The Fund has all necessary governmental authorizations,
approvals, orders, licenses, certificates, franchises and permits of
and from all governmental regulatory officials and bodies required
under the 1933 Act and the 1940 Act (except where the failure so to
have any such authorizations, approvals, orders, licenses,
certificates, franchises or permits, individually or in the
aggregate, would not have a material adverse effect on the business,
properties, operations or financial condition of the Fund), to own
its properties and to conduct business, as described in the
Prospectus; no filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court
or governmental authority or agency, domestic or foreign (other than
under the Act and the Act Rules and Regulations and the 1940 Act and
the 1940 Act Rules and Regulations, which have been obtained, or as
may be required under the securities or blue sky laws of the various
states, as to which we need express no opinion) is necessary or
required in connection with the due authorization, execution and
delivery of the
15
Underwriting Agreement or for the offering, issuance, sale or
delivery of the Securities.
(xii) The execution, delivery and performance of the
Underwriting Agreement and the consummation of the transactions
contemplated in the Underwriting Agreement and in the Registration
Statement (including the issuance and sale of the Securities and the
use of the proceeds from the sale of the Securities as described in
the Prospectus under the caption "Use of Proceeds") and compliance
by the Fund with its obligations under the Underwriting Agreement
and the Fund Agreements do not and will not, whether with or without
the giving of notice or lapse of time or both, conflict with or
constitute a breach of, or default under or result in the creation
or imposition of any lien, charge or encumbrance upon any property
or assets of the Fund pursuant to any Fund Agreement (except for
such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a material adverse change in the
condition, financial or otherwise, or in the earnings or business
affairs of the Fund, whether or not arising in the ordinary course
of business), nor will such action result in any violation of the
provisions of the Restated Certificate of Incorporation or by-laws
of the Fund, or any applicable law, statute, rule, regulation,
judgment, order, writ or decree, known to us, of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Fund or any of its properties, assets or
operations.
(xiii) No holders of securities of the Fund have rights to the
registration of such securities under the Registration Statement.
In addition, such counsel shall state that on the basis of the
information that it gained in the course of its review of the Registration
Statement and the Prospectus, its participation in discussions with the
representatives of the Fund and its accountants, considered in light of its
understanding of the applicable law and the experience it has gained through its
practice under the Act and the 1940 Act, in such counsel's opinion, the
Registration Statement as of its effective date, and the Prospectus, as of the
date of the Prospectus, appeared on their face to be appropriately responsive in
all material respects to the requirements of the Act and the 1940 Act and the
applicable rules and regulations of the Commission thereunder. Further, nothing
that came to our attention in the course of such review has caused us to believe
that the Registration Statement, as of its effective date, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus, as of the date of the Prospectus, and as of the Closing
Date, contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. In addition, such
counsel shall state that they do not know of any litigation or any governmental
proceeding instituted or threatened against the Fund that would be required to
be disclosed in the Prospectus and is not so disclosed nor do they know of any
documents that are required to be filed as exhibits to the Registration
Statement and are not so filed or of any documents that are required to be
summarized in the Prospectus and are not so summarized. Such counsel shall not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus except for
16
those made under the captions "Description of Series B Preferred Stock",
"Description of Capital Stock and Other Securities" and Taxation in the
Prospectus insofar as they relate to provisions of documents therein described.
Also, such counsel shall not express any opinion or belief as to the financial
statements or other financial data contained in the Registration Statement or
the Prospectus.
In rendering such opinion, such counsel may rely as to matters of
fact, to the extent they deem proper, on certificates of responsible officers of
the Fund and public officials. References to the Prospectus above shall also
include any supplements thereto at the Closing Date.
(c) The Representatives shall have received from Xxxxxxx Xxxxxxx &
Xxxxxxxx LLP, counsel for the Underwriters, such opinion or opinions,
dated the Closing Date and addressed to the Representatives, with respect
to the issuance and sale of the Securities, the Registration Statement,
the Prospectus (together with any supplement thereto) and other related
matters as the Representatives may reasonably require, and the Fund shall
have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(d) The Fund shall have furnished to the Representatives a
certificate of the Fund, signed by the President or a Vice President of
the Fund and the principal financial or accounting officer of the Fund,
dated the Closing Date, to the effect that the signers of such certificate
have carefully examined the Registration Statement, the Prospectus, any
supplements to the Prospectus and this Agreement and that:
(i) The representations and warranties of the Fund in
Section 1 of this Agreement are true and correct on and as of the
Closing Date with the same effect as if made on the Closing Date and
the Fund has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to
the Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Fund's knowledge,
threatened; and
(iii) Since the date of the most recent financial statements
included in the Prospectus (or any supplement thereto), there has
been no material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Fund,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(or any supplement thereto).
(e) The Fund shall have requested and caused Xxxxx & Young LLP to
have furnished to the Representatives, at the Execution Time and at the
Closing Date, letters, dated respectively as of the Execution Time and as
of the Closing Date, in form and substance heretofore approved by the
Representatives.
17
(f) Subsequent to the Execution Time or, if earlier, the dates as
of which information is given in the Registration Statement (or any
amendment thereof) and the Prospectus (or any supplement thereto), there
shall not have been (i) any changes or decrease specified in the letter or
letters referred to in paragraph (f) of this Section 6 or (ii) any change,
or any development involving a prospective change, in or affecting the
condition (financial or otherwise), earnings, business or properties of
the Fund, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus (or
any supplement thereto) the effect of which, in any case referred to in
clause (i) or (ii) above, is, in the sole judgment of the Representatives,
so material and adverse as to make it impractical or inadvisable to
proceed with the offering or delivery of the Securities as contemplated by
the Registration Statement (or any amendment thereof) and the Prospectus
(or any supplement thereto).
(g) The Fund shall have used its best efforts to list the
Securities and admit and authorize for trading on the NYSE, and
satisfactory evidence of such actions shall have been provided to the
Representatives.
(h) The Fund shall have delivered and you shall have received
evidence satisfactory to you that the Securities are rated Aaa by Xxxxx'x
as of the Closing Date, and there shall not have been given any notice of
any intended or potential downgrading, or of any review for potential
downgrading, in the rating accorded to the Securities by Xxxxx'x.
(i) The Fund shall have furnished to the Representatives a report,
dated the Closing Date, showing compliance with the Asset coverage
requirements of the 1940 and a Basic Maintenance Report (as defined in the
Certificate of Designations), in form and substance satisfactory to the
Representatives. Such report may use portfolio holdings and valuations as
of the close of business of the sixth business day preceding the Closing
Date; provided, however, that the Company represents in such report that
its total net assets as of the Closing Date have not declined by % or more
from such valuation date.
(j) Prior to the Closing Date, the Fund shall have furnished to
the Representatives such further information, certificates and documents
as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as provided in this Agreement, or if any of the opinions
and certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Representatives and counsel
for the Underwriters, this Agreement and all obligations of the Underwriters
hereunder may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Fund in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, counsel for the
Underwriters, at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, on the Closing
Date.
18
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Fund to perform any agreement
herein or comply with any provision hereof other than by reason of a default by
any of the Underwriters, the Fund will reimburse the Underwriters severally
through Citigroup Global Markets Inc. on demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the
Securities.
8. Indemnification and Contribution. (a) The Fund agrees to
indemnify and hold harmless each of you and each other Underwriter, the
directors, officers, employees and agents of each Underwriter and each person
who controls any Underwriter within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities, joint
or several (including reasonable costs of investigation), to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, the Prospectus, any
Preliminary Prospectus, any sales material (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the Fund
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the Fund
by or on behalf of any Underwriter through the Representatives specifically for
inclusion therein. This indemnity agreement will be in addition to any liability
which the Fund may otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify
and hold harmless the Fund, each of its directors, each of its officers who
signs the Registration Statement, and each person who controls the Fund within
the meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Fund to each Underwriter, but only with reference
to written information relating to such Underwriter furnished to the Fund by or
on behalf of such Underwriter through the Representatives specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any Underwriter
may otherwise have. The Fund acknowledges that the statements set forth in the
cover page regarding delivery of the Securities and, under the heading
"Underwriting", (i) the list of Underwriters and their respective participation
in the sale of the Securities, (ii) the sentences related to concessions and
reallowances and (iii) the paragraphs related to stabilization, syndicate
covering transactions and penalty bids in any Preliminary Prospectus and the
Prospectus constitute the only information furnished in writing by or on behalf
of the several Underwriters for inclusion in any Preliminary Prospectus or the
Prospectus.
19
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of one
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or
(b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Fund and the Underwriters severally agree
to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the Fund and
one or more of the Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Fund on the one
hand and by the Underwriters (treated jointly for this purpose as one person) on
the other from the offering of the Securities; provided, however, that in no
case shall any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Securities) be responsible for any
amount in excess of the underwriting discount or commission applicable to the
Securities purchased by such Underwriter hereunder. If the allocation provided
by the immediately preceding sentence is unavailable for any reason, the Fund
and the Underwriters severally shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of
20
the Fund on the one hand and of the Underwriters on the other in connection with
the statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Fund shall be deemed
to be equal to the total net proceeds from the offering (before deducting
expenses) received by it, and benefits received by the Underwriters shall be
deemed to be equal to the total underwriting discounts and commissions, in each
case as set forth on the cover page of the Prospectus. Relative fault shall be
determined by reference to, among other things, whether any untrue or any
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information provided by the Fund on the one
hand or the Underwriters on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Fund and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, and each person who controls
the Fund within the meaning of either the Act or the Exchange Act, each officer
of the Fund who shall have signed the Registration Statement and each director
of the Fund shall have the same rights to contribution as the Fund, subject in
each case to the applicable terms and conditions of this paragraph (d). The
Underwriters' obligations to contribute pursuant to this Section 8 are several
in proportion to the respective number of Series B Shares set forth opposite
their names in Schedule I (or such numbers of Series B Shares increased as set
forth in Section 9 hereof) and not joint.
(e) 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 from claimants on claims that are the
subject matter of such action, suit or proceeding.
(f) 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 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 or its shareholders, trustees, directors, managers,
members or officers or any person controlling the Fund (control to be determined
within the meaning of the Act or the Exchange Act), (ii) acceptance of any
Securities and payment therefor hereunder and (iii) any termination of this
Agreement. A successor to any Underwriter or to the Fund or its shareholders,
trustees, directors, managers, members or officers or any person controlling any
Underwriter or the Fund shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this
21
Section 8. Any indemnification by the Fund shall be subject to the requirements
and limitations of Section 17(i) of the 1940 Act.
9. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters or in
such other proportion as you may specify in accordance with the Citigroup Global
Markets Inc. Master Agreement Among Underwriters) the Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase; provided,
however, that in the event that the aggregate amount of Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase shall
exceed 10% of the aggregate amount of Securities set forth in Schedule I hereto,
the remaining Underwriters shall have the right to purchase all, but shall not
be under any obligation to purchase any, of the Securities, and if such
nondefaulting Underwriters do not purchase all the Securities, this Agreement
will terminate without liability to any nondefaulting Underwriter or the Fund.
In the event of a default by any Underwriter as set forth in this Section 9
which does not result in a termination of this Agreement, either the
Representatives or the Fund shall have the right to postpone, the Closing Date
for a period, not exceeding five Business Days, in order that the required
changes in the Registration Statement and the Prospectus or in any other
documents or arrangements may be effected. Nothing contained in this Agreement
shall relieve any defaulting Underwriter of its liability, if any, to the Fund
its directors and officers and any nondefaulting Underwriter for damages
occasioned by its default hereunder. 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 Series B Shares which a defaulting Underwriter agreed, but failed or
refused, to purchase.
10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Representatives, without liability on the part of
the Underwriters to the Fund, by notice given to the Fund prior to delivery of
and payment for the Securities, if at any time prior to such time (i) trading in
the Fund's outstanding shares of common stock shall have been suspended by the
Commission or the NYSE or trading in securities generally on the NYSE shall have
been suspended or limited or minimum prices shall have been established on
either of the exchanges, (ii) a banking moratorium shall have been declared
either by Federal or New York State authorities, (iii) a material disruption has
occurred in the commercial banking or securities settlement or clearance
services in the United States, or (iv) there shall have occurred any outbreak or
escalation of hostilities, declaration by the United States of a national
emergency or war, or other calamity or crisis the effect of which on financial
markets is such as to make it, in the sole judgment of the Representatives,
impractical or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Prospectus (exclusive of any supplement
thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Fund or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and
22
effect, regardless of any investigation made by or on behalf of any Underwriter
or the Fund or any of the officers, directors, employees, agents or controlling
persons referred to in Section 8 hereof, and will survive delivery of and
payment for the Securities. The provisions of Sections 7 and 8 hereof shall
survive the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed to the Citigroup Global Markets Inc. General Counsel (fax
no.: (000) 000-0000) and confirmed to the General Counsel, Citigroup Global
Markets Inc., at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention:
General Counsel; or, if sent to the Fund, will be mailed, delivered or telefaxed
to General American Investors Company, Inc. (fax no.: (000) 000-0000) and
confirmed to it at General American Investors Company, Inc. 000 Xxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, attention of the Vice President,
Administration.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, trustees, directors, employees, agents and controlling persons
referred to in Section 8 hereof, and no other person will have any right or
obligation hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for convenience
only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"1940 Act" shall mean the Investment Company Act of 1940, as
amended.
"1940 Act Rules and Regulations" shall mean the rules and
regulations of the Commission under the 1940 Act.
"1940 Act Notification" shall mean a notification of registration of
the Fund as an investment company under the 1940 Act on Form N-8A, as the
1940 Act Notification may be amended from time to time.
"Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Act Rules and Regulations" shall mean the rules and regulations of
the Commission under the Act.
23
"Business Day" shall mean any day other than a Saturday, a Sunday or
a legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
(including the statement of additional information incorporated by reference
therein) referred to in paragraph 1(a) above and any preliminary prospectus
(including the statement of additional information incorporated by reference
therein) included in the Registration Statement at the Effective Date that omits
Rule 430A Information.
"Prospectus" shall mean the prospectus (including the statement of
additional information incorporated by reference therein) relating to the
Securities that is first filed pursuant to Rule 497 after the Execution Time or,
if no filing pursuant to Rule 497 is required, shall mean the form of final
prospectus (including the statement of additional information incorporated by
reference therein) relating to the Securities included in the Registration
Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto or any Rule 462(b) Registration
Statement becomes effective prior to the Closing Date, shall also mean such
registration statement as so amended or such Rule 462(b) Registration Statement,
as the case may be. Such term shall include any Rule 430A Information deemed to
be included therein at the Effective Date as provided by Rule 430A.
"Rule 430A" and "Rule 462" refer to such rules under the Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) under the Act
relating to the offering covered by the registration statement referred to in
Section 1(a) hereof.
24
"Rule 497" refers to Rule 497(c) or 497(h) under the Act, as
applicable.
"Rules and Regulations" shall mean, collectively, the Act Rules and
Regulations and the 1940 Act Rules and Regulations.
25
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Fund and the several Underwriters.
Very truly yours,
GENERAL AMERICAN INVESTORS COMPANY, INC.
By:
---------------------------
Name:
Title:
26
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Citigroup Global Markets Inc.
By:
Name:
Title:
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
By:
Name:
Title:
For itself and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
SCHEDULE I
NUMBER OF UNDERWRITTEN
SECURITIES TO BE
UNDERWRITERS PURCHASED
------------ ----------------------
Citigroup Global Markets Inc..........................
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx, Incorporated...
----------
Total.......................................
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