Exhibit 99.2h1
Salomon Brothers High Income Fund II Inc
[66,666] Shares/*/
Common Stock
($.001 par value)
Underwriting Agreement
New York, New York
May [ ], 1998
Xxxxxxx Xxxxx Xxxxxx
[ ]
As Representatives of the several Underwriters
listed in Schedule I hereto
c/o Xxxxxxx Xxxxx Barney
[388 Greenwich Street]
New York, New York [10013]
Ladies and Gentlemen:
Salomon Brothers High Income Fund II Inc, a Maryland corporation (the
"Company"), and Salomon Brothers Asset Management Inc (the "Investment Manager")
each confirms its agreement with you with respect to the sale by the Company to
the underwriters named in Schedule I hereto (the "Underwriters"), for whom you
(the "Representatives") are acting as representatives, [66,666] shares of Common
Stock, par value $.001 per share, of the Company ("Common Stock") (said shares
to be issued and sold by the Company being hereinafter called the "Underwritten
Securities"). The Company also proposes to grant to the Underwriters, upon the
terms and subject to the conditions set forth in Section 2(b) hereof, an option
to purchase up to [ ] additional shares of Common Stock (the "Option Securities"
and together with the Underwritten Securities, the "Securities").
__________________
/*/ Plus an option to purchase from Salomon Brothers High Income Fund II Inc up
to [ ] additional shares to cover over-allotments.
1. Representations and Warranties. (a) Each of the Company and the
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Investment Manager, jointly and severally, represents and warrants to, and
agrees with, each Underwriter as set forth below in this Section 1. Certain
terms used in this Section 1 are defined in Section 1(iii) hereof.
(i) The Company meets the requirements for use of Form N-2 under the
Securities Act of 1933 (the "Act") and the Investment Company Act of 1940
(the "Investment Company Act") and the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the
"Commission") under each of the Act and the Investment Company Act; the
Company has filed with the Commission a registration statement (file number
[ ]) on such Form, including a related preliminary prospectus and a
notification of registration on Form N-8A under the Investment Company Act
(file number [ ]). The Company may have filed one or more amendments
thereto, including the related preliminary prospectus, each of which has
previously been furnished to you. The Company will next file with the
Commission one of the following: (A) prior to effectiveness of such
registration statement, a further amendment to such registration statement,
including the form of final prospectus or (B) after effectiveness of such
registration statement, a final prospectus in accordance with Rule 497(b)
or Rules 430A and 497(h), as the case may be. In the case of clause (B),
the Company 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 Investment Company Act and the Rules and Regulations to
be included in the Prospectus with respect to the Securities and the
offering thereof. As filed, such amendment and form of final prospectus, or
such final prospectus, shall contain all Rule 430A Information, together
with all other such required information, with respect to the Securities
and the offering thereof and, except to the extent the Representatives
shall agree in writing to a modification, 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
specific additional information and other
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changes (beyond that contained in the latest Preliminary Prospectus) as
the Company has advised you, prior to the Execution Time, will be included
or made therein.
(ii) On the Effective Date, the Registration Statement and the
notification of registration on Form N-8A did or will, and when the
Prospectus is first filed in accordance with Rule 497(b) or (h), as the
case may be, and if subsequently filed pursuant to Rule 497(d), and on the
Closing Date, the Prospectus (and any supplements thereto) will, comply in
all material respects with the applicable requirements of the Act and the
Investment Company Act and the Rules and Regulations; on the Effective
Date, the Registration Statement and the notification of registration on
Form N-8A 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(b) or
(h), as the case may be, did not or will not, and on the date of any filing
pursuant to Rule 497(b) or (h), as the case may be, and on the date of any
filing pursuant to Rule 497(d), 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 circumstances
under which they were made, not misleading; provided, however, that the
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Company makes no representations or warranties as to the information
contained in or omitted from the Registration Statement, the Prospectus (or
any supplement thereto) or the notification of registration on Form N-8A,
in reliance upon and in conformity with (A) information furnished in
writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Registration Statement,
the Prospectus (or any supplement thereto) or the notification on Form N-8A
or (B) information relating to the Investment Manager and furnished to the
Company by the Investment Manager specifically for inclusion in the
Registration Statement, the Prospectus (or any supplement
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thereto) or the notification of registration on Form N-8A.
(iii) The terms which follow, when used in this Agreement, shall have
the meanings indicated. The term "Effective Date" shall mean each date that
the Registration Statement and any post-effective amendment or amendments
thereto became or become effective. "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
referred to in Section 1(i) above and any preliminary prospectus included
in the Registration Statement at the Effective Date that omits Rule 430A
Information. "Prospectus" shall mean the prospectus relating to the
Securities that is first filed pursuant to Rule 497(b) or (h), as the case
may be, after the Execution Time, or as subsequently filed pursuant to Rule
497(d) under the Act or, if no filing pursuant to Rule 497 is required,
shall mean the form of final prospectus relating to the Securities included
in the Registration Statement at the Effective Date. "Registration
Statement" shall mean the registration statement referred to in Section
1(i) above, including incorporated documents, 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 becomes effective prior to the
Closing Date (as hereinafter defined), shall also mean such registration
statement as so amended and 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 497" refer to such rules under the Act.
"Rule 430A Information" means 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.
(iv) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Maryland,
with full corporate power and authority to own its property and conduct its
business as described in
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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 wherein it owns or leases material
properties or conducts material business; the Company has no subsidiaries;
and the Company holds all licenses, certificates and permits from all
governmental authorities necessary for the conduct of its business as
described in the Prospectus (other than the order of the Commission
declaring the Registration Statement effective under the Act and similar
orders under the securities or blue sky laws of the various states of the
United States).
(v) The Company has an authorized equity capitalization as set forth
in the Prospectus; the capital stock of the Company conforms to the
description thereof contained in the Prospectus; there are no shares of
Common Stock owned of record except [ ] shares of Common Stock owned of
record by [the Investment Manager]; the outstanding shares of Common Stock
of the Company 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 validly issued, fully paid
and nonassessable; the Securities have been duly authorized for listing,
subject to official notice of issuance, on the New York Stock Exchange; the
certificates representing the Securities are in valid and sufficient form;
and no holder of outstanding shares of capital stock of the Company is
entitled to preemptive or other rights to subscribe for the Securities.
(vi) There is not pending or, to the best knowledge of the Company,
threatened, any action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving the Company of a
character required to be disclosed in the Registration Statement by the
Act, the Investment Company Act or the Rules and Regulations which is not
adequately disclosed in the Prospectus, and there is no franchise,
contract, agreement or document of a character required to be described in
the Registration Statement or Prospectus by the Act,
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the Investment Company Act or the Rules and Regulations, or to be filed as
an exhibit, which is not described or filed as required.
(vii) Except as stated or contemplated in the Prospectus, subsequent
to the respective dates as of which information is given in the
Registration Statement and the Prospectus, (A) the Company has not incurred
any liabilities or obligations, direct or contingent, or entered into any
transactions, not in the ordinary course of business, that are material to
the Company and (B) the Company has not incurred any indebtedness for
borrowed money.
(viii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the Company
of the transactions contemplated herein, except such as may be required
under the Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Investment Company Act, the Rules and Regulations, the
rules and regulations of the Commission under the Exchange Act or state
securities or blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Securities by the Underwriters.
(ix) The Investment Management Agreement (the "Management
Agreement") to be dated as of the Effective Date, between the Company and
the Investment Manager, the Custodian Agreement (the "Custodian Agreement")
to be dated as of the Effective Date, between the Company and [ ] (the
"Custodian"), and the Registrar, Transfer Agency and Service Agreement (the
"Transfer Agency Agreement") to be dated as of the Effective Date, between
the Company and [ ], (this Agreement, the Management Agreement, the
Custodian Agreement, and the Transfer Agency Agreement, collectively, the
"Company Agreements") have been duly authorized, executed and delivered by
the Company; the Management Agreement, the Custodian Agreement and the
Transfer Agency Agreement comply as to form with all applicable provisions
of the Act and each constitutes a legal, valid and binding instrument
enforceable against the Company in accordance with its terms (subject, as
to enforcement of remedies, to applicable bankruptcy,
6
reorganization, insolvency, moratorium or other laws affecting creditors'
rights generally from time to time in effect).
(x) The Company is registered with the Commission under the
Investment Company Act as a closed-end diversified management investment
company and all required action has been taken under the Act and the
Investment Company Act to make the public offering and consummate the
sale of the Securities under this Agreement, and the provisions of the
Company's articles of incorporation and by-laws do not violate the
Investment Company Act or the Rules and Regulations of the Commission
thereunder.
(xi) The Company is not in violation of its articles of incorporation
or by-laws or of any law, ordinance, administrative or governmental rule or
regulation applicable to the Company or of any decree of the Commission,
the National Association of Securities Dealers, Inc. (the "NASD"), any
state securities commission, any national securities exchange, any
arbitrator, any court or any other governmental, regulatory, self-
regulatory or administrative agency or any official having jurisdiction
over the Company or in default in any material respect in the performance
of any obligation, agreement or condition contained in any bond, debenture,
note or any other evidence of indebtedness or in any material agreement,
indenture, lease or other instrument to which the Company is a party or by
which it or any of its properties may be bound.
(xii) Neither (A) the operations and activities of the Company as
contemplated in the Prospectus, (B) the performance by the Company of the
Company Agreements, nor (C) the consummation of the transactions
contemplated herein or in the Prospectus will conflict with, or result in a
breach of or violation of any of the terms and provisions of, or constitute
a default under, any statute, any agreement or instrument to which the
Company is a party or by which it is bound or to which any of the property
of the Company is subject, the Company's articles of incorporation or by-
laws, or any order, rule or regulation of any court or governmental agency,
authority or body having jurisdiction over
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the Company or any of its properties; and no consent, approval,
authorization or order of, or filing with, any court or governmental
agency, authority or body is required for the consummation of the
transactions contemplated by the Company Agreements in connection with the
issuance or sale of the Securities by the Company, except such as may be
required under the Act, the Exchange Act, the Investment Company Act or
state securities laws or blue sky.
(xiii) Since the date as of which information is given in the
Registration Statement and the Prospectus (and any amendment or supplement
to either of them), except as otherwise stated therein, (A) there has been
no material, adverse change in the condition (financial or other),
business, properties, net assets or results of operations of the Company or
business prospects of the Company, whether or not arising in the ordinary
course of business and (B) there has been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its capital
stock.
(xiv) The accountants, [ ] who have certified or shall
certify the financial statements included in the Registration Statement
and the Prospectus (and any amendment or supplement to either of them),
are an independent public accounting firm as required by the Act, the
Investment Company Act and the Rules and Regulations.
(xv) The financial statements, together with related schedules and
notes, included in the Registration Statement or the Prospectus (or any
amendment or supplement to either of them) present fairly the financial
position of the Company on the basis stated in the Registration Statement
at the respective dates or for the respective periods to which they apply;
such financial statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved except as disclosed
therein; and the other financial and statistical information and data
included in the Registration Statement or the Prospectus (or any amendment
or supplement thereto) are accurately presented and prepared on a basis
consistent with
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such financial statements and the books and records of the Company.
(xvi) The Company has not distributed and, prior to the later to
occur of (A) the Closing Date and (B) completion of the distribution of the
Securities, will not distribute to the public any offering material in
connection with the offering and sale of the Securities other than the
Registration Statement, the prospectus included in Pre-Effective Amendment
No. [ ] to the Registration Statement, the Prospectus and the [ ]
filed by the Company with the NASD on [ ], 1998.
(xvii) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific authorization
and with the investment policies and restrictions of the Company and the
applicable requirements of the Investment Company Act, the Investment
Company Act Rules and Regulations and the Internal Revenue Code of 1986,
as amended; (B) 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 Investment Company Act and the
Investment Company Act Rules and Regulations; (C) access to assets is
permitted only in accordance with management's general or specific
authorization; and (D) the recorded account for assets is compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xviii) The conduct by the Company 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.
(xix) Except as stated in this Agreement and in the Prospectus (and
any amendment or supplement
9
thereto), the Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in or which will constitute stabilization or manipulation
of the price of shares of Common Stock and the Company is not aware of any
such action taken or to be taken by any affiliates of the Company.
(xx) All advertising, sales literature or other promotional material
(including "prospectus wrappers," "broker kits," "road show slides" and
"road show scripts") authorized by or prepared by or on behalf of the
Company or the Investment Manager for use in connection with the offering
and sale of the Securities (collectively, "sales material") complied and
comply in all material respects with the applicable requirements of the
Act, the Act Rules and Regulations and the rules and interpretations of
the NASD and no such sales material contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(xxi) No holder of any security of the Company has any right to
require registration of shares of Common Stock or any other security of the
Company because of the filing of the Registration Statement or consummation
of the transactions contemplated by this Agreement.
(b) The Investment Manager represents and warrants to, and agrees
with, each Underwriter that:
(i) The Investment Manager is duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with full corporate power and authority to own its property and
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 wherein it owns
or leases material properties or conducts material business.
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(ii) The Investment Manager is duly registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act") and is not prohibited by the Advisers Act or the Investment
Company Act, or the rules and regulations under such Acts, from acting as
investment adviser for the Company under the Management Agreement and as
contemplated by the Prospectus.
(iii) This Agreement and the Management Agreement (collectively, the
"Investment Manager Agreements"), have been duly authorized, executed and
delivered by the Investment Manager; the Management Agreement complies as
to form with all applicable provisions of the Act and the Investment
Company Act and constitutes a legal, valid and binding instrument
enforceable against the Investment Manager in accordance with its terms
(subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors'
rights generally from time to time in effect).
(iv) neither (A) the operations and activities of the Investment
Manager as contemplated in the Prospectus, (B) the performance by the
Investment Manager of the Investment Manager Agreements, nor (C) the
consummation of the transactions contemplated herein or in the Prospectus
will conflict with, or result in a breach of or violation of any of the
terms and provisions of, or constitute a default under, any statute, any
agreement or instrument to which the Investment Manager is a party or by
which it is bound or to which any of the property of the Investment Manager
is subject, the Investment Manager's certificate of incorporation or by-
laws, or any order, rule or regulation of any court or governmental agency,
authority or body having jurisdiction over the Investment Manager or any of
its properties; and no consent, approval, authorization or order of, or
filing with, any court or governmental agency, authority or body is
required for the consummation of the transactions contemplated by the
Investment Manager Agreements in connection with the issuance or sale of
the Securities by the Company, except such as may be required under the
Act, the
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Exchange Act, the Investment Company Act or state securities laws or blue
sky.
(v) On the Effective Date, the Registration Statement did not or will
not contain any untrue statement of a material fact relating to the
Investment Manager or the Investment Manager Agreements or omit to state a
material fact relating to the Investment Manager or the Investment
Manager Agreements required to be stated therein or necessary to make the
statements therein not misleading; and on the Effective Date, the
Prospectus, if not filed pursuant to Rule 497(b) or (h), as the case may
be, did not or will not, and on the date of any filing pursuant to rule
497(b) or (h), as the case may be, and on the date of any filing pursuant
to Rule 497(d), and on the Closing Date, the Prospectus (together with any
supplements thereto) will not, include any untrue statement of a material
fact relating to the Investment Manager or the Investment Manager
Agreements or omit to state a material fact relating to the Investment
Manager or the Investment Manager Agreements necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(vi) There has not been any material change in the management of the
Investment Manager or any material adverse change in the condition
(financial or other) of the Investment Manager since the date of the
Prospectus (or, if the Prospectus is not in existence, the Preliminary
Prospectus).
(vii) There is not pending, or to the best knowledge of the Investment
Manager, threatened, any action, suit, proceeding, inquiry or investigation
before or brought by any court or governmental agency, authority or body or
any arbitration involving the Investment Manager (A) relating to any of
the transactions contemplated by the Investment Manager Agreements or (B)
which might, individually or in the aggregate, result in any material
adverse change in the condition (financial or other), business,
prospectus or net worth of the Investment Manager, or might materially and
adversely affect the properties or assets thereof.
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(viii) Except as stated in this Agreement and in the Prospectus (and
in any amendment or supplement thereto), the Investment Manager has not
taken and will not take, directly or indirectly, any action designed to or
which might reasonably be expected to cause or result in or which will
constitute, stabilization or manipulation of the price of shares of Common
Stock and the Investment Manager is not aware of any such action taken or
to be taken by any affiliates of the Investment Manager.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
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reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at a purchase price of $15.00 per
share, the amount of the Underwritten Securities set forth opposite such
Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
[ ] shares of Option Securities at the same purchase price per share as
the Underwriters shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or from
time to time in part at any time on or before the 60th day after the date of the
Prospectus upon written or telegraphic notice by the Representatives to the
Company setting forth the number of shares of the Option Securities as to which
the several Underwriters are exercising the option and the settlement date.
Delivery of certificates for the shares of Option Securities, and payment
therefor, shall be made as provided in Section 3 hereof. The number of shares
of the Option Securities to be purchased by each Underwriter shall be the same
percentage of the total number of shares of the Option Securities to be
purchased by the several Underwriters as such Underwriter is purchasing of the
Underwritten Securities, subject to such adjustments as you in your absolute
discretion shall make to eliminate any fractional shares.
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3. Delivery and Payment. Delivery of and payment for the
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Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the third business
day prior to the Closing Date) shall be made at 10:00 AM, New York City time, on
May [ ], 1998, or such later date (not later than May [ ], 1998) as the
Representatives shall designate, which date and time may be postponed by
agreement between the Representatives and the Company or as provided in Section
9 hereof (such date and time of delivery and payment for the Securities being
herein called the "Closing Date"). 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 Company by certified or
official bank check or checks drawn on or by a New York Clearing House bank and
payable in next day funds. Delivery of the Underwritten Securities and the
Option Securities shall be made at such location as the Representatives shall
reasonably designate at least one business day in advance of the Closing Date
and payment for such Securities shall be made at the office of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP in New York, New York. Certificates for the
Securities shall be registered in such names and in such denominations as the
Representatives may request not less than three full business days in advance of
the Closing Date.
The Company agrees to have the Securities available for inspection,
checking and packaging by the Representatives in New York, New York, not later
than 1:00 PM on the business day prior to the Closing Date.
If the option provided for in Section 2(b) hereof is exercised after
the third business day prior to the Closing Date, the Company will deliver (at
the expense of the Company) to the Representatives, at [388 Greenwich Street],
New York, New York, on the date specified by the Representatives (which shall
in no event be earlier than three business days nor later than ten business days
after exercise of said option), certificates for the Option Securities in such
names and denominations as the Representatives shall have requested against
payment of the purchase price thereof to or upon the order of the Company by
certified or official bank
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check or checks drawn on or by a New York Clearing House bank and payable in
next day funds. If settlement for the Option Securities occurs after the Closing
Date, the Company will deliver to the Representatives on the settlement date for
the Option Securities, and the obligation of the Underwriters to purchase the
Option Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
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Underwriters propose to offer the Securities for sale to the public as set
forth in the Prospectus.
5. Agreements. The Company agrees with the several Underwriters
----------
that:
(a) The Company will use its 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 Company will not file any amendment of the Registration Statement or
supplement (whether pursuant to the Act, the Investment Company Act, or
otherwise) to the Prospectus unless the Company 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. 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
Company will cause the Prospectus, properly completed, and any supplement
thereto to be filed with the Commission pursuant to the applicable paragraph
of Rule 497 within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The Company will
promptly advise the Representatives (i) when the Registration Statement, if
not effective at the Execution Time, and any amendment thereto, shall have
become effective, (ii) when the Prospectus, and any supplement thereto, shall
have been filed (if required) with the Commission pursuant to Rule 497, (iii)
when, prior to termination of the offering of the Securities, any amendment to
the Registration Statement shall have been filed or become effective, (iv) of
any request
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by the Commission for any amendment of the Registration Statement or supplement
to the Prospectus or for any additional information, (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement under the Act or the issuance of any notice or order under Section
8(e) of the Investment Company Act or the institution or threatening of any
proceeding for either such purpose and (vi) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company will use its best efforts to prevent
the issuance of any such stop order 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
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 Investment
Company Act or the Rules and Regulations, the Company promptly will 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.
(c) As soon as practicable, the Company will make generally available
to its security holders and to the Representatives an earnings statement or
statements of the Company and its subsidiaries which will satisfy the provisions
of Section 11(a) of the Act and Rule 158 under the Act.
(d) The Company will furnish to the Representatives and counsel for
the Underwriters, without charge, signed copies of the Registration Statement
(including exhibits thereto) and to each other Underwriter a 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
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and any supplement thereto as the Representatives may reasonably request.
(e) The Company will arrange for the qualification of the Securities
for sale under the laws of such jurisdictions as the Representatives may
designate, will maintain such qualifications in effect so long as required for
the distribution of the Securities and will pay the fee of the National
Association of Securities Dealers, Inc., in connection with its review of the
offering.
(f) The Company will not, for a period of 180 days following the date
of the Prospectus, without the prior written consent of the Representatives,
offer, sell or contract to sell, register with the Commission or otherwise
dispose of, directly or indirectly, or announce the offering of, any shares of
Common Stock other than the Securities or any securities convertible into, or
exchangeable for, shares of Common Stock; provided, however, that the Company
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may issue and sell Common Stock pursuant to any dividend reinvestment plan of
the Company in effect at the Execution Time.
(g) The Company will apply the net proceeds from the sale of the
Underwritten Securities, and of the Option Securities, if any, for the purposes
set forth in the Prospectus.
(h) The Company will use its best efforts to list, subject to notice
of issuance, the Securities to be sold by it on the New York Stock Exchange
simultaneously with the effectiveness of the Registration Statement.
6. Conditions to the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Investment
Manager 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 Company and the Investment Manager made in any certificates pursuant to
the provisions hereof, to the performance by the Company and the Investment
Manager of their respective obligations hereunder and to the following
additional conditions:
17
(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) 12:00 Noon 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(b), (d) or (h), the
Prospectus, and any such supplement, will be filed in the manner and within the
time period required by Rule 497(b), (d) or (h), as the case may be; and no stop
order suspending the effectiveness of the Registration Statement under the Act
and no notice or order under Section 8(e) of the Investment Company Act shall
have been issued and no proceedings for either purpose shall have been
instituted or threatened.
(b) The Company shall have furnished to the Representatives the
opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the Company, dated the
Closing Date, to the effect that:
(i) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Maryland,
with full corporate power and authority to own its prop erties and 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 wherein it owns or
leases material properties or conducts material business; the Company has
no subsidiaries; and the Company holds all licenses, certificates and
permits from all governmental authorities necessary for the conduct of its
business as described in the Prospectus;
(ii) the Company's authorized equity capitalization is as set forth
in the Prospectus; the capital stock of the Company conforms to the
description thereof contained in the Prospectus under the caption
"Description of Capital Stock - Common
18
Stock"; there are no shares of Common Stock owned of record except
[ ] shares of Common Stock owned of record by [the Investment
Manager]; the outstanding shares of Common Stock have been duly and validly
authorized and issued and are fully paid and nonassessable; the Securities
have been duly and validly authorized by all necessary corporate action by
the Company and, when issued and delivered to and paid for by the
Underwriters pursuant to this Agreement, will be validly issued, fully paid
and nonassessable; the Securities have been authorized for listing, subject
to official notice of issuance and evidence of satisfactory distribution,
on the New York Stock Exchange; the certificates representing the
Securities are in valid and sufficient form; and no holder of outstanding
shares of capital stock of the Company is entitled to preemptive or other
rights to subscribe for the Securities;
(iii) to the best knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving the Company of a
character required to be disclosed in the Registration Statement which is
not adequately disclosed in the Prospectus, and there is no xxxx xxxxx,
contract, agreement or document of a character required to be described in
the Registration Statement or Prospectus, or to be filed as an exhibit,
which is not described or filed as required;
(iv) the statements in the Prospectus under the captions "Management
of the Fund - Investment Manager," "Management of the Fund - Directors and
Officers," "Dividends and Distributions; Dividend Reinvestment and Cash
Purchase Plan," "Description of Capital Stock - Common Stock" and contained
in Item 3 of Part 2 of the Registration Statement that purport to summarize
the provisions of statutes, regulations and other documents are accurate
summaries in all material respects and present fairly the information
required to be shown, and the statements in the Prospectus under the
caption "Taxation" fairly summarize the matters described therein;
(v) the Registration Statement has become effective under the Act;
any required filing of the
19
Prospectus, and any supplements thereto, pursuant to Rule 497(b), (d) or
(h) has been made in the manner and within the time period required by Rule
497(b), (d) or (h); to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued,
no proceedings for that purpose have been instituted or threatened and the
Registration Statement and the Prospectus (other than the financial
statements and other financial and statistical information contained
therein as to which such counsel need express no opinion) comply as to form
in all material respects with the applicable requirements of the Investment
Company Act and the Act and the Rules and Regulations; and such counsel has
no reason to believe that at the Effective Date the Registration Statement
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus includes any
untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the Company
of the transactions contemplated herein, except such as have been obtained
under the Act, the Exchange Act and the Investment Company Act and such as
may be required under the securities or blue sky laws of any jurisdiction
in connection with the purchase and distribution of the Securities by the
Underwriters and such other approvals (specified in such opinion) as have
been obtained;
(viii) to the best knowledge of such counsel after reasonable
inquiry, the Company is not in violation of any law ordinance,
administrative or governmental rule or regulation applicable to the Company
or of any decree of the Commission, the NASD, any state securities
commission, any national
20
securities exchange, any arbitrator, any court or any other governmental,
regulatory, self-regulatory or administrative agency or any official having
jurisdiction over the Company;
(ix) neither (A) the operations and activities of the Company as
contemplated in the Prospectus, (B) the issue and sale of the Securities,
(C) the consummation of any other of the transactions herein contemplated,
nor (D) the fulfillment of the terms hereof will conflict with, result in a
breach or violation of, or constitute a default under any law or the
articles of incorporation or by-laws of the Company or the terms of any
indenture or other agreement or instrument known to such counsel and to
which the Company is a party or by which it is bound or any judgment, order
or decree known to such counsel to be applicable to the Company of any
court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company;
(x) the Management Agreement, the Custodian Agreement and the
Transfer Agency Agreement have been duly authorized, executed and delivered
by the Company, comply as to form with all applicable provisions of the
Investment Company Act and are legal, valid, binding and enforceable
obligations of the Company, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law) or by an implied covenant of good
faith and fair dealing; and
(xi) the Company is registered with the Commission under the
Investment Company Act as a closed-end diversified management investment
company, and all required action has been taken under the Act and
Investment Company Act to make the public offering and consummate the sale
of the Securities under this Agreement, and the provisions of the articles
of incorporation and by-laws of the Company do not conflict with the
Investment Company
21
Act or the Rules and Regulations of the Commission thereunder;
In rendering such opinion, such counsel may limit such opinion to matters
involving the application of the laws of the State of New York, the State of
Maryland and the United States and may rely (A) as to matters involving the
application of laws of the State of Maryland, to the extent they deem proper and
specified in such opinion, upon the opinion of [ ] or other counsel of
good standing whom they believe to be reliable and who are satisfactory to
counsel for the Underwriters and (B) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Company, the
Investment Manager and public officials. References to the Prospectus in this
Section 6(b) include any supplements thereto at the Closing Date.
Although such counsel has not undertaken, except as otherwise
indicated in their opinion, to determine independently and does not assume any
responsibility for, the accuracy or completeness of the statements in the
Registration Statement, such counsel has participated in the preparation of the
Registration Statement and the Prospectus, including review and discussion of
the contents thereof and nothing has come to the attention of such counsel that
has caused it to believe that the Registration Statement, at the time the
Registration Statement became effective or the Prospectus, as of its date and as
of the Closing Date, as the case may be, or the date of any closing of the sale
of any Option Securities, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that any amendment or supplement
to the Prospectus, as of the Closing Date or the date of any closing of the sale
of any Option Securities, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no opinion with
respect to the financial statements and the notes thereto and the schedules and
other financial and statistical data included in the Registration Statement or
the Prospectus).
22
(c) The Investment Manager shall have furnished to the
Representatives the opinion of internal counsel for the Investment Manager
reasonably acceptable to the Representatives, dated the Closing Date, to the
effect that:
(i) the Investment Manager is duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Xxxx xxxx, with full corporate power and authority to own its property and
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 wherein it owns
or leases material properties or conducts material business;
(ii) the Investment Manager is duly registered as an investment
adviser under the Advisers Act and is not prohibited by the Advisers Act or
the Investment Company Act, or the rules and regulations under either, from
acting as Investment Manager for the Company under the Management Agreement
and as contemplated in the Prospectus;
(iii) this Agreement and the Management Agreement have each been duly
authorized, executed and delivered by the Investment Manager, and the
Management Agreement constitutes a legal, valid and binding instrument
enforceable against the Investment Manager in accordance with its terms
(subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors'
rights generally from time to time in effect);
(iv) neither (A) the operations and activities of the Investment
Manager as contemplated in the Prospectus, (B) the performance by the
Investment Manager of its obligations under the Investment Management
Agreements, nor (C) the consummation of the transactions contemplated
herein or in the Prospectus will conflict with, or result in a breach of,
or constitute a default under the certificate of incorporation or by-laws
of the Investment Manager or the terms of any indenture or other agreement
or
23
instrument known to such counsel to which the Investment Manager or any of
its affiliates is a party or by which it is bound, or any law, order or
regulation known to such counsel to be applicable to the Investment Manager
of any court, regulatory body, administrative agency, governmental body,
stock exchange or securities association or any other authority or
arbitrator having jurisdiction over the Investment Manager or any of its
affiliates.
Although such counsel has not undertaken, except as otherwise
indicated in their opinion, to determine independently and does not assume any
responsibility for, the accuracy or completeness of the statements in the
Registration Statement, such counsel has participated in the preparation of the
Registration Statement and the Prospectus, including review and discussion of
the contents thereof and nothing has come to the attention of such counsel that
has caused it to believe that the Registration Statement, at the time the
Registration Statement became effective or the Prospectus, as of its date and as
of the Closing Date, as the case may be, or the date of any closing of the sale
of any Option Securities, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that any amendment or supplement
to the Prospectus, as of the Closing Date or the date of any closing of the sale
of any Option Securities, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no opinion with
respect to the financial statements and the notes thereto and the schedules and
other financial and statistical data included in the Registration Statement or
the Prospectus).
(d) The Representatives shall have received from Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP counsel for the Underwriters, such opinion or
opinions, dated the Closing Date, 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 Company shall have furnished to such
24
counsel such documents as they request for the purpose of enabling them to pass
upon such matters.
(e) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the President
and the principal financial or accounting officer of the Company, dated the
Closing Date, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus, any supplement to the
Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of the
Closing Date with the same effect as if made on the Closing Date and the
Company 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 under the Act and no notice or order under Section 8(e) of the
Investment Company Act has been issued and no proceedings for either
purpose have been instituted or, to the Company's knowledge, threatened;
and
(iii) since the date of the most recent financial statements included
in the Prospectus (exclusive of any supplement thereto), there has been no
material adverse change in the condition (financial or other), earnings,
business or properties of the Company, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto).
(f) The Investment Manager shall have furnished to the
Representatives a certificate of the Investment Manager, signed by the Chairman
of the Board, the President or any Vice President and the principal financial or
accounting officer of the Investment Manager, dated the Closing Date, to the
effect that the signers of such certificate have carefully examined the
Registration Statement, the Prospectus, any supplement to the Prospectus and
this Agreement and that the represen-
25
tations and warranties of the Investment Manager in this Agreement are true and
correct in all material respects on and as of the Closing Date with the same
effect as if made on the Closing Date and the Investment Manager 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;
(g) At the Execution Time and at the Closing Date, [ ] shall
have furnished to the Representatives a letter or letters, dated respectively as
of the Execution Time and as of the Closing Date, in form and substance
satisfactory to the Representatives, confirming that they are independent
accountants within the meaning of the Act and the respective applicable
published rules and regulations thereunder and stating in effect that:
(i) in their opinion the statement of assets and liabilities and
related notes included in the Registration Statement and the Prospectus and
reported on by them comply in form in all material respects with the
applicable accounting requirements of the Act and the Investment Company
Act and the Rules and Regulations;
(ii) on the basis of carrying out certain specified procedures (but
not an examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of significance with
respect to the comments set forth in such letter, a reading of the minutes
of the meetings of the stockholders, directors and committees thereof of
the Company, and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company, nothing
came to their attention which caused them to believe that at a specified
date no more than five business days prior to the date of the letter there
was any change in the shares of Common Stock or net assets or shareholders'
equity of the Company as compared with the amounts shown on the statement
of assets and liabilities included in the Prospectus, except in all
instances for changes or decreases set forth in such letter, in which case
the letter shall be accompanied by an explanation by the Company as to the
significance thereof unless
26
said explanation is not deemed necessary by the Representatives.
References to the Prospectus in this paragraph (g) include any supplement
thereto at the date of the letter.
(h) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto),
there shall not have been (i) any change or decrease specified in the letter or
letters referred to in paragraph (g) of this Section 6 or (ii) any change, or
any development involving a prospective change, in or affecting the business or
properties of the Company the effect of which, in any case referred to in clause
(i) or (ii) above, is, in the judgment of the Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the offering or
the delivery of the Securities as contemplated by the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of any
supplement thereto).
(i) Prior to the Closing Date, the Company 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 in all material respects 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 in all material respects 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 Company in writing or by telephone or
telegraph confirmed in writing.
7. Reimbursement of Underwriters' Expenses.
---------------------------------------
The Company will pay all costs, expenses, fees and taxes incident to
the performance of its obligations under this Agreement, including, but not
limited to, expenses relating to (i) the preparation, printing and
27
filing of the Registration Statement as originally filed and of each amendment
thereto, of the Preliminary Prospectuses, and of the Prospectus and any
amendments or supplements thereto, (ii) the preparation of the Company
Agreements, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Underwriters, including stock transfer taxes, if any,
payable upon the sale, issuance and delivery of the Securities, (iv) the fees
and disbursements of the Company's counsel and accountants, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 5(e) of this Agreement, including filing fees and any fees
or disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of a Preliminary and Supplemental Blue Sky
Survey, (vi) the reproduction and delivery to the Underwriters of copies of the
Registration Statement as originally filed and of each amendment thereto, of the
Preliminary Prospectuses, and of the Prospectus and any amendments or
supplements thereto, (vii) the reproduction and delivery to the Underwriters of
copies of the Preliminary and Supplemental Blue Sky Survey and any legal
investment survey, (viii) the fees and expenses incurred with respect to filings
with the National Association of Securities Dealers, Inc., (ix) the preparation
and delivery to the Underwriters of any marketing brochure (excluding any
brochures distributed to brokers) and any tombstone advertisement placed by the
Company or placed by the Underwriters at the request of the Company, (x) the
fees and expenses incurred with respect to the listing of the Securities on the
New York Stock Exchange and the registration thereof under the Exchange Act, and
(xi) an amount not to exceed [ ] payable on the Closing Date to the Underwriters
in partial reimbursement of their expenses in connection with the offering.
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 Company to per form any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
remain liable to pay all of the costs, expenses, fees and taxes specified in the
preceding paragraph and will reimburse the Underwriters
28
severally upon 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 Company and the
--------------------------------
Investment Manager jointly and severally agree to indemnify and hold harmless
each 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, 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 for the registration of the Securities
as originally filed or in any amendment thereof, or in any Preliminary
Prospectus or the Prospectus, or in any amendment thereof or supplement thereto,
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 Company and the Investment
-------- -------
Manager 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 Company 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 Company or the Investment Manager may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company and the Investment Manager, each of its respective directors, each
of its respective officers who signs the Registration State-
29
ment, and each person who controls the Company and the Investment Manager within
the meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity to each Underwriter, but only with reference to written
information relating to such Underwriter furnished to the Company 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 Company and the Investment Manager acknowledge that the
statements set forth in the last paragraph of the cover page and under the
heading "Underwriting" 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, and you, as the Representatives, confirm that such statements are
correct.
(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 indemnify ing 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
30
the reasonable fees, costs and expenses of 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 Company and the Investment Manager,
jointly and severally, and the Underwriters 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 Company, the Investment Manager and one or
more of the Underwriters may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Investment Manager
on the one hand and by the Underwriters 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
31
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 Company and the Investment Manager,
jointly and severally, and the Underwriters shall contribute in such proportion
as is appropriate to reflect not only such relative benefits but also the
relative fault of the Company and the Investment Manager 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 Company and the Investment Manager
shall be deemed to be equal to the total net proceeds from the offering (before
deducting expenses), 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 whether any alleged untrue statement or omission
relates to information provided by the Company, the Investment Manager or by the
Underwriters. The Company, the Investment Manager and the Underwriters agree
that it would not be just and equitable if contribution 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 Section 8(d), no person guilty of fraudulent misrepresentation (within
the meaning of Section ll(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 Company or the Investment Manager
within the meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this Section 8(d).
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 Under-
32
writer 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) 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, the
Investment Manager or the Company. In the event of a default by any Underwriter
as set forth in this Section 9, the Closing Date shall be postponed for such
period, not exceeding seven days, as the Representatives shall determine 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 Company, the Investment Manager, and any nondefaulting Underwriter
for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in
-----------
the absolute discretion of the Representatives, by notice given to the Company
prior to delivery of and payment for the Securities, if prior to such time (i)
trading in the Company's Common Stock shall have been suspended by the
Commission or the New York Stock Exchange or trading in securities generally on
the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on such Exchange, (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities or
(iii) 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
33
as to make it, in the judgment of the Representatives, impracticable 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
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter, the Investment Manager,
or the Company or any of the officers, directors 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
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effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telegraphed and confirmed to them, care of Xxxxxxx Xxxxx Xxxxxx, at
[388 Greenwich Street], New York, New York, [10013], attention: [ ];
or, if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to care of Salomon Brothers Asset Management Inc, Seven Xxxxx Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention: [ ].
13. Successors. This Agreement will inure to the benefit of and be
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binding upon the parties hereto and their respective successors and the officers
and directors 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.
15. Counterparts. This agreement may be signed in any number of
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
34
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
Company and the several Underwriters.
Very truly yours,
SALOMON BROTHERS HIGH INCOME
FUND II INC
By:__________________________
Name:
Title:
SALOMON BROTHERS ASSET
MANAGEMENT INC
By:__________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
XXXXXXX XXXXX XXXXXX
[ ]
By: XXXXXXX XXXXX BARNEY
By:______________________
Name:
Title:
For themselves and the other several
Underwriters named in Schedule I to the
foregoing Agreement.
35
SCHEDULE I
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Number of Shares
of Underwritten
Securities
Underwriters to Be Purchased
-------------- ----------------
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36
