<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 15, 1998
SECURITY ACT FILE NO. 333-48431
INVESTMENT COMPANY ACT FILE NO. 811-00041
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 3 TO
FORM N-2
[X] REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No.
[ ] Post-Effective Amendment No. and/or
[X] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
(Check appropriate box or boxes)
------------------------
GENERAL AMERICAN INVESTORS COMPANY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
------------------------
450 LEXINGTON AVENUE
SUITE 3300
NEW YORK, NEW YORK 10017
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
------------------------
EUGENE L. DESTAEBLER, JR.
450 LEXINGTON AVENUE
SUITE 3300
NEW YORK, NEW YORK 10017
(212) 916-8400
(NAME AND ADDRESS OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
JOHN E. BAUMGARDNER, JR., ESQ. RICHARD T. PRINS, ESQ.
SULLIVAN & CROMWELL SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
125 BROAD STREET 919 THIRD AVENUE
NEW YORK, NEW YORK 10004 NEW YORK, NEW YORK 10022
(212) 558-4000 (212) 735-3000
</TABLE>
------------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of this Registration Statement.
If any securities being registered on this form will be offered on a delayed
or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered in connection with a dividend reinvestment plan, check
the following box. [ ]
It is proposed that this filing will become effective (check appropriate
box): [ ] when declared effective pursuant to Section 8(c)
If appropriate, check the following box
[ ] this [post-effective] amendment designates a new effective date for a
previously filed [post-effective amendment] [registration statement].
[ ] this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act and the Securities Act
registration statement number of the earlier effective registration statement
for the same offering is -
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
CROSS-REFERENCE SHEET PURSUANT TO RULE 481(A)
<TABLE>
<CAPTION>
N-2 ITEM NUMBER LOCATION IN PART A (CAPTION)
<S> <C>
PART A
1. Outside Front Cover.................... Outside Front Cover Page
2. Inside Front and Outside Back Cover
Page.................................... Outside Front Cover Page; Inside Front Cover
Page; Outside Back Cover Page
3. Fee Table and Synopsis................. Not Applicable
4. Financial Highlights................... Financial Highlights
5. Plan of Distribution................... Outside Front Cover Page; Prospectus Summary;
Underwriting
6. Selling Shareholders................... Not Applicable
7. Use of Proceeds........................ Prospectus Summary; Use of Proceeds;
Investment Objectives and Policies
8. General Description of the
Registrant.............................. Outside Front Cover Page; Prospectus Summary;
The Company; Investment Objectives and
Policies; Risk Factors; Description of
Cumulative Preferred Stock
9. Management............................. Prospectus Summary; Management; Custodian,
Transfer Agent, Registrar and Dividend-Paying
Agent
10. Capital Stock, Long-Term Debt, and
Other Securities....................... Outside Front Cover Page; Prospectus Summary;
Capitalization; Investment Objectives and
Policies; Description of Cumulative Preferred
Stock; Description of Capital Stock and Other
Securities; Taxation
11. Defaults and Arrears on Senior
Securities.............................. Not Applicable
12. Legal Proceedings...................... Not Applicable
13. Table of Contents of the Statement of
Additional Information................. Table of Contents of Statement of Additional
Information
PART B LOCATION IN STATEMENT OF ADDITIONAL
INFORMATION
14. Cover Page............................. Outside Front Cover Page
15. Table of Contents...................... Outside Front Cover Page
16. General Information and History........ General Information and History
17. Investment Objectives and Policies..... Investment Objectives and Policies
18. Management............................. Management of the Company
19. Control Persons and Principal Holders
of Securities.......................... Management of the Company; Principal
Stockholders
20. Investment Advisory and Other
Services................................ Investment Advisory and Other Services
21. Brokerage Allocation and Other
Practices............................... Brokerage Allocation and Other Practices
22. Tax Status............................. Taxation
23. Financial Statements................... Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE> 3
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<S> <C> <C> <C>
(1) Financial Statements*
(2) (a) (1) Restated Certificate of Incorporation**
(2) Certificate of Amendment to the Restated Certificate of
Incorporation, dated April 28, 1987**
(3) Certificate of Amendment to the Restated Certificate of
Incorporation, dated March 19, 1992**
(4) Certificate of Amendment to the Restated Certificate of
Incorporation, dated March 11, 1998**
(5) Certificate of Correction to the Certificate of Amendment to
the Restated Certificate of Incorporation, dated March 20,
1998**
(6) Certificate of Designations**
(b) By-Laws**
(c) Not Applicable
(d) Specimen Stock Certificate**
(e) Not Applicable
(f) Not Applicable
(g) Not Applicable
(h) (1) Form of Underwriting Agreement+
(2) Form of Master Agreement Among Underwriters**
(i) (1) Employees' Retirement Plan**
(2) Amendment of the Employees' Retirement Plan**
(3) Employees' Thrift Plan**
(4) Excess Benefit Plan**
(5) Excess Contribution Plan**
(j) Custodian Agreement**
(k) Not Applicable
(l) Opinion and Consent of Sullivan & Cromwell**
(m) Not Applicable
(n) Consent of Ernst & Young, LLP+
(o) Not Applicable
(p) Not Applicable
(q) Not Applicable
(r) Not Applicable
</TABLE>
- ---------------
* Incorporated by reference from Registrant's Annual Report for the year ended
December 31, 1997, File No. 811-00041, as filed with the Securities and
Exchange Commission on February 2, 1998 and from Registrant's Quarterly
Report for the three months ended March 31, 1998, File No. 811-00041, as
filed with the Securities and Exchange Commission on April 24, 1998.
** Previously filed.
+ Filed herewith.
ITEM 25. MARKETING ARRANGEMENTS
See Exhibit 2(h) to this Registration Statement.
C-1
<PAGE> 4
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION(1)
The following table sets forth the estimated expenses payable by the
Company in connection with the offering described in this Registration Statement
(excluding underwriting discounts and commissions):
<TABLE>
<CAPTION>
NATURE OF EXPENSES AMOUNT
- ------------------ --------
<S> <C>
SEC Registration fees....................................... $ 44,250
NYSE listing fee............................................ 51,300
Rating Agency fee........................................... 37,500
Printing expenses........................................... 90,000
Auditing fees and expenses.................................. 22,000
Legal fees and expenses..................................... 300,000
Consulting fees and expenses................................ 137,500
Miscellaneous............................................... 17,450
--------
Total............................................. $700,000
========
</TABLE>
- ---------------
(1) The amounts set forth above, except for the SEC and NYSE fees, are in each
case estimated.
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
General American Advisers, Inc. is a wholly owned, inactive subsidiary of
the Company.
ITEM 28. NUMBER OF HOLDERS OF EACH CLASS OF SECURITIES OF THE COMPANY AS OF
MARCH 31, 1998:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
- -------------- --------------
<S> <C>
Common Stock, par value $1.00 per share..................... 5,903
</TABLE>
ITEM 29. INDEMNIFICATION
Under the Company's Restated Certificate of Incorporation and By-Laws, the
directors and officers of the Company will not be liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that the foregoing shall not eliminate or limit liability of a director
(i) for any breach of such director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct, gross negligence or reckless disregard of the duties
involved in the conduct of such director's office, or a knowing violation of
law, (iii) under Section 174 of Title 8 of the Delaware Code, or (iv) for any
transaction from which such director derived an improper personal benefit.
Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to the directors and officers, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Act and is
therefore unenforceable. If a claim for indemnification against such liabilities
under the Securities Act of 1933 (other than for expenses incurred in a
successful defense) is asserted against the Company by the directors or officers
in connection with the Shares, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in such Act and will be governed by the
final adjudication of such issue.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF ADVISER
Not applicable.
C-2
<PAGE> 5
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
The Company's accounts and records are maintained at the Company's
principal executive offices located at 450 Lexington Avenue, Suite 3300, New
York, New York 10017. In addition, Bankers Trust Company, which is located at
One Bankers Trust Plaza, New York, NY 10006, acts as the custodian of the
securities, cash and other assets of the Company and maintains certain accounts
and records of the Company. ChaseMellon Shareholder Services, L.L.C., which is
located at Overpeck Center, 85 Challenger Road, Ridgefield Park, NJ 07660, acts
as the Company's transfer agent, registrar and dividend-paying agent and
maintains certain accounts and records of the Company.
ITEM 32. MANAGEMENT SERVICES
Not Applicable.
ITEM 33. UNDERTAKINGS
1. Registrant undertakes to suspend the offering of shares of Cumulative
Preferred Stock until the prospectus is amended if (1) subsequent to the
effective date of this Registration Statement, its net asset value declines more
than ten percent from its net asset value as of the effective date of the
Registration Statement or (2) its net asset value increases to an amount greater
than its net proceeds as stated in the prospectus.
2. Not applicable.
3. Not applicable.
4. Not applicable.
5. Registrant undertakes that (a) for the purpose of determining any
liability under the Securities Act of 1933, the information omitted from the
form of prospectus filed as part of the Registration Statement in reliance upon
Rule 430A and contained in the form of prospectus filed by the Registrant
pursuant to Rule 497(h) will be deemed to be a part of the Registration
Statement as of the time it was declared effective; and (b) for the purpose of
determining any liability under the Securities Act, each post-effective
amendment that contains a form of prospectus will be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time will be deemed to be the initial bona
fide offering thereof.
6. Registrant undertakes to send by first class mail or other means
designed to ensure equally prompt delivery, within two Business Days of receipt
of a written or oral request, any Statement of Additional Information
constituting Part B of this Registration Statement.
C-3
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant has duly caused
this Amendment No. 3 to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York, State of
New York on the 15th day of June, 1998.
GENERAL AMERICAN INVESTORS COMPANY, INC.
By: /s/ EUGENE L. DESTAEBLER, JR.
-------------------------------------------
Name: Eugene L. DeStaebler, Jr.
Title: Vice-President, Administration
IN WITNESS WHEREOF, the undersigned officers and directors have hereunto
set their hands this 15th day of June, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* President and Chief Executive Officer and
- --------------------------------------------------- Director (Principal Executive Officer)
(Spencer Davidson)
* Executive Vice-President, Chief Operating Officer
- --------------------------------------------------- and Director
(Victoria Hamilton)
/s/ EUGENE L. DESTAEBLER, JR. Vice-President, Administration
- --------------------------------------------------- (Principal Financial Officer and Principal
(Eugene L. DeStaebler, Jr.) Accounting Officer)
* Chairman of the Board of Directors and Director
- ---------------------------------------------------
(Lawrence B. Buttenwieser)
* Director
- ---------------------------------------------------
(Arthur G. Altschul, Jr.)
* Director
- ---------------------------------------------------
(Lewis B. Cullman)
* Director
- ---------------------------------------------------
(Gerald M. Edelman)
* Director
- ---------------------------------------------------
(Anthony M. Frank)
* Director
- ---------------------------------------------------
(John D. Gordan, III)
</TABLE>
C-4
<PAGE> 7
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Director
- ---------------------------------------------------
(Bill Green)
* Director
- ---------------------------------------------------
(Sidney R. Knafel)
* Director
- ---------------------------------------------------
(Richard R. Pivirotto)
* Director
- ---------------------------------------------------
(Joseph T. Stewart, Jr.)
* Director
- ---------------------------------------------------
(Raymond S. Troubh)
/s/ EUGENE L. DESTAEBLER, JR.
- ---------------------------------------------------
Attorney-in-Fact
</TABLE>
C-5
<PAGE> 8
SCHEDULE OF EXHIBITS TO FORM N-2
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
------- ------- ------
<S> <C> <C>
Exhibit A (1) Restated Certificate of Incorporation**.................
(2) Certificate of Amendment to the Restated Certificate of
Incorporation,
dated April 28, 1987**......................................
(3) Certificate of Amendment to the Restated Certificate of
Incorporation,
dated March 19, 1992**......................................
(4) Certificate of Amendment to the Restated Certificate of
Incorporation,
dated March 11, 1998**......................................
(5) Certificate of Correction to the Certificate of
Amendment to the Restated
Certificate of Incorporation, dated March 20, 1998**........
(6) Certificate of Designations**...........................
Exhibit B By-Laws**...................................................
Exhibit C Not Applicable..............................................
Exhibit D Specimen Stock Certificate**................................
Exhibit E Not Applicable..............................................
Exhibit F Not Applicable..............................................
Exhibit G Not Applicable..............................................
Exhibit H (1) Form of Underwriting Agreement+.........................
(2) Form of Master Agreement Among Underwriters**...........
Exhibit I (1) Employees' Retirement Plan**............................
(2) Amendment of the Employees' Retirement Plan**...........
(3) Employees' Thrift Plan**................................
(4) Excess Benefit Plan**...................................
(5) Excess Contribution Plan**..............................
Exhibit J Custodian Agreement**.......................................
Exhibit K Not Applicable..............................................
Exhibit L Opinion and Consent of Sullivan & Cromwell**................
Exhibit M Not Applicable..............................................
Exhibit N Consent of Ernst & Young LLP+...............................
Exhibit O Not Applicable..............................................
Exhibit P Not Applicable..............................................
Exhibit Q Not Applicable..............................................
Exhibit R Not Applicable..............................................
</TABLE>
- ---------------
** Previously filed.
+ Filed herewith.
<PAGE> 1
GENERAL AMERICAN INVESTORS COMPANY, INC.
(a Delaware corporation)
6,000,000 Shares
-% Tax-Advantaged Cumulative Preferred Stock
(liquidation preference $25 per share)
PURCHASE AGREEMENT
Dated: -, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
PURCHASE AGREEMENT................................................................................................1
SECTION 1. Representations and Warranties................................................2
(a) Representations and Warranties by the Company.................................2
(i) Compliance with Registration Requirements.....................................2
(ii) Incorporated Documents.......................................................3
(iii) Distribution of Offering Material.............................................3
(iv) Registration of the Company...................................................4
(v) Investment Company Act........................................................4
(vi) Agreements and Obligations....................................................4
(vii) Independent Accountants.......................................................4
(viii) Financial Statements..........................................................4
(ix) No Material Adverse Change in Business........................................4
(x) Good Standing of the Company..................................................5
(xi) No Significant Subsidiary.....................................................5
(xii) Capitalization................................................................5
(xiii) Authorization of Agreement....................................................5
(xiv) Authorization and Description of Common Stock.................................5
(xv) Authorization and Description of Securities...................................5
(xvi) Absence of Defaults and Conflicts.............................................6
(xvii) Absence of Proceedings........................................................6
(xviii) Accuracy of Exhibits..........................................................7
(xix) Possession of Intellectual Property...........................................7
(xx) Absence of Further Requirements...............................................7
(xxi) Possession of Licenses and Permits............................................7
(xxii) Maintenance of Accounting Controls............................................8
(xxiii) Title to Property.............................................................8
(xxiv) Compliance with Cuba Act......................................................8
(xxv) Registration Rights...........................................................8
(xxvi) Interested Persons and Affiliated Persons.....................................8
(xxvii) Portfolio Management..........................................................8
(b) Officer's Certificates........................................................9
SECTION 2. Sale and Delivery to Underwriters; Closing....................................9
(a) Securities....................................................................9
(b) Payment.......................................................................9
(c) Denominations; Registration...................................................9
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
SECTION 3. Covenants of the Company.....................................................10
(a) Compliance with Securities Regulations and Commission
Requests.....................................................................10
(b) Filing of Amendments.........................................................10
(c) Delivery of Registration Statements..........................................10
(d) Delivery of Prospectuses.....................................................11
(e) Continued Compliance with Securities Laws....................................11
(f) Rule 158.....................................................................11
(g) Use of Proceeds..............................................................11
(h) Listing......................................................................11
(k) Reporting Requirements.......................................................12
(l) Ratings......................................................................12
(m) Accountant's Confirmation....................................................12
(n) Compliance with NASD Rules...................................................
SECTION 4. Payment of Expenses..........................................................12
(a) Expenses.....................................................................12
(b) Termination of Agreement.....................................................13
SECTION 5. Conditions of Underwriters' Obligations......................................13
(a) Effectiveness of Registration Statement......................................13
(b) Opinion and Letter of Counsel for Company....................................13
(c) Opinion of Counsel for Underwriters..........................................13
(d) Officers' Certificate........................................................14
(e) Accountant's Comfort Letter..................................................14
(f) Bring-down Comfort Letter....................................................14
(g) Maintenance of Rating........................................................14
(h) Basic Maintenance Report.....................................................14
(i) Approval of Listing..........................................................15
(j) Additional Documents.........................................................15
(k) Termination of Agreement.....................................................15
SECTION 6. Indemnification..............................................................15
(a) Indemnification of Underwriters..............................................15
(b) Indemnification of Company, Directors and Officers...........................16
(c) Actions against Parties; Notification........................................16
(d) Settlement without Consent if Failure to Reimburse...........................17
(e) Indemnification for Reserved Securities......................................
SECTION 7. Contribution.................................................................17
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery.....................................................................19
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
SECTION 9. Termination of Agreement.....................................................19
(a) Termination; General.........................................................19
(b) Liabilities. ................................................................19
SECTION 10. Default by One or More of the Underwriters...................................19
SECTION 11. Notices......................................................................20
SECTION 12. Parties......................................................................20
SECTION 13. GOVERNING LAW AND TIME.......................................................20
SECTION 14. Effect of Headings...........................................................20
SCHEDULES
Schedule A - List of Underwriters..................................................................Sch A-1
Schedule B - Pricing Information...................................................................Sch B-1
EXHIBITS
Exhibit A- Form of Opinion and Letter of Company's Counsel.............................................A-1
</TABLE>
iii
<PAGE> 5
GENERAL AMERICAN INVESTORS COMPANY, INC.
(a Delaware corporation)
6,000,000 Shares
-% Tax-Advantaged Cumulative Preferred Stock
(liquidation preference $25 per share)
PURCHASE AGREEMENT
-, 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Smith Barney Inc.
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
General American Investors Company, Inc., a Delaware
corporation (the "Company"), confirms its agreement with Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and Salomon
Smith Barney Inc. and each of the other Underwriters named in Schedule A hereto
(collectively, the "Underwriters", which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom Merrill
Lynch and Salomon Smith Barney Inc. are acting as representatives (in such
capacity, the "Representatives"), with respect to the issue and sale by the
Company and the purchase by the Underwriters, acting severally and not jointly,
of the respective numbers of shares of the Company's -% Tax-Advantaged
Cumulative Preferred Stock, liquidation preference $25 per share, set forth in
said Schedule A. The aforesaid shares of preferred stock to be purchased by the
Underwriters are hereinafter called the "Securities".
The Company understands that the Underwriters propose to make
a public offering of the Securities as soon as the Representatives deem
advisable after this Agreement has been executed and delivered.
The Company and the Underwriters agree that up to 291,000
shares of the Securities to be purchased by the Underwriters (the "Reserved
Securities") shall be reserved for sale within the United States by the
Underwriters to certain eligible directors, employees and persons having
business relationships with the Company, as part of the distribution of the
Securities by the Underwriters, subject to the terms of this Agreement, the
applicable rules, regulations and interpretations of the National Association of
Securities Dealers, Inc. (the "NASD") and all other applicable laws, rules and
regulations. To the extent that such Reserved Securities are not orally
confirmed for purchase by such eligible directors, employees and persons having
business relationships with the Company by the end of the first business day
after the date of this Agreement, such Reserved Securities may be offered to the
public as part of the public offering contemplated hereby.
<PAGE> 6
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form N-2 (Securities
Act File No. 333-48431 and Investment Company Act File No. 811-00041) covering
the registration of the Securities under the Securities Act of 1933, as amended
(the "1933 Act") and the Investment Company Act of 1940, as amended (the "1940
Act"), including the related preliminary prospectus or prospectuses. The Company
has also filed with the Commission a notification of registration of the Company
as an investment company under the 1940 Act on Form N-8A (the "1940 Act
Notification"). Promptly after execution and delivery of this Agreement, the
Company will prepare and file a prospectus in accordance with the provisions of
Rule 430A ("Rule 430A") of the rules and regulations of the Commission under the
1933 Act (the "1933 Act Regulations") and paragraph (h) of Rule 497 ("Rule
497(h)") of the 1933 Act Regulations. The information included in such
prospectus that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information." Each form of prospectus used before such
registration statement became effective, and any prospectus that omitted the
Rule 430A Information that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final prospectus in the form first furnished to the Underwriters
for use in connection with the offering of the Securities is herein called the
"Prospectus." For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the Prospectus or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("EDGAR").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and agrees with each
Underwriter, as follows:
(i) Compliance with Registration Requirements. Each
of the Registration Statement and any Rule 462(b) Registration
Statement has become effective under the 1933 Act and the 1940
Act and no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act or the 1940 Act
and no proceedings for that purpose have been instituted or
are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied
with.
At the respective times the Registration Statement,
any Rule 462(b) Registration Statement and any post-effective
amendments thereto became effective
2
<PAGE> 7
and at the Closing Time, the Registration Statement, the Rule
462(b) Registration Statement and any post-effective
amendments and supplements thereto complied and will comply in
all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations and the 1940 Act and the rules
and regulations of the Commission under the 1940 Act (the
"1940 Act Regulations") and did not and will not contain an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading. Neither the
Prospectus nor any amendments or supplements thereto, at the
time the Prospectus or any such amendment or supplement
thereto was issued and at the Closing Time, included or will
include an untrue statement of a material fact or omitted or
will 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.
Each preliminary prospectus and the prospectus filed
as part of the Registration Statement as originally filed or
as part of any amendment thereto, or filed pursuant to Rule
497 under the 1933 Act, complied when so filed in all material
respects with the 1933 Act Regulations and the 1940 Act
Regulations and each preliminary prospectus and the Prospectus
delivered to the Underwriters for use in connection with this
offering was identical in all material respects to the
electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted
by Regulation S-T. The representations and warranties in this
subsection shall not apply to statements in or omissions from
the Registration Statement or Prospectus made in reliance upon
and in conformity with information furnished to the Company in
writing by any Underwriter through Merrill Lynch expressly for
use in the Registration Statement or Prospectus.
(ii) Incorporated Documents. The documents
incorporated or deemed to be incorporated by reference in the
Registration Statement and the Prospectus, at the time they
were or hereafter are filed with the Commission, complied and
will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations, the 1934 Act and
the rules and regulations of the Commission thereunder (the
"1934 Act Regulations") or the 1940 Act and the 1940 Act
Regulations, and, when read together with the other
information in the Prospectus, at the time the Registration
Statement became effective, at the time the Prospectus was
issued and at the Closing Time, did not and will not contain
an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading.
(iii) Distribution of Offering Material. The Company
has not distributed and, prior to the later to occur of (A)
Closing Time and (B) 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 or
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other materials, if any, permitted by the 1933 Act, the 1933
Act Regulations, the 1940 Act or the 1940 Act Regulations.
(iv) Registration of the Company. The Company 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 and, at the time of
filing thereof and any amendment or supplement thereto,
conformed in all material respects with all applicable
provisions of the 1940 Act and the 1940 Act Regulations. The
Company is, and at all times through the completion of the
transactions contemplated hereby, will be, in compliance in
all material respects with the terms and conditions of the
1933 Act and the 1940 Act.
(v) Investment Company Act. No person is serving or
acting as an officer or director of the Company except in
accordance with the provisions of the 1940 Act and the 1940
Act Regulations.
(vi) Agreements and Obligations. Each of the
Company's contracts with its custodian, transfer agent,
registrar and dividend paying agent (the "Company Agreements")
comply in all material respects with the applicable provisions
of the 1940 Act and the 1940 Act Regulations.
(vii) Independent Accountants. The accountants who
certified the financial statements incorporated by reference
in the Registration Statement are independent public
accountants as required by the 1933 Act and the 1933 Act
Regulations.
(viii) Financial Statements. The financial statements
incorporated by reference in the Registration Statement and
the Prospectus, together with the related notes, present
fairly the financial position of the Company at the dates
indicated and the statement of operations, stockholders'
equity and cash flows of the Company for the periods
specified; said financial statements have been prepared in
conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods
involved. The financial highlights included in the Prospectus
present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited
financial statements incorporated by reference in the
Registration Statement.
(ix) No Material Adverse Change in Business. 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 Company, whether
or not arising in the ordinary course of business
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(a "Material Adverse Effect"), (B) there have been no
transactions entered into by the Company, other than those in
the ordinary course of business, which are material with
respect to the Company, and (C) except for dividends on the
Company's Common Stock, par value $1.00 per share (the "Common
Stock") in amounts per share that are consistent with past
practice, there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its
capital stock.
(x) Good Standing of the Company. The Company has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of
Delaware and 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 this Agreement; and the Company is duly
qualified as a foreign corporation to transact business and is
in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing
would not result in a Material Adverse Effect.
(xi) No Significant Subsidiary. The Company does not
have any "significant subsidiary" as such term is defined in
Rule 1-02 of Regulation S-X.
(xii) Capitalization. The authorized, issued and
outstanding capital stock of the Company is as set forth in
the Prospectus in the column entitled "Actual" under the
caption "Capitalization" (except for subsequent issuances, if
any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of convertible
securities or options referred to in the Prospectus). The
shares of issued and outstanding capital stock of the Company
have been duly authorized and validly issued and are fully
paid and non-assessable. The Company is not a party 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.
(xiii) Authorization of Agreement. This Agreement has
been duly authorized, executed and delivered by the Company.
(xiv) Authorization and Description of Common Stock.
The Common Stock conforms to all statements relating thereto
contained or incorporated by reference in the Prospectus and
such description conforms to the rights set forth in the
instruments defining the same.
(xv) Authorization and Description of Securities. The
Securities have been duly authorized for issuance and sale to
the Underwriters pursuant to this Agreement and, when issued
and delivered by the Company pursuant to this Agreement
against payment of the consideration set forth herein, will be
validly issued and fully paid
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and non-assessable; the Securities will conform in all
material respects to the description thereof contained in the
Prospectus and such description conforms in all material
respects to the rights set forth in the instruments defining
the same; no holder of the Securities will be subject to
personal liability by reason of being such a holder; and the
issuance of the Securities is not subject to the preemptive or
other similar rights of any securityholder of the Company.
(xvi) Absence of Defaults and Conflicts. The Company
is not in violation of its Restated Certificate of
Incorporation or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or
instrument to which the Company is a party or by which it may
be bound, or to which any of the property or assets of the
Company is subject (collectively, "Agreements and
Instruments") except for such violations or defaults that
would not result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein 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 Company with
its obligations hereunder have been duly authorized by all
necessary corporate action and do not and will not, whether
with or without the giving of notice or passage 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
Company pursuant to, the Agreements and Instruments (except
for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse
Effect), nor will such action result in any violation of the
provisions of the Restated Certificate of Incorporation or
by-laws of the Company or, to the best of the Company's
knowledge, any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its assets, properties
or operations.
(xvii) Absence of Proceedings. There is no action,
suit, proceeding, inquiry or investigation before or brought
by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of the Company,
threatened, against or affecting the Company, which is
required to be disclosed in the Registration Statement (other
than as disclosed therein), or which might reasonably be
expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely
affect the properties or assets thereof or the consummation of
the transactions contemplated in this Agreement or the
performance by the Company of its obligations hereunder; the
aggregate of all pending legal or governmental proceedings to
which the Company is a party or of which any of its property
or assets is the subject which are not described in the
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Registration Statement, including ordinary routine litigation
incidental to the business, could not reasonably be expected
to result in a Material Adverse Effect.
(xviii) Accuracy of Exhibits. There are no contracts
or documents which are required to be described in the
Registration Statement or the Prospectus or to be filed as
exhibits thereto which have not been so described and filed as
required.
(xix) Possession of Intellectual Property. The
Company does not own or possess any intellectual property that
is material to its business.
(xx) Absence of Further Requirements. No filing with,
or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for
the performance by the Company of its obligations hereunder,
in connection with the offering, issuance or sale of the
Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except such as have been
already obtained or as may be required under the 1933 Act and
the 1940 Act or the 1933 Act Regulations and the 1940 Act
Regulations.
(xxi) Possession of Licenses and Permits. Except as
disclosed in the Registration Statement or as would not have a
Material Adverse Effect, (i) the Company possesses such
permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued
by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now
operated by it; and (ii) the Company is in compliance with the
terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or
the failure of such Governmental Licenses to be in full force
and effect would not have a Material Adverse Effect; and the
Company has not received any notice of proceedings relating to
the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xxii) Maintenance of Accounting Controls. 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 applicable
requirements of the 1940 Act, the 1940 Act Regulations and the
Internal Revenue Code of 1986, as amended (the "Code"); (B)
transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for
assets and to maintain compliance with the books and records
requirements under the 1940 Act and the 1940 Act Regulations;
(C) access
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<PAGE> 12
to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with
respect to any difference.
(xxiii) Title to Property. The Company owns no real
property. All of the leases and subleases material to the
business of the Company and under which the Company holds
properties described in the Prospectus, are in full force and
effect, and the Company has no notice of any material claim of
any sort that has been asserted by anyone adverse to the
rights of the Company under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the
Company to the continued possession of the leased or subleased
premises under any such lease or sublease except such as could
not reasonably be expected to have a Material Adverse Effect.
(xxiv) Registration Rights. There are no persons with
registration rights or other similar rights to have any
securities registered pursuant to the Registration Statement
or otherwise registered by the Company under the 1933 Act.
(xxv) Interested Persons and Affiliated Persons.
Except as disclosed in the Registration Statement and the
Prospectus, no director of the Company is an "interested
person" (as defined in the 1940 Act) of the Company.
(xxvi) Portfolio Management. Spencer Davidson is the
validly appointed President and Chief Executive Officer of the
Company and the manager of the Company's portfolio; Mr.
Davidson has not given notice nor made known his intention to
give notice of termination of his employment and the Company
knows of no reason why Mr. Davidson should be unable to manage
the Company's portfolio.
(b) Officer's Certificates. Any certificate signed by any
officer of the Company delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby and no personal liability
therefor shall attach to the officer providing any such certificate.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each
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Underwriter, severally and not jointly, and each Underwriter, severally and not
jointly, agrees to purchase from the Company, at the price per share set forth
in Schedule B, the number of Securities set forth in Schedule A opposite the
name of such Underwriter, plus any additional number of Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) Payment. Payment of the purchase price for, and delivery
of certificates for, the Securities shall be made at the offices of Skadden,
Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York, or at
such other place as shall be agreed upon by the Representatives and the Company,
at 9:00 A.M. (Eastern time) on the third business day after the date hereof
(unless postponed in accordance with the provisions of Section 10), or such
other time not later than ten business days after such date as shall be agreed
upon by the Representatives and the Company (such time and date of payment and
delivery being herein called "Closing Time").
Payment shall be made to the Company by wire transfer of
immediately available funds to a bank account designated by the Company, against
delivery to the Representatives for the respective accounts of the Underwriters
of certificates for the Securities to be purchased by them. It is understood
that each Underwriter has authorized the Representatives, for its account, to
accept delivery of, receipt for, and make payment of the purchase price for, the
Securities, if any, which it has agreed to purchase. Merrill Lynch, individually
and not as representative of the Underwriters, may (but shall not be obligated
to) make payment of the purchase price for the Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time, but such payment shall not relieve such Underwriter from its obligations
hereunder.
(c) Denominations; Registration. One or more certificates in
global form representing the Securities shall be registered in the name of Cede
& Co., as nominee of DTC. The global certificate or certificates representing
the Securities will be made available for examination by the Representatives in
The City of New York not later than 10:00 A.M. (Eastern Time) on the business
day prior to the Closing Time. Delivery of the Securities by the Company shall
be made by book-entry transfer to an account or accounts specified by the
Representatives in such respective portions as the Representatives may
designate, upon notice given to the Company prior to 10:00 am (Eastern time) on
the business day prior to the Closing Time.
SECTION 3. Covenants of the Company. The Company covenants
with each Underwriter as follows:
(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A and will notify the Representatives immediately, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and
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(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to 497(c) or Rule
497(h), whichever is applicable, or if applicable the certification permitted by
Rule 497(j); and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule 497(c)
or 497(h), whichever is applicable, or if applicable the certification permitted
by Rule 497(j); was received for filing by the Commission and, in the event that
it was not, it will promptly file such prospectus or certification. The Company
will make every reasonable effort to prevent the issuance of any stop order and,
if any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) Filing of Amendments. The Company will give the
Representatives notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectus,
will furnish the Representatives with copies of any such documents in a
reasonable amount of time prior to such proposed filing or use, as the case may
be, and will not file or use any such document to which the Representatives or
counsel for the Underwriters shall object promptly after it receives copies
thereof.
(c) Delivery of Registration Statements. The Company has
furnished or will deliver to the Representatives and counsel for the
Underwriters, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the
Representatives, without charge, a conformed copy of the Registration Statement
as originally filed and of each amendment thereto (without exhibits) for each of
the Underwriters. The copies of the Registration Statement and each amendment
thereto furnished to the Underwriters will be identical in all material respects
to the electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to
each Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act and the 1940 Act. The
Company will furnish to each Underwriter, without charge, during the period when
the Prospectus is required to be delivered under the 1933 Act, such number of
copies of the Prospectus (as amended or supplemented) as such Underwriter may
reasonably request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical in all material respects to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company
will comply with the 1933 Act and the 1940 Act and the 1933 Act Regulations and
the 1940 Act Regulations so as to
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permit the completion of the distribution of the Securities as contemplated in
this Agreement and in the Prospectus. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of which
it is necessary, in the opinion of counsel for the Underwriters or for the
Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue statements
of a material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations and the 1940 Act and the 1940 Act
Regulations, the Company will promptly prepare and file with the Commission,
subject to Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish to the
Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(f) Rule 158. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally available
to its securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last paragraph of
Section 11(a) of the 1933 Act.
(g) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified in the
Prospectus under "Use of Proceeds".
(h) Listing. The Company will use its best efforts to effect
the listing of the Securities on the New York Stock Exchange.
(j) Restriction on Sale of Securities. During a period of -
days from the date of the Prospectus, the Company will not, without the prior
written consent of the Representatives, (i) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any share of Cumulative Preferred
Stock or any securities convertible into or exercisable or exchangeable for
Cumulative Preferred Stock or file any registration statement under the 1933 Act
or the 1940 Act with respect to any of the foregoing or (ii) enter into any swap
or any other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Cumulative
Preferred Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Cumulative Preferred Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to the Securities to be sold hereunder.
(k) Reporting Requirements. The Company, during the period
when the Prospectus is required to be delivered under the 1933 Act or the 1940
Act, will file all documents required to be filed with the Commission pursuant
to the 1940 Act within the time periods required by the 1940 Act and the rules
and regulations of the Commission thereunder.
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(l) Ratings. The Company will use its best efforts to cause
the Securities prior to Closing Time, to be assigned a rating of "aaa" by
Moody's Investors Services, Inc. ("Moody's").
(m) Accountant's Confirmation. The Company will furnish to
the Representatives, on the date delivery is made to Moody's, the Accountant's
Confirmation (as defined in the Certificate of Designations) corresponding to
the Basic Maintenance Report (as defined in the Certificate of Designations)
for the first Valuation Date (as defined in the Certificate of Designations)
following Closing Time.
(n) Compliance with NASD Rules. The Company hereby agrees
that it will ensure that the Reserved Securities will be restricted as required
by the NASD or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of this
Agreement. The Underwriters will notify the Company as to which persons will
need to be so restricted. At the request of the Underwriters, the Company will
direct the transfer agent to place a stop transfer restriction upon such
securities for such period of time. Should the Company release, or seek to
release, from such restrictions any of the Reserved Securities, the Company
agrees to reimburse the Underwriters for any reasonable expenses (including,
without limitation, legal expenses) they incur in connection with such release.
SECTION 4. Payment of Expenses. (a) Expenses. The Company will
pay all expenses incident to the performance of its obligations under this
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, including any stock or other transfer taxes and any stamp or other
duties payable upon the sale, issuance or delivery of the Securities to the
Underwriters, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus and of the
Prospectus and any amendments or supplements thereto, (vii) the fees and
expenses of any transfer agent or registrar for the Securities, (viii) any fees
charged by securities rating services for rating the Securities, (ix) the fees
and expenses incurred in connection with the listing of the Securities on the
New York Stock Exchange and (x) all costs and expenses of the Underwriters,
including the fees and disbursements of counsel for the Underwriters, in
connection with matters related to the Reserved Securities which are designated
by the Company for sale to directors, officers and others having a business
relationship with the Company. It is understood, however, that except as
provided in this Section, Section 6 and Section 7, the Underwriters will pay all
of their own costs and expenses, 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.
(b) Termination of Agreement. If this Agreement is terminated
by the Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The
obligations of the several Underwriters hereunder are subject to the accuracy of
the representations and warranties of the Company contained in Section 1 hereof
or in certificates of any officer of the Company delivered pursuant to the
provisions hereof, to the performance by the Company of its covenants and other
obligations hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act
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or proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of counsel to the Underwriters. A
prospectus containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 497(h) (or a post-effective amendment
providing such information shall have been filed and declared effective in
accordance with the requirements of Rule 430A).
(b) Opinion and Letter of Counsel for Company. At Closing Time,
the Representatives shall have received the favorable opinion and letter, each
dated as of Closing Time, of Sullivan & Cromwell, counsel for the Company,
in form and substance reasonably satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters to the effect set forth in Exhibit A hereto. In giving such opinion
such counsel may rely, as to all matters governed by the laws of jurisdictions
other than the law of the State of New York, the federal law of the United
States and the General Corporation Law of the State of Delaware, upon the
opinions of counsel satisfactory to the Representatives. Such counsel may also
state that, insofar as such opinion involves factual matters, they have relied,
to the extent they deem proper, upon certificates of officers of the Company and
certificates of public officials.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters with respect to the matters set forth in clauses (i), (ii), (vi),
(vii), (xi) (solely as to the Purchase Agreement) and the second and fourth
sentences of the penultimate paragraph of Exhibit A hereto (provided, however,
that with respect to such fourth sentence of such penultimate paragraph, such
opinion shall be solely with respect to the information in the Prospectus
under "Description of Cumulative Preferred Stock"). In giving such opinion
such counsel may rely, as to all matters governed by the laws of jurisdictions
other than the law of the State of New York, the federal law of the
United States and the General Corporation Law of the State of Delaware, upon
the opinions of counsel satisfactory to the Representatives. Such counsel may
also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company and certificates of public officials.
(d) Officers' Certificate. At Closing Time, there shall not
have been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, whether or not arising in the ordinary course
of business, and the Representatives shall have received a certificate of the
President or a Vice President of the Company and of the chief financial or chief
accounting officer of the Company, dated as of Closing Time, to the effect that
(i) there has been no such material adverse change, (ii) the representations and
warranties in Section 1(a) hereof are true and correct with the same force and
effect as though expressly made at and as of Closing Time, (iii) the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time, and (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending or are
contemplated by the Commission.
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(e) Accountant's Comfort Letter. At the time of the execution
of this Agreement, the Representatives shall have received from Ernst & Young
LLP a letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the
Representatives shall have received from Ernst & Young LLP a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(g) Maintenance of Rating. At Closing Time, the Securities
shall be rated at least "aaa" by Moody's Investors Service, Inc., and the
Company shall have delivered to the Representatives a letter dated the Closing
Time, from such rating agency, or other evidence satisfactory to the
Representatives, confirming that the Securities have such rating; and since the
date of this Agreement, there shall not have occurred a downgrading in the
rating assigned to the Securities or any of the Company's other securities by
any "nationally recognized statistical rating agency", as that term is defined
by the Commission for purposes of Rule 436(g)(2) under the 1933 Act, and no such
organization shall have publicly announced that it has under surveillance or
review its rating of the Securities or any of the Company's other securities.
(h) Basic Maintenance Report. At Closing Time, the Company
shall have delivered to the Representatives a report showing compliance with the
Asset coverage requirements of the 1940 Act 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 Closing Time;
provided, however, that the Company represents in such report that its total net
assets as of Closing Time have not declined by 5% or more from such valuation
date.
(i) Approval of Listing. At Closing Time, the Securities shall
have been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
(j) Additional Documents. At Closing Time, counsel for the
Underwriters shall have been furnished with such documents and opinions as they
may require for the purpose of enabling them to pass upon the issuance and sale
of the Securities as herein contemplated, or in order to evidence the accuracy
of any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained.
(k) Termination of Agreement. If any condition specified in
this Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement may be terminated by the
14
<PAGE> 19
Representatives by notice to the Company at any time at or prior to Closing Time
and such termination shall be without liability of any party to any other party
except as provided in Section 4 and except that Sections 1, 6, 7 and 8 shall
survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. (1) The Company
agrees to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any
untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment
thereto), including the Rule 430A Information or the omission
or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein
not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject
to Section 6(d) below) any such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as
incurred (including, subject to Section 6(c) hereof, the fees
and disbursements of counsel chosen by the Representatives),
reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii)
above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); and provided, further, that
15
<PAGE> 20
the Company will not be liable to an Underwriter with respect to any preliminary
prospectus to the extent that the Company shall have sustained the burden of
proving that any such loss, liability, claim, damage or expense resulted from
the fact that such Underwriter in contravention of a requirement of this
Agreement or applicable law, sold Securities to a person to whom such
Underwriter failed to send or give, at or prior to the Closing Time, a copy of
the Prospectus as then amended or supplemented if the Company has previously
furnished copies thereof (sufficiently in advance of Closing Time to allow for
distribution by Closing Time) to the Underwriter and the loss, liability, claim,
damage or expense of such Underwriter resulted from an untrue statement or
omission or alleged untrue statement or omission of a material fact contained in
or omitted from the preliminary prospectus which was corrected in the Prospectus
as, if applicable, amended or supplemented prior to the Closing Time.
(b) Indemnification of Company, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through the Representatives expressly for use
in the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified
party shall give notice as promptly as reasonably practicable to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability hereunder to
the extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have otherwise than on
account of this indemnity agreement. In the case of parties indemnified pursuant
to Section 6(a) above, counsel to the indemnified parties shall be selected by
the Representatives, and, in the case of parties indemnified pursuant to Section
6(b) above, counsel to the indemnified parties shall be selected by the Company.
An indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or
16
<PAGE> 21
not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a) (ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
(e) Indemnification for Reserved Securities. In connection
with the offer and sale of the Reserved Securities, the Company agrees,
promptly upon a request in writing, to indemnify and hold harmless the
Underwriters from and against any and all losses, liabilities, claims, damages
and expenses incurred by them as a result of the failure of the relevant
eligible directors, employees and persons having business relationships with
the Company to pay for and accept delivery of Reserved Securities which, by the
end of the first business day following the date of this Agreement, were
subject to a properly confirmed agreement to purchase.
SECTION 7. Contribution. If the indemnification provided for
in Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Securities pursuant to this Agreement or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters, in
each case as set forth on the cover of the Prospectus.
The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which
17
<PAGE> 22
does not take account of the equitable considerations referred to above in this
Section 7. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
7 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial Securities set forth opposite
their respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements contained in
this Agreement or in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or controlling person, or
by or on behalf of the Company, and shall survive delivery of the Securities to
the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate
this Agreement, by notice to the Company, at any time at or prior to Closing
Time (i) if there has been, since the time of execution of this Agreement or
since the respective dates as of which information is given in the Prospectus,
any material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such
18
<PAGE> 23
as to make it, in the judgment of the Representatives, impracticable to market
the Securities or to enforce contracts for the sale of the Securities, or (iii)
if trading in any securities of the Company has been suspended or materially
limited by the Commission or the New York Stock Exchange, or if trading
generally on the American Stock Exchange or the New York Stock Exchange or in
the Nasdaq National Market has been suspended or materially limited, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) if a banking moratorium has been declared by
either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to
this Section, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and provided further that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full force
and effect.
SECTION 10. Default by One or More of the Underwriters. If one
or more of the Underwriters shall fail at Closing Time to purchase the
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), the Representatives shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this Agreement or, with
respect to any Date of Delivery which occurs after the Closing Time, the
obligation of the Underwriters to purchase and of the Company to sell the Option
Securities to be purchased and sold on such Date of Delivery shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement either the Representatives or the Company shall
have the right to postpone Closing Time for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or Prospectus
or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 10.
19
<PAGE> 24
SECTION 11. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at Merrill Lynch & Co.,
North Tower, World Financial Center, New York, New York 10281-1201, attention of
Mr. Rick Doyle and at Salomon Smith Barney Inc., 388 Greenwich Street, New York,
New York 10013, attention of Mr. Robert F. Bush, Jr.; and notices to the Company
shall be directed to it at 450 Lexington Avenue, Suite 3300, New York, New York
10017, attention of Eugene L. DeStaebler, Jr.
SECTION 12. Parties. This Agreement shall each inure to the
benefit of and be binding upon the Underwriters and the Company and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriters and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters and the Company and
their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Securities from any
Underwriter shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
20
<PAGE> 25
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its terms.
Very truly yours,
GENERAL AMERICAN INVESTORS COMPANY, INC.
By:
------------------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
SMITH BARNEY INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
--------------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
21
<PAGE> 26
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Initial
Name of Underwriter Securities
- ------------------- ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Smith Barney Inc.
PaineWeber Incorporated
Prudential Securities Incorporated
----------
Total
==========
</TABLE>
Sch A1
<PAGE> 27
SCHEDULE B
GENERAL AMERICAN INVESTORS COMPANY, INC.
$6,000,000 Shares
__% Tax-Advantaged Cumulative Preferred Stock
(liquidation preference $25 per share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $25.00.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $- [, being an amount equal to the initial public
offering price set forth above less $- per share].
3. The dividend rate on the Securities will be ___% per annum.
Sch B1
<PAGE> 28
Exhibit A
COMBINED FORM OF OPINION AND LETTER OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.
(ii) The Company 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 Purchase Agreement.
(iii) The Company 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 Company
to such counsel in which the Company owns property, has operations or
conducts business).
(iv) The Company does not have any "significant subsidiary"
as such term is defined in Rule 1-02 of Regulation S-X.
(v) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus in the column entitled
"Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to the Purchase Agreement or pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of convertible securities or
options referred to in the Prospectus); the shares of issued and
outstanding capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable. The Company is
not a party 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.
(vi) The Securities have been duly authorized for issuance
and sale to the Underwriters pursuant to the Purchase Agreement and,
when issued and delivered by the Company pursuant to the Purchase
Agreement against payment of the consideration set forth in the
Purchase Agreement, will be validly issued and fully paid and
non-assessable; 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.
A1
<PAGE> 29
(vii) The Company 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.
(viii) The Company is in compliance in all material respects
with the terms and conditions of the 1940 Act.
(ix) No person is serving or acting as an officer or
director of the Company except in accordance with the provisions of the
1940 Act and the 1940 Act Regulations.
(x) Each of the Company Agreements and the Company's
obligations under each of the Company Agreements comply as to form in
all material respects with the applicable provisions of the 1940 Act
and the 1940 Act Regulations.
(xi) The Purchase Agreement and each of the Company
Agreements has been duly authorized, executed and delivered by the
Company.
(xii) If the Company operates as described in the Prospectus,
and based upon appropriate factual assumptions and factual
representations of the company described in or accompanying such
opinion, the Company will qualify as a regulated investment company
under the Code.
(xiii) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act;
and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or
threatened by the Commission.
A2
<PAGE> 30
(xiv) 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 Company and
the requirements of the New York Stock Exchange.
(xv) To the best of our knowledge, the Company is not in
violation of its Restated Certificate of Incorporation or by-laws and
no default by the Company exists in the due performance or observance
of any material obligation, agreement, covenant or condition contained
in any of the Company Agreements.
(xvi) 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 1933 Act and the 1933 Act Regulations and the 1940 Act and the 1940
Act 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 Purchase Agreement
or for the offering, issuance, sale or delivery of the Securities.
(xvii) The execution, delivery and performance of the
Purchase Agreement and the consummation of the transactions
contemplated in the Purchase 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
Company with its obligations under the Purchase Agreement 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 Company pursuant to any of the
Company Agreements (except for such conflicts, breaches or defaults or
liens, charges or encumbrances that would not have a Material Adverse
Effect), nor will such action result in any violation of the provisions
of the Restated Certificate of
A3
<PAGE> 31
Incorporation or by-laws of the Company, 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 Company or any of its properties,
assets or operations.
(xviii) To the best of our knowledge, there are no persons
with registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise
registered by the Company under the 1933 Act.
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 Company 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, and as of the Closing
Time, 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 Time, 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
Company 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 those made under the captions "Description of Cumulative
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 (but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
A4
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights", "Experts", "Financial Statements" and "Counsel and Independent
Auditors" and to the use of our report dated January 14, 1998, which is
incorporated by reference in this Registration Statement on Form N-2 of General
American Investors Company, Inc.
/s/ ERNST & YOUNG LLP
---------------------------
ERNST & YOUNG LLP
New York, New York
June 8, 1998
